Andrew Sandler. March 18, 2010. Photo by Diego M. Radzinschi/ALM

Andrew Sandler, a founder of the firm formerly known as Buckley Sandler, was forced out in 2018 amid allegations of past misconduct, according to an insurer's lawsuit seeking to avoid a $6 million coverage claim from the firm.

Buckley LLP confirmed Friday that Sandler faced misconduct allegations before his departure, but the firm disputes that he left involuntarily.

Oxford Insurance Co. filed the lawsuit in North Carolina federal court Tuesday, arguing that it is under no obligation to cover Buckley's claim for loss of a key employee because Sandler, chairman and executive partner of the firm at the time, did not leave on his own accord.

The suit, which does not describe Sandler's alleged misconduct, also says that the firm's executive committee was aware of claims against Sandler in December 2017, when it was still finalizing the terms of supplemental insurance coverage with Oxford.

"No one from Buckley, including neither its chairman and executive partner nor its Executive Committee, informed Oxford of the allegations against Mr. Sandler before the captive insurance applications were submitted," the complaint said.

Sandler and the firm announced his departure in February 2018, nine years to the day after he founded Washington, D.C.-based Buckley Sandler alongside Jeremiah Buckley. In a letter to colleagues, he cited the challenge of juggling his role as chairman and executive partner of the firm with his responsibilities leading three other businesses while also pursuing his own personal interests. He stepped down the next month.

At the time, Sandler was serving as CEO of Treliant Risk Advisors, the financial services industry consulting firm he founded and sold in 2017, as CEO of compliance software provider Asurity, and also running his private investment company, Temerity Capital Partners.

The firm formally changed its name from Buckley Sandler to Buckley in January, citing how the firm was already recognized in the marketplace. Sandler issued a statement wishing the firm future success. "Founding and leading Buckley Sandler from its 2009 formation through 2017 was a career highlight," he said.

He returned to the practice of law earlier this year, forming Mitchell Sandler alongside two other former Buckley partners. The majority women-owned and managed firm focuses on financial services regulatory, enforcement and litigation matters, representing banks, mortgage and specialty finance companies, credit card issuers and fintech companies. Sandler continues to lead Temerity Capital Partners and Asurity.

Oxford's lawsuit contends that the circumstances of Sandler's exit differed from the explanation made public at the time.

It says that based on information it was provided by the Buckley firm, members of Buckley's Executive Committee began investigating allegations of past misconduct against Sandler in December 2017, going as far as engaging Kathryn Ruemmler, Latham & Watkins' global white-collar and investigations co-chairwoman and a former White House counsel to President Barack Obama, for advice on the matter.

That engagement came at the same time that the firm was finalizing its applications for coverage that included a policy for loss of key employees. The policy provided for an aggregate limit of $12 million and a per claim limit of $6 million.

Oxford's complaint also provides an account of negotiations in February 2018 that preceded Sandler's exit from the firm. The insurer says that Sandler began negotiating with executive committee members Ben Klubes, Chris Witeck, and John Kromer shortly before the letter announcing his retirement was released. A document that was initially referred to as a "separation agreement" was later renamed a "retirement agreement" and finalized on the eve of a scheduled arbitration, after Sandler released his letter, according to the complaint.

After Sandler formally left the firm, it submitted a claim with Oxford for the loss of a key employee, but Sandler informed Oxford as well as members of the firm later in the year that his exit was involuntary, the complaint said.

Oxford says that it followed the receipt of that conflicting information with an investigation into the Buckley firm's claim for coverage. While that investigation was ongoing, it says the firm made a formal demand in March that the insurer pay the full $6 million per claim limit on the policy, threatening litigation if it did not.

In a statement on Friday, Buckley's Klubes confirmed that the firm's executive committee was first informed of an initial allegation against Sandler in December 2017, prompting the firm to retained Ruemmler for an investigation. He said that rather than cooperate with the probe or field questions from Ruemmler, Sandler elected to retire from the firm.

Along with asserting that Sandler's retirement was indeed voluntary, Klubes said the firm ultimately looked into multiple allegations against him.

"Buckley acted swiftly to address the allegations while protecting the privacy and confidentiality requested by each of the individuals who had raised concerns about Mr. Sandler's conduct," he said in the statement. "While we promised that confidentiality to those individuals, we never sought or required confidentiality from them."

"The firm is confident that the full factual and legal record will demonstrate that it handled the matter appropriately and that it is entitled to payment under its 'key person' insurance claim," he continued.

Klubes declined to offer details of the nature and number of allegations lodged against Sandler.

Oxford is seeking a legal declaration that it is under no obligation to indemnify Buckley, along with attorney fees and other costs.

Sandler declined to comment on the allegations in the lawsuit, and Womble Bond Dickinson partner Jim Cooney, who represents Oxford, also declined to comment.