CHARLESTON – A Texas law firm involved in a national pelvic mesh lawsuit being heard in Charleston is at the heart of a lawsuit regarding the firm’s business dealings.
Amir Shenaq filed a lawsuit Sept. 29 against AkinMears partners Truett Akin IV and Michelle Mears last month in Harris County District Court in Texas. Shenaq, the firm’s former chief business development officer, contends AkinMears fired him to avoid paying him several millions of dollars for 14,000 medical mesh lawsuits he acquired for the firm.
In his complaint, Shenaq describes AkinMears as a “mass tort warehouse.” He also claims AkinMears is not run like a traditional law firm and is more or less like a “glorified claims processing center,” spending large sums of money on thousands of television advertisements to drum up as many faceless clients as possible.
Some of the potential clients the firm advertises for include mesothelioma victims, and individuals injured by medical products, such as transvaginal mesh or prescription drugs, like Lipitor for example.
Two days after Shenaq’s suit was filed, the firm moved to have the petition sealed. The judge sealed the suit, citing irreparable harm.
“Rather than simply alleging facts sufficient to meet the notice pleading standard, Shenaq’s original petition discloses … trade secret information about AkinMears, its business partners and clients,” the motion states. “By doing so, Shenaq has breached an enforceable confidentiality agreement.
“This disclosure was certainly no accident and serves no purpose other than to financially harm AkinMears and those with whom it does business.”
AkinMears is one of the firms involved in seven related Multi District Litigation cases being heard in Charleston by U.S. District Judge Joseph Goodwin. All of the MDLs focus on the use of transvaginal surgical mesh to treat pelvic organ prolapse and stress urinary incontinence.
In the seven MDLs, there are more than 80,000 cases currently pending against seven different manufacturers of pelvic mesh. The next major event currently on the MDL schedule is a design defect trial against Ethicon in December.
In the Texas case against AkinMears, court records show Shenaq disclosed:
• The source of AkinMears’ financing, Virage Capital Management and Gerchen Keller Capital;
• The amounts of financing obtained, around $93 million from GKC;
• Settlement values of cases;
• Borrowing costs;
• Actual and potential fees received;
• Commissions paid; and
• Confidential deal terms related to the purchase of a transvaginal mesh docket, which, according to the petition, boasted around 14,000 cases potentially worth up to $200 million.
In its motion, AkinMears argued Shenaq’s disclosure would enable competitors to copy its business model, which includes spending large sums of money on thousands of television advertisements to drum up as many faceless clients as possible, according to the petition.
Court records show Judge Randy Wilson, 157th Judicial District, signed of an agreed temporary sealing order on Oct. 7, which said both parties consented to the sealing order pursuant to Rule 76A of the Texas Civil Code. A hearing on a more permanent sealing has been slated for Nov. 6.
The rule stated that a document may be sealed if the substantial interest clearly outweighs presumption of openness and any probable adverse effect that sealing will have upon the general public health or safety.
According to Shenaq’s suit, Akin was in need of cash to finance his operation and began to court his new next-door neighbor, Shenaq, an investment banker who had moved to Houston in June 2014 to work at Wells Fargo.
Akin allegedly told Shenaq the firm’s current lender, Virage Capital Management, was unreliable and he had a desire to hire someone who could guide the firm’s capital raising efforts.
Shenaq later learned that the firm owed Virage tens of millions of dollars and the lender was no longer willing to loan the firm any more money because of the significant debt, the suit states.
“Desperate times require desperate measures, and Shenaq further discovered that in its search for capital, AkinMears ‘gave’ various mesothelioma cases it had previously signed up to its ‘partner’ (Akin’s term) Harris Junell,” the suit states.
“Junell then allegedly represented to Virage that the cases were actually his, used the claims to secure a $4 million loan from Virage in his name, and then funneled the money back to AkinMears.”
Junell is not listed as an AkinMears attorney on the firm’s website and, according to the suit, he leases office space from Akin.
As discussions between Akin and Shenaq progressed, Akin conveyed that he wanted to aggressively grow his business, the suit states.
Rather than buying non-stop advertisements to acquire random clients, Akin told Shenaq he wanted to start buying claims that had previously been accumulated by other tort lawyers, with a goal of closing on $100 million worth of cases in 2015 alone.
On March 15, the parties executed an employment agreement and a relationship began that lasted less than five months, the suit states.
Shenaq, now the firm’s chief business development officer, was tasked with the goal of originating $20 million in capital from new sources or $40 million from all sources.
Not long after starting, Shenaq began discussions with the Chicago-based Gerchen Keller Capital, one of the largest litigation funders in the world.
A deal was closed on April 24, in which GKC wired $25 million to Virage Capital Management to pay off a portion of the firm’s debt and another $25 million to AkinMear’s bank account.
Shenaq was paid around $1.4 million up front and Akin assured he would also be paid another $1 million in 18 months.
Shenaq then, at the suggestion of Junell, reached out to a Dallas trial lawyer, Mazin Sbaiti, who was affiliated with a group of four law firms known as Alpha Law that had a combined docket of nearly 14,000 transvaginal mesh cases.
GKC, which had just provided the firm with $50 million a month prior, informed Shenaq that it was willing to advance AkinMears an additional $50 million to purchase the mesh cases, which it did, fronting the firm $43 million to make the transaction possible.
Shenaq’s calculations showed AkinMears receiving up to $200 million in attorney’s fees if the firm purchased the cases. Through Shenaq’s efforts, Alpha Law sold the cases to the firm for $45 million in mid July.
On July 21, Shenaq had also closed on the separate purchase of 160 mesh cases gathered by Fletch Trammell, a Houston trial lawyer who had contacted Shenaq in late April.
Before he left on a vacation in late July, Shenaq sent an email to Akin outlining what the firm owed him for all his efforts the past several months, which was more than $4.2 million.
While on vacation, AkinMears’ CFO Brian Hampton sent Shenaq an email essentially saying he negotiated a bad deal. Upon returning home, Akin launched a “full-on assault” against Shenaq, the suit alleges.
“Shenaq had helped take AkinMears to the big time,” the suit states. “And AkinMears was about to take Shenaq for a ride.”
During a July 31 meeting, Akin allegedly began bullying Shenaq, screaming at him in an attempt to intimidate the soon-to-be former employee who just landed the firm potentially $200 million in profit from the new mesh suits.
Akin argued that the Alpha Law deal originated with Junell, allegedly taking a position that would save the firm from paying Shenaq a $3 million origination fee.
“In reality, Junell did no more than provide Shenaq with Mazin Sbaiti’s name, which he didn’t even know how to spell,” the suit states. “In fact, back in April, it was Junell who suggested that Shenaq reach out to Sbaiti and see what he had in terms of cases because neither he nor Akin had any sort of a relationship with him.”
Shenaq then alleges Akin “nonsensically” asserted that no capital had actually been raised in conjunction with the Alpha Law and Trammell transactions, because, in his words, the firm had acquired cases, not capital.
“It takes a very clever lawyer – or something – to argue with a straight face that GKC’s transfer of over $43 million to the firm’s account at the Post Oak Bank was not an acquisition of capital. But that’s what he said.”
At the conclusion of the Friday “ambush,” Akin told Shenaq to “think about it over the weekend,” saying they would resume talks on Monday, Aug. 3, the suit states.
Over the weekend, Shenaq’s wife attempted to fill multiple prescriptions for their infant twins, who were ill. She was surprised to learn that their health insurance, which they had through the firm, was declined and longer in effect as of July 31.
Shenaq soon learned he had been terminated the day of the Friday meeting.
“In reality, there wasn’t anything at all for Shenaq to ‘think about’ over the weekend,” the suit states. “Akin had done all the thinking for both of them.”
Shenaq maintains the firm then began to craft a reason for his termination in order to avoid paying him.
Even though Shenaq had met all his performance milestones under his contract, the firm argued he failed to honor a confidentiality and nondisclosure agreement, specifically stating that he was terminated for “breaches of fiduciary duty, self-dealing and conflicts of interest, thus extinguishing any compensation, back-end interest, or fees allegedly owed,” the suit states.
“One would think that the firm and its counsel would bother to explain exactly what Shenaq had done which brought about all this insubordination, self dealing, etc.,” the suit states. “One would think. But they didn’t. And the reason they didn’t is because no such thing existed.”
Shenaq admits that he did consummate deals on behalf of Junell and another individual named Scott Freeman with GKC, but both deals were Akin’s idea and he was merely doing what his boss had instructed him to do.
“AkinMears’ after-the-fact story is utter pretext, and its revisionist history would be comical if it wasn’t so sinister,” the suit states. “Akin and Mears didn’t pay Shenaq for one reason and one reason only: They didn’t pay him because they didn’t feel like it.”
The suit goes on to state that perhaps it “shouldn’t be surprising” that AkinMears would have “no qualms about stiffing” Shenaq, since the firm enriches itself through a business model that includes: borrowing as much money as possible; purchasing TV ads to land as many faceless clients as possible; and waiting on real lawyers to establish liability against somebody for something.
“Amir Shenaq has learned a life lesson the hard way,” the suit states. “And he respectfully brings this action so that Akin and Mears can now learn one of their own.”
Shenaq is suing for actual, general and special damages, plus attorney’s fees.
Editor's Note: David Yates of The Southeast Texas Record contributed to this report.