April 13, 2012 2:06 PM
Retired Coudert Partners Lose Second Bid to Recover Unpaid Benefits
Posted by Sara Randazzo
Retired partners from defunct Coudert Brothers have lost their second attempt to recover money from three law firms that took a sizeable chunk of the firm’s assets after its late 2005 dissolution, sibling publication New York Law Journal reports (subscription required).
A group of 24 former partners sued Baker McKenzie; Orrick, Herrington Sutcliffe; and Dechert in 2007, claiming that the firms conspired with Coudert partners to buy firm assets for less than fair market value, according to NYLJ. Because none of the three firms took on 50 percent of Coudert’s assets, none were true “successor” firms with obligations to continue paying retirement benefits, according to court filings.
The suit had already been dismissed by U.S. bankruptcy judge Robert Drain, who oversaw Coudert’s New York bankruptcy. In Manhattan on Thursday, U.S. district court judge Colleen McMahon confirmed that dismissal, ruling that the retirees had no standing to pursue their claims of successor liability and tortious interference with contract.
In her ruling (PDF), McMahon found that the retired partners’ claims have no place in a bankruptcy, writing: “If the Trust can rely on a theory of successor liability to recover from the Firms, then so can every other Coudert creditor, and who recovers depends merely on who sues the Firms first.”
In an interview with NYLJ, an attorney for the retired partners said they plan to appeal the decision.
The Am Law Daily reported last month that an $85 million malpractice suit against Coudert brought by former client Statek Corporation gained new life on February 28 when a three-judge panel for the U.S. Court of Appeals for the Second Circuit ruled (PDF) that a lower court had erred in tossing out the suit on statute-of-limitation grounds.
Clawback claims against former Coudert partners are also ongoing. In January, Orrick succeeded in moving so-called unfinished business claims against it out of bankruptcy court. The move followed an earlier decision, also by judge McMahon, to allow 10 firms including Akin Gump Strauss Hauer Feld, Duane Morris, and Jones Day to move similar claims to district court. All of the firms were sued by the Coudert estate over profits tied to work that originated at Coudert and was taken elsewhere by former partners before and after the firm’s dissolution.
Make a comment
Report offensive comments to The Am Law Daily.
Category: Legal Articles