The Jewel Doctrine posits
that, upon the dissolution of a partnership (and especially a law firm), business that is being performed at the time of dissolution continues to be an asset of the partnership. Hence, the proceeds of that work will be applied to the satisfaction
of partnership
obligations with
the balance split amongst the partners (now former partners) in accordance with their respective
sharing ratios. In connection with the breakup of major money center law firms, most precipitated by the 2008 economic crisis, the firms to which those partners went have asserted that the Jewel Doctrine should not apply, and they should keep all of the proceeds of the transferred projects. In contrast, those in charge of the winding up and termination of those failed firms, many having significant
third party debts, have argued that the Jewel Doctrine should
apply. This is a topic that Tara McGuire and I addressed in an article titled Conflicting
Views as to the Unfinished Business Doctrine, 46 Texas Journal of Business Law 1 (2015). HERE IS A LINK to that article.
Most recently, Dean Don Weidner, whose credentials
include having
served as the Reporter on the Revised Uniform
Partnership Act, has published a piece in the Florida Bar Journal
titled Leaving Law Firms With Client Fees: Florida’s Path. In this article, Dean Widener argues
that the Jewel Doctrine is correct, especially as to contingent fee
cases, and that as well it should be applied beyond situations
of a law firm’s dissolution. HERE IS A LINK to Dean Weidner’s article.
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