Ex-partners, Krieg DeVault settle compensation lawsuit

Three former Krieg DeVault LLP partners who sued the firm alleging they were denied compensation when they moved to new firms — and then faced a countersuit from their former employer — have confidentially settled the litigation, court records show.

David Jose, Mark Wenzel and Melinda Shapiro sued Krieg Devault in September 2016. They claimed they were shortchanged when they departed the firm in June 2015 and were made to pay for other partners whose capital accounts with negative balances had been written off.

The three attorneys who ultimately landed at SmithAmundsen LLP claimed they were denied shares of net income ranging from about $26,000 to $27,000 each in David Jose, Mark Wenzel and Melinda Shapiro v. Krieg DeVault LLP, 49D01-1609-CT-31701.

Marion Superior Judge Heather Welch last week granted a joint motion to dismiss the commercial court case. James R. Fisher of Miller & Fisher LLC represented Jose, Shapiro and Wenzel. He said he could not comment on the settlement because of a confidentiality agreement. Krieg DeVault attorneys Mark Merkle Jr. and Kay Dee Baird, who defended the firm, did not immediately respond to messages seeking comment Tuesday.

Prior to dismissing the case, Welch granted a joint motion releasing to Krieg DeVault an $80,000 deposit the firm had placed with the court in August 2017 to fund any potential judgment. The deposit came after Welch ruled in June 2017 that the former partners were “entitled to receive their June 2015 distributions of net income in the same manner and at the same time as all other Krieg DeVault partners”.

Welch also ruled at that time that it was for a jury to decide whether paying the former partners would create a “substantial and material adverse effect” for Krieg DeVault, as the firm had argued in court pleadings.

The settlement puts an end to a bare-knuckled employment dispute that had been on a course for a five-day trial this June. Kreig DeVault claimed in court filings that the ex-partners “violated their fiduciary obligations to the partnership in the course of organizing an en masse resignation from the firm and Krieg DeVault is entitled to obtain documentation evidencing the communication between the named Plaintiffs and their law firms.”

Welch in February rejected both parties’ motions for summary judgment in a case where Krieg DeVault moved for discovery including the ex-partners’ personal emails, and the former partners sought to depose former managing partner Deborah Daniels.

Krieg DeVault named Michael Messaglia managing partner earlier this year. According to the Indianapolis Business Journal’s Largest Indianapolis-Area Law Firms lists, Krieg DeVault is the eighth-largest firm with 86 attorneys in its various offices. It was the area’s fourth-largest firm in 2012 with 138 attorneys. The firm was also in the eighth spot on the 2016 list, reporting 79 lawyers.