Bankruptcy trustees representing creditors at bust law firms are arguing over the ownership of cases emanating from these firms in a New York Court. Unfinished business claims, where creditors seek to recover profits from lawyers and their new firms for work taken by former partners following dissolution, have been particularly prevalent in recent years. The trustees of Heller Ehrman, Howrey and Dewey & LeBoeuf have filed an amicus brief urging the court to rule that profits from unfinished business can be collected by the trustees as happens in other parts of the US, including California.
Law firms opposing
Meanwhile, law firms have vigorously opposed this stance. A group of firms inclduing Kaye Scholer, Mayer Brown and Weil, Gotshal & Manges have submitted an opinion saying this would hinder client choice. The case in the New York Court of Appeals stems from an earlier hearing over Dechert’s takeover of Coudert’s Paris office. A judge from the Southern District of New York had ruled that client matters left unfinished when the firm dissolved were the property of Coudert. However, a later hearing over Thelen LLP took a different view.
ABA backs clients
The American Bar Association has backed US law firm Dechert, saying that law firms do not own legal matters and that it is the choice of the client when chosing representation. It says bankruptcy trustees should not be able to claim money from unfinished legal business which moves to other firms. An amicus brief filed by the organisation said that it was not lawyers but clients who owned their legal matters. The case will be heard on 4 June. Sources: Wall Street Journal; Americanbar.org
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