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  • Sarah Little

California Supreme Court Determines Dissolved Law Firm has No Property Interest In Ongoing Legal Mat

Heller dissolution

The California Supreme Court held that a dissolved law partnership is not entitled to profits derived from its former partners' work on unfinished hourly fee matters. Any "property, profit, or benefit" accountable to a dissolved law firm derives only from a narrow range of activities: those associated with transferring the pending legal matters, collecting on work already performed, and liquidating the business.

The 9th Circuit certified the question to the California Supreme Court in order to ultimately determine whether the Jewel waivers Heller gave upon its dissolution constituted fraudulent transfers under the Bankruptcy Code. (Jewel waivers refers to a 1984 Cal. 1st Dist. Court of Appeal case Jewel v. Boxer, which held that a dissolved partnership had a right to fees in pending contingency matters.) The 9th Circuit asked the California Supreme Court to determine to what extent the dissolved partnership had property rights in the pending hourly matters that had unperformed work remaining.

See opinion here.

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