N.Y. Court Upholds Change in Partner Payouts
In 2004, lawyers at Fish & Neave decided they needed to do something to stem the tide of partner defections and attract a suitable merger partner.
By a majority vote, the firm decided to defer payouts of accrued income to departing partners until they reached age 65 or retirement, whichever is later. And capital contributions would be returned over four years rather than one.
Yesterday, New York’s highest court ruled (PDF) the move was proper, saying its partnership agreement gave it the right to change its payment structure by a majority vote, according to the New York Law Journal.
The suit was filed by two senior partners who left the law firm, including managing partner W. Edward Bailey. The firm has since merged with Ropes & Gray.