Resolving a dispute with a former partner of the firm, the personal injury firm of Fuchsberg & Fuchsberg was ordered by an arbitrator to pay $2,500,000 to the lawyer that supervised its medical malpractice department for 20 years.
The 1999 decision came eight years after the firm’s founder, Abraham Fuchsberg, had been found personally liable to pay $900,000 each to former partners Donald Miller and Edwin N. Weidman for lost profits, as part of an arbitrator’s determination that Messrs. Miller and Weidman were fired in bad faith from Fuchsberg & Fuchsberg in 1987.
The method of paying that award to Messrs. Weidman and Miller was challenged against the 26-lawyer firm. The claimant maintained that Mr. Fuchsberg used firm funds to pay the award to Messrs. Miller and Weidman, despite the fact that the firm itself was not a party to the earlier dispute.
Other issues in the arbitration revolved around a failure to properly account for the partner’s income, the diversion of funds to a charity of Mr. Fuchsberg’s, and the deliberate delay in settling a major case until after the partner left the firm.
In defending the case, Abraham Fuchsberg first tried to claim that the partner was actually an employee and not a partner, despite 20 years of representations to the contrary throughout the legal community.
Had Fuchsberg succeed in doing this, then only the past six years would have been subject to the arbitration as all others would be barred by the statute of limitations. But if he was a partner, then all claims throughout the partnership accrue when the partnership dissolves, even if it involves events more than six years prior. When the arbitrator quickly ruled against the firm on the employee-partnership issue, a number of people “congratulated” the former department head on making partner after 20 years.
After attempting to challenge the arbitration award in court, and losing, and appealing, and losing, the firm finally paid what it owed.