Blackmail, Stolen Clients Alleged in Estranged Sports Agents’ Dispute

Legendary sports agent Leigh Steinberg squared off against a former business associate in federal court Thursday, accusing him of stealing more than half of their firm’s clients and then trying to blackmail Steinberg to keep him from taking legal action.

Steinberg is seeking more than $40 million in damages against former associate David Dunn, who last year broke away from Steinberg, his onetime mentor, along with five other key employees.

In opening remarks to an eight-member jury in Los Angeles, Steinberg’s lawyer, Brock Gowdy, accused Dunn of violating a five-year contract and stealing confidential records concerning clients and potential recruits.

Moreover, he charged that Dunn intended to use “private and embarrassing” information about Steinberg to prevent him from bringing a lawsuit.

Gowdy cited an e-mail message purportedly written by Brian Murphy, a Dunn lieutenant, just before their sudden departure from the Newport Beach firm.

“Lee has a lot of secrets,” the message said, alleging that he drank a lot, had numerous extra-marital affairs and took medications for sexual dysfunction.

Gowdy said Dunn’s new firm, Athletes First, hired a publicist for $100,000 to disseminate that information if Steinberg tried to sue them.

Rather than succumb to intimidation, Steinberg made a “courageous decision to pursue this case,” Gowdy told the jury.

Dunn’s lawyer, Lee Hutton, denied that Dunn, Murphy or any other defector had ever tried to blackmail Steinberg. He said Murphy was simply “brainstorming” when he drafted the memo in preparation for a meeting with a lawyer.

“The mere fact that Brian Murphy thought about doing dumb things doesn’t mean they happened,” Hutton said.

“These cases are like divorces. Things get acrimonious. They get personal.”

Hutton also denied that Dunn or anyone else in the departing group took confidential records or solicited any of the firm’s clients before they quit.

At the time of his resignation, Dunn handled all of the firm’s professional football players.

Dunn, who had worked for Steinberg for a decade, decided to leave, his lawyer said, in part because his boss had become “rude” and “arrogant” and the operation was “dysfunctional.” He said many of the athlete clients were also disenchanted.

In addition, Dunn thought he had been cheated out of several million dollars’ worth of promised stock and money when Steinberg and partner Jeff Moorad merged the firm in 1999 with Assante Corp. of Canada in return for $79 million, Hutton said. Steinberg and Moorad split the proceeds.

Hutton said Dunn accepted a $2-million bonus in exchange for agreeing to stay with the firm for at least five more years. But the attorney said Dunn also received a verbal promise from Assante that he would receive another $2.5 million in stock, along with more money.

After getting a runaround for more than a year, Hutton said, Dunn decided that it was time to quit.

Steinberg and Dunn are expected to testify in the trial, along with a number of current and former football players.

For the last quarter-century, Steinberg has represented some of the biggest names in professional sports.

He was a partial inspiration for the film “Jerry Maguire,” in which Tom Cruise played the role of a slick, hotshot sports agent who has a crisis of conscience and persuades his clients to contribute portions of their salaries to charity.

Gowdy, his lawyer, estimated that Steinberg has negotiated more than $1 billion in player contracts over his career.