Article. I understand the desire of the bankruptcy trustees and judges to rake in as much money for the benefit of creditors, but now that the game is well-known, it means that there is a deleterious effect on the ability of some clients to find a new home. And the Jewell doctrine clashes with the law of lawyering. Abstract:
law firm goes out of business, who is entitled to the earnings that the
partners generate from unfinished, pending hourly matters? Most states
that have addressed the issue hold that unless the partners agree
otherwise, all profits from unfinished business belong not to the
partners who complete the matters, but to the former partnership. The
rationale for this so-called unfinished business doctrine is that
because partners owe fiduciary duties to one another as they wind up the
firm, the partners who continue to complete the unfinished business do
so for the benefit of all former partners. The doctrine has been
criticized for impinging clients’ choice of counsel because it creates
financial disincentives that may encourage attorneys to withdraw from
pending client matters, given that they would need to share earnings
with their former partners.
In 2012, two judges in the Southern District of New York, writing opinions for separate cases, thoroughly examined whether the doctrine applies to hourly matters. They arrived at different conclusions, creating a split in the district. The issue is currently under interlocutory appeal in the Second Circuit.
This Note argues that the unfinished business doctrine applies to hourly matters because it does not violate public policy by improperly deterring attorneys from practicing law. Nevertheless, this Note proposes a statutory amendment for New York that would reduce the financial disincentives that the unfinished business doctrine creates by allowing partners to earn reasonable compensation for winding up unfinished business.