A failed law firm isn't entitled to recover profits from unfinished hourly fee cases taken to new firms, according to a federal judge ruling in California. US.District Judge Charles Breyer ruled that bankrupt law firm Heller Ehrman lacked the financial ability to continue providing legal services to its clients, thus forcing them to seek other law firms to take their cases. Judge Breyer ruled in a de novo review of a contrary ruling by a bankruptcy court judge. Heller Ehrman wanted to claw back unfinished business profits in hourly cases taken from clients to firms such as Davis, Wright, Tremaine; Orrick, Herrington & Sutcliffe; Foley & Lardner; and Jones Day. In addition to these law firms, others settled with Heller Ehrman.
Heller Ehrman was a global law firm with about 700 lawyers until its dissolution in 2008, the judge wrote in his opinion. The firm was structured as a limited liability corporation composed of eight partners, and all of them were professional corporations.The shareholders of the Heller professional corporations provided legal services to the firm's clients, and in September 2008, the Bank of America seized control of the firm's bank accounts. Sources: ABA Journal