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Keywords

lawyerequitytrialpartnershipdeclaratory judgment
plaintiffattorneylawyerequitytrialpatentpartnership

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Hoffman v. Levstik, 369 Ill.App.3d 144, 860 N.E.2d 551, 307 Ill.Dec. 897

Facts

Perry J. Hoffman joined the law firm Fitch, Even, Tabin & Flannery in 1992 and became an equity partner in 2000. After announcing his withdrawal in May 2002, he sought a declaratory judgment regarding the partnership agreement's sections on paid-in capital and retirement capital, arguing they violated professional conduct rules. The firm paid him his pro rata share of profits but did not include a $1.5 million contingent fee received after his withdrawal, leading to the legal dispute.

Plaintiff joined Fitch, Even, Tabin & Flannery (Fitch Even) as an attorney upon graduating from law school in 1992. Fitch Even trained plaintiff as a patent attorney and elected him an equity partner as of January 1, 2000. Plaintiff signed the partnership agreement on October 27, 2000.

Issue

Did the sections of the partnership agreement violate Rule 5.6 of the Illinois Rules of Professional Conduct, and was Hoffman entitled to include the contingent fee in his profit share calculation?

Did the sections of the partnership agreement violate Rule 5.6 of the Illinois Rules of Professional Conduct, and was Hoffman entitled to include the contingent fee in his profit share calculation?

Rule

Rule 5.6 prohibits partnership agreements that restrict a lawyer's right to practice after termination, except for agreements concerning retirement benefits.

Rule 5.6 states: 'A lawyer shall not participate in offering or making: (a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement[.]' 134 Ill.2d R. 5.6(a).

Analysis

The court found that the partnership agreement's sections did not impose undue restrictions on Hoffman's ability to practice law or limit client choice. The provisions regarding paid-in capital and effective termination dates were not deemed to violate Rule 5.6, as they did not impose noncompetition restrictions. Additionally, the court ruled that the contingent fee was part of the profits for the period preceding Hoffman's termination and should be included in his profit share.

On these facts, then, sections 7.1 and 8.3(B) of the partnership agreement did not violate Rule 5.6 or the principles of public policy underlying the rule.

Conclusion

The appellate court affirmed the trial court's ruling that the partnership agreement sections were valid and that Hoffman was entitled to include the contingent fee in his profit share calculation.

Accordingly, we affirm the portion of the trial court's order finding that sections 7.1, 8.3(B), and 8.4 do not violate Rule 5.6.

Who won?

Perry J. Hoffman prevailed in part, as the court ruled he could include the contingent fee in his profit share calculation, while the law firm prevailed on the validity of the partnership agreement sections.

The appellate court affirmed the trial court's ruling that the partnership agreement sections were valid and that Hoffman was entitled to include the contingent fee in his profit share calculation.

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