Case 1:17-cv-00901-ABJ Document 17-1 Filed 06/13/17 Page 1 of 15

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
------------------------------------------------------------- X

JANE DOE,
Plaintiff,
Civil Action No. 17-00901 (ABJ)
V.

PROSKAUER ROSE LLP,
Defendant.
------------------------------------------------------------- X

DECLARATION OF JOSEPH M. LECCESE, ESQ.
IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT
Joseph M. Leccese, Esq., makes the following declaration pursuant to 28 U.S.C.
§ 1746:

1.

I submit this Declaration in support of the Motion for Summary Judgment and Motion

to Dismiss filed by Defendant Proskauer Rose LLP ("Proskauer" or the ''Firm").
2.

I am the current Chairman of the Firm and have served in that position at all relevant

times. I am fully competent to make this Declaration and do so based upon my personal
knowledge. If called to testify, I would state the following facts.

The Firm
3.

Proskauer is an international law firm of approximately 740 lawyers in 13 offices

around the world. Plaintiff Doe practices in the

Department, for which

Proskauer is particularly well known.
4.

Proskauer has long been recognized for its achievements in the areas of diversity and

inclusion. In 2017, the Firm was shortlisted for the Euromoney Women in Business Law
(Americas) Awards in several categories, including, including best international firm for women

 Case 1:17-cv-00901-ABJ Document 17-1 Filed 06/13/17 Page 2 of 15

in business law and best international firm for diversity. The Firm was also nominated by
Chambers in 2016 as one of the most inclusive firms for minority lawyers; has been honored in
the "Gender Equity" category by the Yale Law Women's 2015 Top Ten Family Friendly Firms
Survey; and, in 2014 and 2015, received Gold Standard Certifications from the Women in Law
Empowerment Forum.
5.

The Firm has also received recognition for its diversity initiatives, including its

Women's Sponsorship Program, which pairs women associates with partner sponsors and
provides supplemental training for the express purpose of being able to increase the number of
women partners at the Firm. The Program also provides sponsors and training to newly
promoted women partners and senior counsel to support their ability to succeed as senior lawyers
and future Firm leaders.

The Firm's Partnership Agreement
6.

Proskauer is a New York limited liability partnership. The relationships among its

partners are governed by its partnership agreement. At all times during Doe's membership in the
Firm, the Firm's operative partnership agreement has been the Restated Partnership Agreement
dated October 12, 2011, as amended (the "Partnership Agreement"). A true and correct of the
Partnership Agreement is attached hereto as Exhibit 1. 1
7.

The Partnership Agreement is governed by New York law. (Ex. 1 § 23.) The Firm's

principal office is located in New York, and the Firm maintains twelve other offices, including
an office in Washington, D.C. (Id. § 4.) The Firm does not maintain an office in Maryland.

1

The Firm has omitted Exhibit B to the Partnership Agreement from its filing. Exhibit B
concerns partner retirement, and the information contained in Exhibit B is not a basis for the
Firm's Motion for Summary Judgment and Motion to Dismiss.
2

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8.

The Firm has two types of active partners: equity partners and income partners. Doe is

an equity partner. The term "regular partner" in the Partnership Agreement means an equity
partner. The term "contract partner'' in the Partnership Agreement includes both equity partners
whose relationship with the Firm is governed in part by a separate agreement with the Firm and
income partners whose rights are different than equity partners. (Id. § 3.)
9.

Each equity partner of the Firm, including Doe, has agreed to the Firm's Partnership

Agreement. The rights and obligations of all equity partners are governed by the Partnership
Agreement, except to the extent specifically modified by an individual agreement between the
partner and the Firm. (Id.)

Equity Partner Voting on Firm Affairs
10.

The Firm's partners have the right under the Partnership Agreement to direct the Firm

by voting on matters of significance. (Id. § 6.) The Partnership Agreemenl provides for a
"weighted vote" system in which each equity partner has three votes and, on matters on which
they are entitled to vote, each income partner has one vote. (Id. § 6(e).)
11.

Under Section 6 of the Agreement, a 75% vote of the partners is required in order to: (i)

admit new partners to the Firm; (ii) amend the Partnership Agreement; (iii) change the name of
the Firm; (iv) establish additional Firm offices; or (v) vote on any other matter submitted to a
vote of the partners by the Executive Committee or by 25% of the Firm's partners (unless a
lesser vote has been specified in the Partnership Agreement). (Id. §§ 6(a)(i)-(vi), 9.) In addition,
the Firm's principal office can be relocated upon a two-thirds vote of all equity partners in which
each equity partner is entitled to one vote. (Id. § 4.)
12.

The Agreement further requires that partners vote to approve all decisions to (i) expel a

partner from the Firm upon the recommendation of the Executive Committee; (ii) merge with

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another law firm; or (iii) terminate the partnership, with a 75% weighted vote of all partners
entitled to vote required to approve such actions. (Id. §§ 6(a)(x)-(z)).
13.

The Partnership Agreement provides for meetings of the partners at least monthly to

discuss or decide matters that require a decision by the partners and at which decisions made by
the Executive Committee are reported to the partners. (Id. § 5(e).) Any partner may request that
a matter be placed on the agenda of the partners' meeting for discussion among the partners.
(Id.)

The Firm's Executive Committee

14.

Pursuant to the Partnership Agreement, the Firm's partners, who retain ultimate control

over the Firm, have conferred on the Executive Committee responsibility for ''matters of
management, policy and operations." (Id. § 5(c).) As the Partnership Agreement explains, the
Executive Committee's authority to manage the operations of the Firm "derives from and is
delegated by the partners." (Id. § 5(a)). The Agreement makes clear that any and "[a]ll authority
not delegated [to the Executive Committee under the Partnership Agreement] is retained by the
partners." (Id.)
15. The Partnership Agreement reinforces the Executive Committee's authority to make
decisions on delegated matters by stating that "if by the express terms of [the Partnership]
Agreement any matter is to be determined by the Executive Committee or by decision of the
partners ... it shall be so determined or decided, and every such determination or decision
shall be final and binding for purposes of this Agreement and not subject to review or
modification in any arbitration or judicial proceeding.'' (Id. § 22.)
16.

As set forth in the Partnership Agreement, the Executive Committee's responsibilities

include the:

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(i) determination of fees, profits, expenses, and accounting
practices, (ii) allocation of profits among and distribution of profits
to the partners, (iii) authorization of banking and safe deposit
accounts and signatures, (iv) incurring of capital expenditures, (v)
investing funds of the Partnership, (vi) borrowing on behalf of the
Partnership, (vii) hiring and discharging of employees, (viii)
determinations regarding acceptance of client representation and
resolution of conflicts arising in the course of such representation,
(ix) determination of all matters relating to the Firm's insurance
and its pension, group life and other plans, (x) equipment and other
purchases, (xi) negotiation and execution on behalf of the
Partnership of all leases and contracts, (xii) interpretation of this
Agreement and (xiii) all other matters as to which no other or
inconsistent provision has been made in this Agreement.

(Id. § 5(c).)
17.

Under the Agreement, the Executive Committee may appoint other committees to assist

in carrying out its functions, and it also appoints chairpersons to head each of the Firm's
departments after giving due consideration to the views of the partners in each department. (Id. §
5(b), (f).)
18.

Although the Executive Committee has the authority to manage the Firm's affairs under

the Partnership Agreement, the Executive Committee is also required to submit to the partners
any matter that three Executive Committee members "deem of sufficient importance to merit
discussion or decision by the partners.'' (Id. § 5(c).) Thus, the Executive Committee can-and,
at times does-ask the partners to vote on matters that the Executive Committee would otherwise
have the authority to decide on its own. Ultimately, however, the Executive Committee must
report to the partners-as it does in monthly meetings-on decisions made by the Executive
Committee on behalf of the Firm. (Id.§ 5(e).)
19.

The Executive Committee consists of seven members, including the Firm's Chair. (Id.

§ 7(a)(l).) The Firm's partners elect the Committee members and the Chair through the
weighted voting procedure described above. (Id. § 6( c). ) Elections are conducted by secret

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ballot and partners may vote in person or by proxy. (Id. § 6(g), Exhibit A.) A candidate who
receives a majority of the votes cast is elected to the position. (Id. § 6(c).)
20.

All equity partners, including Doe, are eligible to run for Chair or a seat on the

Executive Committee. (Id. §§ 5(b), 7(c).) There is no nominating committee that controls who
runs for a position. Each equity partner is simply asked whether s/he wishes to have her/his
name included on the ballot for election. to the position. (Id. Exhibit A,

,r 2.)

included, then her/his name will be shown on the ballot. (Id. Exhibit A,

,r,r 4, 5.)

21.

Ifs/he wants to be

The Chair presides at partner meetings and Executive Committee meetings, and serves

a three-year term. (Id. §§ 5(d), 7(a)(2).) Executive Committee members also serve three-year
terms, which are staggered so that two of the six members' terms expire each year. (Id. §
7(a)(2)-(3).)
22.

Executive Committee members, other than the Chair, may not serve consecutive terms.

(Id. § 7(a)(3).) With limited exceptions, no more than two partners on the Committee can be
from any one department, and none of the Firm's offices may have more than six members on
the Executive Committee, including the Chair. (Id. § 7(a)(5).) In 2014 and 2015, two of the
seven Executive Committee members were women, and in 2016, one of the seven Committee
members was a woman.

Allocation of Profits and Losses Among Equity Partners; Capital Contributions
23.

The Firm's equity partners, including Doe, share in the profits and losses of the Firm.

(Id. § 11.) They also contribute capital to the Firm annually in an amount equal to 7% of their
share of the Firm's profits for the year, subject to certain limitations. (Id. § 12(a).) Equity
partners are entitled to a return on their capital at a rate fixed by the Executive Committee. (Id. §
12(b).) Employees of the Firm do not make capital contributions and are not charged with any

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portion of the Firm's losses.
24.

The Partnership Agreement requires that "[t]he profits of the Firm each year shall be

allocated among the partners by the Executive Committee," and that "[i]f the Firm shall incur net
losses, such net losses shall be chargeable to the partners in such a manner as is determined by
the Executive Committee .... " (Id. § 11 )
Partner Allocations

25.

Unlike many other law firms, Proskauer does not have "points" or "shares" or any

metrics that "entitle" a partner to any particular level of allocation in a given year. Rather, in an
effort to allocate the Firm's profits in a way that fairly rewards each partner's overall
contribution to the Firm's success and incentivizes Firm-minded behavior, the Executive
Committee annually undertakes a thorough year-end review of each partner's performance on a
host of quantitative and qualitative factors related to both short-term and long-term contributions.
26.

In conducting its annual allocation process, the Executive Committee takes into account

the myriad ways in which partners contribute to the Firm's success. Accordingly the Firm's
allocation system reflects the fundamental values, culture and expectations of the Firm's
partners, including teamwork, mutual respect, and a "client and Firm first" philosophy.
27.

The Executive Committee sends an annual memorandum to all equity partners

addressing the allocation of profits for the preceding fiscal year. True and correct copies of these
memoranda from the years in which Doe has been a partner in the Firm are attached hereto, for
2016 as Exhibit 2, for 2015 as Exhibit 3, for 2014 as Exhibit 4, and for 2013 as Exhibit 5.
28.

Each year Doe was a partner, the Executive Committee emphasized in its annual

memorandum (which was sent to Doe and all other equity partners) that in determining
allocations it "did not make any decisions - up or down - based on a single year's performance"

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(Ex. 2 at 2, Ex. 3 at 4) and that it did not base allocations on "the vagaries of a single year" (Ex.
4 at 9, Ex. 5 at 7). Rather, the Executive Committee made clear that it "rigorously examined
three-year (and longer) averages and the totality of each partner's long term contributions" (Ex. 2
at 2, Ex. 3 at 4) and that it made allocation decisions "based on the totality of that partner's
contribution over a period of years" (Ex. 4. at 9, Ex. 5 at 7). In other words, partner allocations
are not tied to one year's financial performance, but take into account the totality of the partner's
contributions over several years.
29.

Similarly, the Executive Committee has advised the Firm's equity partners that "no

metric should be viewed as dispositive,'' and "each has its limitations.'' (Ex. 2 at 4, Ex. 3 at 5.)
It is the Executive Committee's role to "carefully assess all metric and non-metric information."
(Ex. 2 at 4.)
30.

In explaining to partners the review it undertakes each year, the Committee has stressed

"the laborious and nuanced process we go through in attempting to understand more fully the
entirety of each partner's contributions to our collective well-being, the fairness of relative
placement and the importance of all the factors not reflected on [the allocation] schedule,
including the non-metric factors set forth in the statement of Our Fundamental Partnership
Values." (Id. at Ex. 2 at 5, Ex. 3 at 6, Ex. 4 at 11 & Ex. 5 at 9.)
31.

Those values include, among other things, acting as a business owner and fiduciary,

practicing at the highest level of quality and integrity, abiding by ethical and legal standards,
operating as a consummate team player, adhering to sound practice management, sharing credit
with others and ensuring that the Firm prospers for future generations. A statement of the Firm's
Fundamental Partnership Values is attached to each pre-allocation memorandum. A true and
correct copy of the Statement is attached here as Exhibit 6.

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32.

As the Executive Committee emphatically repeated each year Doe was a partner:
If metrics were all that counted we could simply ask a member of
the finance staff to multiply one or more of the metric columns by
a percentage. The allocation process would take only hours but
would invariably lead to a ruinous focus on limited, and often
inadequate, measures of contribution .... [I]t is ... a disservice to
the process, when partners . . . form adverse judgments about the
allocations made to others solely by comparing the metrics.

(Ex. 2 at 5, Ex. 3 at 6-7, Ex. 4 at 11, & Ex. 5 at 9.)
33.

The annual allocation process begins each year with the distribution of a pre-allocation

memorandum to all partners in early to mid-October.2 True and correct copies of the preallocation memoranda from the years in which Doe has been a partner in the Firm are attached
hereto as Exhibit 7 (2016), Exhibit 8 (2015) and Exhibit 9 (2014). In that memorandum, the
Executive Committee invites partners to submit memoranda outlining their contributions to the
Firm and the contributions made by their colleagues, so that the Executive Committee has as
much information as possible when making allocation decisions.
34.

As the Executive Committee has explained, partner memos "provide valuable

information [to the Committee] on a variety of economic and non-economic matters that cannot
be measured solely by the year-end metrics available to us." (Ex. 7 at 1, Ex. 8 at 1, and Ex. 9 at
1.)
35.

The annual memoranda prepared by partners are sent not only to the Executive

Committee, but also to the partner's Department Chairs and office heads for review and
discussion. Although the Department Chairs and office heads do not set allocations for the
Firm's partners, they are available to meet with each partner to review his/her memorandum and
discuss any questions, issues, concerns or other information that the partner may wish to raise in

2

The Firm's fiscal year runs from November 1 to October 31. (Ex. 1 § 10.)
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advance of the Firm's annual allocation decisions, and Department chairs and office heads
provide input to the Executive Committee for its consideration with respect to those decisions.
36.

After partner memos are submitted to the Executive Committee for consideration,

members of the Executive Committee make themselves available to meet with any partner who
wishes to discuss his/her contributions, as well as the contributions of other partners. Following
these meetings, and after the Executive Committee has considered each partner's contributions to
the Firm, the Committee makes final allocation decisions and communicates those decisions to
the partners in December of each year.
37.

In accordance with Section 22 of the Partnership Agreement, such allocation decisions

- which are entrusted to the Executive Committee by the partners - are "final and binding for
purposes of [the Partnership] Agreement and not subject to review or modification in any
arbitration or judicial proceeding." (Ex. 1 § 22.)
38.

To assure the transparency of the allocations process, each of the Firm's equity partners

receives a report each December specifying the allocation paid to each partner and reflecting
various metrics applicable to each partner - including cash collected per hour worked by the
partner, revenue from clients originated by the partner, revenue from clients for which the
partner had relationship responsibility, revenue from client matters for which the partner had
responsibility, revenues from matters on which the partner worked, the realization rates
associated with such revenue, and hours billed. The report provides data for each of those
metrics for the immediately preceding year and as an average for the three preceding years. In
addition, the individual partner memoranda prepared by each partner are available for review by
all partners after the allocation process is complete.

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39.

Realization, as measured at Proskauer, includes two different metrics - one that

approximates the fees collected as a percentage of the fees accrued at specified rates on client
matters, and a second that reflects a "hypothetical" realization that approximates the fees
collected as a percentage of the fees that would have accrued at rates attorneys should reasonably
charge for their services based on their years of experience.
40.

Equity partners are responsible for paying their own individual taxes on allocated Firm

mcome. The allocations paid to equity partners are reported on a Schedule K-1, which is the IRS
Schedule used to report profits and losses of self-employed business owners of a partnership.
Accordingly, the Firm's partners report to the IRS annually that they are self-employed business
owners, and thus not employees of the Firm.

The Firm's Partners Operate as Business Owners
41.

Proskauer' s equity partners are business owners, who have autonomy over their work

and do not report to "management" as would an "employee." Among other things, the Firm's
partners have broad latitude in bringing business into the Firm, subject to the Firm's conflicts
procedures, billing and collection guidelines, risk management and similar policies, all of which
are set by the Executive Committee pursuant to the express grant of authority in the Partnership
Agreement. 3
42.

Subject to these policies, the Firm's equity partners, including Doe, also have discretion

over the manner in which they provide services to the Firm's clients and manage their work, and
they are not subject to oversight or supervision by the Executive Committee. In the case of

3

Specifically, and as noted above, the partnership has vested in the Executive Committee the
authority to "determin[e] the fees, profits, expenses, and accounting practices of the Firm'', as
well as the authority to make "determinations regarding acceptance of client representations and
resolution of conflicts arising in the course of such representations.'' (Ex. 1 § 5(c).)

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litigators like Doe, for example, partners routinely advise clients on litigation avoidance, confer
with clients on litigation strategy and file court documents, all without any oversight by the
Executive Committee.
43.

The autonomy and discretion exercised by equity partners clearly distinguishes them

from the Firm's associates or other Firm employees who are subject to supervision by the Firm,
including by the partners (such as Doe) who oversee client matters.
44.

The Firm's partners also have wide-ranging access to the Firm's financial information.

Pursuant to Section 5( e) of the Partnership Agreement, partners are entitled to financial
information and other materials to be discussed at monthly partner meetings (Ex. 1 § 5(e)); and,
in fact, detailed financial data - including revenue, billings, collections, hours and other metrics
- is presented to all partners during monthly partnership meetings. In addition, access to Firm
financial data is available to equity partners through the Partner Portal on the Firm's intranet.
45.

Furthermore, as described above, all equity partners receive, at the time of profit

allocations, annual and 3-year average data on partner allocations, cash collected per hour
worked, four categories of revenue credit, and realization rates for each partner of the Firm.
Thus, in addition to having the right to cast three votes in partnership votes, equity partners also
have extensive access to individual allocations and other financial metrics on their fellow
partners. Income partners and other employees of the Firm are not given access to this financial
information about equity partners.

Doe's Tenure with the Firm
46.

Doe joined Proskauer as an equity partner in the

Department in

- 2 0 1 3 , and has been a partner for the past four years in the Firm's Washington D.C.
Office. Doe came to the Firm after having spent -

12

as a partner at -

and

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as a partner at

. Like all prospective partners, Doe's

admission to the partnership was subject to approval by a vote of the partners. After a
presentation to the equity partners at a partnership meeting, the equity partners voted to admit
Doe as an equity partner. Upon joining the Firm, she agreed to the Partnership Agreement.
47.

When Doe joined the Firm, in addition to agreeing to the Partnership Agreement, she

and the Firm agreed that while she would be a regular equity partner for all other purposes, her
allocation would be guaranteed for 2013 and, subject to certain terms and conditions, her
membership in the Firm could be terminated by the Executive Committee either for cause or not
for cause. A true and correct copy of the individual agreement Doe signed is attached hereto as
Exhibit 10.

48.

Since joining the Firm, Doe has received annual allocations from the Firm's profits.

For the balance of the Firm's 2013 fiscal year (i.e., through October 31), Doe's allocation was in
accordance with the individual agreement she entered into with the Firm. Specifically, Doe
received a pro rata portion o f ~ , which was comprised of pro rata portions of

~ and a s;all signing bonus. After 2013, her annual partner allocations were
determined in accordance with the Executive Committee's allocation process as described above.
49.

For 2014, Doe's profit allocation o f $ - represented

al% increase over the

allocation she received for 2013, while the average increase for full-year equity partners was
approximately only

1%. For 2015, Doe's allocation o f ~ represented a 1% increase

over 2014 as compared to the average increase for full-year equity partners of approximately
only
-

1%, and it resulted in her being one of the six highest paid partners in the Department, of whom three are male and three are female.

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I% increase over 2015
which, again, exceeded the average increase for full-year equity partners of approximately 1%
50.

In 2016, Doe's allocation was increased t o ~ , an

and which resulted in Doe being the fifth highest paid partner in the
Department.
51.

The Firm does not set rules and regulations to control Doe's work. It does not assign

Doe work, nor does it oversee the work she performs. For example, Doe routinely files court
documents and advises clients both pre- and during litigation without oversight by the Executive
Committee or any of her other co-owners. Doe generates client relationships and performs legal
work for clients in her discretion subject to the general policies concerning conflicts, risk and
billing established by the Firm's elected Executive Committee for the collective benefit of the
partners and the Firm.
52.

Unlike a Firm employee, Doe sets her own priorities and schedule, determining, for

example, whether and when she will spend her time pursuing business from existing clients or
prospective clients, and when, and even where, she will perform the legal work for which she is
retained by those clients.
53.

The Firm's associates and other staff are subject to supervision, including by Doe, who

oversees client matters and serves as the head of the Firm's
practice group.

Group and co-head of the Firm's

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54.

Doe has never requested "leave" from the Firm. Like all equity partners, she may come

and go as she sees fit, provided that she meets her professional responsibilities to clients. Doe
has taken time away from the Fim1 for her health and welfare without seeking permission from
anyone.
55.

Throughout her tenure with the Finn, Doe's allocation of partnership profits has been

reported on an IRS Schedule K-1 (used to report partner income), not a Form W-2 (used to report
employee wages). Doc's K-1 indicated that her residence is i n 56.

Finally, Doe has complete information about other equity partners' allocations, and

access to comprehensive financial information about the Firm's perfonnance and substantial
information regarding other equity paiiners' contributions. The Firm's income partners and
employees do not have access to this information.

I declare under penalty of perjury that the foregoing is true and correct. Executed this
13th day ofJune, 2017 in New York, New York.

15