Headhunting agency Boston Executive Search Associates Inc.'s case against Freshfields Bruckhaus Deringer US LLP over the law firm’s lateral hiring of a partner will be narrowed, but not dismissed entirely, a Massachusetts federal court said.
The international law firm contacted the headhunter in August of 2018 to discuss potential help in recruiting for one of its practice groups, according to the complaint. The agency sent the firm a copy of its standard agreement for recruiting services, but Freshfields didn’t sign it. Instead the firm sent back its own contingency fee agreement which differed materially from the agency’s, including by imposing a fee cap. Boston Executive countered with its standard agreement again, but Freshfields still didn’t sign.
While these negotiations were ongoing, Boston Executive contacted Ethan Klingsberg, a partner at Cleary Gottlieb Steen & Hamilton, who responded positively to the possibility of joining Freshfields, the agency said. When told of this, Freshfields allegedly expressed great interest in recruiting Klingsberg, but soon after asked the agency to hold off its recruiting efforts.
In October 2019 Freshfields announced it had hired Klingsberg and three associates from Cleary. Freshfields reportedly told Boston Executive the agency had played no role in the introduction or placement of Klingsberg and wasn’t owed any compensation.
Boston Executive accused Freshfields of violating the Massachusetts Unfair Business Practices Act, as well as breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit, and unjust enrichment.
The U.S. District Court for the District of Massachusetts dismissed most of these claims. The Massachusetts Business Brokerage Statute of Frauds mandates that any broker or finder agreement is void and unenforceable unless it’s in writing and signed by the defendant. Moreover, this law precludes “quasi-contract” claims like unjust enrichment or quantum meruit, the court said.
But the court allowed Boston Executive’s claim for unfair or deceptive business practices to move forward. Questions remain on this claim, including whether Freshfields’ alleged actions “are sufficiently rancid to rise above the ordinary rough and tumble of the marketplace,” Judge Richard G. Stearns said
Yurko, Salvesen & Remz represents Boston Executive Search Associates. Goodwin Procter LLP represents Freshfields.
The case is Boston Exec. Search Assocs. v. Freshfields Bruckhaus Deringer US LLP, D. Mass., No. 1:19-cv-12378, 6/3/20.