3.3.2Sale of a law practice (Rule 1.17)

Rule 1.17 permits sale of an entire practice when four conditions, all protecting clients who never agreed to the transfer, are met. The fourth is the one that slips: the fees charged clients are not increased by reason of the sale.

A practice is built out of client relationships, and clients are not inventory that transfers with the furniture. Yet a lawyer who retires or dies leaves matters that someone must carry. Rule 1.17 makes the handover possible while keeping the choice of counsel where it belongs, with each client.

A practice or a practice area may be sold when four conditions hold:

1. the seller ceases private practice in the area sold;
2. the entire practice or practice area goes to one or more lawyers or firms;
3. each client gets written notice of the sale, of the right to other counsel or to the file, and that ninety days' silence counts as consent; and
4. fees are not increased by reason of the sale.

Rule 1.17 — Sale of a Law Practice

Four conditions, all required:

1. Seller ceases private practice in the geographic area or practice area sold; Comment [3]: salaried employment as a lawyer on the staff of a public agency, on the staff of a legal services entity that provides legal services to the poor, or as in-house counsel to a business is not private practice. Comment [2]: a return to private practice as a result of an unanticipated change in circumstances does not necessarily result in a violation
2. Entire practice or practice area sold to one or more lawyers or firms; no cherry-picking — the seller must offer the whole practice or practice area in good faith, and clients who choose other counsel, or a matter the buyer cannot take because of a conflict, do not spoil the sale
3. Written notice to each client:
   • fact of the sale,
   • right to other counsel or file retrieval, and
   • notice that 90 days' silence constitutes consent; court authorization required for unlocatable clients
4. No fee increases resulting from the sale; buyer honors existing fee agreements (Comment [10])

• Comment [7]: negotiations with a prospective purchaser sit outside Rule 1.6 only prior to disclosure of information relating to a specific representation of an identifiable client; giving the purchaser detailed information relating to a representation — the client's file is Comment [7]'s example, not its limit — requires that the client first be given actual written notice of the contemplated sale, including the identity of the purchaser, and then consent

The exam will offer a seller who keeps favored clients: retaining even one matter that should transfer voids the sale. A non-responding client: silence after ninety days is consent.