Law Firm Clients Defeat Bankruptcy Trustees in New York Court of Appeals

The New York Court of Appeals, on July 1, 2014, in response to questions certified by the U.S. Court of Appeals for the Second Circuit, held that “pending hourly fee matters are not [a dissolved law firm’s] ‘property’ or ‘unfinished business’” under New York’s Partnership Law. In re Thelen LLP, _________ N.Y.3d _________, 2014 N.Y. LEXIS 1577, *1 (July 1, 2014). See In re Thelen LLP, 213 F.3d 213, 216 (2d Cir. 2013). A federal district court had applied California law to reach the same conclusion in a similar case three weeks earlier. In reHeller Ehrman, 2014 U.S. Dist. LEXIS 81087, *2 (N.D. Cal. June 11, 2014) (“A law firm — and its attorneys — do not own the matters on which they perform their legal services. Their clients do.”) In this article, SRZ partner Michael L. Cook examines the court’s decision.