What are the Ethical Issues Surrounding the Sale of A Practice?

TRANSCRIPT:

Most states – when I say “most,” I want to say about 45 have what is known as Rule 1.17, 1.117, that talks about all the rules that apply to a sale of a practice. And it’s really all not that complicated. There are notice provisions to clients that the lawyer has to do, and each state does it perhaps a little bit differently. And it tells you what to do about the files and how to give clients the notification about they can come pick up their files or you do this or you do that. And you also can’t in most states raise the rates for the first year after a sale. But the requirements are not that onerous when people look at it. Sometimes it’s somewhat of a pain, but not that bad.

Other ethics rules that will come into play – and this comes into play even if you necessarily go of counsel at another law firm – is you want to sell to a competent lawyer, so you have that competency rule out there, as well as confidentiality. When you’re talking about your practice to a potential buyer, it’s not gonna be a free for all to talk about some of the cases that you’re dealing with some of your clients. You need to sign some confidentiality agreement and in certain situations get client consent. But other than that, the ethics rules don’t really tie lawyers’ hands when it comes to doing these types of deals. It makes it a little more onerous, but again only a little.