CHICAGO—CRC Insurance Services Inc. took a big hit last week when nearly 10% of its workforce resigned to join Patrick G. Ryan's new wholesale venture, but the nation's largest wholesaler will likely survive the blow, according to market experts.

The raid—which experts say is unprecedented in its scope and scale—could be costly for Chicago-based Ryan Specialty Group, however, as both firms have filed lawsuits against each other in state courts in Illinois and Alabama. Compared with what it might have cost Ryan Specialty to acquire a firm of that size, though, it could end up being a good deal for the startup venture, they say.

Tom Curtin, CEO and founder of Birmingham, Ala.-based CRC, reacted to the employee defections in a statement last week.

“In response to the recent departure of approximately 100 employees, including brokers and staff, we are reorganizing and appropriately restaffing to ensure that the business with which we have been entrusted continues to be handled in the highest quality, most professional manner,” he said. “We will not be closing any offices or exiting any markets.”

In an earlier e-mail to “valued business partners,” Mr. Curtin said the departing staff resigned May 4 and worked in offices in Illinois, California and Pennsylvania.

He said CRC's counsel “is closely monitoring and evaluating the situation to ensure that CRC and its clients are protected.”

It was Ryan Specialty, however, that struck first as 22 departing CRC of Illinois employees and R-T Specialty of Illinois, a new unit of Ryan Specialty, filed suit against CRC in Cook County Circuit Court in Chicago May 4 seeking a declaration that restrictions in their employment agreements are unlawful and contrary to public policy.

The employees allege that CRC is preventing them from joining R-T Specialty by threatening to enforce restrictive covenants, which would bar them from working in the wholesale business for the next two years.

The complaint goes on to say the CRC employees wish to leave the wholesaler because CRC and its parent, Winston-Salem, N.C.-based BB&T Corp., have “for the past several years, embarked on a business plan that creates direct conflicts of interest between CRC's retail insurance broker clients and BB&T's own retail insurance brokers.” That business plan, they allege, has led to “significant problems” with clients.

In addition to CRC, BB&T Corp. owns Raleigh, N.C.-based BB&T Insurance Services Inc., the world's eighth-largest retail broker.

CRC has since filed a motion in circuit court in Alabama against Ed McCormack—a managing director of Ryan Specialty and former outside counsel to CRC—Ryan Specialty, Mr. Ryan and R-T Specialty, seeking a temporary restraining order and preliminary injunction.

CRC accuses the defendants of soliciting CRC employees, stealing customer relationships and causing CRC employees to violate their employment contracts. CRC says these actions resulted in “a mass exodus resignation” that was part of a concerted effort on the part of the defendants “to attempt to raid and destroy CRC's business.”

According to court papers, most of the CRC employees are working out their 30-day notice period and an injunction would maintain their “status quo” pending expedited discovery and an injunction hearing.

In the same court, CRC filed another suit against the defendants, accusing them of breach of fiduciary duty, intentional interference with contracts, unjust enrichment and conspiracy.

Both CRC and Ryan Specialty declined to comment due to the pending litigation.

Wholesale insurance market experts say the raid is unprecedented. However, CRC, which recorded written premiums of more than $2.4 billion in 2009 and had more than 1,050 employees, will likely survive, they say.

“I've seen and dealt with raids of 25 or 30 employees, but never 100 employees,” said Gary B. Eidelman, a labor attorney with Saul Ewing L.L.P. in Baltimore. “I think more significant is the percent this is of the (total workforce). “I mean if it was 100 employees and the company had 100,000 employees, it would be one thing, but the sheer number of people and geographic scope...it's somewhat remarkable.”

“I'm not aware of a raid of this magnitude; certainly wholesalers are prone, as retailers are, to poaching talent particularly when business is hard to come by as it is now, but nothing of this scale before,” said John Butler, managing director and head of investment bank Piper Jaffray & Co.'s insurance practice in New York.

“I'm sure Pat Ryan and his team put a lot of thought into how they did this, when they did it and where they did it,” he said. “It will be interesting to see whether this causes (BB&T and CRC) to pause and rethink insurance distribution. My gut tells me they're not going to retreat from the space.”

“I see it as a rather bold step and possibly a costly step” for Ryan Specialty, said Timothy J. Cunningham, a principal with OPTIS Partners L.L.C. in Chicago. There are still a lot of unknowns, not the least of which is whether the former CRC employees will be able to convince the retail brokers to move their business, he said.

“For CRC it's certainly not a happy event, but given their size and scale, they'll be able to work through it,” Mr. Cunningham said.

“I would imagine that CRC will survive,” agreed Kevin P. Donoghue, managing director of Mystic Capital Advisors Group L.L.C. in New York. However, “they've got to wonder if they're vulnerable to another hit” and the strength of their employment agreements.

It likely will turn out to be a good deal for Ryan Specialty, he noted. Assuming Ryan Specialty's attorneys are confident in their positions, “the acquisition cost of this team should be a lot less than a comparable deal,” he said. “Certainly 100 employees, that's a significant team and infrastructure that they just picked up.”