The American Bar Association is the latest group to offer its opinion in litigation aimed at resolving whether law firms that go bust in New York can continue to reap profits on hourly assignments that originated at the firm, the Wall Street Journal reported today. Bankruptcy administrators insist that such assignments are the property of a law firm’s estate and can be monetized, while most of the law firms that inherited the work argue that they shouldn’t owe the bankruptcy estates a penny. In a brief filed with the New York Court of Appeals, the ABA sided with its law firm constituency, arguing that the dissolution of a firm should not impact the long-standing principle “that the client has the right to control its relationship with its attorney, and to select and retain or change counsel at any time.” The filing comes in an appeal stemming from the bankruptcy of Coudert Brothers LLP, a law firm that sought chapter 11 protection in 2006 and is still in the process of paying back creditors. A May 2012 decision by a New York federal district court judge gave Coudert clearance to collect proceeds from unfinished business. Months later, the same court issued a conflicting decision related to the Thelen LLP bankruptcy, and both cases landed before the U.S. Court of Appeals for the Second Circuit.
