The Perella Weinberg dispute goes to trial ten years after the split

Wall Street stars are set to testify in an eagerly anticipated trial starting Friday over Perella Weinberg Partners’ decision a decade ago to fire a star executive the top investment bank said was plan to start a competing firm.

PWP founders Joe Perella and Peter Weinberg, along with high-profile developer Robert Steel, will tell a New York jury that they discovered the secret plan of Michael Kramer, the founder’s head of the bank’s restructuring process, starting a new business, competing with the three closest to him. colleagues.

PWP fired Kramer and his alleged co-workers via voicemail in February 2015 after it said it learned of the plan, which it said was a violation of their employment contracts. work. It says their departures cost the bank tens of millions of dollars in lost revenue, ill-gotten bonuses and expensive hiring.

Kramer denied that PWP’s leadership was pitted against him by longtime enemies and that they were out to drive him and others from the firm in an effort to take $60mn in salary and equity, which Kramer now he wants to return it.

The level of bad blood between PWP and Kramer has so far prevented the settlement of a case that financial institutions are looking closely to understand the status of non-compete clauses in labor agreements, which in recent years have been faced with criticized for being unduly restrictive. business.

“If anything non-compete is more important than ever,” said Jeffrey Eilender, a partner at Schlam, Stone & Dolan who is not involved in the lawsuit. “Relationship or marketing companies are very aggressive in enforcing it.”

In the first ruling, the judge presiding over the case ruled in 2023 that non-compete agreements are still allowed in New York.

Among the key topics of the court proceedings will be an examination of PWP’s actions regarding Kramer’s clients in the days following his termination.

Witnesses in support of Kramer’s report will include the head of Monsanto, a chemical group he has worked with for a long time, who will testify that the PWP administration was more interested in retaliating against Kramer than serving the needs of Monsanto after he was terminated.

Kramer’s lawyers also intend to question the PWP’s former communications chief over what they say was a covert media campaign to discredit the outgoing executive after he was fired. .

Kramer has sidelined allegations that he improperly solicited Monsanto and one of his PWP clients in the months after he was fired in 2015.

PWP says Kramer and his restructuring colleagues, many of whom he has worked with for years across multiple firms, have spent months planning to leave and start their own competing firm. need them too.

Among the documents found in discovery include a book from a business consultant as well as business plans and spreadsheets detailing compensation and equity levels for the hypothetical firm.

One email between Kramer and two of his partners, Derron Slonecker and Joshua Scherer, suggested naming the firm KSS, which Scherer wrote reminded him of private equity group KKR.

PWP later learned that after a dinner Kramer had with Weinberg in early 2015 where he allegedly announced Kramer’s resignation, Kramer’s restructuring colleagues met for “drinks sweet ones”.

Perella, 83, is an M&A business executive, while Weinberg, 67, comes from a family that ran Goldman Sachs for generations. Steel, 73, was a former Goldman and deputy mayor of New York City, and regularly advises the likes of BlackRock founder Larry Fink.

However the star witness in the case may be Kevin Cofsky, who ten years ago was a junior PWP executive in his thirties and worked early in his career with Kramer.

Cofsky had attended a critical Sunday meeting in January 2015 at Kramer’s Connecticut home where about 10 members of the PWP development team had gathered.

Cofsky weeks later told PWP executives that the purpose of the meeting was to promote the creation of a rival firm.

Kramer in his court filings said Cofsky embellished his story after being offered a $500k bonus and the opportunity to lead the PWP restructuring team after Kramer was fired.

The PWP described the dispute as a “book begging case”. However, Kramer’s court filings state that each of the eight PWP entrepreneurs who later in 2015 joined his new firm, Ducera Partners, will testify under oath that Kramer never asked them to design a new business or join him in a new firm as they went along. they are employed by PWP.

Kramer insisted that it was a vendetta motive where Weinberg wanted to “back him in his cage”, a phrase found in the PWP email.

“PWP undermined the organizational team that Kramer had led and built from the ground up, underpaid them, gave them poor year-end reviews, and made it clear that opportunities their progress on PWP was narrow or non-existent,” Kramer wrote in court papers, adding. that his team “was unceremoniously dismissed before any of them had decided whether they wanted to go”.

PWP was founded in 2006 to great acclaim following the lineage of its founders. Kramer was brought in quickly to begin a restructuring process after spending time at Houlihan Lokey and Greenhill & Co.

Kramer’s status as a PWP partner, he says, prevented him from being summarily terminated.

Kramer’s Ducera Partners has since 2015 been one of the top management consulting firms, last year approaching $150mn in revenue with fewer than 50 employees, according to a person with knowledge of the matter. its performance.

The firm is branching out into traditional M&A, last year hiring Goldman Sachs executive John Vaske, who was Weinberg’s colleague.

PWP reorganized its restructuring team after Kramer’s departure and the company listed its shares in 2021. Its stock price has doubled in the past year and its revenue has The market is now about $ 2bn.

Cofsky, the only PWP employee who attended the meeting at Kramer’s home in early 2015 who did not contact Ducera later, remains with PWP.

The trial is scheduled to last three weeks.