Based on the efforts of a highly paid legal industry consultant, your firm has been in confidential negotiations with a practice group looking to leave a prominent, nationally known law firm. One of the attractions of the group is the expectation its lawyers will generate significant fees for your firm on the client matters you anticipate they will bring with them.
On the eve of reaching the final terms of the group’s move comes dramatic news: the group’s firm, citing a significant downturn in revenue due to recent departures of other partners, announces it is insolvent and will be dissolving, with rumors swirling of an imminent bankruptcy filing. Should your firm now consider terminating the negotiations? If the laterals do join your firm, is there a risk that fees collected for work performed after the clients transfer their files might not actually “belong” to your firm? Might a receiver or bankruptcy trustee for the defunct law firm have authority to a “claw back” those fees from your firm? Is there a way to protect your firm from exposure to such claims?
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