Bankruptcy

Risky Business or when not to add a lateral hire from a dissolving law firm

By mcbride

Ok, here is the summary:  Coudert Brothers was a major storied law firm, based in New York.  It dissolved in 2006, having started in 1853.  Predictably, lawyers left that firm and joined other firms.  Now the remains of Coudert is in bankruptcy and the Trustee has sued some of the firms where the Coudert partners landed for recovery of millions of dollars which he says belongs to the Coudert bankruptcy estate. 

“Southern District Judge Victor Marrero has blocked a bid by 10 large firms seeking an interlocutory appeal of adversary proceedings initiated by the administrator for the bankruptcy estate of defunct international law firm Coudert Brothers.

In a 13-page decision on Monday, Judge Marrero denied motions to dismiss by 10 firms: Akin Gump Strauss Hauer & Feld; Arent Fox; Dechert; DLA Piper; Dorsey & Whitney; Duane Morris; Jones Day; K&L Gates; Morrison & Foerster; and Sheppard Mullin Richter & Hampton. The firms are all on The American Lawyer’s Am Law 200 list.

At issue is whether or not partners that left Coudert for those firms should, under the “unfinished business” doctrine, return millions of dollars to the bankruptcy estate for work performed at their new firms.

The 10 firms moved to dismiss the administrator’s claims by arguing that the unfinished business doctrine does not apply to New York partnerships, such as Coudert. To the extent it does apply, the firms argued, it pertains only to contingency fee matters and not to work performed on an hourly fee basis.

A bankruptcy court in New York denied the motion to dismiss in November 2009 and January 2010. The defendants then appealed to the district court.

In denying the defendants’ request for an interlocutory appeal, Judge Marrero wrote, “The Court finds that leave to file an interlocutory appeal is not warranted here because none of the statutory requirements are met. The Court is not persuaded that the Orders present a controlling issue of law, that an interlocutory appeal would terminate the Adversary Proceedings or advance their termination, or that there is substantial ground for difference of opinion on the questions presented.”

Here is a link: http://www.law.com/jsp/nylj/nylawyer/PubArticleNYL.jsp?id=1202487841823&Death_Grip_10_BigLaw_Firms_Cant_Escape_Black_Hole_Left_by_NY_Firms_Implosion=&src=EMC-Email&et=editorial&bu=NY%20Lawyer&pt=NYLAWYER%20Daily%20Buzz&cn=buzz032511&kw=Death%20Grip%3A%2010%20BigLaw%20Firms%20Can’t%20Escape%20Black%20Hole%20Left%20by%20NY%20Firm’s%20Implosion&hbxlogin=1 

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Michael

Full post as published by Texas Lawyer Blog on March 25, 2011 (boomark / email).