Sports Agent Seeks Bankruptcy Protection

Faced with a $4.66-million jury verdict and millions more in attorney fees, Newport Beach sports agent David Dunn has filed for bankruptcy protection.

Dunn, who runs Athletes First and is considered one of pro football’s most effective contract negotiators, filed for Chapter 11 protection Monday because he intends to appeal the jury verdict but doesn’t have the assets to secure the bond, company attorney Mark Humenik said.

“If you’re in Chapter 11 bankruptcy protection, you do not have to post a bond in order to file an appeal,” Humenik said, adding that it is still undecided whether Athletes First also will file for bankruptcy protection.

Dunn filed his petition in U.S. Bankruptcy Court in Santa Ana.

The filing is the latest twist in a bitter lawsuit pitting Dunn against former employer Steinberg & Morad, founded by super sports agent Leigh Steinberg, whose career helped inspire the movie “Jerry Maguire.”

Steinberg’s firm accused Dunn of leading an office cabal that plundered the firm’s computer records and stole away a majority of its football player clients.

A Los Angeles federal court jury in November sided with Steinberg’s firm, awarding it nearly $45 million in damages. The jury assessed $4.66 million in compensatory and punitive damages against Dunn and $40 million in similar damages against his firm.

Monday, U.S. District Judge Ronald S.W. Lew granted a motion by Steinberg’s firm to make Dunn pay an additional $2.7 million of his former employer’s attorney fees. That comes on top of nearly $1 million that Dunn owes his own lawyers, court records show. After the decision, Dunn filed for bankruptcy protection.

Despite the legal cloud, Dunn’s agency has been able to recruit clients among this year’s top college football players, including USC quarterback and Heisman Trophy winner Carson Palmer.

Dunn faces possible sanctions from the National Football League Players Assn., which could suspend his agent’s license based on allegations that arose during the trial. The NFLPA certifies and regulates contract advisors working on behalf of the players.

Steinberg declined to comment Tuesday.