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    Selling a Law Practice under ABA Model Rule 1.17

    Michael P Downey

    Feb 28, 2017

    2 min read

    Career Selling a Practice

    Summary

    • Selling a law practice under Rule 1.17 involves specific requirements: selling an intact portion, ceasing practice in the sold area, client notification, and fee regulation.
    • The practical process includes multi-stage disclosures, buyer evaluations, and a detailed purchase agreement covering critical aspects.
    • Due diligence is vital, emphasizing "trust but verify" and the readiness to walk away if concerns arise.
    Selling a Law Practice under ABA Model Rule 1.17
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    If you are considering leaving the practice of law, or if you are just tired of a particular type of practice, you may want to sell some or all of your law practice.

    Many lawyers sell their practice under the framework established by ABA Model Rule of Professional Conduct 1.17, a special rule designed specifically to facilitate law firm sales.

    Rule 1.17 states:

    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.

    Read the entire rule

    Rule 1.17 does not establish the only method for transferring a law practice for compensation. A lawyer may "sell" a law firm to the lawyers' partners, a method for transferring a law practice that generally falls outside the legal ethics rules. A lawyer may also "sell" a law practice by transferring matters on a case-by-case basis, complying with Rule 1.5(e) to the extent the lawyer wants to share fees with the lawyer taking over the case.

    In this article I will not discuss transferring a practice at length, but instead will focus on the requirements as well as practical guidance for selling a law practice under Rule 1.17.

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