The opinion of the court was delivered by: BRIAN BARNETT DUFF
On January 31, 1994, Barry W. Sufrin ("Sufrin") sued Gerald D. Hosier ("Hosier") for, among other things, breach of contract. On June 28, 1994, Hosier moved in limine or, in the alternative, for summary judgment. For the reasons discussed below, we deny his primary and alternative motions.
In January 1984, Hosier and Sufrin established the law firm Hosier & Sufrin ("H&S"). Pl.'s R. 12(N)(3)(b) at 2. On January 10, 1984, Sufrin proposed a formula to govern the division of the firm's revenues. Pl.'s Br. at Ex. E. In part, the formula provided that Hosier's income would equal "billings less overhead 25% of [Sufrin's] billings less overhead[,] 67% of residual profits," and Sufrin's income would equal "75% of billings
less overhead,  33% of residual profits." Id. On January 21, 1984, Hosier agreed to the proposal ("the Agreement"). Id. On March 5, 1984, the State of Illinois certified H&S as a professional corporation ("PC"). Compl. at Ex. C.
Some time in early 1984, Telesonics Systems, Inc., ("Telesonics") discussed with Hosier "the prospect of [his] representing [it]." Hos. Dep. at 166. On April 4, 1986, Telesonics hired Hosier on a contingent fee basis "to license the television industry under Telesonics' stereo-television sound patents." Pl.'s Br. at Ex. H. In 1987, Telesonics received a settlement from the industry, and the settlement led to a "plan of royalty distribution." Pl.'s Br. at Ex. G. Under the plan, Hosier received a 38.5% interest, and Sufrin received a 1% interest. Id.
From 1988 to 1989, "Hosier entered into a series of agreements with an inventor, Jerry Lemelson ("Lemelson"), under which Lemelson retained [H&S] on a contingency fee basis to pursue his rights under a variety of patents." Pl.'s Br. at 4. The number of agreements is unclear. When Sufrin learned about the agreements is also unclear, yet by 1989, he became involved in at least one of them, the Mattel case.
In January 1990, Sufrin resigned from H&S. The firm dissolved, but "Hosier carried on the Lemelson matters for which [H&S] had been retained," and his "contingent compensation swelled to $ 150 million or more." Pl.'s Br. at 6. Hosier and Sufrin did not wind up the firm's affairs. Who is entitled to what amount of the contingent fees?
A. Does the Agreement Govern the Entitlement?
In Ellerby v. Spiezer, 138 Ill. App. 3d 77, 485 N.E.2d 413, 92 Ill. Dec. 602 (2nd Dist. 1985), the plaintiff sued for an accounting of her law partnership with the defendants after it dissolved. The firm represented clients on a contingency fee basis, and after it dissolved, it realized profits from some of them. The firm, however, made no arrangements for the post-dissolution distribution of the profits. The court stated that the "issue reduced to the question of how, in the absence of an agreement on the subject, the post-dissolution profits from the contingency fee cases should be distributed." Id. at 80.
The court decided that the resolution of that issue lay in the Uniform Partnership Act ("UPA"). Id. The UPA provided that the "dissolution of the partnership did not terminate it; rather, the parties [remained] partners until [they] [wound] up . . . their partnership affairs." Id. Specifically, they remained partners until they wound up "the pending cases the partnership agreed to handle on a contingency fee basis." Id. at 81. Until then, "the fees from those cases [were] . . . assets of the partnership." Id. "Since there was no showing that the partners agreed to change the distribution of profits after dissolution . . ., the distribution formula in effect at the time of the dissolution remained in effect." Id. at 83. Therefore, the court held that "the partners were entitled to share in the remaining profits in accordance with the terms of their partnership agreement." Id. at 84.
Is Ellerby inapposite because it concerned a law partnership rather than a PC? In Fox v. Abrams, 163 Cal. App. 3d 610, 210 Cal. Rptr. 260 (2nd Dist. 1985), the court addressed a similar question. There, "in 1976, the parties
[practiced] law together [at AFGO,]. . . a law corporation." Id. at 612. "Relations between the parties broke down, and, on May 6, 1976, Fox resigned." Id. Before Fox resigned, he "actively [worked] on a number of [AFGO's] pending cases, mostly personal injury and wrongful death." Id. After he resigned, numerous of the clients involved in those pending cases substituted AFGO out and him in as the attorney of record. The court stated that the case "primarily concerned the parties' rights and obligations in the fees subsequently received for the cases which were in [progress] on the date of [his] resignation." Id.
To analyze the case, the court revisited Jewel v. Boxer, 156 Cal. App. 3d 171, 203 Cal. Rptr. 13 (1st Dist. 1984), which "shows the proper way to resolve the instant dispute." 210 Cal. Rptr. 260 at 263. "In [Jewel], four attorneys . . . practiced law together in a partnership. They dissolved the partnership and formed two new firms . . . . Each of the new law firms took a portion of the former firm's active cases, and the clients involved executed the appropriate substitutions of attorney." Id. Following the UPA, the Jewel court held that fees from the former firm's active cases should "be allocated to the former partners according to their right to fees in the former partnership." Id.
Fox argued that Jewel "is a partnership case which should have no application because this case involves a [corporation]." Id. ...