Gabe Lincoln has been a solo domestic relations practitioner in Capitol, Ohio for 55 years. In recent years, he has reduced his time practicing, spending the winter months in Florida. Ready to retire, he does not wish to abandon his clients, many of whom have ongoing post-decree matters. As Gabe has always practiced alone, he does not know how to transition his clients to another lawyer. He would like the practice to continue to carry his name, and to financially benefit from the value of the practice, including the good will. He also remembers that, traditionally, it was unethical to sell a law practice. He seems to recall that the Ohio rule changed several years ago.

At the annual Capitol Bar Association continuing legal education seminar, the ethics speaker generally discusses the ethics of one lawyer selling his or her practice to another lawyer. Gabe begins thinking seriously about selling his practice. He goes back to the office, pulls out his dusty set of ethics rules, determining there are a variety of considerations in selling a law practice.

Locating a Purchaser and Meeting Ethical Requirements

Gabe's foremost concern is identifying a lawyer worthy of serving his clients. He desperately wants to sell his practice to someone who will care about his clients as much as he does. For several years, Gabe has become a mentor to a 10-year lawyer in town, Sandy O'Conner. Gabe has co-counseled a case with Sandy and has taken note of her brilliance, diligence and extreme loyalty to her clients. Gabe views Sandy as a daughter and thinks she would be perfect to buy his practice. Gabe takes Sandy to lunch and discusses the deal. After mulling things over for a couple of weeks, Gabe and Sandy agree she will purchase his law practice. They both agree to hire ethics and business counsel to accomplish this.

Reviewing the issues in some detail, they determine that Rule 1.17 permits the sale of a law practice, including the good will of the practice1. The entire practice must be sold, except where conflicts of interest prohibit the transfer of certain clients2. Even if a number of the clients decide not to be represented by the purchasing lawyer, the good-faith requirement is satisfied, if the selling lawyer makes the entire practice available for sale to the purchasing lawyer3.

The Rule indicates a "selling lawyer" is a solo lawyer, a firm, the estate of a deceased lawyer, or the representatives of a disabled lawyer, or a lawyer who has abandoned his or her practice4. A "purchasing lawyer" is a solo lawyer or a firm5. Sales where the purchasing lawyer's only purpose for the purchase is to resell the practice are prohibited6.

The prospective purchasing lawyer must run conflicts of interest checks and enter into a confidentiality agreement before client confidences are shared with the prospective purchasing lawyer7. Pursuant to the agreement, the purchasing lawyer is to treat the selling lawyer's clients as his or her own. The selling and purchasing lawyers must agree that the purchase is in good faith with the intention and purpose of delivering legal services to the clients, and that the purchasing lawyer will honor all ongoing fee agreements made between the seller and the seller's clients8. They may also agree to reasonably limit the ability of the selling lawyer to reenter the practice of law9. Neither the selling lawyer nor the purchasing lawyer can exonerate themselves for limit their liability to the clients for any malpractice10.

Notice to the Clients

The selling and purchasing lawyers must give joint notice to all active clients of the firm and to those clients with closed files that the selling and purchasing lawyers agree to transfer to the purchasing lawyer upon the sale, containing the following:

• the proposed sale date;

• a statement that the purchasing lawyer will honor fee agreements on active matters, and that new fee agreements will be negotiated by the purchasing lawyer and the client;

• a statement of the right of the client to opt out of the sale and seek another lawyer;

• a statement that consent to the purchasing lawyer's representation will be presumed, if the client does not object within 90 days of the notice; and

• a biographical statement of the purchasing lawyer, including his or her disciplinary history11.

Having complied with the foregoing, and with the business lawyers' advice regarding the transactional issues, Gabe and Sandy close the deal. They determine the firm can carry on Gabe's name, so long as he continues practicing in the firm or retires.

Footnotes

1. Prof. Cond. R. 1.17, Comment [11].

2. Id, Comment [6].

3. Id.

4. Prof. Cond. R. 1.17 (b) (2).

5. Prof. Cond. R. 1.17 (b) (1).

6. Prof. Cond. R. 1.17(a).

7. Prof. Cond. R. 1.17 (c); Comment [7].

8. Prof. Cond. R. 1.17(d).

9. Id..

10. Id., Comment [11].

11. Prof. Cond. R. 1.17 (e).