Expelling a partner for unpopular views

ATL reports that an Orrick, Herrington & Sutcliffe of counsel emailed the firm complaining that a partner’s contribution to California’s Yes on 8 campaign (opposing same sex marriage)

damages the reputation of Orrick as a progressive law firm supportive of equal rights for gay and lesbian people. This can adversely impact the firm in many ways, including hurting our ability to attract gay and lesbian recruits; turning off clients, existing and potential, that support equal rights for homosexuals; and making our current gay and lesbian work force feel like second class citizens.

The email suggests that "we should try to counteract the damage that has occurred."

Professor B asks about the partners’ power and right to expel the pro-Yes on 8 partner under various assumptions about the applicable law and the partnership agreement.

The simple answer is that this depends on the partnership agreement. The partnership statutes don't provide by default for expulsion by partner vote in this situation. They do provide for expulsion per the partnership agreement and for judicial dissociation (or the close equivalent of dissolution and continuation) for partner misconduct (unpopular views probably wouldn't qualify).

Can the partners take action that has the effect of expulsion without an expulsion provision in the agreement? Cadwalader, Wickersham & Taft, 728 So. 2d 253 (Fla. App. 1998) says no. Dawson v. White & Case, 88 N.Y.2d 666, 672 N.E.2d 589, 649 N.Y.S.2d 364 (1996) seems to allow it, though that opinion didn't resolve the fiduciary duty issue.

If the partners’ action is permitted by the partnership agreement, then it’s probably not a breach of fiduciary duty or bad faith – the courts are pretty generous in enforcing the partners’ right to decide whom they associate with. See my article, Law Partner Expulsion, 55 Business Lawyer 845 (2000), and Bromberg & Ribstein on Partnership, Section 7.02(f).

Any questions?

Comments

[Fat Man]

Law firms expel partners all the time, but there is only one reason -- money. If the offensive partner has a big book, they will ignore his conservatism, or liberalism, or failure to bath. If he has no book, mismatched socks will provide sufficient grounds for expulsion.

[Skinny Man]

I agree generally with the comments of "Fat Man" above, but the more "politically incorrect" the partner's speech is, the bigger the book of business she needs in order to stay in the partnership.