IN THE MATTER OF KEVIN R.HACKETT, RESPONDENT v. MILBANK, TWEED, HADLEY &
MCCLOY, A PARTNERSHIP, APPELLANT
86 N.Y.2d 146, 654 N.E.2d 95, 630 N.Y.S.2d 274
July 5, 1995
(Case Commentary by Editorial Board)
1 No. 171 (1995 NY Int. 174)
Decided July 5, 1995
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Russell E. Brooks, for Appellant.
Gerald E. Ross, for Respondent.
SIMONS, J.:
Petitioner was formerly a partner in respondent law firm but now is a
member of another firm. He contends that respondent owes him a
supplemental payment, authorized for withdrawing partners under the
Milbank, Tweed articles of partnership, and that its denial of the
payment constitutes an impermissible forfeiture of earned but
undistributed income and an impermissible restraint on the practice of
law under the rule in Cohen v Lord, Day & Lord (75 NY2d 95) and
similar cases. Respondent claims that petitioner is not entitled to
any withdrawal payments because the amount of his annual income at his
new firm forecloses payments under the Milbank, Tweed scheme (which
reduces the amount of the supplemental payments in proportion to a
withdrawing p artner's new earned income) and that the provisions of
the partnership's agreement are not unlawfully anticompetitive.
The matter was submitted to an arbitrator, as required by the
partnership agreement. He concluded after a hearing that the agreement
was enforceable and that under its terms petitioner was not entitled
to any supplemental withdrawal payments. Petitioner then instituted
this proceeding challenging both the arbitrator's power to resolve the
question and his determination in respondent's favor. The courts below
vacated the arbitrator's award, holding that the sums authorized by
the agreement represented a withdrawing partner's share of
undistributed earn ed income and thus any provision in the partnership
agreement reducing them constituted a forfeiture for competition which
violated public policy
. There is a second, and arguably stronger, policy concern in this
SNIPPETS:
IN THE MATTER OF KEVIN R.HACKETT, RESPONDENT v. MILBANK, TWEED, HADLEY &
MCCLOY, A PARTNERSHIP, APPELLANT
(Case Commentary by Editorial Board)
Petitioner was formerly a partner in respondent law firm but now is a member of another firm.
He contends that respondent owes him a supplemental payment, authorized for withdrawing
Respondent claims that petitioner is not entitled to any withdrawal payments because the
The matter was submitted to an arbitrator, as required by the partnership agreement.
The courts below vacated the arbitrator's award, holding that the sums authorized by the
There is a second, and arguably stronger, policy concern in this case, however, the public
Under the parties' broad arbitration agreement, whether the supplemental payment represents
the Articles of Partnership provided in the 28th Amendment that only those withdrawing
In Cohen v Lord, Day & Lord, however, we held that a pr ovision of a law firm partnership
He received repayment of his capital contribution and a share of undistributed net profits
Supreme Court granted petitioner's motion to permanently stay the arbitration, ruling that
In Denburg v Parker Chapin Flattau & Klimpl, we considered the validity of a provision in the
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