Attorneys - Client accounts - Constructive trust.

Byline: Mass. Lawyers Weekly Staff

Where a law firm has brought suit against an attorney who previously worked there, summary judgment for either side is unwarranted with respect to the firm's request for a constructive trust.

"In 2016, Attorney Daniel Shapiro brought his federal workers' compensation law practice to Sugarman & Sugarman P.C., pursuant to an 'Employment and Purchase of Practice Agreement' between the parties. By late 2017 the parties' relationship had soured and Shapiro left with his law practice. Sugarman filed suit seeking quantum meruit compensation for its work on Shapiro's cases, damages for alleged breach of contract and breach of Shapiro's duty of loyalty to the firm, and an accounting for all monies received by Shapiro's law practice. Shapiro inserts counterclaims for fraud in the inducement, breach of contract, breach of fiduciary duty, and violation of G.L. 93A.

"Sugarman has now moved that a constructive trust be imposed on the proceeds from all matters on which Sugarman provided services while Shapiro worked there.

"If Sugarman succeeds in proving that Shapiro breached his duty of loyalty, then Sugarman may well be entitled to an order requiring Shapiro to hold some part or all of his earnings from disputed client accounts in a constructive trust for the benefit of Sugarman.

"But Sugarman has not prevailed yet.

"The Court will therefore treat this motion as a motion for a preliminary injunction barring Shapiro 'from using or in any way alienating' any funds received as payment for work on the disputed client accounts. ...

"The Court will deny this motion because Sugarman has not met its burden of proving that it is likely to succeed in proving its claim for breach of fiduciary duty.

"The Court cannot tell from the current record which side, if any, is at fault. The mere fact that Shapiro left the firm and took clients with him does not...

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