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Compliance March 16, 2006
New York Lawyers Lose Fight for Partner Award Share
March 16, 2006 (PLANSPONSOR.com) - Four New York
lawyers have lost their battle for a slice of a $3.2 million
class action fee received by their firm after a New York
judge ruled they were not equity partners and did not deserve
a portion of the money.
Reported by Fred Schneyer
Manhattan Supreme Court Justice Richard Lowe decided that attorneys Joan Harnes, John Harnes, H. Adam Prussin and Gregory Keller had no legitimate call on a share of the award garnered by the firm’s sole equity partner Sidney Silverman. In the absence of a written partnership agreement, their badges of partnership were outweighed by other evidence indicating they were mere employees, Lowe ruled.
“The fact that a person has always been listed in a company’s payroll books as an employee tends to establish that he is not a partner,” Lowe wrote in Silverman v. Keller, 601913/04.
According to a New York Law Journal news report, the Silverman firm dissolved in 2000, with Harnes and Keller leaving one year earlier to start their own firm. But Keller took over two class action representations the Silverman firm had shared with another lawyer who died in 1999.
Silverman was to have received a percentage of the fees on both cases and he sued in 2004 after the $542,614 he was due on the second case was withheld. The defendants countersued that they were due a share in the $3.2 million fee Silverman received in 2002 on a case begun in 1998.
Lowe also noted the testimony of the firm’s accountant, who said Silverman alone secured firm loans, made capital contributions and otherwise funded the firm’s operations. The accountant also said he generally treated the defendants as employees at tax time, issuing them W-2 forms.