In a fraudulent transfer case brought by the trustee for Thelen LLP against law firms where former Thelen partners took work, Judge Pauley ruled today that the billable matters (as compared to contingency cases) were not “property” of the bankruptcy estate. Although “unfinished business” is generally an asset of a dissolved partnership, Judge Pauley concluded that “applying the unfinished business doctrine to pending hourly fee matters would result in an unjust windfall for the Thelen estate, as compensating a former partner out of that fee would reduce the compensation of the attorneys performing the work.” He also observed that deeming billable matters “property” to be shared with the estate would conflict with ethical rules against dividing fees, and “would have bizarre consequences”:
Continue Reading Judge Pauley Rules that Dissolved Law Firm’s Hourly Matters Are Not Property of Bankruptcy Estate; Certifies Issue for Interlocutory Appeal