ABA Rule 1.17 Sale of Law Practice
Lawyers should review ABA Rule 1.17 before buying or selling a law practice. Some states have enacted versions of ABA Rule 1.17. Lawyers are urged to consult with ethics counsel to review the version of ABA Rule 1.17 that was adopted in the applicable jurisdiction.
The sale of a law practice has not always been allowed. Historically, sole practitioners were out of luck when they retired. Law practice sales were prohibited. Sole practitioners’ counter-parts in small and not-so-small firms had an advantage by selling to associates or other partners who would continue the practice. That unfair advantage was neutralized with the adoption of ABA Rule 1.17.
ABA Rule 1.17: Client-Lawyer Relationship,
A lawyer or a law firm may sell or purchase a law practice, or an area of law practice, including good will, if the following conditions are satisfied:
(a) The seller ceases to engage in the private practice of law, or in the area of practice that has been sold, [in the geographic area] [in the jurisdiction] (a jurisdiction may elect either version) in which the practice has been conducted;
(b) The entire practice, or the entire area of practice, is sold to one or more lawyers or law firms;
(c) The seller gives written notice to each of the seller’s clients regarding:
(1) the proposed sale;
(2) the client’s right to retain other counsel or to take possession of the file; and
(3) the fact that the client’s consent to the transfer of the client’s files will be presumed if the client does not take any action or does not otherwise object within ninety (90) days of receipt of the notice.
If a client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer of a file.
(d) The fees charged clients shall not be increased by reason of the sale.
More information is available by reading other blog posts by lawyer Robert Schaller of the Schaller Law Firm and its page on Rule 1.17 Sale of Law Practice. Also read the ABA’s practice advice at https://www.americanbar.org/groups/senior_lawyers/publications/voice_of_experience/2017/february-2017/selling-a-law-practice-under-aba-model-rule-1-17/.