Haymond v. Lundy
United States District Court for the Eastern District of Pennsylvania
2002 WL 1972101
John Haymond (plaintiff), Robert Hochberg, and Marvin Lundy (defendant) founded the law firm partnership Haymond & Lundy (H&L) in October 1997. The partnership agreement provided that a partner must get the approval of a majority of the partners before purchasing or disposing of a material asset exceeding $10,000 in value. John Kelly was injured in an accident. He initially retained attorney Emmett Fitzpatrick to represent him in a personal injury action. After Fitzpatrick filed the complaint, Kelly said he no longer wanted Fitzpatrick’s services and turned to Lundy and H&L instead. Without consulting the other partners, Lundy contacted Fitzpatrick and promised to pay a referral fee out of any trial proceeds. The case settled for nearly $2.5 million, including attorney’s fees of $996,500. In satisfaction of their referral agreement, Lundy paid Fitzpatrick $150,000. H&L dissolved in October 1999. The partners’ various liabilities regarding partnership business were ultimately sorted out in court. Haymond and Hochberg alleged that the referral fee was not a liability of the partnership because Lundy lacked authority to pay it without majority approval. Lundy countered that the referral fee was not a material asset. No evidence of the firm’s prior treatment of referral fees was presented.
Rule of Law
Holding and Reasoning (Shapiro, J.)