Unfinished Business Doctrine: Federal Judge Gets it Right!

Big news today in the development of the unfinished business doctrine and defunct law firms!

On June 11, 2014, the US District Court in San Francisco ruled CONTRARY to the shocking decision issued earlier this year by a California bankruptcy court.  That bankruptcy court, issuing a ruling in the Heller case before it, had refused to dismiss claims brought by Heller's trustee seeking disgorgement of profits earned by law firms to which former Heller attorneys had decamped prior to Heller's dissolution but after its financial distress had begun.

The US District Court concluded that the old Heller firm has NO RIGHT to the profits earned from uncompleted legal matters which Heller's old partners took to their new law firms.  The court dismissed the Heller trustee's lawsuits against Davis Wright Tremaine, Foley & Lardner, and Orrick, Herrington & Sutcliffe.

This judge gets it!  His order says "Heller ceased to be able to represent its clients, leaving them with no choice but to seek representation elsewhere.  [The defendant law firms] came to the rescue of these clients and provided them with legal services on ongoing matters…. [and] did the work that generated the fees at issue here.  With [those law firms] those fees should stay."

The Heller trustee vows to appeal.

This could not have come at a more opportune time, because just last week New York's Court of Appeals heard arguments on the very same issue (albeit different state law). (See my blog posted June 10, 2014.)  That court must be influenced by today's decision of the US Court in San Francisco.

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