A 1.4m (€2.3m) lawsuit casts a revealing light on how the relationship between an investment bank and a headhunter can go wrong. Filed in May, it cites the bank's failure to pay Sheffield for hiring Alan Broughton and Jacques-Henri Gaulard, two highly regarded banking analysts recruited from Morgan Stanley last year.
Sheffield asked Lehman for 90,000 for each hire, on the basis of its normal charge of one third of a successful candidate's anticipated first-year remuneration and benefits. Some of those fees were not paid, the claim says.
Lehman contests every point put forward by the claim and filed a defence at court last Wednesday.
Sheffield says that under an exclusive supplier agreement signed in 1996, it charged Lehman only a quarter of first-year remuneration, instead of its normal one third. It also agreed to put a cap on its hiring fees, at 60,000. However, Lehman failed to pay some invoices and paid others only after Sheffield put considerable pressure on the bank.
It adds that another agreement was signed in 1999, which the bank breached by recruiting staff who were not introduced to it by Sheffield, including Julie Lamirel, a telecoms equipment analyst, and Paul Ryb, an emerging telecoms analyst. Sheffield claims Lehman failed to pay part of the 60,000 fees owed for each of them.
Lehman failed to give adequate notice that it did not wish to renew the 1999 agreement, the claim adds. This prevented Tim Bristol, the managing director of Sheffield International, from devoting his time to other clients. It is claiming 150,000 each for three hires that it estimates it would have made for other banks if proper notice had been given.