Legal Update: March 2026
LeVine v. Platzer: Valuation of Intangible Assets Under New York Partnership Law Statute
The valuation of an ownership interest in a law firm can be challenging because it will often include significant unknowns as of the valuation date. The existence of uncertainty is not a justification for assigning no value to such assets. The author discusses LeVine v. Platzer, which involves the valuation of a law firm’s intangible assets under New York’s Partnership Law Statute.
According to the United States Small Business Administration, nearly half of small law firms will break up. Those breakups are typically driven by economics or personalities. Either way, somebody needs to determine the value of the firm’s assets and liabilities. In LeVine v. Platzer, 2025 N.Y. Misc. LEXIS 8520, 2025 NY Slip Op 34050(U), 2025 LX 487106 (N.Y. Sup. Ct. October 17, 2025), that responsibility was left to the court, and, despite being confronted with wildly conflicting expert testimony, Judge Schecter did just that.
Background
Scott Levine (“Plaintiff”) had been the managing partner of Platzer, Swergold, Levine, Goldberg, Katz & Jaslow, LLP (the “Old Firm”), a practice focused on creditors’ rights, as of its dissolution on March 19, 2021 (the “Valuation Date”). Plaintiff joined a different, larger firm. Plaintiff’s three partners, Defendants Henry G. Swergold, Clifford A. Katz, and Howard M. Jaslow (collectively with the Old Firm, “Defendants”), along with the associates and staff, continued practicing under the name Platzer, Swergold, Goldberg, Katz & Jaslow, LLP (the “New Firm”).
While the parties agreed on the appropriate approach to valuing the Old Firm’s net assets, they offered widely disparate expert opinions on what those values should be. Key issues for the bench trial were Plaintiff’s percentage of ownership, the value of the Old Firm’s accounts receivable, work in process and portfolio of contingent and flat fee cases, and the extent to which the remaining office lease obligation would offset the value of those assets.
Court Findings
Ownership Interest
In a classic example of the cobbler’s children going barefoot, the Old Firm did not have a written partnership agreement, nor had the partners entered into any kind of agreement governing their exact percentage interests. Therefore, Defendants argued, under section 40[1] of the New York Partnership Law, “partners ‘share equally in the profits and surplus remaining after all liabilities’” irrespective of how income is allocated among them.[1] Plaintiff, on the other hand, looked to the Old Firm’s tax returns, including the final return filed by the individual defendants after he had departed, showing his “distributive share” as 40.362%.
The court looked at several sources in resolving this dispute. First, the tax return did not just reflect an allocation of income among the partners. The Forms K-1 issued to the partners also contained a line for “capital” allocation which, according to the IRS instructions for that form, “is the portion of the capital you would receive if the partnership was liquidated at the end of its tax year by the distribution of undivided interests in the partnership’s assets and liabilities.”[2]
Further, in prior instances of a partner leaving the Old Firm, the parties had entered into a separation agreement that, among other things, noted that “the former partner’s then ‘equity interest’ … was the same as the ‘share of profits, losses, and capital’ reflected on the most recent Schedule K-1.”
The court found that, despite the absence of a formal partnership agreement, the evidence, including the tax returns, the prior separation agreements and the method for allocating cash distributions, established an agreement on the parties’ ownership interests. Therefore, the court found that Plaintiff’s interest in the Old Firm was 40.362%.
Value of Accounts Receivable
The parties provided vastly different values for the Old Firm’s accounts receivable as of the Valuation Date.
Plaintiff’s expert calculated the value of accounts receivable at $3,540,080 by aging the accounts receivable into six categories and assigning collectability rates between 5% and 90% based on those categories. The court found this methodology unconvincing.
Defendants’ expert on the other hand concluded that accounts receivable as of the Valuation Date were worth only $1,493,735 based on a methodology that the court did not describe in its opinion but was equally flawed.
Confronted with equally unappealing evidence of the value as of the Valuation Date, the court looked at the Old Firm’s actual collections through the remainder of 2021 and into 2022 to conclude that the value of accounts receivable was $2,000,000.
Value of Work in Process
As the Valuation Date was mid-month, the Old Firm had accumulated time and expenses as yet unbilled, or “work in process” (“WIP”). Defendants’ expert valued the WIP based on a 60% realization factor at $441,000. Plaintiff’s expert valued the WIP at $1,226,497; the court, while describing that value as “somewhat optimistic,” declined to describe the valuation method. Without explaining how it reached the number, the court valued the Old Firm’s WIP at $900,000.
Value of Contingent Fee Matters
In addition to its hourly billing clients, the Old Firm had a portfolio of contingency fee matters. Plaintiff’s expert valued those cases at $2,096,243. Defendants’ expert determined, presumably due to the uncertainty attached to contingent fee matters, that he could not value them and, thus, effectively considered them worthless.
While the court did not find Plaintiff’s expert’s method “particularly persuasive,” the court recognized that those cases, collectively, had significant value and was “unconvinced that such value cannot be reasonably approximated based on known information at the [Valuation Date].”[3]
In support of his expert’s calculation, Plaintiff had noted that the Old Firm realized annual revenues from contingent fee matters of $2,033,865.65, on average, for the five years preceding the Valuation Date. “While this backward-looking view is not on its own enough to determine value, it is probative evidence that defendants failing to assign any value to what was unquestionably a significant part of the Old Firm’s business is untenable and would result in a valuation not rooted in reality or consistent with settled law.”[4] The court, based the Old Firm’s historical performance and financial records, assigned a value of $2,000,000 to these matters.
Lease Offset
The Old Firm was obligated under its office lease through October 2024 for lease payments totaling more than $3 million. Defendants argued that this liability was an offset to the value of the Old Firm’s assets.
While the court agreed with Defendants “that value must be determined based on what was known or knowable at the time of dissolution,”[5] the evidence provided at trial established that Plaintiff’s former partners intended to continue operating the firm for the foreseeable future. By way of example:
- At the trial, Defendants’ counsel asserted, “To be clear, my clients intend to continue practicing together as partners, without [Plaintiff], consistent with their legal rights” and “my clients intend to ensure the continued employment of the dozens of attorneys and staff that rely on them for their livelihood, especially during these very challenging economic times;”
- Following the dissolution of the Old Firm, the partners immediately formed the New Firm, operating from the same offices, transferring all open matters, bank accounts, subscriptions and other operations to the new firm, just removing Plaintiff’s name;
- All but one client remained with the New Firm; and
- The New Firm operated out of the same offices, using all of the same equipment and fixtures, and continued to make the monthly lease payments through the end of the lease.
The Defendants argued that failing to offset the lease liability against the value of the assets produced a windfall to Plaintiff, but the court disagreed. The court concluded that what was known or knowable at the time of dissolution was that the remaining partners intended to continue the operation of a law practice at that location. To discount the value of the Old Firm’s assets for the remaining lease payments due on a lease that was assumed by the New Firm would have resulted in a windfall to Defendants.
Pre-judgment Interest
The court directed the parties to jointly prepare a proposed form of order based on Plaintiff’s 40.362% ownership interest and the court’s valuation of the Old Firm’s assets as set forth in the order along with pre-judgment interest at 9% from the dissolution date. The court did not include any legal analysis to support an award of pre-judgment interest, suggesting that Plaintiff was entitled to it as a matter of right.
Conclusion
The valuation of an ownership interest in a law firm can be challenging because it will often include significant unknowns as of the valuation date. The existence of uncertainty is not a justification for assigning no value to such assets. Further the court affirmed the “known or knowable” standard for determining value but essentially applied a practical approach to what is knowable. While the Old Firm was dissolving at a particular date, its receivables would still be collected and its lease was not being terminated as the partner defendants had determined to continue practicing from those offices following dissolution.
[1] 2025 N.Y. Misc. LEXIS 8250 at *3.
[2] Ibid., internal punctuation omitted.
[3] Ibid. at *6.
[4] Ibid. at *7.
[5] Ibid. at *10.
Michael J. Molder, JD, CPA, CFE, CVA, MAFF, applies 30 years of experience as a Certified Public Accountant and litigator to help investigate and analyze cases with complex financial and economic implications. He has acted as both counsel and accounting expert in pending and threatened litigation as well as participating in internal investigations of financial misconduct. As a litigator, Mr. Molder helped co-counsel understand complex financial and accounting issues in dozens of cases. In 2006, Mr. Molder returned to public accounting applying his unique skills to forensic engagements. He has also performed valuations of business interests in a wide variety of industries.
Mr. Molder has served as a valuation expert for both plaintiffs and defendants in commercial litigation matters and owner and non-owner spouses in matrimonial dissolutions. He has participated in the valuations of businesses in a wide variety of industries, including: food service, wholesale and retail distribution, literary development and production, healthcare, manufacturing, and real estate development.
Mr. Molder has also investigated and valued damages in a wide variety of litigation contexts ranging from breach of contract claims to personal injury cases, and from employment disputes to civil fraud. He has consulted on many matters which have not involved the issuance of a report for litigation or resulted in deposition or trial testimony. Accordingly, the identity of these matters is protected by attorney client privilege.
Mr. Molder has also lectured widely on a variety of accounting and litigation related topics including business valuation, financial investigations in divorce proceedings, accountant ethics, financial statement manipulation and “earnings management.”
Mr. Molder can be contacted at (610) 208-3169 or by e-mail to Molder@lawandaccounting.com.
