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Q. After 40 years as a general practitioner, I'm tired of going to court. So I'd like to sell my litigation cases and scale back to transactional work only. How can I sell out?
A. The first question you need to ask is whether you can sell one part of your law firm, while keeping the other.
Recognizing that clients are not commodities that can be bought and sold at will, almost all jurisdictions restrict the terms of a sale to protect them from getting lost in the shuffle. To protect clients with less lucrative matters that may find it hard to retain other counsel, you generally cannot sell profitable cases and leave the duds out of the deal.
Most states and the District of Columbia follow the ABA's Model Rule of Professional Conduct by allowing you to sell an "area of law practice" to another lawyer or law firm. But about a dozen states take an "all or nothing" approach to such sales. In places like California, New York and Maryland, you must sell your entire practice and, in most of these jurisdictions, must sell out to a single lawyer or law firm.
Regardless of the scope of the sale, all jurisdictions require that you protect the interests of affected clients by advising each in writing of:
➤ The proposed sale;
➤ The client's right to retain other counsel or to take possession of the file; and
➤ The fact that the client's consent to the transfer of the file will be presumed if the client fails to take action or to object within a certain period. Most rules specify a period of 60-90 days.
If you can't track down the client for the purpose of giving such notice, you may need a court order approving of the transfer of the case to the purchaser.
These steps will enable you to sell the "goodwill" of your practice. But letters and court orders are never enough. Clients always have the freedom to choose their counsel, so you can't force anyone to patronize your purchaser.
To ensure a successful sale, you must account for more than money when "selling out" to someone else. Make sure that the buyer has the knowledge, skill and resources to serve these clients well. In many cases, it may be prudent to associate with your successor so that your clients may develop a positive rapport long before a sale is consummated.
Although you cannot truly "sell" your clients, your clients must be "sold" on your successor to ensure a smooth transition and a rewarding deal that serves the interests of all concerned.