Fee clawbacks in case of failed Heller firm to be considered by California Supreme Court
Lawyers for the dissolved law firm Heller Ehrman are urging the California Supreme Court to rule that the firm is entitled to claw back hourly fees from partners who jump to new law firms for matters that were pending at the time of the dissolution.
Lawyers from Diamond McCarthy represent the Heller Ehrman bankruptcy estate. They argue the estate is entitled to the fees under the Unfinished Business Rule, which is part of the state’s Uniform Partnership Act, the Recorder (sub. req,) reports. Bloomberg Big Law Business previewed the case.
The California Supreme Court is considering the issue at the request of the San Francisco-based 9th U.S. Circuit Court of Appeals. The Heller estate is appealing a ruling by U.S. District Judge Charles Breyer that the estate isn’t entitled to recover profits from unfinished hourly fee cases taken to new law firms.
Leslie Corwin, a Blank Rome partner who created the Heller dissolution plan, said he hopes the court will affirm Breyer’s ruling. “You can’t penalize a law firm that takes on clients and attorneys from a dissolving law firm,” he told the Recorder.
The New York Court of Appeals has also ruled that dissolved law firms have no right to claw back hourly fees from partners at their new law firms. “I would be shocked,” Corwin told Bloomberg, “if the California Supreme Court did anything different” than the New York Court of Appeals.
