Cleary Gottlieb

Cleary Gottlieb Steen & Hamilton's decision to fire a four-partner team last week after the firm learned of their planned exit to Freshfields Bruckhaus Deringer has surprised many in the market, with a number of partners and recruiters criticising the decision and warning of the impact it might have on the firm.

The New York team was fired before giving notice about their departure last week in response to a breach of duties to the firm in relation to confidential information and the handling of clients, according to one person close to the situation.

But the unusual move has raised eyebrows among rivals, industry advisers and former partners. Several partners Legal Week spoke to said the move was simply "sour grapes". One London-based partner at a U.S. firm agreed, and added: "Their reaction is bad – a sore loser reaction."

One former Cleary partner who spent time in the firm's New York office described the decision as "more spiteful" than he recognised the firm's culture to be from his time there. He added it was a "very un-Cleary" move to make.

So why make it? Some feel it could possibly be intended as a deterrent to other partners who might think of departing. The view stems from the fact that the quartet is so highly regarded.

The group is a heavyweight team and includes M&A rainmaker Ethan Klingsberg, who Freshfields is said to have broken its lockstep model for to bring him in on a multimillion-dollar package. A person with knowledge of the move said Klingsberg is expected to receive more than $10 million with a guarantee for "at least five years".

U.S.-based recruiter and former Cleary lawyer Alisa Levin told The American Lawyer last week that following the departures it will be "open season" on other Cleary partners.

She added: "Cleary lawyers are known to be among the best and most creative in the field and previously regarded as virtually untouchable by other firms. If someone like [Klingsberg] can be poached, I think others are going to stop and think."

The London-based partner said he doubts Cleary's move will have a deterrent effect. He said: "They may think it will, but it won't. People are allowed to leave."

Others felt the reasons behind Cleary's move were unlikely to be so ominous, suggesting instead that Cleary may have decided the partner group had broken the conditions of their deed by discussing their departure openly prior to giving notice, and fired them as a direct result of that.

"Cleary is a classy firm, so there must be a reason for this," said another recruiter. "You can't draw any huge conclusions."

The move to fire the team also has financial implications. "Certain payments may not kick in if they're fired," one recruiter said, with another adding that the decision to kick out the group may impact their financial entitlements, including repayment of their capital and partner pensions.

He warned that while there are all sorts of things firms can do in this situation, if a legal challenge is sought, a balance is needed between "throwing the book at the departing partners and Cleary's own credibility".

"They need to be careful in how they handle this," the recruiter said, "as a number of clients don't like seeing firms behave in an aggressively petulant manner."

A Cleary spokesperson said: "It is our policy not to comment on personnel matters."

The departing partners did not respond to requests for comment.

Meanwhile, the former Cleary partner said the team's decision to leave raises questions about the "health of the Cleary culture".

"[Cleary] is a place that is deeply gentlemanly and one of the few true lockstep cultures remaining," he said. "To have people come out of that, for whatever reason, raises questions."