Brief Fact Summary. Charles Gibbs and Robert Sheehan, (Plaintiffs), former partners of Breed, Abbot & Morgan, (Defendant), brought suit against Defendant for monies due to them under their employment contract. Defendant alleged Plaintiffs breached their fiduciary duty to Defendant. Plaintiffs appeal the trial court judgment in favor of Defendant in the amount of $1,861,045.
Synopsis of Rule of Law. It is a breach of fiduciary duty for a shareholder to surreptitiously provide competitors with a selective list of qualified employees and their salaries.
At the other end of the spectrum, secretly attempting to lure firm clients (even those the partner has brought into the firm and personally represented) to the new association, lying to clients about their rights with respect to the choice of counsel, lying to partners about plans to leave, and abandoning the firm on short notice (taking clients and files) would not be consistent with a partner's fiduciary duties.View Full Point of Law
Whether Plaintiffs breached their fiduciary duty as partners of the firm they were about to leave by supplying confidential information to Chadbourne while still partners at Defendant law firm.
Whether Gibbs improperly solicited his partner Sheehan to leave the law firm.
Whether it was improper for the two attorneys to take their chronologies with them.
Yes. Plaintiffs breached their fiduciary duty as partners of the firm they were about to leave by supplying confidential information to Chadbourne while still partners at Defendant law firm.
No. There was no breach of fiduciary duty with respect to Gibbs’ interactions with Sheehan.
No. There was no breach of fiduciary duty with respect to either partner’s removal of his desk files from Defendant law firm.
Dissent. The evidence before the court fails to support any finding that Plaintiffs violated their fiduciary duty to their partners at Defendant law firm. There is no showing nor did the trial court find that the employee information was provided to Chadbourne or any other firm during the period that Plaintiffs were interviewing or at any time before they gave notice to Defendant law firm. Further the type of employment information at issue in this case is generally widely known outside the firms themselves and can be obtained from professional publications, headhunters, and other sources.
Discussion. Defendant did not establish that Gibbs breached any duty to it by discussing with Sheehan a joint move to another firm. There was no breach of duty by Plaintiffs in taking their desk files. However, there is ample support for the finding that the preparation and sending of the memo was a breach of fiduciary duty. Plaintiffs began recruiting while still members of the firm and prior to serving notice of their intent to withdraw. The memo itself contained confidential employment data calculated to give Chadbourne an unfair advantage in recruiting certain employees. Gibbs was privy to this information based on his position as a shareholder.