Ex-Chadbourne Partner Sues Firm for Return of Capital

A former London-based Chadbourne & Parke partner is demanding the return of $127,000 in capital, claiming Chadbourne should have repaid her the money within weeks of her departure for Andrews Kurth in late September.

The ex-partner, international arbitration lawyer Melanie Willems, sued Chadbourne in London Mercantile Court on Oct. 30. According to her claim, Willems borrowed $127,000 from Citibank in May 2010—weeks after joining the firm’s London office from Howrey—in order to meet Chadbourne’s capital contribution requirement. Chadbourne agreed to return the capital “as soon as reasonably practicable” following her termination, according to language from the firm’s partnership agreement that Willem quotes in her claim.

Now, Willems is demanding payment from the firm, saying “It would have been ‘reasonably practicable’” for Chadbourne to repay the capital on the day she officially left the partnership, Sept. 27, or “shortly thereafter.”

In her suit, Willems, who did not respond to multiple requests for comment, seeks a court order directing Chadbourne to either pay Citibank the loan balance directly or pay her so she can satisfy her debt to the bank. She also seeks damages for interest on the loan.

News of the suit—which is filed in a U.K. court intended for domestic and international business disputes “of lesser value and complexity” than those in the country’s commercial court—was first reported by British publication Legal Week.

Two former Chadbourne partners say the firm typically does not return capital to those who have left until the following spring after they depart and doesn’t makes promises to repay sooner. Mary Lopatto, an insurance partner who left Chadbourne for Cozen O’Connor in August 2012, says the firm returned her capital to her the following April, around tax season.

As The American Lawyer reported in its March 2013 cover story about firms increasing to unprecedented levels the amount of capital they are requiring of partners, Citi is one of several banks that work closely with Am Law 200 firms to provide capital loans. Such agreements often offer favorable terms for partners, including provisions under which a firm pays the interest on the loan or the bank waives interest entirely for a period of time.

Willems claims Citibank told her in a letter dated Oct. 25 that the loan had gone into default, and that until it is repaid, “interest shall continue to accrue at a daily rate of 2.35 percent per annum over our base rate.”

Disputes over capital loans were the basis of several suits following Dewey & LeBoeuf’s collapse. In one of those matters, Citibank sued a former Dewey partner demanding the immediate payment of his loan (the case later settled for undisclosed terms). In a second, pending suit, former Dewey partner Londell McMillan is suing Barclays Bank and several former firm leaders, claiming the defendants borrowed money in his name without his permission that the bank is now requiring him to repay.

Willems had worked at Chadbourne since joining the firm in April 2010 along with three other arbitration lawyers from then-floundering Howrey, which dissolved and fell into bankruptcy less than a year later.

Andrews Kurth announced Sept. 13 that Willems would be joining the firm to become its head of international arbitration. Her arrival, along with two former Chadbourne associates, boosted to nine the number of attorneys in Andrews Kurth’s London. Until earlier this year, Texas-based Andrews Kurth had not employed any U.K.–qualified lawyers in its decade-old London office, according to The Lawyer.

Outside of her law practice, Willems moonlights as a romance writer, coauthoring two steamy novels centered around a New York lawyer who moves to London and has a variety of racy run-ins.