As New York’s highest court considers whether defunct law firms’ estates may collect hourly fees made by other firms that take up the collapsed firm’s client matters, experts say that the decision will boil down to how heavily the judges value a client’s right to choose its lawyers, Law360.com reported today. Though the provision of the Uniform Partnership Act known as the unfinished business rule says collapsed firms are entitled to “any property, profit or benefit” a partner receives that derived from the firm after that partner leaves, courts have differed on whether that applies to profits gleaned from hourly fee matters attorneys take from their old firm to their new firm. Determining which firm rightly owns the profits of those cases will depend to some degree on how the courts view the importance of lawyer autonomy and clients’ right to choose who represents them, attorneys said. “On one side of the equation, you have lawyer mobility and the ability of a client to choose its counsel,” said Paul Labov, an Edwards Wildman Palmer LLP attorney. On the other, trustees overseeing the dissolved firm’s wind-down can argue that under the unfinished business doctrine, the profits made really belong to the firm in which the work began because the attorney used the now-defunct firm’s resources to obtain the client in the first place, he said. The New York Court of Appeals recently agreed to address how the unfinished business doctrine applies to hourly fees made by partners for work performed on matters that they took from their old firm to a new firm, as well as what defines “client matter.” Until now, that question has not made its way through the appellate courts because in most situations, the trustees and the firms that took on the dissolved firms’ casework settle.
