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Aon poaching suit against JLT alleges millions in losses

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Aon poaching suit against JLT alleges millions in losses

Aon P.L.C. sued units of Jardine Lloyd Thompson Group P.L.C. and seven former Aon employees, including JLT Specialty Insurance Services Inc. CEO Michael Rice, on Wednesday accusing them of breaching their noncompete agreements that have cost Aon 55 employees and millions of dollars in business.

The suit, which also names JLT Re (North America) Inc., comes after two years of aggressive recruitment and expansion by JLT.

The suit, filed Wednesday in Cook County Circuit Court in Illinois, also accuses JLT of inducing the former Aon employees to violate their noncompete agreements concerning “certain stock award agreements with plaintiffs” for two years after leaving Aon.

Aon accuses the defendants of a “coordinated effort” with “certain other former Aon and current JLT employees” to raid Aon clients and employees. Aon said it had lost 55 employees since August 2014 and “millions of dollars of business” to JLT.

The suit asks the court to award unspecified compensatory damages; render a permanent injunction that enjoins the defendants from direct involvement with any Aon competitor or client for two years; and enjoin JLT from inducing any current or former Aon employee to breach his or her obligations to Aon.

It also seeks costs and legal fees.

The individual defendants named in the suit are:

• Colin Daly, a former national practice leader with Aon; Patrick Donnelly, a former broker leader with Aon;

• Jim Gaubert, a former senior property broker and team leader at Aon;

• Paul Graziano, a former producer with Aon;

• Bradley McDonald, a former Aon broker leader;

• Michael Rice, a former business line executive with Aon; and

• Steve Shappell, a former national practice leader with Aon.

Aon said that all but one of the defendants left Aon in 2014 and “immediately opened” a JLT office in Denver.

Mr. Rice became CEO of JLT Specialty USA. Mr. Donnelly is now president and deputy CEO of JLT Specialty USA; Mr. Gaubert is a senior vice president at JLT Specialty USA's entertainment and hospitality practice; Mr. Graziano is executive vice president and chief business development officer at JLT Specialty USA; Mr. McDonald is a senior vice president in JLT's financial lines group; Mr. Shappell is JLT Specialty USA's chief legal officer.

The suit also said that “over the last two years, JLT has engaged in multiple raids on Aon's officers, employees and clients,” which “had the purpose and effect of damaging Aon' s business and inducing Aon officers and employees to violate their contracts with Aon by breaching covenants that restrict those employees from competing with Aon, taking Aon's clients, and soliciting Aon's employees to leave Aon.”

Among clients Aon said it has lost to JLT are:

• Denver-based restaurant chain Chipotle Mexican Grill Inc.;

• Sunnyvale, California-based data storage and system provider NetApp Inc.;

• Oakland, California-based developer Catellus Acquisition Co. L.L.C.;

• San Antonio-based cloud services provider Rackspace Inc.; and

• Denver-based social marketing and communications provider Wayin Inc.

JLT re-entered the U.S. retail market in 2014, having divested its previous U.S. retail operations eight years earlier. Last year, Dominic Burke, JLT's group CEO said in an interview with Business Insurance: “We've arrived on the shores of the United States. We've burnt our boats, and we are not going back.”

In its latest U.S. expansion efforts, the brokerage has focused on specialty business and has aggressively recruited from rival brokerages. Aon in particular has lost several senior brokers and brokerage teams to JLT.

Most recently, it took on Brad Kotlewski, a former Aon managing director, who joined JLT's financial lines group, and Andrew Hersh, a former Aon senior vice president, who joined JLT to work on risk financing and risk consulting.

Previously, JLT recruited Aon environmental risk brokers, energy specialists, cyber risk brokers and financial services executives.

To see more stories on brokers JLT has recruited from rival brokers, click here.

Poaching suits are not uncommon in the brokerage world. For example, Willis Ltd., a unit of what is now Willis Towers Watson, sued JLT last year in a London court for luring employees of its fine art, jewelry and specie division as Willis sought to sell the division and other operations to Miller Insurance Services L.L.P.

Aon has also sued Alliant Insurance Services Inc. of Newport Beach, California, for allegedly poaching key members of it construction practice.

JLT declined immediate comment on the suit.

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