Opinion
August 31, 1995
Appeal from the Supreme Court, New York County (Jane Solomon, J.).
The advice the attorneys gave the clients, that a certain transaction should be disclosed to the receiver in a corporate dissolution proceeding in which the clients were involved, was appropriate, and thus provides no basis for a finding that the clients discharged the attorneys for cause. Nor did the attorneys act improperly in seeking a clarification of the retainer agreement when the clients proposed releasing certain performers under their management from their contracts, raising a possibility that the performers' royalties would thereby be placed outside the scope of the retainer agreement while leaving it open to appellant Chalpin to re-sign the released performers with shell entities he was known for using in the past. This was not an attempt by the attorneys to maximize or create the fund from which their contingency would be paid, but rather to preserve the status quo in the face of the clients' intent to subvert the retainer agreement by rendering it illusory ( cf., Dagny Mgt. Corp. v. Oppenheim Meltzer, 199 A.D.2d 711). Nor did the post-discharge disclosure of the transaction to the hearing court warrant forfeiture of the attorneys' fee, since it was in the context of the attorneys seeking to recover their fee by defending themselves against charges of improper conduct ( see, United States v. Ballard, 779 F.2d 287, 292, cert denied 475 U.S. 1109), and any inaccuracy in the substance of the disclosure did not prejudice the clients. Finally, the amount of the fee was proper, as was the award of interest ( Ash Miller v Freedman, 114 A.D.2d 823).
We have considered the clients' other arguments and find them to be without merit.
Concur — Ellerin, J.P., Wallach, Ross and Williams, JJ.