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Dentons’ $35 Million Ex-Partner Dispute Sent Back to Arbitration

Nov. 9, 2022, 11:59 PM

A dragged-out legal battle between Dentons and ex-partner Jinshu “John” Zhang is once again headed for arbitration after a California appeals court sent the wrongful termination suit back to New York.

The suit stems from a $35 million contingency fee Zhang earned while working at Dentons. The two sides have offered different stories over what happened next.

Zhang, no longer at the firm, had tried to keep the case in a California court while Dentons wants it in private arbitration. He scored a win earlier this year when the California Supreme Court paused a New York arbitration and asked the appeals court to again rule on where the case should be tried.

The appeals court on Wednesday sent the case back to the New York arbitrator to determine jurisdiction.

An arbitrator will determine whether the former Dentons partner was a firm “employee.” If so, the dispute will be decided in California. It’ll be resolved in New York if he’s not an employee, the California appellate judges wrote.

Zhang plans to appeal the ruling to the California Supreme Court, his lawyer, Paul Murphy of Murphy & Rosen, said in an interview.

“The California Supreme Court specifically directed the court of appeal to answer a question that is much broader,” Murphy said. “They dodged the question. They didn’t answer it.”

The question has to do with what Zhang’s lawyers say is a contradiction between a California Labor Code rule that mandates California employee disputes be adjudicated in the Golden State with a California Code of Civil Procedure rule that requires California trial courts to pause litigation when a petition to compel arbitration is pending in another state’s court.

Fee Fight

Dentons says Zhang engaged in “self-dealing” to secure for himself a huge portion of the $35 million contingency fee award. Little information has been made public about the work that Zhang performed for the client, an international company.

Zhang says he was fired after alleging the firm’s former US chief executive officer, Mike McNamara, sent a letter to a counterparty of Zhang’s client, directing that a payment be made to the law firm.

Zhang told the Dentons US board it was a “massive fraud,” according to a redacted copy of the e-mail viewed by Bloomberg Law. Dentons has called Zhang’s allegations “false and slanderous.”

McNamara was later ousted as US CEO. The firm’s global chairman, Joe Andrew, said at the time that the firm could not discuss McNamara’s departure due to the pending litigation with Zhang.

For his part, Andrew announced this week he was retiring from the position of global chairman. He said he’ll continue to practice law at Dentons.

While Dentons earned a victory in the partner dispute ruling, the firm this week lost an effort to overturn a $32.3 million legal malpractice award in an unrelated case.

A Dentons spokeswoman did not immediately respond to a request for comment on the ruling.

The case is Jinshu “John” Zhang v. Dentons US LLP, 21- 19442, 11/9/22

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com