Simpson Thacher & Bartlett in Washington, D.C. November 9, 2015. Photo Credit: Diego M. Radzinschi/ALM

A recruiting agency that is suing Simpson Thacher & Bartlett for withholding a placement fee on a lateral partner now says its alleged damages have expanded, based on learning that the law firm may have paid the partner a $1 million signing bonus.

Boston Executive Search Associates, a recruiting firm in Cambridge, Massachusetts, sued Simpson Thacher last December to recover a placement fee when Michael Torkin, previously a partner at Sullivan & Cromwell, joined Simpson Thacher's restructuring practice.

In a suit in the U.S. District Court for the Southern District of New York, Boston Executive alleged it introduced the firm and Torkin to one another and arranged their initial meeting, leading to Simpson Thacher's hiring of Torkin last year. Accordingly, it claimed, Simpson Thacher owes it a standard recruiting fee of 25 percent of Torkin's expected first-year compensation, believed to be about $3.75 million, equaling $937,500. Still, Simpson Thacher has balked at paying any fee, according to its complaint.

Since discovery in the lawsuit started this year, Boston Executive claims it has learned new details that increase its alleged damages. In particular, discovery documents show Simpson Thacher “recognized that it needed to fortify its restructuring practice in 2015,” and at the time, the firm's executive committee authorized Sandeep Qusba, head of its bankruptcy and restructuring practice, to undergo a search process, according to Douglas Salvesen, attorney for Boston Executive, in court papers filed Thursday.

Qusba first engaged another recruiting firm, New York-based Corrao Miller Wiesenthal Legal Search Consultants Inc., to present lateral candidates, with an agreed upon fee of 25 percent of the first year of a successfully placed attorney's compensation, the agency said. Ultimately, the agency's effort was unsuccessful, Salvesen said.

Discovery documents also disclose an Oct. 20, 2017, offer letter to Torkin in which Simpson Thacher said it expected Torkin's share of the partnership would result in an annual compensation of $3.75 million and also referenced “a previously undisclosed additional payment” of a $1 million signing bonus to Torkin.

Boston Executive said it now wants to file an amended complaint to adjust its claim for damages. The agency also wants to include allegations that Simpson Thacher's request that it present lateral candidates “was part of an ongoing effort by the firm to shore up its restructuring practice, that defendant was aware of—and had expressly agreed with another search firm—to pay the standard fee” of 25 percent and that the amount expected to be paid to Torkin included the signing bonus.

Salvesen said defense counsel at Simpson Thacher want to have part of the plaintiff's proposed amended complaint and attachments filed under seal, even though Salvesen said he thought that was unnecessary.

'No such agreement'

Simpson Thacher has said it intends to move to dismiss. In a Feb. 9 letter, Simpson Thacher's defense counsel, partner Alan Turner, said there was no written contract between Simpson Thacher and Boston Executive. Only after Torkin joined Simpson Thacher did the agency seek to enter into contractual relations, sending Simpson Thacher a proposed “Agreement for Recruiting Services,” Turner noted, citing the complaint.

The fact that Boston Executive belatedly sought a written agreement—“never once contending that Simpson and [Boston Executive] were already bound by an oral agreement—further confirms that there was no such agreement,” Turner said.

Turner argued that what Boston Executive is seeking “is the benefit of a bargain it never made; payment of a fee that it never sought until after the fact, and that Simpson never agreed to pay.”

In response, Boston Executive said in court papers that its introduction of Torkin to the firm was not unsolicited. Over the years, an agency recruiter spoke often with Qusba and presented various lateral candidates, not to mention that Boston Executive itself had recruited Qusba years earlier when he moved his practice to White & Case.

In March 2017, Qusba told a Boston Executive recruiter that Simpson Thacher was interested in a lateral partner who had a specialty in handling bankruptcy and restructuring matters for private equity and hedge fund clients, said the agency's attorney, Salvesen. Within a few days, the agency identified Torkin, and after speaking with Torkin, presented him to the firm.

“Simpson Thacher's apparent suggestion that it requested [Boston Executive] to locate a lateral partner who met Mr. Qusba's criteria, to make the introduction to that candidate, to consult with both parties regarding the anticipated compensation, to arrange for the initial meetings, and to stay in touch while the parties continued their negotiations—all without an actual expectation of paying [Boston Executive],” Salvesen said, “is ridiculous.”

Still, in March, Boston Executive dropped its breach of contract claim and is pursuing damages against Simpson Thacher only under unjust enrichment and quantum meruit. Simpson Thacher said it denies any and all liability.

While the parties battle over whether Boston Executive can amend its claims, they are going forward with depositions. In court papers, Boston Executive said it expects to depose Qusba and Torkin and others with knowledge of the negotiations between Torkin and the firm and those with knowledge of any financial benefits at Simpson Thacher due to his hiring. For its part, Simpson Thacher said it will seek to depose four employees who have knowledge relevant to the claims.

Before the suit was filed, the parties said they had “limited settlement discussions” but are now not seeking a settlement conference. The case is before U.S. District Judge Lorna Schofield of the Southern District of New York.

Turner, the firm partner defending Simpson Thacher, did not return a call seeking comment. Nor did Salvesen, a partner at Boston-based firm Yurko, Salvesen & Remz.