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Defense Digest

Message From the Executive Committee

Defense Digest, Vol. 27, No. 4, September 2021

September 1, 2021

by G. Mark Thompson

Have you experienced a greater appreciation lately for the things you used to take for granted? I have. Downing a cup of coffee and leaving the house for work feels better than ever. I’m happy knowing we are all back in the office and spurred by how wonderful that feels. This past year helped me realize how much the people of Marshall Dennehey mean to me and how much better I am around them. I look forward each day to the boost I get from the folks I’m fortunate to work alongside.

Our sense of community, and all its positive energy, is back. Across the firm, hallways are louder as attorneys, paralegals, and support staff linger to talk, laugh and check in on one another. We have gone back to holding doors and sharing elevators. And in our kitchens, baked goods, pizza and all kinds of unhealthy treats have reappeared. It’s marvelous!

There really is an antidote for much of the frustration and fatigue we have come to experience in the past year. Just look up. Look up and take stock of all we have to be grateful for. Do that and you’ll find it impossible to be grateful and discouraged at the same time.

When I look around I smile, thinking of the 17 new attorneys we recently onboarded at Marshall Dennehey. I told them during an in-person orientation that they had chosen an exceptional firm that does exceptional things. I meant and declared it with conviction because I know it to be true. I am both grateful to say that and for the talented lawyers I was able to say it to.

Whether you are a client or an employee of Marshall Dennehey, I want you to feel good about what this firm stands for and know you are part of something special.

You enable us, when others falter, to step forward and lead. And we are grateful. It is because of you we press on, always striving to do the right thing, regardless of circumstance. And it is why, I believe, we are blessed to be an exceptional firm.

Think about this, last year Marshall Dennehey was able to accomplish what 95% of the Am Law 200 could not.

This prestigious group, among which we are proud to be ranked, represent the 200 largest, most successful law firms in the country. The best of the best. And yet last year, when faced with adversity, they flinched.

Ninety-five percent of these firms opted to lay off or cut the pay of their employees. The majority did both.

I am grateful we took a different path.

At Marshall Dennehey, we determined to take care of each other. We committed to keeping our entire 1,200-member family together, safe, fully employed and fully paid. It is a commitment from which we have never wavered. And it’s something we achieved without PPP, stimulus checks or bank loans.

We did it through hard work, shared sacrifice and a healthy dose of providence. Facing an uncertain future, our shareholders put the pursuit of good before the pursuit of profit. Everyone participating in our 401(K) plan gave up their employer match. We deferred employer-paid social security taxes and we saved on expenses. And together we did what our peers did not. We avoided layoffs, pay cuts, and the hardship those measures would have imposed on our employees and their families. We chose character over compromise. We did what was right and emerged grateful and intact from the largest threat to ever confront our 59-year-old firm.

Why do I think we’re exceptional? Why am I grateful to work at Marshall Dennehey? Because putting us ahead of me has always been part of our culture. Instilled by our founders, it’s a guiding principle that provides clarity, calmness and strength. And our resolve to follow that tenet makes all the difference.

Putting us ahead of me explains our distinct pay structure. Marshall Dennehey doesn’t compensate its lawyers based on origination. A recent ALM Intelligence survey found that 83% of law firms still do. This is a tired but pervasive practice in which the lawyer who first touched (or originated) the client receives credit, often in perpetuity, for all subsequent assignments. He or she might then share credit with the lawyer who grows the account and/or the attorney who performs most of the client’s legal work. The lawyers are then paid on the basis of these “originations.”

These systems encourage hoarding. They create incentives and shape behaviors that are me-focused and counter to most clients’ interest. Lawyers end up disregarding venue, subject matter expertise or experience, all in an effort to retain a file and preserve origination credit.

At Marshall Dennehey, we’d rather focus on client-oriented performance. Spurning origination credit allows us to easily assign the right matter to the right lawyer in the right location. Our lawyers are also able to specialize in distinct areas of law such as ride sharing, employment, insurance coverage or appellate advocacy. By contrast, where compensation is based on origination, lawyers tend to juggle multiple disciplines in an effort to keep matters under their own name.

Our unique approach puts our clients’ interest first but also fosters sharing, team work and trust among our lawyers, putting us ahead of me and strengthening the firm.

This past year, as the world staggered from order to disorder, it was putting us ahead of me that galvanized and drove our firm to recalibrate, remain ahead of the curve and continue providing clients superior legal services. I’m still in awe of what our people, working together, were able to accomplish.

The firm’s IT department scaled our remote work capacity almost overnight to serve more than 1,100 employees working from home—including nearly 500 administrative staff who had never before worked remotely. Our finance department got immediately to work bringing innovation, digitization and greater efficiency to invoicing while our lawyers learned to market, litigate and resolve cases virtually, successfully and as never before. In fact, it was Marshall Dennehey attorneys who led the way when first virtual and then socially distanced, in-person civil jury trials resumed.

Here in Philadelphia, putting us ahead of me meant a legal aid clinic, founded and continuously staffed by our firm since 2015, pushed through a pandemic and continued operating virtually with a dedicated team of volunteer attorneys spanning associates to senior management.

Putting us ahead of me accounts for why Marshall Dennehey was one of only a few firms in the country to honor its commitment to law students and run a fully intact, multi-state Summer Associate program last year, something it’s doing again this summer.

Putting us ahead of me explains why we continued to provide opportunity when other firms were laying people off, onboarding 67 new attorneys in the past year and a half.

And when asked what we were doing returning to the office while others sat at home—putting us ahead of me - became our proud reply.

It is something we did with a sense of urgency, balancing risk with obligation to our employees, our clients and our future. Working together, we brought back 20 offices across six different states safely, methodically and without any incidence of outbreak. These offices have now been up and running for months.

Which brings me back to where I started—looking up and seeing the value of community. To say it’s important is a gross understatement. To Marshall Dennehey, community is everything. It is what enlightens and protects us as an organization. It is what holds us accountable, teaches, refines, motivates and encourages us. It is in community that we are informed, that we collaborate, improve as a law firm and better serve our clients.

It’s a notion we have always grasped and one that’s catching on. It was reported earlier this month that Morgan Stanley’s CLO, Eric Gross, recently delivered a message to outside counsel, declaring the legal industry’s apprenticeship model vital to the development of young lawyers. He noted “individual lawyers learn and perform best and collectively deliver the best results when they are together -actually together.” He went on to opine that “...firms that return to the office will have a significant performance advantage over those that do not, and will see that advantage reflected in their client service and ability to deliver successful outcomes...”

We agree and have always known we’re better together.

That being said, we also see the value of flexibility and are trying to strike the right balance. Long before the pandemic, Marshall Dennehey had developed and implemented a remote work program for attorneys. Inspired by its success and our experience last year, we have now expanded the program to include paralegals and administrative staff. At present, we are operating under a hybrid model and seeking the right mix. Our attorneys and paralegals are required to come into the office at least three days a week and our administrative staff four. Everyone can otherwise work remotely. It’s a popular arrangement that emphasizes community while still affording some flexibility.

It appears to be working well.

Which can also be said of our firm.

I hope after reading this you have a better understanding of what we stand for, what makes Marshall Dennehey special and why I am so grateful to be its CEO. Our story is a powerful proof of concept: no matter what we face, we can do the right thing and still succeed.

Firm Highlights

Thought Leadership

The Search-Incident-to-Arrest Doctrine Does Not License Strip Searches

In Beatty v. Gardner, No. 25-2860 (3d Cir. Sept. 16, 2026), Kyle Beatty sued police officers Clinton Gardner and Calvin Irvin under 42 U.S.C. § 1983 after they stopped, arrested, and searched him three times during a drug investigation in Williamsport, Pennsylvania. The officers initially smelled marijuana coming from the car in which Beatty was sitting and observed marijuana residue, giving them probable cause to arrest him. Beatty consented to the first pat-down, and the second search was conducted incident to his lawful arrest; neither search uncovered weapons or contraband. The officers then transported Beatty to the police station solely to strip-search him, but the strip search also revealed nothing. The District Court granted the officers summary judgment, concluding that the initial stop, arrest, and first two searches were reasonable and that qualified immunity protected the officers from liability for the strip search. The Third Circuit affirmed, but held that the strip search itself violated the Fourth Amendment. The court concluded that the search-incident-to-arrest doctrine does not automatically permit officers to strip-search an arrestee outside the jail or prison setting. Because strip searches are highly intrusive and the traditional justifications for searches incident to arrest (officer safety and preservation of evidence) did not justify the search of Beatty, the officers generally needed either the arrestee’s consent, exigent circumstances, or a warrant supported by probable cause to believe that a search beneath the clothing would reveal weapons, contraband, or evidence. Here, the officers had none of those justifications. Nevertheless, the court held that qualified immunity barred damages liability because, at the time of the search, the right against a warrantless strip search of an arrestee outside the institutional setting was not clearly established by Supreme Court or Third Circuit precedent. The court likewise upheld qualified immunity on Beatty’s First Amendment retaliation claim and affirmed summary judgment for the officers.

Thought Leadership

Two Tracks, No Preclusion: Ohio Supreme Court Preserves Separate Damages Claims After Chapter 2506 Appeals

The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

Thought Leadership

Pennsylvania Supreme Court to Review Whether Legal Malpractice Claims May Be Recast as Breach of Contract Claims

The Pennsylvania Supreme Court recently granted allowance of appeal to consider whether a plaintiff may pursue a breach of contract claim against an attorney based on allegations that the attorney failed to provide competent legal services. The issue is significant in professional liability litigation because it concerns whether a plaintiff may avoid the statute of limitations applicable to professional negligence claims by characterizing the alleged misconduct as a breach of contract. Antoine Poteat retained attorneys Gary Asteak and Nino V. Tinari to represent him in a criminal matter. After his conviction was subsequently overturned through a Post Conviction Relief Act proceeding, Poteat filed suit against his former attorneys alleging that they breached their retainer agreements by failing to provide competent legal services. The attorneys argued that the claims sounded in professional negligence, rather than breach of contract, and were therefore time-barred. The trial court dismissed Poteat’s complaint, but the Superior Court, sitting en banc, reversed. The Superior Court held that the gist-of-the-action doctrine did not bar Poteat’s breach of contract claim because the alleged failure to provide competent legal services could constitute a breach of the parties’ agreement. The Court further held that a legal-services agreement contains an implied duty requiring an attorney to provide competent legal services, even where the agreement does not contain an express provision requiring such services. The Pennsylvania Supreme Court granted review in July 2026 and will consider whether the Superior Court’s decision conflicts with Pennsylvania precedent distinguishing contract and tort claims, including Bruno v. Erie Insurance Co. The Supreme Court will also address whether a plaintiff may maintain a breach of contract claim based on an implied duty to provide competent legal services without identifying a specific contractual provision that was breached. The Supreme Court’s decision could have significant implications for professional liability litigation in Pennsylvania, particularly where plaintiffs seek to characterize claims arising from alleged professional negligence as contractual claims.