Five-strong IR practice heads off to set up new firm without warning
Travers Collins & Co, a Buffalo, New York-based PR and marketing firm, lost its IR practice when Lynn Casteel and Jeff Schoenborn, the two people who ran it, abruptly quit and started their own firm, called Casteel Schoenborn.
They also took the other three members of the investor relations team and a number of clients with them, telling Travers two days after receiving year-end profit-sharing bonuses.
Earlier this year, in happier days (at least for Travers Collins), the firm referred to Casteel and Schoenborn as its IR rock stars in a post on the company’s Facebook page. That was back when both appeared as speakers at the Bank Investor Relations Symposium. Those times are now long gone.
Neither Casteel nor Schoenborn had given any indication they were unhappy, according to Travers Collins principal Bill Collins. Building records show the former employees entered the office between 5.45 am and 6.05 am Saturday morning to clean out their offices, including a portfolio of investor relations clients, he says. Then they sent an email at 7.30 am to say that they wanted to discuss leaving.
‘You’d think they would have come to my partner and me and said, We’d like to explore a different model here, where perhaps we could have equity and have a greater share of the profits of the work we are generating,’ Collins says. ‘I think my partner and I would have been foolish not to say, Let’s talk about it.’
The IR business was on hourly billing and an as-needed basis, not on retainer. ‘It was always very profitable,’ Collins says. ‘These fellows ran a solid business in that regard. We had just added the fifth person about two months ago. That group of employees doing $750,000 gross business with their salaries leaves a nice margin.’
Collins says the company is ‘not ruling out’ rebuilding the IR practice. ‘We have to go on the search for the right person who would be interested in joining us,’ he says. It is also considering legal options.
The new firm has set up shop in Williamsville, New York. It already has a web page, www.csirfirm.com, up and running.
Casteel says that while they had not discussed leaving, he and Schoenborn did have ‘a discussion with the firm in the past about different things we wanted to change in the agency, like the compensation structure and a number of things about how the agency ran that I don’t want to get into.
‘To say that we walked out with a portfolio of clients, I don’t know if that’s an accurate statement,’ Casteel adds, although he and Schoenborn have contacted the clients and they think that ‘most are planning to follow us’.
One question is whether Travers Collins has any legal claims against Casteel and Schoenborn. New York-based intellectual property and business lawyer Anthony Elia says there are many potential issues, including misappropriation of confidential information or trade secrets, non-compete clauses in contracts and breaches of employee fiduciary duty.
‘If [any of the clients were] under contract, there can be tortious interference,’ Elia says. ‘Affecting this kind of maneuver without running afoul of one course of action or another is a tightrope walk.’
Casteel doesn’t think the new firm faces any legal danger. ‘We had no legal agreements in place that prohibited us from leaving or soliciting our clients,’ he says. ‘We were careful not to solicit any of our clients prior to leaving. We don’t think we crossed any legal boundaries by allowing our clients to know that we planned to leave.’