## Facts

- Colette Bohatch joined Butler & Binion’s Washington, D.C. office in 1986, became a partner in 1990, and worked primarily on the firm’s major client, Pennzoil.
- After reviewing internal billing and collection reports and portions of a managing partner’s time diary, Bohatch suspected that managing partner John McDonald was overbilling Pennzoil.
- Bohatch reported her suspicion to the firm’s managing partner, Louis Paine, who said the firm would investigate.
- The next day, McDonald told Bohatch that Pennzoil was dissatisfied with her work and wanted supervision; Bohatch testified this was her first criticism.
- Firm management investigated by reviewing bills and documentation and speaking with Pennzoil’s in-house counsel, who stated Pennzoil was satisfied that the bills were reasonable; the firm concluded there was no basis for the overbilling accusation.
- After the report, Bohatch was told to find other employment; the firm continued paying a monthly draw and certain benefits during her job search.
- The firm later denied her 1990 year-end partnership distribution, reduced her tentative 1991 distribution to zero, and stopped her monthly draw before she left.
- The partners voted to expel Bohatch shortly after she filed suit.

## Issues

1. Whether partners’ fiduciary duties impose a duty on a law-firm partnership not to expel a partner for reporting suspected client overbilling by another partner.
2. Whether the firm breached the partnership agreement by reducing Bohatch’s tentative distribution and terminating her draw without the notice required by the agreement.

## Decision

- The Supreme Court of Texas affirmed the court of appeals’ judgment.
- The court held the firm did not breach a fiduciary duty by expelling Bohatch after she reported suspected overbilling; the expulsion did not support tort damages absent evidence of expulsion in bad faith for self-gain.
- The court upheld the finding that the firm breached the partnership agreement by reducing Bohatch’s tentative 1991 distribution to zero and cutting off her draw without contractually required notice, leaving intact the contractual recovery.

## Legal Principles

- A partnership is based on the partners’ agreement; absent contractual limits, partners in an at-will partnership have no duty to continue the relationship and may expel a partner for business reasons, including loss of trust and confidence.
- Fiduciary duties among partners require good faith and loyalty, but do not include a general duty to retain a partner when the relationship has become untenable due to loss of confidence.
- A narrow fiduciary constraint may exist where expulsion is used in bad faith for self-gain (such as appropriating the expelled partner’s share), but a whistleblowing-based expulsion is not, by itself, actionable in tort without evidence of such self-dealing.
- Contractual provisions governing notice and compensation/distributions remain enforceable; violations may yield contract damages even when tort fiduciary-duty claims fail.

## Conclusion

The court declined to recognize a fiduciary-duty tort remedy protecting a law-firm partner from at-will expulsion after reporting suspected overbilling, while enforcing the partnership agreement’s notice requirements for compensation and distributions.


Bohatch v. Butler & Binion, 977 S.W.2d 543 (Tex. 1998)