Citation. Meehan v. Shaughnessy, 404 Mass. 419, 535 N.E.2d 1255, 1989)
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Brief Fact Summary.
Meehan (P) and Boyle (P) were partners in the law firm Parker Coulter (D), they filed suit against the firm to recover amounts owed to them under their partnership agreement. Parker Coulter (D) filed a counterclaim against Meehan (P) and Boyle (P) accusing them of breaching the partnership agreement and violating fiduciary duties.
Synopsis of Rule of Law.
The partnership agreement requires fiduciary duty of the utmost good faith and loyalty.
Meehan (P) and Boyle (P) planned to start their own firm outside of Parker Coulter (D). In the meantime, they continued to work normally for Parker Coulter (D). After giving notice, Meehan (P) and Boyle (P) networked with referring attorneys and received consent from a majority of clients to take their cases with them when they leaved. The partnership agreement allowed for cases to be removed in exchange for a â€œfair chargeâ€ and with the consent of the client. Boyle (P) provided the list of those cases taken to Parker Coulter (D) until two weeks after it had been requested. Meehan (P) sued Parker Coulter (D) after it refused to return the capital contributions of Boyle (P) and Meehan (P) nor return their share of the dissolved firm’s profits. The firm filed a counterclaim alleging that Meehan (P) and Boyle (P) broke the partnership agreement and violated their fiduciary duties when they unjustly consent from clients and attorneys to take their cases with them. The trial court dismissed Parker Coulter’s (D) claims. The firm appealed.
Does a partnership agreement require fiduciary duty of the utmost good faith and loyatly?
(Hennessey, C.J.) Yes. A partnership agreement requires fiduciary duty of the utmost good faith and loyalty. Meehan (P) and Boyle (P) made secret preparations to obtain clients for the purposes of leaving without affirming that they were leaving. Boyle (P) also delayed sending the list of clients he intended to transfer until he had already obtained authorization from most of them. Finally, the letters informing the clients of the potential switch were unfairly prejudiced against Parker Coulter (D) because the letters did not present the clients with a clear choice to stay or leave. These preemptive tactics violate the good faith and loyalty clause of the partnership agreement. Now, they also have the burden of proving that the clients would consent to the transfer in absence of any breach of duty. The trial judge erred in finding that they did not unjustly acquire the cases, but the judge correctly found that they had not breached their duty by improperly handling the actual subjects of the cases themselves. Reversed in part and remanded.
Ethical standards for attorneys announcing a change in professional association were set in the ABA’s committee on Ethics and Professional Responsibility Informal Opinion 1457 (April 29, 1980). The standard maintains that notice must be given to a client that he or she has the right to decide who will continue to represent him or her. In addition, the court found that partners have an obligation to reveal to other partners true and full information of all things affecting the partnership. Meehan (P) and Boyle (P) used their positions to the determinant of Parker Coulter (D).