Bankrupt Law Firm Clawbacks Take Hit in California

California firm Heller Ehrman LLP went bankrupt a decade ago, and it’s taken that long for some of the financial repercussions to be ironed out. A major one was whether a defunct firm has any right to claw back money made from unfinished legal work that departed partners take with them to their new employers.

The California Supreme Court ruled this week that failed law firms are not entitled to fees earned on legal matters that are in progress – but not completed – at the time the firm closes its doors.

“Any expectation the law firm had in continuing ...