Law firms have no property interest in hourly billed client matters, the D.C. Court of Appeals ruled on Thursday, undercutting the “unfinished business” claims of bankrupt law firm Howrey, Law.com reported. While Howrey closed its doors in 2011, the unanimous ruling by a three-judge panel has major implications for law firms that have picked up groups of lawyers—and their clients—when other law firms failed or dissolved. The judge rejected the claims made by Allan Diamond, the managing partner of Diamond McCarthy who is the chapter 7 trustee overseeing the estate of Howrey, in a case that caught the attention of major national and international law firms and the American Bar Association. Diamond had argued that the estate was owed money from law firms including Jones Day, which hired 22 former Howrey partners who brought with them client matters that originated at Howrey. In an issue of first impression, the D.C. court found that this property interest rested with the clients. When partners move between firms, it’s up to the clients to decide whether to go with them, the court found. Agreeing to Diamond’s argument would not only affect how clients choose their representation, but how lawyers could move from firm to firm, the court added.
