March 01, 2015

The Evolution of Unfinished Business Claims

Here is a guide to understanding the unfinished business rule, which has been applied to law firms for more than 60 years.

Andrew B. Ryan

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The mere mention of the unfinished business rule, or Jewel v. Boxer, draws an immediate and visceral reaction from most lawyers. Lawyers representing creditors and trustees of bankrupt law firms likely view the doctrine as good public policy because its application makes it possible for a bankrupt firm to repay some of the debt owed to creditors. On the other hand, law firms that scooped up or cherry-picked lawyers deserting the dissolving firm likely believe the rule is anathema to the practice of law because it limits mobility, restricts clients’ choices, and takes money from firms that earned it. No matter the reaction, the unfinished business rule has been applied to law firms for more than 60 years, and it is likely to be around for decades to come.

This article addresses four topics relating to the evolution of unfinished business claims. First, it outlines the history of unfinished business claims involving a law firm’s pending cases and uncompleted transactions, and how that history reveals a rule embedded in the partnership statutes and common law of many states. Second, the article discusses the application of the unfinished business rule to recent law firm bankruptcies, including public policy arguments for and against the rule. Third, it summarizes recent decisions that endorse or oppose the rule. Finally, the article identifies three key issues that will affect the development of the rule in ongoing and future litigation.

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