Business and Corporate Law
Philip N. Krause, Esquire
Clients have a fundamental right to freely choose their
counsel. Accordingly, a case is not a law firm asset, and a law firm
is not entitled to retain a contingency fee contract if the client
chooses to engage a departing partner (or another firm) instead of the
law firm from which the partner is departing. Welman, et al., v. Parker, No. 30016 (Mo. App. S.D., November 19, 2010), Lynch, J.
Attorney withdrew from a law firm, thereby dissolving the law firm's
partnership. The law firm had no written partnership agreement. A
personal injury client with a pending case determined to transfer his
contingency fee case from the old firm to the departing attorney at a
new firm. When the case settled, the old firm claimed it was entitled
to a share of the fee. The trial court ruled that the contingency fee
case was an asset of the old firm and required the departed attorney to
return a pro rata portion of the contingency fee to the old firm.
Held: Reversed. Although this issue had not been
previously determined by a Missouri appellate court, the court found
that Missouri follows the "modern rule" in which a client may at any
time release an attorney, with or without cause, and hire another. The
court therefore determined that whether the contingency fee contract
remains an asset of the dissolved partnership is solely the decision of
the informed client, who has the free choice to further engage the
services of the former partners, the withdrawing partner - either
individually or as a partner in a new partnership - or an entirely
different attorney or law firm. Clients are free to discharge the law
firm or attorney who represents them at any time and hire new counsel.
Clients have a fundamental right to freely choose their counsel. The
dissolved firm is only entitled to recover the reasonable value of the
services it provided.
A partnership cannot be created by an oral agreement as to
the sharing of ownership and profits but not the sharing of
liabilities. Winslow v. Nolan, No.93544 (Mo. App. E.D., August 24, 2010), Odenwald, J.
Winslow and Nolan discussed going into a plumbing business together.
According to Winslow, they agreed to have a partnership in which they
each shared 50 percent of the profits and ownership. Nolan proceeded to
form a limited liability company without naming Winslow as an owner.
Instead of sharing profits, Nolan paid Winslow a salary. Winslow sued
to recover a share of the profits. The trial court determined that a
partnership had been formed by oral agreement, and awarded Winslow 50
percent of the profits.
Held: Reversed. The court found that, according to
Winslow's own testimony, the parties had not agreed to share any losses
or liabilities of the plumbing business. Without an agreement as to
sharing losses or liabilities, a partnership cannot be formed.
The Missouri Bar Courts Bulletin, 11-Mar