Littler Mendelson offices. Photo: Jason Doiy/ALM

The state of Missouri is pushing back on Littler Mendelson's claims that the law firm is owed at least $1.5 million in financial incentives for opening a back-office operations center in Kansas City.

The Am Law 100 law firm and the state are at odds over how many jobs the firm was obligated to create in order to receive a total of $14 million in financial incentives from the Missouri Works Program. The San Francisco-founded firm has already received some of the $14 million but claims the state is withholding a portion of the incentives.

A state official said Littler was obligated to create 476 jobs through the August 2015 opening of its global services center.

Maggie Kost, the director of strategy and performance for Missouri's Department of Economic Development, said their incentive programs are structured "to ensure that companies keep their commitments or they can't receive benefits. Because of these protections, the state isn't out a dime for the jobs that weren't created by the company."

But Littler has maintained that it was only obligated to create 275 jobs. The other 201 jobs the state is referencing were part of an agreement that was never signed, Littler alleged in a Dec. 31 lawsuit filed in Cole County, Missouri.

In the lawsuit, Littler is seeking a court order that allows it to receive all of the $14 million in incentives for creating at least 275 jobs.

"Littler faces immediate and irreparable harm from DED's breach of contract," the firm's complaint said, referring to the Department of Economic Development, "and Littler seeks an affirmative injunction compelling DED to authorize the discretionary tax credits for year 3 and a declaratory judgment finding that Littler has fully complied with its contractual obligations."

The 53,000-square-foot space Littler created at the Kansas City Crown Center houses the law firm's back-office functions, including human resources, administrative management and operations, and attorney recruiting and development. The Aug. 12, 2015, press release heralding the center's opening said the building can house 275 employees, with room to grow.

In its 2015 announcement, Robert Domingues, Littler's chief operating officer, said one of the reasons why the law firm, which has over 60 offices in the U.S. and across the world, chose Kansas City was because of the cost. "We chose Kansas City because of the quality and diversity of its labor force, location in the central time zone and cost benefits," Domingues said at the time.

Real estate costs are usually law firms' second-largest expense, after compensation, leading firms to lean on economic incentives like tax breaks whenever they can, said one law firm management consultant. A commitment by a state or municipality that doesn't hold up could have a significant impact on a law firm's finances, the consultant said.

The consultant added it's unclear whether Littler's decision to place its global services center in Kansas City was solely contingent on its economic agreement with Missouri. But it's possible that the incentives may have made the difference, the person added.

While economic incentives could influence the location of a law firm's back-office functions, they're usually not factors when law firms consider city locations of attorney offices, the consultant said.

The state hasn't filed a response to the firm's complaint as of Friday.

Littler is being represented by James Martin, a St. Louis partner at the high-stakes litigation firm Dowd Bennett. Martin served as the U.S. attorney for the Eastern District of Missouri for about a year during the George W. Bush administration.

A Littler spokeswoman declined to comment.