CHAPTER 5 - 5-10 SALE OF LAW FIRMS

• Jurisdiction: United States

5-10 Sale of Law Firms

A law firm may be sold, in whole or in part, if a lawyer ceases to practice or ceases to practice in the area of practice being sold.¹⁶⁸ The seller must give written notice to the clients regarding the sale and the clients' rights to retain other counsel.¹⁶⁹ Consent to the transfer of a client's file may be assumed if he client does not object within 90 days from notice.¹⁷⁰ If the client cannot be given notice, authorization may be obtained from a court having jurisdiction.¹⁷¹ Sale of the firm may not cause an increase in fees charged to a client.¹⁷² If a firm is sold, the name may continue to contain the seller's name as long as the name is not false or misleading.¹⁷³

5-11 Planning for Retirement or Continuation of Practice in Case of Death or Illness

We do not like to think about unexpected events that could cause us to abruptly cease practicing law. However, events such as accidents, unexpected illnesses, and untimely death are known to occur. If any of these events were to happen to you, have you made adequate plans to assure that your clients' interests will be protected?

A lawyer has a duty of competent representation.¹⁷⁴ This includes making arrangements that will safeguard the client's interests (including the integrity of any trust monies, confidentiality of information, and the continuing viability of the client's legal matter) in the event of the lawyer's death, disability, impairment, or incapacity.¹⁷⁵ The rules also require that lawyers maintain detailed financial records concerning client matters for a period of seven years, and to make arrangements for their maintenance after the firm ceases to do business.¹⁷⁶ Many malpractice carriers require that the lawyers they insure make arrangements for the appropriate disposition of client matters in the event of the insured lawyer's death or disability.

The commentary to Rule 1.3 tells us that part of ethical lawyering is planning how the needs of clients will be met if a lawyer becomes disabled, dies, or is otherwise unable to continue in practice. By arranging in advance for the temporary management or closing of your practice, your ongoing matters will be handled in a timely manner and there will be less likelihood that a court date will be missed or a closing delayed (for example, because of an inability to access your escrow account), or clients' interests otherwise prejudiced. Funds and property belonging to your clients will be returned to them promptly, as required...