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OP I N ION owes him $61 million. Meanwhile, the Manhattan district attorney's office has launched a criminal investigation into the activities of Dewey's former chair- man Steven Davis. For many Dewey partners, the financial consequences of the collapse will be severe, for some even ruin- ous. Their capital in the firm (in most cases borrowed from the bank) will be lost. Monthly advances already paid on non-existent future profits will be clawed back. There may be liability for employee severance, tax withholdings, staff pension obligations, and unfunded pension obligations to retired partners. Partners may owe taxes on forgiven firm debt. Many partners with claims against the firm — those IOUs I men- tioned, for example — will find them- selves subordinated to other unsecured creditors (that may not matter much, because the chances are that unsecured Dewey creditors will get nothing). It is just possible that years of acrimonious litigation will be avoided by a general settlement agreement (this has been mooted recently), but that would be cold comfort, for any such agreement would require former Dewey partners to make substantial personal contribu- tions to the Dewey bankruptcy estate. Almost all of partners have gone to other firms, tak- ing with them active client files. It is a sure thing that the Dewey estate will go after these firms, claiming that profits from "unfinished business" belong to Dewey even though they accrued after the firm's collapse. The estate's claim will be given heft by a U.S. district court ruling this past May that rev- enues from files that Coudert Brothers LLP lawyers took to other firms when Coudert collapsed in 2006 belong to Coudert's bankruptcy estate. "Under the partnership law, the client matters are presumed to be Coudert's assets on the dissolution date, the bankrupt firm's The Coudert ruling may make firms that took in Dewey refugees regret hav- ing done so. Note that there still is ongoing litigation six years after the Coudert bankruptcy. Brobeck Phleger & Harrison LLP, a large firm that " said the judge. dissolved in 2003, is still being unwound. It's a long haul when a big law firm goes belly up. The "unfinished business" doctrine OP I N ION York Times, who recently wrote "For many years, if a lawyer was called 'com- mercial, doesn't just apply to cases of firm bank- ruptcy. It's of general application, and it applies as much in Canada as in the United States. Ongoing files belong to a law firm and not to an individual lawyer. If a lawyer joins another firm and takes a file with him, he and his new firm can be called on to account to his old partner- ship for fees earned from that file. The position is less clear when a departing lawyer takes not just a file, but a client — something that is done routinely. It seems a lawyer is free to do that. After all, a firm may own a file, but not a cli- ent, who is free to migrate as it wishes. That's not to say the departed lawyer's old firm may not peevishly feel that ethi- cal and fiduciary obligations have been ignored by its former member. In my last ethics column, I quot- ed Andrew Ross Sorkin of The New Harper, who a short time ago wrote in his acclaimed legal blog The Belly of the Beast, "Most big law firms have evolved — or devolved — into short- term bottom-line businesses." The old- fashioned "I'm a professional, my last column, has been supplanted by the modern "I'm a businessman." The Dewey fiasco exemplifies this trend. Unfortunately, a lot of lawyers — like " I said in tive. Today, it is increasingly a badge of honor. ' that was considered a pejora- " I also mentioned Steven those who ran Dewey — are hopeless at business, even though they seem prepared to swallow old-fashioned ethics in their pursuit of Mammon. Philip Slayton's latest book, Mighty Judgment: How the Supreme Court of Canada Runs Your Life, is now available in paperback. Follow him on Twitter @philipslayton. ONTARIO FAMILY LAW EXAMINED NEW PUBLICATION PROPERTY RIGHTS AND OBLIGATIONS UNDER ONTARIO FAMILY LAW ROBERT M. HALPERN, LL.B. Strengthen your knowledge of Family Law's core areas with Property Rights and Obligations under Ontario Family Law. "NEED-TO-KNOW" FAMILY LAW INFORMATION This title offers comprehensive analysis of a wide variety of core topics and issues pertaining to property rights and obligations in Ontario family law. • Chapters I through IV focus on the rights and obligations of married spouses under Part I of the Family Law Act • Chapter V offers exclusive coverage of the substantive rights and obligations of all cohabitants • Chapters VI and VII discuss coverage of income tax and bankruptcy matters • Chapter VIII covers property protection techniques ORDER # 804568-65203 $119 Hardcover approx. 580 pages May 2012 978-0-88804-568-3 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 CANADA LAW BOOK® www.CANADIAN Lawyermag.com A U GUST 2012 17

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