When Law Firms Dissolve: Dividing Up The Proceeds From Contingent Fee Cases

When Law Firms Dissolve: Dividing Up The Proceeds From Contingent Fee Cases

The Court of Appeals in February 2011 ordered Judge Jolly to dissolve Mitchell, Brewer, Richardson, Adams, Burge & Boughman, a law firm organized as a member-managed professional limited liability company.  The dissolution was ordered per N.C. Gen. Stat. § 57C-6-02, which authorizes judicial dissolution when the managers of the LLC are deadlocked "in the management of the affairs of the limited liability company."

The deadlock, which had existed since June of 2005, concerned how  the profits from contingent fee engagements, concluded after several partners withdrew from the PLLC, should be divided among the partners.  Carrying out the directive of the Court of Appeals, Judge Jolly  last week in Mitchell v. Brewer, 2013 NCBC 14 resolved the issue of how those profits should be shared.

These former partners have been at war for seven years over the division of these fees.  I've written several times about the case, including in May 2007April 2008, and March 2009.

In this latest round in their war, the former partners (the Plaintiffs) and the remaining Partners (the Defendants, who did all the work after the dissolution to resolve the outstanding contingent fee matters) had different approaches as to how the fees should be allocated among them.

Read this article in its entirety on North Carolina Business Litigation Report, a blog for lawyers focusing on issues of North Carolina business law and the day-to-day practice of business litigation in North Carolina courts.

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