Plaintiff alleges lawyer's dissolution of PC a sham.

Byline: Kris Olson

Back in 2014, Lawyers Weekly chronicled a judgment a plaintiff obtained against the employer of an attorney who defrauded him. It was a cautionary tale about the exposure law firms can face from rogue members.

But the story did not end there.

Five years later, that plaintiff, Robert Smith, is still chasing the judgment of more than a quarter-million dollars he obtained against RKelley-Law, P.C. That's because on Jan. 13, 2016, the day after final judgment had entered, the firm's principal and sole shareholder, R. Emmett Kelley, voted to dissolve the PC. Attorney Kelley would later put the PC into bankruptcy, with Smith as its main creditor.

Meanwhile, there was little disruption in Kelley's law practice, beyond its name change to the Law Offices of R. Emmett Kelley. Kelley ported many of his clients over by asking them to sign amendments to their ongoing fee agreements.

In Smith's view, those steps were clearly designed to avoid the debt he is owed. He filed suit in Norfolk Superior Court, asking for Kelley to be found individually liable for the PC's debt on theories of successor liability or piercing the corporate veil.

On Oct. 29, 2018, Judge Thomas A. Connors granted Kelley summary judgment but acknowledged that "[t]he issue here is a complex one which is not free from doubt."

Now, the Supreme Judicial Court has been charged with trying to dissipate some of that doubt, with oral arguments in Smith v. Kelley scheduled for Nov. 5.

Novel issue

The issue on which the SJC honed in successor liability or piercing the corporate veil in the context of a shareholder who dissolves a PC and resumes practicing law as a sole practitioner under his own name appears to be a novel one on which Connors had been unable to unearth any relevant precedent.

"The justices seem to be troubled at the notion of a lawyer avoiding a judgment by dissolving his law firm PC, then immediately resuming his law practice under his own name, especially where the lawyer admits to dissolving the PC because of the judgment," Boston attorney Christopher R. Blazejewski said.

Kelley had been an individual defendant in the original federal litigation, but U.S. District Court Judge Richard G. Stearns allowed his motion for judgment as a matter of law on the grounds that there was insufficient evidence that Kelley had been involved in the scheme of attorney Louis G. Bertucci III, an associate at the PC.

Bertucci had lured Smith, a disabled Marine Corps veteran who was...