Major, Lindsey & Africa offices in Washington, D.C. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.

More than eight years after Major, Lindsey & Africa fired a star recruiter in its partner practices group, claiming that she was stealing trade secrets and sharing closely guarded job postings with competitors, the legal recruiting giant stands ready to collect more than $2.7 million in damages and attorney fees from her. But she stands ready to continue the fight, it appears.

On Tuesday, the Appellate Division, First Department, issued a terse opinion that called ex-employee Sharon Mahn, once a top worldwide revenue-generator for Major Lindsey, a “faithless servant.” The decision by a unanimous panel then upheld arbitrator Rosemary A. Townley's 2014 opinion that ordered Mahn to disgorge $1.77 million in past-earned salary and commissions—an amount that included all of the compensation she'd earned during her four years at Major Lindsey.

The arbitrator's order also directed Mahn to pay Major Lindsey $945,765.39 in attorney fees and costs racked up by the firm during several years of litigation and arbitration against Mahn. Plus, more than $150,000 in interest has accrued, adding to Mahn's obligation, according to court records.

But Mahn, now the CEO and founder of Mahn Consulting, a Manhattan-based legal and executive recruiting firm, may not be ready to give up. Her attorney, Edward Finkelstein, said in an email on Thursday, “We believe the decision [by the panel] is mistaken and manifestly unjust. As we argued to the [appeals] court, we believe the Final Award [by the arbitrator] violates public policy, ignores well-settled law and is tainted by significant undisclosed relationships and conflicts on the part of the arbitrator.”

Finkelstein added, “We believe attorneys and litigants are increasingly wary of arbitration, particularly in situations like this case, in which multi-billion dollar corporations use the process to harass and bully former top-performing employees who have become competitors.”

Finkelstein, of Finkelstein Filler on Staten Island, also wrote that Mahn's legal team is considering all options, including possibly seeking leave to appeal to the state's highest court.

Mahn herself, in an email to the Law Journal on Thursday evening, said she will defer to her legal counsel ”on all appropriate future next steps.” She also wrote that “twenty years ago, when I started in the legal recruiting industry, it was rare for recruiting companies to sue law firms or for recruiting companies to target and sue their former recruiters. Now, perhaps as the legal market has become more saturated and competitive, lawsuits have increasingly become an almost common occurrence.”

Mahn and her lawyers have contended in legal papers that Major Lindsey has consistently imposed lawsuits, arbitrations, cease-and-desist letters and other legal maneuvers on former employees-turned-competitors.

David Warner, an employment law shareholder at Littler Mendelson who's been representing Major Lindsey for years in its disputes with Mahn, said in an email Thursday that he and his client “appreciate the Court's thoughtful consideration of this matter and are pleased with the outcome.” He declined to say more.

Representatives from Major Lindsey's New York office did not return a call and email seeking comment for this report.

In 2010, months after Major Lindsey fired Mahn, it launched an apparently rare civil Racketeer Influenced and Corrupt Organizations Act federal lawsuit against her in Manhattan. Months later, though, U.S. District Judge Colleen McMahon warned Major Lindsey that she was not interested in entertaining “trumped up” charges in order to foster federal jurisdiction. Two days later, Major Lindsey withdrew the suit, albeit without prejudice, so that it could reassert its claims against Mahn in arbitration or state court. The battle then moved into arbitration before Townley that same year.

While the precise allegations of wrongdoing against Mahn by Major Lindsey remain somewhat murky—and parts of the underlying record in litigation and arbitration remain sealed—Townley clearly found what she deemed was ample evidence to conclude that Mahn had undercut her employer.

“There are dozens of emails from Mahn to MLA competitors that shall not be included by this Arbitrator in the Opinion, as to do so would fill pages of this Reasoned Award,” Townley wrote in a 25-page final opinion and award.

“Suffice it to say that the evidence of disloyalty by Mahn to MLA is, at a minimum, overwhelmingly shocking in its scope, duration and tone,” Townley continued. “She was stealing her employer's assets or property consisting of confidential information and trade secrets, as well as its business goodwill, while secretly divulging the same to [its] competitors, and receiving financial 'kickbacks' after placements by these competitors. In addition, she coached the competitors on how to sever the candidate's relationship with MLA.”

Townley used New York case law's “faithless servant” doctrine to mandate that Mahn pay back to Major Lindsey all of the compensation she made while working there from 2005 to 2009. Her order also required Mahn to pay Major Lindsey an additional $212,288 in “lost opportunity damages” that equaled the “admitted payments” Mahn received from two local search firms she'd allegedly funneled information to.

The amounts Mahn must disgorge are large, but appear to fit with her role at Major Lindsey as a managing director in the partner practices group. Mahn's job was to find and move major law partners, or sometimes entire practice groups, from one law firm to another. And she was good at the often intensely heated competition of law partner lateral moves.

She came to Major Lindsey with a Rolodex of contacts and a track record from smaller recruiting firms. And in 2004 she'd pulled off what she's described in court papers as one of the largest legal recruiting transactions of the year. Moreover, the partner practices group's role at Major Lindsey, which has described itself as an international leader in the recruiting industry, was central and lucrative. A partner's or practice group's move could generate millions of dollars in fee earnings for the firm.

After Townley's 2014 order, which was issued after nearly four years of arbitration, Mahn and Finkelstein moved to vacate it in Manhattan Supreme Court. One of their main lines of argument was that Townley was conflicted, and had wrongfully failed to disclose ties to Major Lindsey and its arbitration counsel at Littler.

For example, Mahn argued that Townley never disclosed that she and the managing partner of Littler's New York office appeared together as speakers at a 2007 panel sponsored by the law firm. And, likewise, Mahn alleged that Townley never revealed that she and the same managing partner had both served as chairs of and were executive committee members of the New York State Bar Association's Labor Section.

In addition, Mahn contended that while it was disclosed that Townley was a National Football League arbitrator, it was not divulged by Major Lindsey that a co-owner of its parent company, Allegis Group, was an NFL owner himself: Steve Bisciotti of the Baltimore Ravens.

Mahn also alleged that she learned the American Arbitration Association, whose rules controlled the arbitration with her ex-employer, had been a client of Major Lindsey's. And she argued that Major Lindsey had paid Townley what she claimed were excessive arbitration fees of more than $180,000.

Townley did not respond to an email and phone call seeking comment.

In addition, Mahn and her lawyers have argued that Major Lindsey knew that Mahn shared information with other recruiting companies while she worked there, and that such “cross-referencing” was part of the business and ultimately helped Major Lindsey make more lawyer placements and lucrative associated fees.

But in May 2015, Manhattan Supreme Court Justice Manuel Mendez issued a three-page order tossing aside Mahn's challenges and confirming Townley's award. “There is no evidence of misconduct, fraud or partiality on Townley's behalf. Nor is there evidence that Townley exceeded her powers as an arbitrator,” Mendez wrote.

In an appellate brief to the First Department, Finkelstein wrote, “This appeal provides a window into the high-stakes, fiercely competitive industry of recruiting and placement of elite legal talent and in which where virtually all compensation is commission-based. The appeal reveals the lengths to which a self-proclaimed industry leading company (MLA) will go to secure any advantage, lead or fee, regardless of the cost, ethics or degree of hypocrisy involved.”

He further has claimed that Major Lindsey learned in 2009 both that Mahn was planning to leave the firm soon and that it may have to share a potential forthcoming million-dollar commission with her, and so it fired and went after her.

The First Department panel, in its decision Tuesday, agreed with Mendez. “The arbitrator did not exceed her power in finding that petitioner was a faithless servant,” the justices wrote, adding, “Nor was the award itself … violative of public policy, or punitive in nature. There is also no evidence the arbitrator's findings should be vacated based upon conflicts or bias.”

Meanwhile, Finkelstein, in his statement sent Thursday, ended it by saying that Mahn “will continue to thrive in her career as a highly respected legal and executive search consultant.”

And wrote Mahn in her emailed message, “Fortunately, I haven't personally or professionally soured from this experience with my former employer. I remain proud to work in an industry that I love, and where I have been blessed and lucky to achieve tremendous success and acquire an unparalleled network of incredible contacts and friends.”