San Francisco court rules failed firms can't claim profits

June 13, 2014 A San Francisco federal court has ruled that failed law firm Heller Ehrman does not have the right to claim profits from unfinished legal work that its ex-partners took away with them to new firms.

Judge Charles Breyer dismissed the claims made by Heller’s trustee against Davis Wright Tremaine, Jones Day, Foley & Lardner and Orrick, Herrington & Sutcliffe.

Judge Breyer wrote the following in his ruling: “Heller ceased to be able to represent its clients, leaving them with no choice but to seek representation elsewhere. Defendants came to the rescue of these clients and provided them with legal services on ongoing matters. . . Defendants did the work that generated the fees at issue here. With the Defendants those fees should stay.”

A Jones Day partner from the case, Shay Dvoretzky, said, “A firm that dissolves simply has no right to profits that somebody else earns on a client matter that the old firm abandoned. This is a very well-reasoned opinion by a respected district judge, and I hope it will be persuasive to other judges considering similar issues on other law firm bankruptcies.”

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