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Ex-Krieg DeVault attorneys sue over pay, alleged partner write-offs

September 14, 2016

Three partners who left Krieg DeVault LLP last year have sued their former firm over compensation. They claim they were shortchanged when they departed the firm and made to pay for other partners whose capital accounts with negative balances were written off.

David Jose, Melinda Shapiro and Mark Wenzel sued their former firm Sept. 7, seeking compensatory damages, enhanced damages, and attorney fees and costs on claims of breach of contract, conversion, breach of fiduciary duty and breach of trust.

Krieg DeVault officials did not immediately respond to messages seeking comment.

Jose, Shapiro and Wenzel all provided notice of their departure in June 2015 and left the firm the following month, the suit says. They claim they each were entitled to a June 2015 distribution based on participation units allocated to partners in the firm. The suit says Jose received no distribution, and that the firm unilaterally made an accounting entry to Shapiro’s and Wenzel’s capital accounts in an amount equal to what they should have received.

“The remaining partners at Krieg DeVault effectively retained and divided among themselves the net revenues attributable to the June 2015 participation units of Jose, Wenzel, and Shapiro,” the suit asserts. The former partners also allege the firm commingled funds belonging to their capital accounts with the firm’s general funds and assets.

The suit asserts Krieg DeVault under managing partner Deborah J. Daniels and partnership attorney Mark Merkle decided to write off the negative capital account balances of some departing partners. The suit says the firm balanced that write-off by making an accounting adjustment this year in the capital accounts of other partners who had positive balances in their accounts.  

Jose, Shapiro and Wenzel argue in their suit that their capital accounts regulated by a contract with the firm were “not subject to retroactive adjustment or to year end adjustment, to pay for the business decision made by Krieg DeVault in 2016 to write off negative capital accounts of certain departing partners.”

The suit does not name those partners, nor does it allege specific amounts the plaintiffs say they are owed. It seeks immediate payment without reduction of their June 2015 participation unit distributions and their June 30, 2015, capital account balances, without reductions, plus interest and unspecified enhanced damages.

Jose is now a partner and chair of the health care and life sciences practice at Plews Shadley Racher & Braun LLP. Shapiro and Wenzel joined the Indianapolis office of SmithAmundsen — Shapiro as a partner in its health care practice, and Wenzel as a partner practicing in the areas of creditors’ rights, bankruptcy, real estate and commercial law.

According to data from the Indianapolis Business Journal, the local lawyer count for Krieg DeVault has fallen from roughly 100 to 75 in the past two years. The IBJ’s list of largest Indianapolis-area law firms shows Krieg DeVault had 138 attorneys in offices around Indiana and the U.S. Data from 2015 shows that number dropping to 79. The firm was established in Indianapolis in 1870.
 
The case filed by Miller & Fisher LLC before Marion Superior Judge John M.T. Chavis II is David Jose, Mark Wenzel and Melinda Shapiro v. Krieg DeVault LLP, 49D05-1609-CT-31701.
 

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