Court Opinion

ID: 9739271
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:11:33.093685+00
Date Added: 2024-06-11T07:24:11.260155
License: Public Domain

*1315GARRARD, Judge,
dissenting.
I dissent. While I agree with the majority that the only question available for appellate review is the partial summary judgment entered on the remaining partners' first count of counterclaim, I disagree with its resolution of that issue.
In that count the remaining partners alleged that when Kelly left the partnership he took with him clients and potential clients of the partnership; that he performed legal services for them, and accepted payment therefor; and that the partnership was entitled to all the fees earned in those employments both before and after the partnership dissolution (subject, of course, to Kelly's partnership percentage.) The trial court agreed and granted partial summary judgment so ordering. In my view this was error.
One of the precepts of our legal system is that litigants should be entitled to legal representation by the lawyer(s) of their choosing, assuming the litigant is willing and able to pay the bill and the lawyer is admitted before the court in question. That view is reflected in Rule 5.6 of the Rules of Professional Conduct.
Of course, the former partnership is entitled to treat as an asset work which was in progress on the date of dissolution. The partnership agreement details the manner of valuing that business for hourly matters, flat fee matters and contingent fee cases. The agreement should be applied to all work in progress on the date of dissolution whether retained by the remaining partners or by Kelly.
Recently, in Hammes v. Frank (1991) Ind.App., 579 N.E.2d 1348, the court was confronted with the dissolution of a law partnership caused by a split up of the firm. There had been no written partnership agreement, and accordingly (unlike the circumstances present here) no provision covered how work-in-progress was to be handled upon a dissolution. Looking to the Uniform Partnership Act, IC 28-4-1-1 et seq. as controlling under those cireum-stances, the court determined that income produced through the winding up of unfinished partnership business should be distributed to the former partners according to their respective partnership shares. See IC 23-4-1-80. I do not disagree with the analysis in Hommes except to the extent the court's reasoning appears to focus on the inquiry as to what constitutes "unfinished business" rather than what constitutes "winding up."
Under IC 23-4-1-80, when a dissolution is caused by the withdrawal of a partner, the existence of the partnership continues "until the winding up of partnership affairs is completed." The term "winding up" has special legal significance in the context of partnership law. It refers to the process of settling partnership affairs after dissolution, often called liquidation, and involves reducing the assets to cash to pay creditors and distribute to partners the value of their respective interests. Dreifuerst v. Dreifuerst (1979) 90 Wis.2d 566, 280 N.W.2d 335, 338; see also Weisbrod v. Ely (1989) Wyo., 767 P.2d 171, 174; Smith v. Kennebeck (1973) Mo., 502 S.W.2d 290, 293.
Thus, in the absence of some agreement among the partners as to how work- in-progress assets are to be valued, winding up activity is necessary to determine their worth. But this does not mean that work performed after a dissolution in the ordinary course of business, as opposed to winding-up activity, should or does belong to the previous partnership. This may, additionally, be inferred from IC 28-4-1-18(f) which provides that while a partner is not entitled to remuneration for acting in the partnership business, a surviving partner is entitled to reasonable remuneration for his services performed in winding up the partnership affairs. In other words, the line of demarcation is to be drawn at the time of dissolution with recognition that some winding up activity may be necessary.
In the case before us the partnership agreement covers both how work-in-progress assets are to be valued and how partners are to receive payment for their shares. Potentially, minimum winding up activity will be, or was, necessary.
On the other hand, the former partners are not entitled as a matter of partnership law to the fruits of the new, or continuing, *1316services Kelly performs for former clients of the firm.
The court erred in holding that they were. The partial summary judgment should be reversed.