LaFond v. Sweeney
2012 COA 27
Colo. Ct. App.2012Background
- Two-member LLC law firm formed by LaFond and Sweeney; no written agreement on asset division or contingent-fee distribution when dissolved.
- Maxwell qui tam (False Claims Act) case was pending with contingent-fee potential; LaFond continued representation after dissolution as co-counsel with Porter.
- Firm dissolved June 1, 2008; dispute arose over how any contingent fee from Maxwell should be allocated between LaFond and Sweeney.
- Trial court held Maxwell as a firm asset valued by work/costs as of dissolution; awarded Sweeney half of that value up to a cap, and held LaFond’s contingent fee as firm asset subject to equal division.
- On appeal, court ultimately held contingent fee is a firm asset due to winding-up duties, and that the dispute centers on dividing that asset; remanded for determinations consistent with an equal-share division absent an agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the contingent fee from Maxwell an asset of the dissolved LLC? | LaFond contends it is not an asset of the firm. | Sweeney argues the fee is an asset of the dissolved LLC to be divided among members. | Yes; the contingent fee is a firm asset. |
| What is the proper division of the contingent fee among former members when an oral fee-sharing agreement exists? | LaFond seeks a narrower recovery per the trial court’s valuation and cap. | Sweeney argues equal division of the entire contingent fee under the oral agreement. | Equal division of the entire contingent fee allocated to LaFond and Sweeney. |
| Does a former partner wind up a case on behalf of the dissolved firm entitle any compensation beyond a share of the contingent fee? | LaFond suggests no beyond-lead to equal share once earned. | Sweeney asserts the firm’s wind-up duties do not entitle extra compensation beyond the share. | No extra winding-up compensation beyond a share of the contingent fee. |
Key Cases Cited
- Mullens v. Hansel-Henderson, 65 P.3d 992 (Colo. 2002) (contingent fee recoverable by attorney upon completion; contract not ordinary)
- Jewel v. Boxer, 156 Cal.App.3d 171 (Cal. App. Dist. Ct. 1984) (unfinished business wind-up; income allocated to former partners)
- Ellerby v. Spieger, 485 N.E.2d 413 (Ill. App. Ct. 1985) (clients free to choose counsel; continuation of representation does not harm client rights)
- Fox v. Abrams, 210 Cal.Rptr. 266 (Cal. Ct. App. 1985) (cases, files, and fees as assets; winding up after dissolution)
- Frates v. Nichols, 167 So.2d 80 (Fla. Dist. Ct. App. 1965) (clients and cases are assets; continuation of representation governed by wind-up duties)
- Sullivan v. Bodney & Hammond, 820 P.2d 1251 (Kan. App. Ct. 1991) (cases are assets; distribution post-dissolution guided by prior agreement)