Law Firms Must Divulge Profits Made From Coudert Brothers Bankruptcy
Posted May 25, 2012 4:23 PM CDT
By Rachel M. Zahorsky
In a ruling that could also affect similar claims related to the wind-down of Dewey & LeBoeuf, 10 law firms must account for profits they made for completing client matters that former partners of the now-defunct Coudert Brothers law firm brought with them when they joined their new firms.
Akin Gump Strauss Hauer & Feld, Jones Day and Dechert are among the 10 firms sued in 2008 in bankruptcy court by Coudert’s plan administrator who claimed the firms were liable for any profits derived from work done to wind down client matters that the former Coudert partners took with them when they jumped ship, Bloomberg News reports.
While the firms argued that the doctrine didn’t apply to matters billed hourly, U.S. District Judge Colleen McMahon disagreed and denied the firms’ motion to dismiss.
“Although the New York Court of Appeals has not addressed this precise issue, I believe that it would conclude that the method by which the client matters were billed does not alter the nature of Coudert’s property interest in them,” McMahon said today’s ruling.
The case is In Re Coudert Brothers LLP 11-cv-05994, U.S. District Court, Southern District of New York (Manhattan).