Heller Case to Arm Hiring Firms in Clawback Fights
Orange County partner Penelope Parmes was quoted in a June 12 Law360 article – “ Heller Case to Arm Hiring Firms in Clawback Fights” – following a District Court’s ruling denying Heller Ehrman LLP bankruptcy trustee’s lawsuit against Jones Day and three other law firms, which sought to claw back profits from client matters that ex-partners took with them to new law firms. Per the article, if the court’s decision stands on appeal, the decision will give firms that hire laterals from struggling rivals powerful ammunition against potential recovery efforts.
“If the ruling is upheld on the same grounds, I think that’s going to send a strong message around the country to other bankruptcy and appellate judges overseeing law firm bankruptcies that it’s not right for new law firms to have to give up what they are earning by their own labor in the future to the trustee of a firm that went out of business,” Penelope said. “The case is basically a roadmap for telling law firms exactly why defunct firms don’t have any rights to future fees.”