On June 21, 2016, the Louisiana Supreme Court amended the Louisiana Rules of Professional Conduct to permit the sale of a law practice. Rule 1.17 now allows a lawyer to sell “a law practice, or an area of law practice, including good will” if the following conditions are satisfied:
- the selling lawyer has not been disbarred and has not permanently resigned from the practice of law in lieu of discipline;
- the selling lawyer “permanently ceases to engage in the practice of law, or has disappeared or died”;
- the “entire law practice, or area of law practice” is sold;
- proper notice is provided to the selling lawyer’s clients;
- the fees and costs charged to the affected clients do not increase; and,
- the confidentiality of client information is protected.
See Order Enacting Rule 1.17 of the Rules of Professional Conduct and Amending Rule 5.4(a)(4) of the Rules of Professional Conduct (signed June 21, 2016 and effective July 1, 2016).
Differences from ABA Model Rules
This newly-enacted rule differs from ABA Model Rule 1.17 in several respects. First, the Model Rule permits any lawyer to sell a practice. The Louisiana Rule, however, prohibits a lawyer who has been disbarred or who has permanently resigned in lieu of discipline from selling a practice.
Second, the Model Rule requires only “written notice” to the seller’s clients. The Louisiana Rule requires that such notice be given either through an in-person consultation (later confirmed in writing) or through United States mail. Moreover, the Louisiana Rule requires publication of the transfer in a local newspaper and in the LSBA Bar Journal. In addition, the notice must provide the seller’s clients with more detailed information about the buyer, including the buyer’s disciplinary history and years in practice.
Third, the Model Rule does not address related confidentiality and conflicts issues associated with a sale of a law practice. The Louisiana Rule, however, requires that a potential buyer receive limited information about the seller’s clients to evaluate whether conflicts of interest would exist. It further requires that the potential buyer safeguard the confidentiality of any information received.
Finally, the Model Rule does not provide that “the client shall retain unfettered discretion to terminate the selling or purchasing lawyer or law firm at any time.” Although the Louisiana Rule expressly so provides, this principle is no doubt true under the Model Rule as well.
A Good Change
This rule is long overdue. Not only will it encourage the orderly transition of a client’s file upon a lawyer’s disability, retirement, or death, it also makes Louisiana’s rules more consistent with ABA Model Rule of Professional Conduct 1.17. The model rules have permitted the sale of a law practice since 1990. See ABA Ctr. for Prof’l Responsibility, A Legislative History: The Development of the ABA Model Rules of Professional Conduct, 1982-2013 (2013).
However, the rule does have one curious aspect. It requires notice by publication and by United States mail. No other rule of professional conduct defines a method of notice, particularly methods that are more costly and difficult than modern means of communication (such as email). The rule should instead require only “written notice” to the transferor lawyer’s clients. See ABA Model Rule of Prof’l Conduct 1.17(c) (requiring only “written notice”).