Business succession planning for contingent fees is important. The fight between your family and your former partners can be avoided. The example in the case below should motivate you to employ estate planning ideas in your partnership agreement. Alternatively, a buy sell agreement funded by insurance could have helped. It could have saved a lot of time and attorneys fees at the end.
THE SUPREME COURT OF THE STATE OF ALASKA
Supreme Court No. S-14060 Superior Court No. 3KN-04-00052 PR OPINION No. 6779 – May 3, 2013
SUZANNE C. DIMEFF and THE OLETA COWAN TRUST, Appellants,
ESTATE OF ROBERT MERLE COWAN and DALE DOLIFKA, PERSONAL REPRESENTATIVE OF THE ESTATE OF ROBERT COWAN, Appellees.
On March 24, 1989, the oil tanker EXXON VALDEZ ran aground on Bligh Reef in Prince William Sound, spilling 11 million gallons of crude oil. Litigation followed — in what became known as the Exxon Valdez Oil Spill (EVOS) Litigation, over 50 law firms and 30,000 plaintiffs appeared before the United States District Court for the District of Alaska.
Several years later, compensatory damages were calculated at $507.5 million and punitive damages at $2.5 billion.
After appeals and remands, the United States Supreme Court resolved the case in 2008, ruling that punitive damages could not exceed $507.5 million. Payments to individual plaintiffs and attorneys were made through a qualified settlement fund.
Some of the recipients didn’t survive to see their share distributed. The lawyers that performed the work and financed the costs to prepare the case used joint venture agreements. They did not have buy sell provisions. They joint venturers did now wind up their affairs on the death of their members. The joint venture agreement did not provide for survivorship rights. One of the attorneys did not survive to see payment. But with 1.9 million dollars at stake the heirs and joint venture parties had plenty to argue about in federal district court, California state court and the Alaska state courts. The courts entered orders that the parties argued conflicted with each other. Even after this appeal was rendered, they were still involved in a Federal Court interpleader about the money.