Law firms have grown accustomed to managing the “traditional” risks inherent in lateral hiring, discussed in the two most recent articles in this column “Do’s and Don’ts of Lateral Attorney Movement: Managing the Risks,” March 5, 2012, and “Lateral Attorney Movement: Pre-Departure and Recruitment,” May 7, 2012. But increasingly the “unfinished business” doctrine poses a potentially painful headache for hiring firms. The doctrine was recently interpreted and applied expansively in Development Specialists v. Akin Gump, 462 B.R. 457, decided by Judge Colleen McMahon of the U.S. District Court for the Southern District of New York, in connection with the bankruptcy of the Coudert Brothers firm. The case (hereafter the “Coudert unfinished business decision”) has the potential to profoundly change the economics of lateral movement and in some situations even to inhibit, if not undermine, the ability of lawyers to make lateral moves.
Historical Background
Law firms acquiring laterally hired lawyers are generally safe in assuming that work performed and fees earned on matters laterals bring to the new firm are the rightful earnings of the hiring firm. But according to Jewel v. Boxer, 156 Cal.App.3d 171 (1984), and its offspring, that general rule changes when the laterals move from firms that dissolve following the lawyers’ departure (whether the two events are causally related or not).
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