March 23, 2011 7:48 PM
Federal Judge Denies Bid by Ten Firms Appealing Coudert Proceedings
Posted by Brian Baxter
A federal judge in Manhattan has blocked a bid by ten Am Law 200 firms seeking an interlocutory appeal of adversary proceedings initiated by the administrator for the bankruptcy estate of defunct international law firm Coudert Brothers.
In a 13-page decision delivered on Monday, U.S. district court judge Victor Marrero denied motions to dismiss by ten firms: Akin Gump Strauss Hauer & Feld, Arent Fox, Dechert, DLA Piper, Dorsey & Whitney, Duane Morris, Jones Day, K&L Gates, Morrison & Foerster, and Sheppard Mullin Richter & Hampton.
At issue is whether or not partners that left Coudert for those firms should, under the "unfinished business" doctrine, return millions to the bankruptcy estate for work performed at their new firms.
The ten firms moved to dismiss the administrator's claims by arguing that the unfinished business doctrine doesn't apply to New York partnerships, such as Coudert. To the extent it does apply, the firms argued, it pertains only to contingency fee matters and not to work performed on an hourly fee basis.
A bankruptcy court in New York denied the motion to dismiss in November 2009 and January 2010. The defendants then appealed to the district court. In denying the defendants' request for an interlocutory appeal, Marrero's ruling details some of the case law surrounding the unfinished business doctrine.
"The Court finds that leave to file an interlocutory appeal is not warranted here because none of the statutory requirements are met," Marrero wrote in his ruling. "The Court is not persuaded that the Orders present a controlling issue of law, that an interlocutory appeal would terminate the Adversary Proceedings or advance their termination, or that there is substantial ground for difference of opinion on the questions presented."
Coudert broke up in August 2005, but the firm's death has been anything but quiet. The liquidation agent for the firm has launched civil suits against several Am Law 200 firms seeking to recoup funds owed to Coudert before its dissolution. Baker & McKenzie agreed to pay $6.65 million to the firm last July in a settlement over unfinished business claims.
In December, the Coudert estate sued Orrick, Herrington & Sutcliffe, claiming that the firm delivered a "fatal blow" when it poached a group of partners in London and Moscow that had been engaged in merger talks between both firms. The American Lawyer recently reported on the litigation emanating from Coudert's estate.
McCarter & English bankruptcy and restructuring partner David Adler is representing the liquidation plan administrator for Coudert in its bankruptcy case.
Rescues Gone Wrong?
Litigation launched by the estates of two bankrupt firms illustrates the perils of plucking partners from sinking ships.
The American Lawyer, February 2011
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