Update, 8/30/13, 11:30 a.m. EST: The 10th paragraph below has been updated to include information on a settlement approved this week between McDermott, Will & Emery and the Howrey estate.
Two-and-a-half years after Howrey's March 2011 dissolution scattered the firm's partnership across the legal universe, some of those former colleagues have reunited to fight what they view as a common foe—the defunct firm's Chapter 11 bankruptcy trustee, Allan Diamond.
This week, six firms—including Pillsbury Winthrop Shaw Pittman; Ropes & Gray; and Shearman & Sterling—filed a joint defense motion in response to suits Diamond filed against each of them earlier this year in U.S. bankruptcy court in San Francisco. In the suits, Diamond seeks the return of money from client matters that Howrey partners took with them to their new professional homes in the months prior to their former firm's collapse. Based on the hotly contested legal precedent established through the 1984 California case known as Jewel v. Boxer, the suits claim the Howrey estate has an ownership right over work started before the firm dissolved.
For the most part, the firms where former Howrey partners landed disagree.
"Clients are not property," says Nancy Newman, a partner at Hanson Bridgett in San Francisco who represents Chicago's Neal, Gerber & Eisenberg, one of the firms that has signed on to the joint defense. "We agree with all the other counsel; it's not appropriate to apply this doctrine in this context."
In a 75-page memo filed Monday supporting the group's motion to dismiss the suits, the firms, a group that also includes Kasowitz Benson Torres & Friedman and Kilpatrick Townsend & Stockton, argue that because nearly all of the ex-Howrey partners at the six firms in question left before the defunct firm voted to dissolve, "the unfinished business doctrine does not apply here." The firms also say that California's Jewel shouldn't apply because Howrey was formed as a partnership under District of Columbia law. The motion argues that "the District of Columbia imposes affirmative obligations on lawyers to place the needs of their clients first . . . even at the expense of the firm’s profits" and that if enforced, the unfinished business rule could encourage partners in future law firm dissolutions "to abandon unfinished client work knowing that no new law firm would accept a matter only to have to disgorge all profits earned as a result of the new firm’s work."
