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The Gay Flannel Suit

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Sullivan & Cromwell's headquarters at 125 Broad Street.  

What did or didn’t happen on that October night in 2005, and in the weeks and months that followed is, naturally, the heart of Charney v. Sullivan & Cromwell. According to one source, Krautheimer is now telling people that Charney’s version of events never happened—though he’s stopping short of denying that he might have said something crude; he just doesn’t remember. Another knowledgeable source says that Grinberg, who allegedly witnessed both comments, didn’t interpret either insult as homophobic. But Charney is unpersuaded. “The tone, the way he did it,” Charney says. “It’s one of those things you never forget.”

A few weeks later, Charney began to suspect that Krautheimer’s alleged bias didn’t exist in a vacuum. At his semi-annual review, he says, he was told by Jim Morphy, managing partner of the M&A group, that he was “one of the best associates” at the firm, that his work was “brilliant” and his efforts “Herculean.” But Morphy also told him several partners were complaining about his being too close to Grinberg: They were “walking the halls together” and “eating lunch together.” This, Charney was told, “needs to stop.” Charney says the subtext was obvious. “I don’t even know what that means,” he says, “other than a homophobic comment.”

There are plenty of others, however, who say that Morphy might have just been trying to give Charney a little friendly advice. For a mid-level associate to work in lockstep with just one older associate, they say, isn’t the way to win friends and influence people at Sullivan & Cromwell. “An ambitious associate wants to work with a lot of people to propel their career,” says one source. “There were circumstances where one would be assigned and two would show up. It’s not behavior that’s even close to typical. We could never have figured out what his abilities were this way.”

Charney was getting a warning: He wasn’t playing the game the right way; he’d better make some adjustments if he wanted to stay on partner track. But Charney had no intention of distancing himself from Grinberg. To do so, he thought, would be tantamount to an admission of guilt. Instead, he defended himself in the review but decided to keep his mouth shut about the perceived homophobia. He had nothing to connect the dots between the lukewarm review and the Krautheimer incidents.

But over the next few months, Charney alleges in his lawsuit, the discrimination became more explicit: An associate named Daniel Serota told him in December 2005 that both Krautheimer and a partner named Alexandra Korry were “disgusted” by Grinberg and Charney and wanted to punish them by “putting the screws” to them. Korry is a powerhouse on the 28th floor—senior to Krautheimer in the M&A department—and, as with Krautheimer, the tales about her mistreatment of associates are legion. Even her devotees admit she is brutal. “She’s very profane,” says one lawyer. “I know plenty of good associates who had issues with her and ended up leaving the firm.” On April 28, Charney alleges, Serota told him Korry believed Charney and Grinberg were in an “unnatural relationship”; she had even started pumping Serota for personal details. Did “unnatural” mean “gay”? Charney asked. He says Serota told him Korry thought Charney and Grinberg were having an affair.

Serota’s new tip, Charney says, was the proof he needed. On May 1, he went to David Harms, co–managing partner of general practice, to lodge a formal in-house complaint of sexual-orientation discrimination. He says he was in tears, not least of all because it forced him to talk about being gay with one of his bosses for the first time. “I don’t want my personal life to be an issue in this building,” he says he told Harms. “I don’t want anyone retaliating against me for coming to you, and I don’t want to have all of these comments and innuendo.”

Sources sympathetic to the firm believe that the messages that came through Serota were wildly misinterpreted. “If she said it’s unnatural working together, the answer is, it was highly unusual,” one source suggests. “If you think you’re being persecuted, you can take words out of context.” But Serota apparently wasn’t finished playing messenger, according to Charney: The day after he complained, he heard from Serota that Korry had e-mailed Harms, calling Charney “a liar” and demanding “all liars should be fired.” When Charney asked Serota to back up his story, he says, Serota refused because Korry terrified him. “There’s no such thing as confidence at S&C,” Charney says Serota told him. Korry would punish him for coming forward. Charney says the two haven’t spoken since. (Serota wouldn’t comment for this story.)


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