Daniel Shank, left, and Patrick Gaas of Kilpatrick Townsend & Stockton.

A Houston search firm is suing two partners from Kilpatrick Townsend & Stockton's Houston office, claiming they breached a yearlong search contract by cutting the recruiters out of a deal to launch their firm's Houston office.

The petition filed Thursday in state district court in Harris County does not identify the law firm or the recruiter. But the defendants are identified as Patrick Gaas and Daniel Shank. The two lawyers led a 13-lawyer group from Coats Rose to Atlanta-based Kilpatrick Townsend, allowing the latter firm to open a Houston office in October 2017.

Shank and Gaas are now partners at Kilpatrick Townsend.

The recruiting firm is not in the petition and the plaintiff's attorney, Ross Spence, a partner at Snow Spence Green in Houston, declined to identify the search firm. The plaintiff, identified as USPLS, is the “assignee of causes of action” of a professional employment agency, the suit said.

The plaintiff is seeking the “maximum compensation it would have earned if defendants had not breached the contract and prevented plaintiff from performing.”

USPLS alleged that Gaas and Shank breached a contract they signed in January 2017 by engaging in employment discussions with the firm in September 2017. USPLS was “at all times ready, willing and able to perform pursuant to the contract” on behalf of the defendants and the group that moved with them, the suit said.

Reached Friday, Gaas said, “The plaintiff's allegations are groundless and have absolutely no merit, and Dan Shank and I intend to defend this matter vigorously.” Shank declined to comment on the suit.

A spokesman for Kilpatrick Townsend, which is not named as a defendant, also declined to comment.

Gaas, Shank and “Person C” engaged the search firm in January 2017 to conduct a search for new employment for them and others in their group, the suit said. The contract included a one-year term, and the defendants and Person C agreed to allow the search firm to act as their agent with respect to negotiations with all firms, with the exception of one designated firm the lawyers had previously contacted, the suit alleged.

The suit alleged that the defendants and Person C were also obligated to promptly acknowledge the representation when talking to any firm.

Over the next few months after the contract was signed, the search firm reached out to eight firms that Shank, Gaas and Person C had identified as “priority.” Two of the firms were interested and engaged in “extensive employment discussions” with the defendants and the group. The search firm had fee agreements in place with both of those firms, the suit said.

Both of those firms made written proposals offering employment to the defendants, Person C and others in the group, and were “ready, willing and able to move forward, subject to customary conditions of final due diligence and clearance of potential client conflicts,” the petition said.

However, the plaintiff alleged that contrary to its advice, the defendants and Person C delayed responses to proposals from the two firms, so both firms deferred discussions until after Jan. 1, 2018.

Meanwhile, according to the plaintiff, the defendants and Person C reached out to two other firms, but did notify those firms that they had hired the search firm.

In early September, the defendants and Person C informed the plaintiff that their current employer had learned of their talks with other firms and was “forcing them to sever their employment and vacate their offices.”

Richard Rose, managing director of Coats Rose, did not immediately return a telephone message seeking comment on that allegation.

The defendants and Person C advised the plaintiff that they wanted to resolve terms of their severance before resuming their search. For the next three weeks, the suit alleged, the search firm heard nothing from the defendants and Person C.

“Despite their assurances that they were only addressing their severance with their existing firm, and that they were not engaging in employment discussions, however, plaintiff became suspicious,” the petition said.

During a Sept. 25, 2017, teleconference with Gaas, Shank and Person C, the plaintiff learned that in  early September Gass had “secretly initiated” employment discussions with an undisclosed firm. During that call, Gaas stated that the group was entitled to initiate discussions with the firm because he had “cashed in a personal chip I had with these guys” and it had been an option before the search contract, the petition said.

After learning about the discussions with the undisclosed firm, the search firm reminded the defendants and Person C about the terms of the contract via email. It was not until later that the search firm learned that the defendants and others in the group had already accepted employment offers to open a Houston office for the firm, the plaintiff alleges.

On Sept. 26, 2017, counsel for the search firm contacted the undisclosed firm, asking to negotiate a placement fee, but the firm responded that it had no relationship with the search firm and refused to pay or negotiate a placement fee.

According to the petition, in late September 2017, using the search firm as its agent, Person C and some colleagues joined one of the “priority” firms the search firm had, and that firm, which was also not identified in the petition, paid the search firm a placement fee.

Spence, the plaintiff's attorney, declined to put a dollar amount on the damages sought from Gaas and Shank.

Read More

Kilpatrick Townsend Expands With New Houston Office

Munsch Hardt Adds Four Construction Law Laterals in Houston