General Practice, Solo & Small Firm DivisionMagazine

Volume 17, Number 1
January/February 2000

What Rule 1.17 Says

Among other things, Model Rule 1.17 provides that a lawyer's practice may be sold only in its entirety, as a single commodity, not piecemeal, to a solo lawyer or law firm, provided the seller ceases thereafter to engage in the private practice of law. If the seller is the estate or surviving nonlawyer spouse of a deceased lawyer, the matter of cessation, of course, is not an issue.

The rule assumes that the continued-practice restriction applies to a defined geographic area or to the state, district, or territorial jurisdiction as selected by an adopting jurisdiction. It is not intended to mean that the selling lawyer may never again engage in the private practice of law under any condition, but it guards against deception, sham, pretension, or worse. Nor does it prohibit a selling lawyer from future employment as an attorney in government service or in a private or public agency providing legal services to the poor. Jurisdictions adopting the rule are free, of course, to set their own re-engagement standards or prohibitions.

All affected clients must be given written notice regarding the proposed sale, the terms of fee arrangements, the client's right to retain other counsel or to take possession of his or her file, and the fact that the client's consent to the sale will be presumed if no action or objection is made within a specified period of time. The onus, then, is on the client in all cases to determine the disposition of the file, and the client must arrange for referral to other counsel.

Fees charged to clients cannot be increased by reason of the sale, although the purchasing lawyer or firm may refuse to undertake representation unless the client pays a fee not to exceed that charged by the purchaser for similar services prior to the start of purchase negotiations.

Concern about client confidences in the course of negotiations is addressed by the provision of the rule requiring client notification prior to sale. The "Comment" to Rule 1.17, intended to lend guidance to the implementation of the rule, says that such notice must include the identity of the purchaser and any proposed changes to future representation. If the client consents, then information in the file may be disclosed. If the client does not respond within the allowed 90-day period, consent will be deemed to have been given. The client can, of course, retrieve the file for referral elsewhere.

The rule also contemplates that each seller exercise competence in selecting a qualified prospective purchaser and that the purchasing firm or lawyer adhere to Model Rule 1.1 requiring competent subsequent representation. Finally, the rule discusses the sale of a law practice by representatives of deceased, disabled, or disappeared lawyers.

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