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Toxic partnership? Cellino steps up attacks on Barnes, in new court filings

Officially speaking, Ross M. Cellino Jr. and Stephen E. Barnes continue to be partners in charge of their Buffalo-based Cellino & Barnes personal injury law firm.

But in State Supreme Court, the two men continue to clobber away at each other — in an ugly legal dispute, now in its sixth month.

Late Friday afternoon, Cellino accused his estranged law partner of financial improprieties, including giving lucrative case assignments to Barnes' brother and girlfriend.

Cellino also asked a State Supreme Court judge to appoint a receiver to oversee a financial audit of Cellino & Barnes.

Court documents show that Cellino and his attorneys hired an accountant to look at the books of the law firm, including tax returns. The accountant, Kelly G. Besaw, said he found financial practices by Barnes that were "not proper and otherwise suspect." Besaw said there should be "a receiver appointed to oversee an accounting" of the firm.

Gregory V. Pajak, a special counsel to the firm who describes himself as a close confidante to both Cellino and Barnes, submitted an affidavit saying the atmosphere at the law firm is so toxic that the partnership should be dismantled.

"The toxicity level in Buffalo and Rochester has exploded," Pajak said. "The office stress is palpable. People are taking sides. People are at a breaking point...The tension between Ross and Steve spills over into the entire office...Nobody wants to work in a firm where the two owners are so antagonistic toward each other."

The accusations were denied by Barnes' attorney, Paul J. Cambria, who said Cellino is "trying to create a false impression" to convince a judge to dissolve the law firm. Robert J. Schreck, the firm's managing attorney and a close supporter of Barnes, disagreed with Pajak's description of the atmosphere.

"In my opinion, it's anything but toxic," Schreck said. "In terms of staff turnover, very few people leave this firm. Our people are working hard on cases for our clients every day. This law firm is on track to have its most profitable year ever. I see no reason why a receiver should be appointed."

The decisions on whether the firm should be overseen by a court-appointed receiver, and ultimately dismantled, will be made by State Supreme Court Judge Deborah A. Chimes. She is scheduled to hear legal arguments in the case on Oct. 24 — but lawyers on both sides of the dispute said that court date may be delayed.

The blistering series of documents filed by Cellino and his attorney, Terrence M. Connors, on Friday were in response to papers filed by Barnes in July, seeking to convince Chimes to keep Cellino & Barnes together.

Exposing one office secret after another, Cellino on Friday criticized Barnes over expenditures on the firm's California offices — now owned entirely by Barnes. Cellino also accused Barnes of  engaging in "favoritism" by assigning some of the firm's most profitable cases to Barnes' brother, Richard J. Barnes, and Barnes' girlfriend, Ellen Sturm.

Richard Barnes has been assigned to the firm's "biggest cases to the detriment of other attorneys," Cellino charged.

He added that Richard Barnes, who according to court papers makes a base salary of $350,000 a year, was "overpaid" by nearly $2.5 million over a period of nine years.

Richard Barnes told The Buffalo News he is "very angry" about any allegations of favorable treatment of him or Sturm.

"I got an increase in compensation years ago, when Ross was suspended for misconduct, and my duties increased tenfold. When Ross came back from his suspension, that compensation was in place, and Ross never objected," Richard Barnes said. "I have worked in the trenches as a trial attorney for 35 years. I have worked on many of the biggest cases in this firm, often paired up with other attorneys, and we had tremendous results in those cases. I just think it's unfortunate that Ross takes issue with this, considering that he makes a million dollars a month."

There were disclosures over the summer that both Cellino and Barnes make about a million dollars each month, despite their recent difficulties.

According to Pajak, the two partners have argued heatedly for years over financial matters, including Cellino's contention that the firm should give better health care and 401(K) benefits to the firm's attorneys and other employees.

Pajak said it bothered him when he learned the two partners were each making a million dollars a month, while an office manager who is a close ally of Stephen Barnes was claiming the firm "would go bankrupt if it contributed to health insurance."

In late 2015, Pajak said, there was a loud "screaming match" in the office in which Cellino and Barnes argued about a number of management issues, including Cellino's unsuccessful effort to hire one of his daughters at the firm.

No one in the law firm should have been surprised when Cellino filed his lawsuit in May seeking to dissolve the firm, Pajak said.

There have been nasty accusations filed by Barnes, too, in recent months.

In late July, Barnes accused Cellino of "reprehensible conduct," including efforts to "pirate" lawyers and cases from the existing firm with the intention of beginning a new law firm, headed solely by Cellino.

"Ross...visited numerous C&B offices in New York State...including Buffalo, Rochester, Manhattan and Long Island, and attempted to solicit C&B employees in person and poach C&B cases," Barnes charged in a July 24 statement filed with Chimes. "Within minutes of filing for dissolution, Ross began soliciting C&B employees to join a 'new firm' he contends he will form."

Barnes accused Cellino in July of "engaging in a pattern of conduct, which has caused and continues to cause catastrophic damage to C&B, its reputation and its brand." He said his estranged partner has tried to convince employees to "violate their duty of loyalty to the firm."

Cellino and Connors have denied any wrongdoing on Cellino's part.

Last month, Cellino said he wants to leave Barnes and start his own law firm. He has said he is unhappy with many of the firm's business practices, including the alleged practice of stealing clients from other local law firms. Sources close to Cellino said he wants to work with several of his sons and daughters, who are attorneys.

Cellino said dealings between him and Barnes have become so poisoned that they cannot work together effectively anymore.

Barnes' attorneys, Cambria and Gregory P. Photiadis, disagree. According to them, the law firm has continued to do excellent work for its clients – despite all the publicity about Cellino's desire to leave the firm.

Cambria claimed that continuing the partnership would be the best thing for the firm’s 200-plus employees and thousands of clients. He noted that many attorneys in the firm have filed affidavits supporting Barnes.

The News reported on Oct. 1 that – by mutual agreement between the estranged partners -- the Cellino & Barnes law firm no longer exists in California. Last month, the firm changed its name to The Barnes Firm in Los Angeles, San Diego and Oakland, where the offices are now run entirely by Barnes.

Besaw, the accountant hired by Cellino, said he found numerous instances in which money from the Buffalo-based Cellino & Barnes was improperly used to benefit the California operation, which until recently was "99.9 percent" owned by Barnes. The California operation is now 100 percent owned by Barnes.

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