Today’s post is about the latest issue of Daredevil. (If you aren’t following Mark Waid’s run on Daredevil, you should be. If you want to catch up, the first six issues and issues 7-10.1 are available in trade paperback.) After an unannounced nine day leave of absence from the firm on Daredevil business, Matt Murdock returns to find his law partner Foggy Nelson kicking him to the curb, at least for the time being. So how does a law firm dissolve, and what are the consequences for Nelson and Murdock as newly independent attorneys?
I. Dissolving a Partnership
Since the sign on the door just says (or rather said) Nelson & Murdock, it’s likely that the firm is organized as an ordinary partnership, as opposed to a limited liability partnership or a professional corporation. Typically those kinds of businesses are legally required to indicate their status (e.g. “Nelson & Murdock, LLP” or “Nelson & Murdock, P.C.”). It is possible that Nelson & Murdock is an LLP or PC that registered “Nelson & Murdock” as a fictitious name (called an assumed name in New York), but that’s needlessly complicated.
In any case, there are a couple of different ways that the partnership could be dissolved. If the partnership was a “partnership at will” (i.e. a partnership that was established for no specific purpose and no particular duration), then any partner can dissolve it at any time. See, e.g., Dunay v. Ladenburg, Thalmann & Co, Inc., 170 A.D.2d 335 (1991). If that were the case here, then Foggy could certainly take his ball and go home, so to speak. All that is required is that Foggy’s actions “must manifest an unequivocal election to dissolve the partnership.” In this case, Foggy says “You need to leave. … I’ve delegated your workload, I’m taking your name off the door, and I’m demanding a break. … We’re through.” That seems pretty unequivocal to me.
However, it seems unlikely that two competent attorneys would form a partnership without a partnership agreement. And if the firm were actually an LLP or PC then there would definitely be a partnership agreement or corporate charter.
A partnership agreement can specify, among many other things, how, why, and when the partnership can be dissolved. In this case, Matt had been completely out of communication for nine days, unannounced, and there was evidence that he had unresolved issues with depression. Being unresponsive to clients is both unethical (see New York Rules 1.3 and 1.4) and can be the basis for a malpractice action. If mental health issues interfere with a lawyer’s ability to perform his or her job competently, then that’s also a problem. New York Rule 1.1. It’s highly likely that this would meet the standard for dissolving the partnership under the partnership agreement. Since Matt was the one ‘in the wrong,’ it’s not surprising that Foggy would keep the office and (apparently) the clients.
Once the partnership was dissolved, it would technically remain in existence long enough to wind up its affairs. N.Y. Partnership Law § 61. This would give the firm time to, for example, disburse the partnership assets to the partners, transfer clients to Nelson’s new firm, etc.
Foggy appears to be keeping the firm’s clients, either by the terms of the partnership agreement or by default, since Matt is in no state to represent them at the moment. But after Matt gets cleaned up, could he approach his former clients?
As a general rule, non-competition and non-solicitation agreements either cannot be enforced against attorneys or can be enforced only very narrowly. New York Rule 5.6; Graubard Mollen v. Moskovitz, 149 Misc.2d 481 (Sup. Ct. 1990). In fact, it would be unethical for Murdock or Nelson to offer or accept an agreement that restricted their right to practice after terminating the partnership. This is very different in other fields, where noncompetes are common. The courts have decided that choosing a lawyer is special in that regard. So Murdock would likely be free to set up his own firm and even to attempt to solicit his former clients to come over to the new firm.
It will be interesting to see where Waid takes this. Is this the end of Nelson & Murdock? Will we see the two on opposite sides of the courtroom in the future? Exciting stuff!