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Ambiguity in Law Firm Partnership Agreements

By Debra L. Raskin and Max Shoengold
May 29, 2008

You would expect that lawyers, many of whom draft and revise contracts on a daily basis, would be especially careful to draft their own law firm partnership agreements so as to make their intentions clear and remove areas of potential ambiguity. Yet this does not always happen. In several recent cases, partners have brought suit against their firms or former firms, and argue that provisions of their partnership agreements should be interpreted one way, while the firms have chosen to implement the provisions in other ways. In these cases, courts must decide if the clauses at issue have at least two reasonable interpretations and are therefore sufficiently ambiguous that the matters should be decided by a fact-finder, or if the provisions are clear enough that they are unambiguous and the claims do not survive summary judgment.

A traditional way courts resolve ambiguity in contract disputes is by applying the doctrine of contra proferentem, which means that if the intent of the parties is impossible to discern, any ambiguities must be construed against the drafter as a matter of law. However, in cases 'where the relevant extrinsic evidence offered raises a question of credibility or presents a choice among reasonable inferences the construction of the ambiguous terms of the contract is a question of fact which precludes the application of the contra proferentem rule.' Morgan Stanley Group, Inc. v. New England Ins. Co., 36 F. Supp. 2d 605, 609 (S.D.N.Y. 1999) (internal quotation marks and citation omitted), aff'd in part & vacated in part on other grounds, 225 F.3d 270 (2d Cir. 2000).

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