New York’s highest court yesterday weighed whether law firms that hire partners from dissolving firms should be obligated to help repay the dead firm’s creditors by turning over profits earned on work the new partners bring with them, the Wall Street Journal reported today. Law firm bankruptcy administrators have long argued that the so-called unfinished business doctrine makes profits from assignments that partners take to new firms a legitimate asset of the defunct firm, which can then be used to pay creditors. But partners at the nation’s top law firms say that client business isn’t a commodity that can be bought and sold and that they shouldn’t be punished for sticking with clients when a firm goes under. The issue came before the New York Court of Appeals after dueling appeals in federal court — stemming from the bankruptcies of Thelen LLP and Coudert Brothers LLP — left case law in New York unclear. Facing the two appeals, the Second U.S. Circuit Court of Appeals asked the New York court to look at the issue from a state law perspective.
