Pomerantz LLP

Really Lost In Translation

Attorney: H. Adam Prussin
Pomerantz Monitor November/December 2016

TransPerfect is – or was -- a very successful, privately held company primarily engaged in language translation services. It has 3,500 full-time employees, half a billion dollars in annual revenue and 92 offices in 86 cities around the world. It maintains a network of more than 10,000 translators, editors, and proofreaders working in approximately 170 different languages.

Yet the company is tearing itself apart because its two founders can no longer get along. . . Elizabeth Elting and Philip Shawe founded TransPerfect almost 25 years ago in the dorm room they shared while attending NYU Business School. They were co-owners, co-CEOs, and the only company directors. Initially they were romantically involved, but Elting broke off their engagement in 1996 and eventually married someone else. This apparently did not sit well with Shawe, and 15 years later, when it was Shawe’s turn to get married, that didn’t sit well with  Elting either.

But the company they founded was so successful that neither wanted to walk away from it. Trying to force each other out, they began all-out warfare while the rest of management, and most of the employees, looked on in horror. Their sophomoric tantrums, retaliations, “hostage-taking” and other embarrassments have now been spelled out, in gory detail for the world to see, in a 104-page decision issued by the Delaware Chancery Court. The court, entering an unusual judgment forcing the sale of an immensely profitable company, concluded that

the state of management of the corporation has devolved into one of complete dysfunction between Shawe and Elting, resulting in irretrievable deadlocks over significant matters that are causing the business to suffer and that are threatening the business with irreparable injury, notwithstanding its profitability to date.

Most of the infighting involved petty power struggles over what otherwise would have been routine business decisions. But eventually their disputes escalated way out of control. Among a list of embarrassing episodes the court found that Shawe repeatedly burglarized Elting’s locked office, when she was away, to “dismantle” her computer hard drive so that he could read her thousands of confidential communications with her own lawyers; and that Shawe once filed a “domestic incident report” with the police, claiming that Elting had pushed him and kicked him in the ankle. According to the court, “Shawe identified Elting as his ex-fiancée, even though their engagement ended seventeen years earlier, apparently to ensure that the matter would be treated as a domestic violence incident and require Elting’s arrest.”

Before these two could completely destroy TransPerfect, the court granted Elting’s request that a custodian take it over and put it up for sale. Selling a successful company obviously runs the risk of destroying whatever it was that made it so successful for so long. In the end, though, the court determined that leaving these two to fight it out to the end was an even riskier bet.