When a law firm goes out of business, who is entitled to the earnings that the partners generate from unfinished, pending hourly matters? Most states that have addressed the issue hold that unless the partners agree otherwise, all profits from unfinished business belong not to the partners who complete the matters but, rather, to all partners of the former law firm. This so-called unfinished business doctrine has been criticized for impinging clients’ choice of counsel because it creates financial disincentives that may encourage attorneys to withdraw from pending matters, given that they would need to share earnings with former partners. The law is unsettled in New York, and in 2012, two judges in the Southern District of New York examined whether the unfinished business doctrine applies to hourly matters. They arrived at different conclusions, creating a split in the district. This Note argues that the unfinished business doctrine applies to hourly matters because it does not violate public policy by improperly deterring attorneys from practicing law. Nevertheless, this Note proposes a statutory amendment for New York and certain other states that would mitigate the financial disincentives that the unfinished business doctrine creates by allowing partners to earn reasonable compensation for winding up unfinished business.
