Blockchain Attorney Klayman Battles MoFo Over Blocked Partnership

Did Joshua Ashley Klayman, one of the US’ top blockchain attorneys, cost herself a partnership in a prominent global law firm, because she chose to focus on the novel field of blockchain and smart contracts, because was female, or because she got pregnant and took three maternity leaves?

Those are among the many questions that will eventually have to be answered at the center of a lawsuit Klayman has filed against California-headquartered Morrison & Foerster (MoFo) for violating the Pregnancy Discrimination Act, the Family and Medical Leave Act, Title VII of the Civil Rights Act, the Equal Pay Act, and the New York City Human Rights Act. If one believes MoFo, there was no discrimination whatsoever. Klayman has herself to blame for not becoming partner because she didn’t make the cut by selecting a novel specialty which didn’t bring in big bucks, by having poor judgment, by exhibiting bad communication skills, by displaying poor administrative abilities, and by not taking advice on how to improve. She voluntarily left in June 2018 to start her own firm, because she couldn’t get sufficient support from other partners to become partner. However, if one believes Klayman’s version of events, MoFo paid her less than her equivalent male counterparts, forced her to work during her maternity leaves, and did not make her partner as she rightly deserved solely because she was female, became pregnant, and took maternity leaves. Klayman, by her account, had no choice but to resign when MoFo’s partners retaliated against her after she complained of discrimination and bad treatment.

Klayman is fighting an attempt by MoFo for a summary judgment to dismiss the lawsuit filed in 2018 and in seeking a jury trial for compensation and punitive damages. US Magistrate Judge Jacqueline Scott Conley in San Francisco is set to hear arguments from both sides on December 10. If she rules against MoFo, a jury trial could take place in March 2021. Klayman now works as senior counsel with the London-headquartered law firm of Linklaters in New York as global tech sector co-head, US head of fintech, and head of blockchain and digital assets. Chambers and Partners has ranked Klayman as one of the top twelve blockchain and digital currency lawyers globally and she is a frequent speaker at blockchain and cryptocurrency events. When hiring Klayman in 2019 after a short stint at her own firm, Linklaters publicly said that her practice would be focused on blockchain and digital assets, including include initial coin offerings and related transactions.

Klayman is one of two former associates at MoFo who decided to identify themselves as plaintiffs, instead of Jane Does, in their lawsuits and asked for a jury trial against MoFo. The other five unidentified women who sued MoFo on similar grounds withdrew their suits in December 2019 after settling for undisclosed terms. Sherry William, the other plaintiff who chose to identify herself, was fired by MoFo in December 2019. She now runs her own law firm in Los Angeles under the name of Pacific Ivy Law Group. Klayman, who sued MoFo in 2018, is represented by the law firm of Sanford Heisler Sharp, which declined to comment for this article. MoFo and its law firm of Gibson, Dunn & Crutcher also would not discuss the case. (FinOps Report sifted through public court documents filed by MoFo’s attorneys and Klayman’s attorneys to present some highlights of each side’s arguments for the benefit of its readers).

In its request for summary judgment, MoFo denies all of Klayman’s allegations. The law firm insists that Klayman could not make a business case for becoming partner because she did not book a sufficient number of billable hours after she dedicated her work to blockchain and smart contracts. “Although her practice was novel and untested, she devoted hundreds of hours to writing and speaking engagements, designed to elevate her reputation [redacted], but at the expense of billable work, basic principles of legal practice and the Finance colleagues who had supported her,” write MoFo’s attorneys at Gibson, Dunn & Crutcher. “She leaned in to the pursuit of blockchain stardom, and away from the path to partnership. Ms. Klayman’s choices did not lead to the result she wanted, so she pointed fingers at discrimination.” MoFo also insists that Klayman worked voluntarily during her maternity leaves, that there was no discrimination in her compensation, and that there was no retaliation after she complained.

In its opposition to MoFo’s request for summary judgment, Klayman’s attorneys reiterate the allegations made in Klayman’s amended lawsuit filed in February 2020. She received great reviews and high praise for her work at MoFo and Klayman believed she was on track to become partner as she was repeatedly reassured of that prospect. However, MoFo changed its tune when Klayman became pregnant and returned after taking her second maternity leave and by the time her third maternity leave ended, the relationship was clearly damaged. By Klayman’s account when she complained of discriminatory policies and abuse at the hands of partners at the firm, she faced retaliation in the form of a barrage of criticism and rumors of her impending departure.

Klayman’s narrative in her amended lawsuit filed against MoFo in February 2020 paints a rather bleak saga of her five-year tenure at MoFo when relations began to sour after she returned from her first maternity leave. In the amended lawsuit, Klayman cites Spencer Klein, a partner at MoFo who co-chairs the firm’s mergers and acquisitions practice, and Jeffrey Chester, a former partner, as among the partners who mistreated her. Klayman identifies Chester as a former romantic interest she left before they both joined MoFo. (Chester left MoFo in 2019 to work for Greenberg Traurig). Dario de Martino, an associate at MoFo, whom Klayman acknowledges helped her create her blockchain and smart contracts practice, was also briefly mentioned in her lawsuit alleging mistreatment. De Martino who was appointed co-chair of the blockchain practice in 2017 during Klayman’s last maternity leaves was made a partner after Klayman’s departure from MoFo. Another MoFo partner Mark Wojciechowski, chair of its finance and projects group and co-chair of its financial transactions group, was cited as a supporter of Klayman who repeatedly recommended her for partnership. However, he was also one of the partners who pressured her to work during her maternity leaves.

Klayman agrees that she was made “of counsel” a year after she joined the firm in 2013, but alleges she was never given a pay raise to match that promotion, earning less than male colleagues with the same title. She received only 80 percent of the compensation of senior associates for two years, she claims, and when her compensation was finally increased, it still was below those of other male counterparts. When Klayman took her maternity leaves, she was encouraged to work to generate business for the firm and when she did return to work, she was told to maintain a part-time designation. No other men were encouraged to take reduced schedules and reduce their billable hours. Klayman alleges that her reduced hours classification permitted MoFo to classify portions of her otherwise billable time as non-billable hours thereby reducing the number of write-offs and assisting with budget management. At times, Klayman claims, billable hours were capped retroactively or she was asked to reclassify her billable hours as non-billable.

Klayman also alleges Chester, who was appointed as a group head for Klayman, told her never to disclose their relationship to others because it would look bad, lied to her supervising partner that he never knew Klayman before joining MoFo, and questioned the paternity of her baby while she was pregnant. When Klayman told the attorney development department about her previous relationship with Chester and asked that he not be involved in decisions about her compensation or partnership her pleas “fell on deaf ears,” according to her attorneys. De Martino allegedly told her it would be in her best interest if Chester “still wanted her” and Klein allegedly called her a “natural blonde.” Other male partners and attorneys at MoFo who were not in her group told her that people wouldn’t pay attention to her during a presentation because they were “thinking of how hot you are” comparing her to Kim Kardashian. Klayman also alleges that she heard Klein and de Martino making disparaging comments about other female attorneys. When she revealed her third pregnancy in 2017, de Martino and Klein, by Klayman’s account began to exclude her from planning and marketing materials from an event series Klayman had organized and obtained approval for; they even changed the date of the event to when she was due to give birth.

In responding to the allegations in Klayman’s amended lawsuit in February 2020, MoFo insists it has a great track record as “the firm of choice” for female attorneys, citing numerous accolades received from such publications such as the Yale Law Review, Working Mother, and other industry groups. The firm also provides some statistics: women hold 25 percent of partnerships and 50 percent of its associates. Women also make up 31 percent of the partner compensation committee and 40 percent of the board of directors. Klayman joined MoFo firm pregnant — after working for five law firms in seven years– and was promoted to role of “Of counsel” within a year. That promotion came after her first maternity leave and the 80 percent rate Klayman cites was due to her reduced work schedule and with her consent, “consistent with MoFo’s flex-time policies and practices.” She received four pay raises in five years, says MoFo, and in the years she worked more than her part-time schedule her compensation was increased at year-end to account for that work. MoFo denies that Klayman’s part-time schedule affected the allocation of her work among billable and non-billable hours or that any “similarly-situated” attorney was paid more. Klayman, according to MoFo, was also repeatedly encouraged not to work during her maternity leaves.

In its response to Klayman’s lawsuit, MoFo suggests that Klayman’s tenure at the firm went well until 2016 when she decided she wanted to switch from the stable and more lucrative field of traditional finance in the financial transactions group to dedicate herself to the cause of blockchain work at the expense of billable hours. Her decision on where to focus her efforts came despite being advised that she needed to increase her number of billable hours “Instead of following the advice of partners to help herself become a partner, Klayman decided to spend most of her time in 2018 in self-promotion and marketing with only 20 percent to billable hours,” write MoFo’s attorneys. Klayman, by MoFo’s account, did as she pleased. “Throughout her tenure at the firm Ms Klayman rejected offers of support and assistance from the leadership of her department, the head of human resources, the attorney development group and the executive coach retained for her. In the end she was unwilling to comply with basic firm requirements (entering time, following proper matter onboarding procedures and being responsive to client concerns).” write MoFo’s attorneys. They also dispute that Klayman was demoted during her last maternity leave simply because de Martino was made the co-chair of the blockchain and smart contracts group that Klayman initially chaired alone or that de Martino or Spencer prevented her from planning and marketing materials from an event she organized.

The two MoFo partners Klayman alleges mistreated her– Klein and Chester– according to MoFo had no say in whether she would be made partner and when Klayman told the firm of her past relationship with Chester the firm ensured she did not have to work with him. What’s more, she either refused to provide the firm’s head of human resources or its head of attorney development with the information necessary for them to understand her concerns about some of her working relationships she complained about. They simply couldn’t take her allegations of mistreatment at face value. There was no retaliation, MoFo claims, noting that her counsel told MoFo of her allegations two weeks before she “voluntarily” resigned.

In its request last month for summary judgment to dismiss Klayman’s lawsuit, MoFo reiterates some of its previous explanations for why it didn’t make Klayman partner and why her other allegations on discrimination are also invalid. She had not developed a business case for her specialty in 2017 or the reputation for exceptional work and partner-level judgment needed to become partner. Klayman was never forced to work on maternity leave. “She was the one who insisted on working, despite being repeatedly told that was not permitted or required,” write MoFo’s attorneys. Klayman’s comparisons with other colleagues to prove discrimination were invalid, they say, because she could not identify anyone “similarly situated to her in all material respects.” When it comes to commenting on Klayman’s allegations of derogatory comments against her which made for a hostile work environment, MoFo’s attorneys have their own spin: they were either “hearsay,” “stray comments” or “petty workplace angling” which don’t meet the far higher threshold of negativity necessary to prove a hostile workplace. As for Klayman’s claim of retaliation after she complained to the HR department, MoFo’s attorneys suggest that any criticism was deserved. “She simply thought her complaint to HR would insulate her from the repercussions of her pattern of increasing unprofessional decisions and behavior,” they write.

Employment lawsuits involving pregnancy and gender discrimination are nothing new. However, more firms are finding themselves with headline risk as plaintiffs are no longer willing to remain anonymous and settle out of court. Winning such lawsuits isn’t easy, say some employment attorneys. “Absent direct evidence of discrimination, the plaintiff has to meet a high burden of proof in citing clearcut examples of lower compensation than for employees of direct comparable qualifications,” says Darrell VanDeusen, president of Kollman & Saucier, a Baltimore law firm specializing in employment law. “In addition, meeting the requirements of a law firm to become a partner involves a combination of meeting quantifiable billable hours and more subjective standards of judgment and other skills. A law firm could argue it was within its right not to make someone a partner for these legitimate non-discriminatory reasons.”

Even if everything a plaintiff says is true he or she can still lose a lawsuit if he or she cannot prove there was an intent to discriminate on the basis of gender or pregnancy, according to VanDeusen who represents management in employment lawsuits and would not comment on the merits of Klayman’s lawsuit. Robert Ottinger Jr., who heads up an employment law firm in New York City representing employees, believes that Klayman has a reasonable shot at winning based on her type of discrimination case– one involving pregnancy. “She might be able to prove discrimination if she had a track record of success with criticism made only after she returned from maternity leaves and her pregnancy was one of the factors used in denying her a promotion,” he says. “It doesn’t have to be the sole factor.” The goal for Klayman now, he suggests, is to prevent any attempt by MoFo to “wear her down” so won’t testify before a jury.

At this stage, for Klayman to have her day before a jury all her lawyers have to do is convince Judge Conley that the material facts in the case are in dispute. They don’t have to prove who is right or wrong. Based on the arguments presented by Klayman’s attorneys for Judge Conley to deny MoFo’s request for a summary judgment, it is clear they are aiming to plant the seeds of reasonable doubt in MoFo’s account of events based on court documentation. The attorneys write that MoFo adjusted Klayman’s base compensation in 2015 and 2016 after she complained, but MoFo did not increase her base pay after 2016. leaving Klayman to earn less than other men doing “substantially equal work.” From 2016 until 2018, Klayman was paid $14,000 to $75,000 less per year than other male attorneys at MoFo with the title of “Of Counsel” who graduated law school within three years of her. “Even though her base-compensation was “trued-up” to reflect her billable hours, she worked in excess of her 80 percent schedule, her bonuses were still pro-rated based on her reduced hours schedule and leave,” write her attorneys. They also note that “similarly qualified men” were promoted to partner and MoFo’s “post-hoc” explanations of why those men aren’t comparable to Klayman present “issues of fact” that should be addressed by a jury. “MoFo’s efforts to slice and dice plaintiff’s comparators wears thin,” write Klayman’s attorneys, noting that employees don’t have to be identical to make comparisons. All they have to be is “similarly situated when they have similar jobs and display similar conduct.”

Klayman was forced to work during her maternity leaves, argue her attorneys in their request for a denial of summary judgment to dismiss her case, because she believed it was the only way she could make partner. In fact, MoFo partner Wojciechowski pressured her to do more and made it clear to he that she had to respond promptly to his original emails or he would send follow-up emails within a few hours with question marks. Klayman’s attorneys cite a June 2017 email during her last maternity leave, when Wojciechowski wrote to her “I’m happy to back you up while on your [sic] on leave but as I said our new management are cold-blooded economic animals. Actually bringing in the work and/or billing time is the absolute primary distinguishing factor for making partner and getting compensated.” When Klayman sends him an email listing everything she was doing such as calls, pitches, and other work, noting that she was at about 150 percent of goal for billable hours she concludes, according to her attorneys, saying “I want you to see that I am working around the clock every day on this stuff, with a baby on my lap, and still trying to work on billable matters. It is not really maternity leave at all.”

In striking down the crux of MoFo’s rationale against making Klayman partner because of her decision to focus on blockchain and smart contracts, Klayman’s attorneys argue that Klayman received plenty of praise in her 2016 review for creating a unit specializing in her new line of work which encouraged her to pursue the goal of making MoFo “own the blockchain/smart contracts space.” Her 2017 review was also glowing calling her work on blockchain “nothing short of extraordinary.” Klayman even agreed to change focus if requested. “No one requested that she redirect her energies, It was not until after the firm decided not to promote her that it needed ad-hoc justification,” write Klayman’s attorneys. “Had MoFo been genuinely concerned that Ms. Klayman was abandoning her practice to go off on a lark, this would have been well-documented.”

In further arguing that Klayman’s protected leaves were the reason she was denied a partnership, Klayman’s attorneys cite emails and verbal interchanges which read alone cast doubt on MoFo’s justifications. One example is a 2016 email written after Klayman’s return from maternity leave in which Nicholas Spiliotes, a partner at MoFo, says “It makes sense to wait to nominate her for partner as she is just back in the office.” Another example MoFo’s attorneys cite is the response Janet Herman, MoFo’s director of attorney development, gave Klayman when Klayman asked her why she was denied a partnership in 2017. Klayman was allegedly told that unnamed MoFo partners complained she “acted like a martyr” in mentioning her baby was on her lap during a conference call during her maternity leave. Klayman’s attorneys are quick to point out that a jury might interpret Spiliotes and Herman’s comments in Klayman’s favor. “Any jury could easily find that Ms. Klayman’s 2015 maternity leave was a negative factor in MoFo’s decision not to promote her in 2016,”  write Klayman’s attorneys. In analyzing Herman’s comment, Klayman’s attorneys write “If [Klayman’s maternity leave] was a non-factor, Morrison would have ignored or reprimanded the naysayers, not elevated their comments to justify its decision. A juror could find Ms. Klayman’s leave was a negative factor in her non-promotion to lawyer.” In response to MoFo’s contention that Spiliotes’ 2016 email did not reflect a discriminatory stance about her gender or pregnancy, Klayman’s attorneys counter that it is up to a jury to decide what he truly meant.

Out of the numerous attorneys that Spiliotes and Herman asked to discuss Klayman’s partnership candidacy in 2017 only one of MoFo partner, Spencer Klein, had anything negative to say about Klayman’s style of communications, according to Klayman’s attorneys. Therefore, magnifying the importance of criticism from one male partner — whom Klayman alleges engaged in discriminatory conduct against her no less– was “cherry-picking” and suggests that the decision about her candidacy {for partnership] was “preordained.” Klayman’s attorneys question why the many other partners at MoFo who supported Klayman’s promotion to partner, but who were only familiar with her blockchain work were written off as illegitimate. “It is undisputed that this was not the standard process for vetting partner candidate and Ms. Klayman underwent a level of investigation not imposed on male candidates,” write her attorneys. (Klayman, they say, presented Spiliotes and Herman a list of 21 partners who would attest to her finance work and 48 who could attest to her blockchain work).

When Klayman complained to the attorney development department under Herman in December 2017 and finally the chief human resources officer Jason McCord in January 2018 of discrimination, her complaints were never “meaningfully” addressed, write her attorneys. Instead she faced a barrage of criticism for her work and character with partners sending emails to Herman and the HR department and some even spreading rumors she would be leaving the firm. “The excessive scrutiny, sham HR investigation of her allegations of discrimination, and whisper campaign designed to force her to leave,” write Klayman’s attorneys, support an inference that MoFo’s actions were retaliatory particularly since she had never received such harsh criticisms beforehand.

Regardless of whether Klayman wins her case against MoFo or even has her day in court, her allegations against a major law firm that insists it is supportive of female employees, are pretty damning. The arguments on both sides offer a fascinating, albeit sad, glimpse into a relationship between an attorney and her law firm that ultimately went sour. A judge and perhaps a jury must now untangle the interconnected elements of the good, the bad and the ugly over the course of Klayman’s volatile five-year tenure at MoFo to decide who is right and who is wrong.

(Editor’s Note: FinOps Report will keep readers updated on further developments in this case as they arise).