Dewey Partner Clawback Ruling May Hurt New York Law Firms

Law360, New York (November 18, 2014, 1:14 PM EST) -- If you are a partner of a New York law firm and unbeknownst to you, your firm is insolvent, then you are working for free. And your unwitting gratuitous service may continue for years before you find out and a bankruptcy trustee shows up at your door asking you to return to the firm every penny you were paid over several years. Had you been working for a California firm, or a firm in a majority of U.S. jurisdictions, you would be entitled to keep the reasonable value of your services over those years. But, at least according to a recent ruling in the Dewey & LeBoeuf LLP bankruptcy case, partners of New York firms must pay back every penny....

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