Arthur J. Gallagher & Co. on Monday sued rival brokerage Alliant Insurance Services Inc. and its private equity backer in a wide-ranging suit alleging Alliant targeted nearly 40 Gallagher staff and has taken on more than 80 of its clients in an ongoing illegal staff poaching scheme.
The suit, which was filed in state court in Delaware, alleges that Alliant embarked on a campaign last December to lure some of Gallagher’s top producers and their colleagues to breach nonsolicitation agreements to join the Newport Beach, California-based broker with financial incentives to bring Gallagher clients with them.
The Delaware litigation comes a month after Gallagher sued Alliant in federal court in California over a group of 10 former employees who are also mentioned in yesterday’s complaint.
In Arthur J. Gallagher & Co. v. Alliant Insurance Services Inc. and Stone Point Capital LLC in Delaware’s Court of Chancery, Gallagher alleges that Alliant, with the support of Stone Point Capital, which became Alliant’s largest shareholder in 2015, has poached staff from numerous rival brokers over the past several years and that Gallagher is its latest target.
“Over the course of the past ten months, and up through today, Gallagher has been forced to play whack-a-mole as Alliant targets Gallagher offices and practice groups across the country and continues to steal Gallagher’s employees and clients away, resulting in lawsuits across the United States,” the suit alleges.
The poaching scheme began after Gallagher turned down offers by Alliant to sell its books of business, the suit alleges.
“The raid is comprehensive in scope and designed to gradually strip Gallagher of its producers and employees … divert key client relationships, and misappropriate confidential information about clients and business strategies from Gallagher to Alliant. This conduct cannot be justified under the guise of healthy competition. Rather, Alliant has carried out these attacks in bad faith, after Gallagher rebuffed Alliant’s coercive ‘offer,’” the suit alleges.
The lawsuit details Alliant’s alleged strategy of targeting brokers at rivals and using Stone Point’s capital to lure them to join the broker with “outsized compensation packages” that are contingent on them bringing clients with them.
In one example, a recruiter for Alliant allegedly told a Gallagher area president that the manager’s compensation at Alliant would be based on the size of the book the manager brought to Alliant.
According to the suit, which lists 39 former Gallagher employees, seven were producers: Frank Albrecht, Bilal Ashraf, Todd Burke, David Ghirardini, Michael Machette, Steven Pierce and Don Tarantino.
The alleged scheme breaches nonsolicitation agreements that the former Gallagher staff had signed, among other things, Gallagher states in the suit, which seeks temporary and permanent injunctions against Alliant and monetary damages.
Lockton Cos. LLC also sued Alliant in Delaware last year over alleged employee poaching. After preliminary decisions that favored Lockton, the brokers settled the dispute.
In the Gallagher suit, which cites the Lockton litigation extensively, Gallagher alleges that Alliant reincorporated in California from Delaware earlier this year in an attempt to avoid further litigation in Delaware. California courts have generally favored employees over their former employers in poaching suits. Law firm Quinn Emanuel Urquhart & Sullivan LLP, which represented Lockton in the earlier suit, also represents Gallagher.
A Gallagher spokeswoman said the brokerage does not comment on pending litigation. Alliant did not respond to a request for comment.
