McDermott Will & Emery office in Miami. Photo credit: J. Albert Diaz

A Manhattan judge has ruled that a tourism group can continue its legal malpractice suit against McDermott Will & Emery for allegedly botching a separation agreement with its former CEO.

Ruling on a motion to dismiss, Manhattan Supreme Court Justice O. Peter Sherwood said the complaint brought by Destination Marketing Association against McDermott “sufficiently alleges facts to support a claim for legal malpractice.” However, he rejected Destination's unjust enrichment and declaratory judgment claims and dismissed an individual defendant, partner Kristin Michaels, from the case.

Destination Marketing, a nonprofit resource group for convention and visitor bureaus, filed the suit in February against McDermott and two partners, Banks Brown and Michaels, for legal malpractice in advising the nonprofit on a 2015 separation agreement with its former CEO, Michael Gehrisch.

The company said it retained Brown and the firm to negotiate an amicable agreement with Gehrisch, and it informed Brown that it suspected that Gehrisch's accounting practices were “deeply flawed” and that his “personal conduct was also highly suspect.”

Destination Marketing said Brown disclosed that he was personally friendly with Gehrisch, but did not disclose the scope of their long-term relationship nor that he had also represented Gehrisch personally. Brown also did not advise Destination's board to obtain other counsel to handle Gehrisch's termination, the complaint alleges.

Destination Marketing alleges that the separation agreement ultimately executed characterized termination payments to Gehrisch as “salary,” which it claims exposed it to a wage lawsuit by Gehrisch. That suit has since settled.

Destination Marketing also claims the law firm advised the nonprofit to make substantial payments to Gehrisch, “even though they knew or should have known that Gehrisch” was allegedly in breach of his underlying employment agreement and should have been forced to return money.

Seeking to dismiss the malpractice suit, McDermott argued that Destination has admitted that, with McDermott's advice, it achieved its business objective of an amicable and quick separation with Gehrisch and “documentary evidence shows that it did so on terms that [Destination] itself negotiated and obtained.”

At an Oct. 30 court conference, Sherwood urged the parties to settle before he reached a decision. “I am certainly willing to hear and decide what is before me. But it seems to me that that's not necessarily in either one of your best interests,” Sherwood said. “I am not so sure that going the distance is the best way to go.”

But Howard Elman, McDermott's attorney and a partner at Matalon Shweky Elman, pressed forward, arguing the malpractice complaint is countered by Destination's own emails. “You have the negotiation of the terms by the client itself,” he said.

“When everything that they pled is refuted by their own documents, then the ballgame shifts,” he said. “They are now blaming their lawyers for what they negotiated themselves.”

Niall O'Murchadha, Destination's attorney and of counsel at Schlam Stone & Dolan, said McDermott and Brown's conduct “was a disgrace to the profession” and “it's a question of ethical duty to inform your current client if you have a past client relationship with the party you are negotiating.”

O'Murchadha added the documentary evidence shows Destination “may have communicated the terms of the final” separation agreement, “but it doesn't say how they reached the decision as to what those terms should be” or what advice McDermott and Brown gave.

Sherwood said he was denying McDermott's request to dismiss the malpractice claim, citing “the various strict requirements” on dismissal motions.

“I can't tell you the number of cases that I have seen in which the [Appellate Division,] First Department has reversed trial courts over this, including yours truly, simply because it is a motion to dismiss and they feel that you ought to get your day in court,” he said.

Elman, McDermott's attorney, declined to comment.

Jonathan Mazer, another attorney for Destination Marketing and a partner at Schlam Stone & Dolan, said, “We believe the judge made the right decision declining to dismiss the malpractice claim and we look forward to proving it in court and believe we'll succeed.”

McDermott Will & Emery office in Miami. Photo credit: J. Albert Diaz

A Manhattan judge has ruled that a tourism group can continue its legal malpractice suit against McDermott Will & Emery for allegedly botching a separation agreement with its former CEO.

Ruling on a motion to dismiss, Manhattan Supreme Court Justice O. Peter Sherwood said the complaint brought by Destination Marketing Association against McDermott “sufficiently alleges facts to support a claim for legal malpractice.” However, he rejected Destination's unjust enrichment and declaratory judgment claims and dismissed an individual defendant, partner Kristin Michaels, from the case.

Destination Marketing, a nonprofit resource group for convention and visitor bureaus, filed the suit in February against McDermott and two partners, Banks Brown and Michaels, for legal malpractice in advising the nonprofit on a 2015 separation agreement with its former CEO, Michael Gehrisch.

The company said it retained Brown and the firm to negotiate an amicable agreement with Gehrisch, and it informed Brown that it suspected that Gehrisch's accounting practices were “deeply flawed” and that his “personal conduct was also highly suspect.”

Destination Marketing said Brown disclosed that he was personally friendly with Gehrisch, but did not disclose the scope of their long-term relationship nor that he had also represented Gehrisch personally. Brown also did not advise Destination's board to obtain other counsel to handle Gehrisch's termination, the complaint alleges.

Destination Marketing alleges that the separation agreement ultimately executed characterized termination payments to Gehrisch as “salary,” which it claims exposed it to a wage lawsuit by Gehrisch. That suit has since settled.

Destination Marketing also claims the law firm advised the nonprofit to make substantial payments to Gehrisch, “even though they knew or should have known that Gehrisch” was allegedly in breach of his underlying employment agreement and should have been forced to return money.

Seeking to dismiss the malpractice suit, McDermott argued that Destination has admitted that, with McDermott's advice, it achieved its business objective of an amicable and quick separation with Gehrisch and “documentary evidence shows that it did so on terms that [Destination] itself negotiated and obtained.”

At an Oct. 30 court conference, Sherwood urged the parties to settle before he reached a decision. “I am certainly willing to hear and decide what is before me. But it seems to me that that's not necessarily in either one of your best interests,” Sherwood said. “I am not so sure that going the distance is the best way to go.”

But Howard Elman, McDermott's attorney and a partner at Matalon Shweky Elman, pressed forward, arguing the malpractice complaint is countered by Destination's own emails. “You have the negotiation of the terms by the client itself,” he said.

“When everything that they pled is refuted by their own documents, then the ballgame shifts,” he said. “They are now blaming their lawyers for what they negotiated themselves.”

Niall O'Murchadha, Destination's attorney and of counsel at Schlam Stone & Dolan, said McDermott and Brown's conduct “was a disgrace to the profession” and “it's a question of ethical duty to inform your current client if you have a past client relationship with the party you are negotiating.”

O'Murchadha added the documentary evidence shows Destination “may have communicated the terms of the final” separation agreement, “but it doesn't say how they reached the decision as to what those terms should be” or what advice McDermott and Brown gave.

Sherwood said he was denying McDermott's request to dismiss the malpractice claim, citing “the various strict requirements” on dismissal motions.

“I can't tell you the number of cases that I have seen in which the [Appellate Division,] First Department has reversed trial courts over this, including yours truly, simply because it is a motion to dismiss and they feel that you ought to get your day in court,” he said.

Elman, McDermott's attorney, declined to comment.

Jonathan Mazer, another attorney for Destination Marketing and a partner at Schlam Stone & Dolan, said, “We believe the judge made the right decision declining to dismiss the malpractice claim and we look forward to proving it in court and believe we'll succeed.”