TAMPA – A group of financial advisors, who together managed about $285 million in client assets, is asking a federal court to compel a Florida law firm to comply with an arbitral subpoena.
Petitioners LPL Financial LLC, Jared Bryce Roskelley, Kyle Lee Robertson, and Matthew Joseph Tinyo filed their lawsuit in U.S. District Court for the Middle District of Florida, Tampa Division. The respondent is Shumaker Loop & Kendrick LLP.
Shumaker is a full-service business law and legislative affairs firm with 13 offices across Florida, Ohio, North Carolina, South Carolina, Minnesota, and Washington D.C.
“Shumaker is refusing to comply with Subpoena and there is no legitimate basis for Shumaker’s refusal,” the 27-page petition states.
According to the filing, in October 2023, the advisors transitioned from Raymond James to Ameriprise.
As is standard industry practice, Ameriprise retained outside counsel to represent the advisors in connection with that transition.
The recruiting firm typically connects advisors with outside counsel to provide unconflicted legal advice on resignation procedures, restrictive covenant compliance, and client transition protocols.
The outside counsel that Ameriprise retained to represent the advisors on their transition was Shumaker, the petitioners claim.
According to the petition, Shumaker counseled the advisors on two transition issues that are central to the arbitration.
First, Shumaker advised them on how to leave Raymond James and join Ameriprise without incurring liability – specifically, by invoking the Protocol for Broker Recruiting.
The Broker Protocol is a covenant among securities-industry participants not to sue departing advisors who follow a specific procedure: the advisor provides a resignation letter and a list of clients to a supervisor at the prior firm, and may retain only that same list, without account numbers, at the new firm.
On Shumaker’s advice, the advisors claim they invoked the Broker Protocol when leaving Raymond James.
They claim their resignation letters to Raymond James identified Michael S. Taaffe of Shumaker as their counsel and informed recipients to contact him in the event of any dispute over their departure under the Broker Protocol.
The advisors then invoked the Broker Protocol when leaving Ameriprise for LPL – which is one of the advisors’ defenses to Ameriprise’s claims in the arbitration.
Second, the petitioners allege Shumaker counseled the advisors on their rights to maintain client information in cloud-based third-party databases, which were not held on either Raymond James’ or Ameriprise’s systems.
“Shumaker negotiated agreements with Ameriprise that expressly permitted the Advisors to continue maintaining client information in those databases,” the petition states.
According to the filing, the subpoena was issued by the arbitration panel in an action brought by Ameriprise against the advisors and LPL.
The subpoena seeks documents and communications relating to Shumaker’s conflicted representation of Ameriprise in the arbitration and of the advisors.
“Shumaker took the engagement without addressing the evident conflict,” the petition states. “It did not screen the lawyers from Shumaker who had previously represented the Advisors.
“To the contrary, the lead attorney for Ameriprise on the Arbitration was the same lawyer listed as the Advisors’ counsel on the resignation letters that the Advisors sent to their former broker-dealer when they joined Ameriprise.”
The petitioners argue that neither Shumaker nor Ameriprise sought a conflict waiver from the advisors. They claim they raised no conflict issue at all.
“Only after the Advisors discovered that their prior counsel was the law firm prosecuting these claims and demanded Shumaker’s withdrawal did Shumaker step aside as counsel in the Arbitration,” the filing states.
“Ameriprise’s hire of conflicted counsel has become a central issue in the Arbitration. The Panel therefore issued the Subpoena to Shumaker to uncover the full scope of its conflicted representation.”
The panel granted the subpoena over Ameriprise’s objections, the petitioners claim.
“The Panel expressly found that ‘the materials and testimony being sought were both relevant and material to issues that have been raised in this arbitration’ and ordered compliance with the Subpoena,” the petition states. “Shumaker, however, refuses to comply.”
LPL and the advisors contend the petition is time-sensitive in that a ruling on the petition is needed before the arbitration hearing Nov. 8.
They ask the federal court to enter an order compelling Shumaker to comply with the subpoena by having a representative appear at the Nov. 6 hearing in Sarasota, Florida, and bring with them all documents “responsive to the subpoena.”
McGuireWoods LLP in Jacksonville, Florida, and Weiss Brown in Scottsdale, Arizona, are representing the petitioners in the action.
