Lawsuits by partners against their former firm have become more commonplace as law firms have faced retrenchments and even bankruptcy, however the lawsuit by a former Bankruptcy partner against Loeb & Loeb also highlights remuneration issues that emerge when the ‘status’ of a lawyer is changed.

Michael Molinaro was a former co-chair of Loeb & Loeb’s bankruptcy practice and is claiming at least $160,000 for services he provided in 2012 and which he says the firm failed to pay him for.

However at the heart of the 10 page lawsuit by the former partner is when he became “of counsel” rather than partner.  Molinaro, who filed the suit in the Cook County Court, said he was entitled to be paid for billable hours and the collections made by the firm.  However the firm continued to pay him as an equity party.

Molinaro left Loeb’s last month to join Reed Smith and it was at that point that matters deteriorated, illustrating another not-so-recent phenomenon of the lateral movement bitterness that occurs when partners or former partners switch firms.

Loebs claim he was going to work for them “for many months”.  The former partner has requested he receive compensation details for partners for the 2012 year so he could make the appropriate calculations.  He has also requested a trial by jury.

On Feb. 1 a Loeb executive wrote Molinaro that Loebs was prepared to pay him $160,000 for 2012, but that he would only receive the sum if he signed the new pay arrangement, the lawsuit said.  Molinaro refused to agree to the new pay arrangement and went to Reed Smith.

A Loeb spokeswoman said in a statement: “Mr. Molinaro’s lawsuit is without merit, and the firm will defend against his claims in the appropriate forum.”

Molinaro’s attorney, Zachary Freeman, said in a statement that his client brought the lawsuit reluctantly but he fel he had no other choice than to sue after Loeb refused to pay his 2012 compensation and has been “stonewalling him” since early February.

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