Can a lawyer with offices in two communities sell one office's practice and keep practicing in the same fields and the same geographic area?

Plain-English summary

A lawyer had offices in two North Dakota communities and wanted to sell the part of the practice associated with one office. The lawyer proposed not to keep any client files from the office being sold and not to represent any of that office's clients. But the lawyer had one primary and two lesser practice fields that were not tied to either office, and after the sale the lawyer planned to keep practicing in those fields in the same geographic area, including the county where the sold office was located. The committee was asked whether Rule 1.17 allowed this.

The committee concluded it did not. Rule 1.17 lets a lawyer or firm sell all or part of a practice only if certain conditions are met, including that the seller ceases to engage in the private practice of law, or a particular area of practice, within an agreed geographic area in which the practice was conducted, and that the practice or particular area is sold as an entirety. The committee found the proposed sale would violate Rule 1.17 in two respects: the lawyer would not be ceasing to practice law (or a specific field) in an agreed geographic area, because the lawyer intended to keep practicing in the same fields and area, and the sale would not include the lawyer's entire practice or a particular field of practice.

In practice

This opinion, approved December 11, 2015, applies North Dakota Rule of Professional Conduct 1.17 (sale of a law practice) as it stood at that time. The committee held that a lawyer with offices in more than one North Dakota community may not sell the practice associated with one office and continue to practice in the same fields and the same geographic area. The committee held that Rule 1.17 requires the seller to cease practicing law, or a particular area of practice, within an agreed geographic area, and to sell the practice or particular area as an entirety, and that the proposed partial sale satisfied neither requirement.

Common questions

Q: Can a lawyer sell one office and keep practicing the same kind of law nearby?

A: No. The committee concluded Rule 1.17 requires the seller to cease practicing law, or a particular area of practice, within an agreed geographic area, so a lawyer who keeps practicing the same fields in the same area cannot make the sale.

Q: What are the two ways the proposed sale violated Rule 1.17?

A: The committee identified that the lawyer would not be ceasing to practice law or a specific field in an agreed geographic area, and that the sale would not include the lawyer's entire practice or a particular field of practice.

Q: Does dropping the sold office's client files fix the problem?

A: No. The committee's conclusion turned on the lawyer's continued practice in the same fields and area and on the sale not covering an entire practice or field, not on which client files were retained.

Background and rules framework

The opinion interprets North Dakota Rule of Professional Conduct 1.17 (Model Rule 1.17, sale of a law practice), reproducing the rule's conditions: the seller's cessation of practice (or of a particular area) within an agreed geographic area, sale of the practice or area as an entirety, written certified-mail notice to clients, the bar on financing the sale through fee increases, and the requirement that a sale of a particular area include all of the seller's files in that area.

The opinion is issued under North Dakota Rule for Lawyer Discipline 1.2(B), the safe-harbor provision protecting good-faith reliance on a written ethics-committee opinion.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.17 / N.D.R. Prof. Conduct 1.17 (sale of a law practice; cessation of practice; sale as an entirety)
• N.D.R. Lawyer Discipline 1.2(B) (safe harbor for reliance on a committee opinion)

See also

• ISBA Ethics Op. 07-02: Selling a Practice, Staying On
• CA COPRAC Op. 2024-209: Succession Planning
• NJ ACPE Op. 80: Sale of a Law Practice

Source

• Landing page: https://www.sband.org/page/ethics_opinions
• Original PDF: https://cdn.ymaws.com/www.sband.org/resource/resmgr/docs/for_lawyers/opinion_15-08.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE BAR ASSOCIATION OF NORTH DAKOTA
ETHICS COMMITTEE
OPINION NO. 15-08

THIS OPINION IS ADVISORY ONLY
QUESTION PRESENTED

Whether an attorney who has offices in two North Dakota communities can sell one of
the offices and the practice associated with the office and continue to practice law in the
same fields and in the same geographic area as the practice to be sold?

OPINION

An attorney who has offices in more than one North Dakota community cannot sell the
attorney's practice that is associated with one of the offices and continue to practice law
in the same fields and in the same geographic area as the practice to be sold.

APPLICABLE NORTH DAKOTA RULE
Rule 1.17 of the North Dakota Rules of Professional Conduct: Sale of a law practice.
FACTS PRESENTED

The requesting attorney has offices located in two North Dakota communities and is
considering selling the part of the attorney's practice associated with one of the offices.
The attorney proposes not to retain any client files that are in the office to be sold nor
represent any clients who have files with that office. The attorney has one primary and
two lessor practice fields that are not specific to either of the offices. After the sale, the
attorney proposes to continue to practice in these fields and do so in the same
geographic area in which the attorney practiced previously, including the county where
the office to be sold is located.

DISCUSSION

Rule 1.17 contains the requirements for the sale the requesting attorney has proposed.
Here is the rule in its entirety:

A lawyer or a law firm may sell or purchase all or part of a law
practice, including good will, if the following conditions are satisfied:

(a) The seller ceases to engage in the private practice of law or
some particular area of the practice of law within an agreed
upon geographic area in which the practice has been
conducted:

(b) The practice or particular area of practice is sold as an entirety
to another lawyer or law firm;

(c) Actual written notice is given by certified mail, return receipt
requested, to each of the seller's clients regarding:

(1) the proposed sale;
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(2) the terms of any proposed change in the fee
arrangement authorized by paragraph (d);

(3) the client's right to retain other counsel or right to take
possession of the file; and

(4) the fact that the client's consent to the sale will be
presumed if the client does not take any action or does
not otherwise object within ninety days of receipt of the
notice.

If written notice by certified mail is ineffective, the seller should take all
reasonable steps to see that notice of the sale is received by the
client. If after all reasonable steps have been exhausted, notice has
still not been received by the client, representation of the client may be
transferred to the purchaser only upon entry of an order so authorizing
by a court having jurisdiction. The seller may disclose to the court in
camera information relating to the representation only to the extent
necessary to obtain an order authorizing the transfer of a file.

(d) The sale may not be financed by increases in fees charged the
clients of the practice. Existing agreements between the seller
and the client as to fees and the scope of the work must be
honored by the purchaser, unless the client consents in writing
after consultation.

(e) Any sale of any particular area of practice arising out of the
selling lawyer's cessation of practice in an area of practice must
include all of the selling attorney's files in the area of specialty
or practice. ;

(emphasis added).
The sale proposed by requesting attorney would violate Rule 1.17 in two respects:
1) the requesting attorney would not be ceasing to practice law, or ceasing
the practice of a specific field, in an agreed upon geographic area, and
2) the sale would not include the attorney's entire practice or a particular field
of practice.

This opinion was drafted by Rob Forward, and was unanimously approved by the Ethics
Committee on the 11" day of December, 2015.

This opinion is provided under Rule 1.2(B), North Dakota Rules for Lawyer Discipline,
which states:

A lawyer who acts with good faith and reasonable reliance on a written
opinion or advisory letter of the ethics committee of the association is not
subject to sanction for violation of the North Dakota Rules of Professional
Conduct as to the conduct that is the subject of the opinion or advisory
letter.

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