Business divorce involving law firms and attorneys presents a number of unique issues and ethical issues, challenges to reputation and ongoing obligations among lawyers and clients.
Valuing the interests of a law firm or an individual lawyer’s practice presents unique financial issues and frequently involves ongoing obligations.
The stakeholders in the business divorce of a lawyer include staff, clients and professional regulatory boards.
Unlike other professions, lawyers and law firms often have a legally enforceable interest in fees earned after the parties have separated their practices.
The practice of law combines the business of law and the profession of law in a way that makes business divorce more complicated and difficult than in any other profession. Lawyers are ethically prohibited from participating in any agreement not to compete, but nonetheless must manage the economics of competition. Lawyers are subject to ongoing financial and ethical obligations and must deal with a body of stakeholders unequaled in any other profession.
We represent law firms and individual lawyers in this difficult and constantly changing environment, including the withdrawal or termination of individual attorneys, business governance disputes, firm dissolutions the winding up of a firm’s affairs, enforcement of attorney charging liens and law firm mergers and acquisitions.
Dissolution of the Law Practice
The breakup of a law firm presents ethical and financial issues unique to the practice of law. Lawyers have an obligation to assure continued representation of clients, to keep clients informed and to separate their financial affairs in compliance with complicated professional and ethical financial rules.
In many cases, lawyers have an obligation to former firms and to other lawyers to collect and pay over legal fees earned after their association has come to an end. Winding up the business of a law firm presents complicated issues of partnership and corporate law.
Protecting an Interest in Legal Fees
Lawyers and law firms that take on clients on matters in which the fees earned are deferred or based on the outcome of a matter must often take affirmative steps to protect their interest in fees that are payable in the future. Often these are contingent-fee cases, but may also include matrimonial or transaction matters in which the fee is paid from some fund at a future date.
To protect these financial interests, lawyers and law firms have a number of alternatives, including statutory charging liens and equitable liens as well as claims against individual clients. Nonetheless, ethical rules apply to all attempts to collect fees and lawyers must be careful to avoid mis-steps that can result in the forfeiture of a fee. We represent individual lawyers and law firms in actions to secure and collect these fees.
Contact the Business Divorce Lawyers at 973-602-3915 with your questions or concerns, or use our on-line form to arrange an initial consultation. There is no charge for our initial discussion and we will be happy to give you an overview of your options.
Partner and Associate Disputes
The law firm as a life-time employer and partners as equal owners of the practice often are antiquated concepts in the modern practice of law. Most lawyers will change firms multiple times during the course of their career. Moreover, today’s norms of practice embrace partner as a job description as much as a statement of ownership. Non-equity, limited-equity and contract partners have become the norm of the legal profession, constituting by some estimates nearly half of the “partners” in the profession. Add to that the role of loosely affiliated of-counsel attorneys, senior attorneys of counsel position, and the law practice invites dispute over the scope of the roles and responsibilities of individual lawyers.
Entry and exit of associates and partners from law firms is fertile ground for disputes and ethical pitfalls. We counsel law firms and individual lawyers in the addition of lawyers and the withdrawal of lawyers from a law firm. The issues range from client notification, collection of fees, intellectual property of the firm, termination agreements and the effect of partnership and employment agreements on competition.
Corporate Governance Disputes and Valuation Issues
Law firm practices take a variety of forms and lawyers may play any number of roles in the business, from sole practitioner to president of a large professional corporation. Governance disputes are subject to the same legal principles as other business organizations. Many of these disputes are reduced to monetary issues, but the unique nature of the practice of law makes the valuation of a law firm or individual lawyer’s practice an unknown variable in many disputes.
Contact the Business Divorce Lawyers at 973-602-3915 to have an experienced attorney consult with you on issued related to your rights as a shareholder of a closely held corporation.