Three St. Louis lawyers who were engaged by an “unconventional” national bankruptcy firm to represent its clients are entitled to their attorney’s fees because they’re members of the national firm, a Missouri federal judge ruled..
“The ultimate issue” is whether Deighan Law, which does business as UpRight Law, “engaged in impermissible fee sharing by engaging local lawyers to represent Deighan Law clients in Chapter 13 bankruptcy cases,” Judge Stephen M. Limbaugh Jr., of the Eastern District of Missouri, wrote in his April 14 opinion.
UpRight Law is headquartered in Chicago and has three general partners and 300 limited partners who are all attorneys, according to Limbaugh’s ruling.
In 2018, a U.S. bankruptcy court ruled that three of those limited partners, Michael Doyel, John Caraker, and Andrew Magdy, had to return the attorney’s fees paid to them in a bankruptcy case because they weren’t lawyers at UpRight Law, applying a rule against fee-splitting among attorneys from different firms.
Doyel, Caraker, and Magdy, who each operate their own practice independently of UpRight Law, had signed partnership agreements with UpRight, describing them as “non-equity, non-voting” members of the firm, Limbaugh said.
None of them can vote at partnership meetings or participate in management of the firm, he added.
The Cape Girardeau-based judge noted additional specific details in the agreements regarding UpRight’s responsibilities such as:
- serving as the initial contact for new clients;
- fielding calls from clients, creditors, and opposing counsel;
- collecting client payments; and attributing fees to attorneys;
- procuring and managing software for the attorneys to use;
- providing them with UpRight business cards; and
- hosting an annual partnership meeting.
The limited partners’ duties include letting UpRight know of any potential client conflicts; conducting all work related to a case; providing client consultation and advice; recording times spent and tasks concluded by the partners in Upright Law’s database; providing updates pertinent to each case in the database; and creating uploading digital copies of all documents gathered into the database, the court said.
The general partners and the limited partners “present themselves to the public in a way that suggests that they are a firm or conduct themselves as a firm,” Limbaugh said. The record also shows that the Chicago office monitors the cases, supervises, and provides legal assistance from staff lawyers and other partners as necessary, making it “more than a lawyer referral agency.”
And “critically,” the limited partners identify UpRight Law as their law firm in court filings and client statements, the judge said. The facts lead show that UpRight law and its limited partners do constitute a law firm, albeit an “unconventional” one, he said, but there’s no authority to preclude it.
The case is Deighan Law LLC v. Daugherty, E.D. Mo., No. 4:19-cv-02506, 4/14/20.