Typically, one reads opinions from the Court of Appeal because the legal doctrines are interesting, or the public policy consequences are significant, or things like that. But, on occasion, there's an element of "law porn" in which you're just fascinated by the underlying legal personalities.
The doctrinal dispute is about the intersection between wrongful termination claims, mandatory contractual arbitration, and choice-of-arbitral-forum provisions (e.g., requiring arbitration outside of California for disputes involving California employees). All that's important, of course. But in terms of sheer interest -- for lawyers, at least -- it's all subsidiary to the "inside peek" one gets into some BigLaw partner-level machinations.
According to the Court of Appeal, at least, here's what happens:
"Petitioner Jinshu “John” Zhang was an equity partner in Dentons U.S. LLP (real party in interest or Dentons), a major law firm with offices throughout the United States. . . . In 2018, petitioner brought a client to Dentons whom the firm agreed to represent for a fee contingent on the outcome. Petitioner was principally responsible for the matter and resolved it successfully in February 2021, entitling Dentons to the contingency fee. The fee could not be collected until a later date when certain transfer restrictions were to be removed and Dentons’s exact percentages would become ascertainable. The fee is substantial; according to petitioner’s complaint, when collected “it will be the single biggest contingency fee Dentons has ever earned.”
Petitioner, whose compensation was determined by the Dentons board, believed the contingency fee “presented an opportunity to negotiate his compensation as it related to the Contingency Fee,” but Dentons’s chief executive officer, Michael McNamara, told him he would have to wait to negotiate his compensation until the Dentons board undertook its annual compensation review.
Matters thereafter deteriorated. Dentons asserts petitioner demanded that Dentons guarantee him 90 percent of the contingency fee and place him on the board, and when Dentons declined, petitioner “covertly went to the Client and negotiated an agreement to receive personally 85% of the proceeds of the contingency fee award, contrary to the terms of the Partnership Agreement.” Petitioner asserts that at the end of April 2021, Mr. McNamara and Edward Reich, Dentons’s general counsel, arranged the creation of a forgery, purporting to be a letter from the client’s representative directing a third party to transfer certain client-held securities worth tens of millions of dollars directly to Dentons. Petitioner reported the alleged forgery to the board on April 30, 2021, demanding Mr. McNamara’s immediate termination.
On May 5, 2021, the Dentons board voted unanimously to terminate petitioner’s status as a partner for cause, and initiated an arbitration the same day, alleging petitioner breached the partnership agreement and his fiduciary duty of loyalty to Dentons."
Fascinating stuff, eh?
As you might expect, litigation between the parties inevitably followed. With competing proceedings in New York and California, a trip to the Court of Appeal, an OSC from the California Supreme Court, and (today) the latest installment, in which the Court of Appeal reaffirms its prior conclusion notwithstanding the OSC.
Needless to say, the dispute isn't over. Not by a longshot.
And I'm confident we'll see more about this in the California appellate tribunals in due course.
