Obermayer Rebmann Still Facing Lawsuit Brought by Former Associate Regarding Bonus Issues

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Summary: Even though most of the claims against the firm have been discredited, the court would not dismiss the key accusation that the firm cheats on their associates’ bonuses.

Even though the case has been whittled down, the judge presiding over the case refused to dismiss the primary claims accusing Obermayer Rebmann Maxwell & Hippel of cheating on their associate bonuses. The Philadelphia Court of Common Pleas granted Obermayer Rebmann’s motion for judgment on the pleadings in regard to their former associate’s claims of breach of fiduciary duty, fraudulent inducement and fraudulent misrepresentation. The court denied the motion of Ryan Leonard’s claims of fraudulent conversion and misappropriation.

  

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According to The Legal Intelligencer, Leonard worked at Obermayer Rebmann from 2008 to 2014. He claims he was told associate compensation was mostly based on an associate’s profitability. He said, “However, numerous partners at the firm, including partners on the management committee, engaged in a practice known as ‘reallocation of pro-rated credit.’”

Leonard filed the complaint against the firm’s method of billing associates’ time to clients with one rate but then changing that rate internally in what is referred to as a “prorated credit.” A higher credit meant the lawyer was more profitable and thus more likely to receive a bonus. Determining the credit was done by calculating a function of hours worked times the rates charged.

He also accused the firm of breach of contract and wage-and-hour problems. The firm’s motion did not include these claims. Leonard states that he had no knowledge of the practice until he saw internal documents outlining the method.

In Obermayer Rebmann’s motion, they stated that Leonard’s claims don’t hold up because an employer does not owe a fiduciary duty to an employee and that Leonard did not plead reliance on their alleged misrepresentations.

The motion said, “Plaintiff admits that he entered his own time and that the firm’s accounting system showed him his client-authorized hourly rate for each matter on which he entered his time. Based on his own allegations, it would have been obvious to plaintiff if his bonus were inadequate.” The firm also noted that the allegedly incorrect calculation of a bonus does not equal conversion and misappropriation under the law.

Leonard responded, “This practice of reallocating prorated credit and/or internally adjusting hourly rates was done without the knowledge or consent of firm clients. This calculated and concealed manipulation of defendant’s entire compensation structure resulted in reduced bonuses and annual compensation to plaintiff.”

Do you think Leonard has a valid argument or is he just upset that he didn’t earn as much money as he feels entitled to? Tell us in the comments below.

To learn more about lawyers that sue their law firms, read these articles:

• Gender Discrimination Suit for $100 Million Filed against Chadbourne & Parke
• Firm’s Former Lawyer Sues Firm over Unpaid Bonuses
• Martin & Seibert Whistleblower Sues for Wrongful Termination

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