Beckman v. Farmer

In 1981, Robert Beckman (plaintiff) and Donald Farmer, Jr. (defendant) announced the formation of a new law firm, “Beckman & Farmer,” which served mostly clients of Beckman, mailing out notices that indicated the “formation of a partnership for the practice of law.” No formal partnership agreement was executed, but the lawyers agreed in writing that Farmer would receive an annual salary of $85,000 and a percentage of net profits above a certain amount, and Beckman was to provide financing and be reimbursed for expenses he covered. A third attorney, David Kirstein, joined the firm in 1982. The firm was renamed “Beckman, Farmer, & Kirstein,” and a document titled “Re: Partnership Agreement” revised the profit sharing of the firm and provided Kirstein an annual salary of $80,000 “guaranteed” by Beckman, plus a share of profits after a certain threshold was reached. Beckman routinely advanced his own money to pay firm expenses, which were all eventually repaid. Both Beckman and the firm’s accountant referred to the firm as a partnership in documents and memoranda, including partnership tax returns signed by Beckman, which identified Beckman, Farmer, and Kirstein as partners. Farmer signed promissory notes binding him as partner for debt obligations of loans made in the firm’s name, secured by the personal assets of Beckman and Beckman’s wife. Farmer eventually left the firm, and a dispute arose as to Farmer’s right to a share of profits from the settlement of an antitrust suit for one of the firm’s clients, Laker Airways. Beckman and Kirstein refused to provide Farmer a final winding up and accounting of the partnership. Farmer sued and claimed he was forced out by fraud and that his former partners breached their fiduciary duty to conduct a final accounting. The lower court granted summary judgment in Farmer’s favor, and Beckman appealed to the District of Columbia Court of Appeals.