Bohatch v. Butler & Binion

Brief Fact Summary. Bohatch (P) alleges that she was wrongfully dismissed as a law partner for whistle blowing.

Synopsis of Rule of Law. Fiduciary relationships cannot create exceptions to the at will nature of partnerships among law partners.

Facts. Bohatch (P) was a former partner in Butler and Binion (D). She complained another partner to others that another partner was overbilling a client. Bohatch (P) was let go. She claimed her firing was bad faith retaliation for her complaints. Her claim of breach of fiduciary duty and breach of the duty of good faith and fair dealing were tried and won before a jury. The appeals court however held that Bohatch (P) could not recover the breach of fiduciary duty, but could recover for breach of partnership agreement because her distribution for 1991 was reduced to zero without the requisite notice. All the parties filed for appeal.

Issue. Do Fiduciary relationships create exceptions to the at will nature of partnerships among law partners?

Held. (Enoch, J.) No. Fiduciary relationships do not create exceptions to the at will nature of partnerships among law partners. The firm did not have a duty to not expel Bohatch (P) for reporting suspected overbilling by another partner. Bohatch’s (P) claim of being expelled improperly were governed by the partnership agreement, however, her claim of an improper reason for expulsion is not subject to the partnership agreement. Affirmed

Dissent. (Spector, J.) I hold that partners break fiduciary duty to one another when the y punish each other for compliance with the Disciplinary Rules of Professional Conduct.

Concurrence. (Hecht, J.) I cannot see how a five person partnership can legitimately continue when one partner accuses another of being unethical. Even though expulsion of a partner for reporting unethical conduct may be a breach of fiduciary duty, expulsion for mistakenly reporting unethical conduct is not a breach of fiduciary duty.

Discussion. The dissent opinion contended that the majority partners were setting the wrong example to lawyers and to the public. To protect the client, there exists a duty to report overbilling and other inappropriate conduct. Even if it was a mistake, retaliation against a partner who tried in good faith to correct misconduct does not set a good precedent for others to follow according to the dissent opinion.