480 B.R. 145
S.D.N.Y.2012Background
- DSI administers Coudert Bros. LLP bankruptcy estate and sues ten firms to recover profits from unfinished matters.
- Dissolution date: August 16, 2005, with Special Authorization to wind down and potentially transfer matters.
- Former Coudert Partners joined these firms to complete unfinished Client Matters.
- Client Matters remained executory contracts and were handled as ongoing partnership assets unless otherwise agreed.
- Parties dispute whether unfinished Client Matters qualify as Coudert assets and how profits should be allocated post-dissolution.
- Court proceedings addressed summary-judgment on whether unfinished matters are partnership assets and the proper measure of profits under New York Partnership Law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Client Matters assets of Coudert on dissolution date? | DSI argues they are Coudert assets under Partnership Law. | Firms contend there was no Coudert asset due to hourly billing. | Yes; Client Matters were Coudert assets. |
| Do Client Matters have value post-dissolution requiring accounting? | DSI seeks accounting for post-dissolution profits from Client Matters. | Firms argue no post-dissolution value beyond pre-dissolution services. | Value exists; trial required to determine post-dissolution profits and deductions. |
Key Cases Cited
- Stem v. Warren, 227 N.Y.538 (N.Y. 1920) (executory contracts can be partnership assets)
- Kirsch v. Leventhal, 181 A.D.2d 222 (3d Dep’t 1992) (contingency fee unfinished business treated as partnership asset)
- Shandell v. Katz, 217 A.D.2d 472 (1st Dep’t 1995) (unfinished business doctrine applied in law partnerships)
- Santalucia v. Sebright Transp., Inc., 232 F.3d 293 (2d Cir.2000) (contingent-fee cases pending at dissolution are assets subject to distribution)
- Murov v. Ades, 12 A.D.3d 654 (2d Dep’t 2004) (unfinished business; value attributable to post-dissolution efforts)
- Jewel v. Boxer, 156 Cal.App.3d 171 (1st Dist.1984) (UPA jurisdictions view pending cases as unfinished business assets)
- Denburg v. Parker Chapin Flattau & Klimpl, 82 N.Y.2d 375 (1993) (public policy; discourages financial disincentives against client choice)
- Cohen v. Lord, Day & Lord, 75 N.Y.2d 95 (1989) (public policy; restrictions on practice void if disincentivize client choice)
- Denver v. Roane, 99 U.S. 355 (1878) (early rule on winding up profits; no compensation absent death-related winding up)