John Pierce (left) and Marc Mukasey (right).

Days after accusing its own leader of financial impropriety, Pierce Bainbridge Beck Price & Hecht and its global managing partner John Pierce have been sued by a high-interest business funding company and dropped by their lawyer, the prominent white-collar defender Marc Mukasey.

An entity called West Coast Business Capital sued Pierce and his firm Thursday in state court in Erie County, New York, asserting that it advanced $260,000 to Pierce Bainbridge three months ago in exchange for an agreement by the firm to pay back $387,400—a 49% return—in installments of around $24,000 a week. It alleges the law firm defaulted Feb. 19.

Separately on Thursday, Mukasey sought court permission for his firm to withdraw from representing Pierce Bainbridge in a bruising legal fight with its former partner, Donald Lewis. Mukasey didn't explain the reason, but cited rules that suggested a legal or ethical risk if his firm, Mukasey Frenchman & Sklaroff, were to continue the representation.

"The firm's withdrawal as counsel is required by Rule 1.16(b)(1), and is permissive pursuant to Rules 1.16(c)(5), 1.16(c)(7) and 1.16(c)(12)," he wrote. Rule 1.16(b)(1), part of the New York Rules of Professional Conduct, requires a lawyer to withdraw when "the lawyer knows or reasonably should know that the representation will result in a violation of these rules or of law." The other parts of the rule he cited refer to a failure by the client to pay its lawyers or cooperate with them, and other "good cause" for withdrawal.

Mukasey asked for Pierce Bainbridge to be granted 30 days to find new lawyers. He declined to comment.

The developments come shortly after Law.com reported that Pierce was on leave from his own firm amid a preliminary finding by an internal firm investigation that he had borrowed money from Karish Kapital. The lender, an apparent merchant cash advance company based out of a house in Queens, filed lien paperwork indicating Pierce Bainbridge was on the hook for the debt, Law.com reported earlier this week.

West Coast Business Capital's lawsuit is short on details, but alleges the firm paid back not quite $218,000 before defaulting in some form. It claims the debt—which was not technically a loan and carried a risk that Pierce Bainbridge would deviate from the anticipated repayment schedule, according to an exhibit—was guaranteed by Pierce personally and by an entity called John M. Pierce Enterprises.

Michael Popok, a trial lawyer at Zumpano Patricios & Popok who reviewed filings in the lawsuit but who is not involved in the dispute, said such funding arrangements could raise red flags with California bar authorities and potentially lead them to audit the firm.

"The sale of a law firm's daily cash receipts undermines the sanctity of the attorney-client relationship because it has the appearance of impropriety in the billing relationship," he said in an email.

It is unclear whether Pierce is still on leave from Pierce Bainbridge. A source told Law.com that Tom Warren, who was said by a firm spokeswoman last week to be serving as Pierce Bainbridge's acting managing partner, announced earlier this week that Pierce's leave had ended. Pierce's profile was also online again as of Thursday after having previously been taken down.

Pierce and Warren didn't respond to a comment request sent Thursday evening.

Meanwhile, more partners have left the firm. On or around Thursday, Yavar Bathaee, whose departure was previously reported by Law.com, and Brian Dunne, whose was not, updated their LinkedIn profiles to list their firm as Bathaee Dunne.

Conor McDonough, listed on the firm's website as a partner in its Boston office, told Law.com that he was also resigning this week. He declined to comment further.

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