Tom Pettiette and his law partner, Martin Akins, received a contingency fee of $1.5 million. They could not agree on how to split the fee, so they each purchased a $750,000 annuity contract from New York Life Insurance Company. They figured that, during the term of the annuity, the money would be safe and each would receive an income. They had agreed that, on a certain date, they would both redeem the annuities. By that point, they figured, they would have decided how to divide the $1.5 million fee. Unfortunately, when they went to redeem the annuities, they discovered that they had to pay a surrender charge and tax penalty that greatly reduced the proceeds. Pettiette sued New York Life for failing to tell him about these charges and penalties. New York Life had disclosed these facts in a prospectus that it had mailed to the law firm. Akins admitted he had received a prospectus. Evidently, he had failed to give it to Pettiette.  Result? The trial court dismissed the case on a motion for summary judgment from New York Life. The appeals court upheld the trial court’s decision. When Akins received the information, he had a duty to pass it on to the partnership. Although he failed to do so, the partnership was treated as if it had been notified.

Questions:

1. What is the partner’s duty?

2. What is a consequence of this duty?