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Shandell v. Katz
Citations: 217 A.D.2d 472; 629 N.Y.S.2d 437; 1995 N.Y. App. Div. LEXIS 7857
Court: Appellate Division of the Supreme Court of the State of New York; July 20, 1995; New York; State Appellate Court
The Supreme Court of New York County, under Justice Burton Sherman, issued an order on September 18, 1993, reversing a previous ruling regarding a Referee's report related to a dissolved negligence law partnership. The court confirmed the Referee's report in part and remanded the matter for further hearings, specifically addressing the distribution of contingency fees after the partnership's dissolution. On September 14, 1981, the plaintiff withdrew from the partnership, taking 14 cases with him, from which he allegedly collected over $1.6 million in fees. The remaining partnership handled 289 cases, recovering $9.6 million in fees. The critical issue is the sharing of contingency fees collected post-dissolution, as the partnership agreement did not address this matter and the partnership operated at will. The court upheld the Referee's finding that the former partners had no right to form a new partnership to continue the business; instead, they were obligated to wind up the affairs of the dissolved partnership. The court referenced the Aurnou v. Greenspan ruling, which allows a withdrawing partner to share in fees only if they contributed to earning them post-dissolution. However, the court chose not to apply this rule broadly, citing that pending contingency fee cases should be treated as partnership assets unless stated otherwise in an agreement. The plaintiff is required to account for the partnership cases he carried with him, governed by Partnership Law §73. In the upcoming hearings, he must decide whether to take the value of each contingent fee case at dissolution with interest or his partnership interest in those fees without interest, minus overhead, considering the contributions of the surviving partners post-dissolution. The decision emphasizes the interpretation of partnership law regarding asset distribution and partners' rights after dissolution.