When partners of a defunct law firm escape to a new firm, bankruptcy trustees often try to recoup the value of the unfinished legal work they take with them on the grounds that it was the “property” of the defunct firm. Not anymore — well, not in New York, anyway.

Judge William H. Pauley said that such profits are not “property” of the defunct firm—at least not under New York law. To classify them as such, he said, would have “bizarre consequences,” such as allowing “a debtor law firm to sell its pending hourly fee matters to the highest bidder”–something Judge Pauley said would violate a client’s right to choose attorneys.

Read Judge: Unfinished Legal Work Isn’t Property (in New York, Anyway) on WSJ Law Blog.

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