Can a lawyer buy, sell, or advertise the sale of a law practice that includes good will and an established clientele?

Plain-English summary

After an attorney died, his non-lawyer heir wanted to dispose of the law library, office equipment, and unexpired lease and submitted a Texas Bar Journal advertisement seeking an "aggressive, competent, and reliable lawyer" to "take over" a 40-year practice, describing a large clientele and good standing and saying the deal included "everything, library, location, and secretary." The question was whether the advertisement was proper.

The Committee held that buying, selling, or advertising the sale of a law practice with established clientele is unethical. It relied on ABA Opinion 266, which states that the good will of a lawyer's practice is not an asset he or his estate can sell, and which quotes opinions that clients are not merchandise to be bartered. The heir was not a lawyer and not subject to the Committee, but his transactions would necessarily be with lawyers, who would act unethically by buying or selling a practice in that manner or by accepting the ad for publication. The Committee reasoned that Canon 24 prohibits solicitation, so a purchase of an established clientele would unavoidably involve soliciting those clients to continue with the purchaser, and a sale would imply the seller soliciting clients to go to the purchaser, giving a preferred position to the highest bidder, which is not the basis on which a lawyer should be retained. Canon 34 adds the duty to preserve client confidences, which outlasts employment, so files of confidential information cannot be transferred without the client's permission. The Committee said it is proper, on a lawyer's death or retirement, to advertise the library, office equipment, and lease for sale, and suggested wording confined to those items. The Committee ruled 9-0.

Currency note

This opinion was issued in 1963, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. It also predates Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which loosened categorical advertising restrictions, though prohibitions on solicitation were not eliminated. The categorical bar on selling a law practice has also been overtaken by ABA Model Rule 1.17, adopted after this opinion, which permits the sale of a law practice subject to conditions protecting clients. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer sell a law practice that includes the clients and good will?

A: Under this opinion, no. The Committee held that selling a practice with an established clientele was improper solicitation under Canon 24 and implicated client confidences under Canon 34. (Modern ABA Model Rule 1.17 now permits such a sale under conditions.)

Q: Can the estate of a deceased lawyer advertise the practice for sale?

A: The Committee said the heir's transactions would be with lawyers who would act unethically by buying or selling a practice with established clientele in that manner, or by accepting such an ad for publication.

Q: What can properly be advertised for sale?

A: The Committee said that on a lawyer's death or retirement it is proper to advertise the law library, office equipment, and unexpired lease, and offered suggested wording limited to those items and the availability of an experienced secretary.

Background and rules framework

The opinion interprets former Texas Canons 24, on advertising and solicitation, and 34, on preserving client confidences, as applied to the sale of a law practice. The modern analogs are ABA Model Rule 7.1, on communications concerning a lawyer's services, Model Rule 1.6, on confidentiality, and Model Rule 1.17, which now governs and permits the sale of a law practice under conditions.

Citations and references

Rules of Professional Conduct:

• MR 7.1 (communications concerning a lawyer's services), as the modern analog
• MR 1.6 (confidentiality of information), as the modern analog
• MR 1.17 (sale of law practice), the modern rule now governing this subject
• Texas Canons 24 and 34 (former canons)

Other opinions cited:

• ABA Opinion 266: the good will of a lawyer's practice is not a saleable asset; files hold confidential information that may not be disclosed without the client's permission
• N.Y. County Lawyers' Association Opinion 109: clients are not merchandise to be bartered
• N.Y. City Bar Association Opinion 16: advertising the sale of a practice with established clientele is improper

See also

• TX Ethics Op. 287: Continued Use of a Deceased Partner's Name in the Firm Name
• TX Ethics Op. 300: Adoption Agency's "Legal Adoption" Circular Naming Its Attorney
• TX Ethics Op. 270: Renting Offices in a Building Sharing Facilities With Non-Lawyer Tenants

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-266/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_266.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

Upon the death of an attorney, his heir, who is not a lawyer, desired to dispose of the law library, office equipment and unexpired office lease, and submitted for publication in the Texas Bar Journal the following advertisement.

"Aggressive, competent, and reliable lawyer needed to take over practice of [ ] of [ ]. Firm has operated under name of [ ] and for over 40 years. Large clientele, and good standing in community and area. Deal includes everything, library, location, and secretary. Contact for interview."

Is such an advertisement proper under the Canons of Ethics?

18 Baylor L. Rev. 341 (1966)

SOLICITATION - CONFIDENCES OF A CLIENT
It is unethical for a member to purchase, to sell or to advertise for sale a law practice with "established clientele."

Canons 24, 34.

The legal profession has in numerous past opinions condemned the sale, or the advertisement for sale, or the purchase of a law practice including good will and established clientele. ABA Opinion 266 states: "The good will of the practice of a lawyer is not, however, of itself an asset, which either he or his estate can sell." Opinion 266, further, quotes from Opinion 109 of the Ethics Committee of the New York County Lawyers' Association: "Clients are not merchandise. Lawyers are not tradesmen. They have nothing to sell but personal service. An attempt, therefore, to barter in clients, would appear to be inconsistent with the best concepts of our professional status." Another opinionΧNo. 16 of the Ethics Committee of the New York City Bar AssociationΧsays that an advertisement of the sale of a law practice with "established clientele" is improper.

The advertisement in the inquiry was, as stated, submitted to the Bar Journal by the heir of a deceased lawyer, which heir is not a lawyer and, therefore, not subject to the decisions of this committee. Such heir's transactions, however, will necessarily be conducted with lawyers, who are guided by the opinions of the Ethics Committee and who, according to the Canons, would be acting unethically if they bought or sold a law practice in the manner of the proposed advertisement, or if they accepted such advertisement for publication in the Bar Journal.

It is the committee's opinion that the purchase or sale of a deceased or retired lawyer's law practice, including good will and an established clientele, would result in a situation in violation of Canons 24 and 34. Canon 24 prohibits solicitation and would, therefore, preclude a lawyer from purchasing a law practice with established clientele because such purchase upon such conditions would unavoidably involve the solicitation of these clients to continue their business with the purchaser. It would likewise preclude a lawyer from selling a law practice, including the clients, because such a sale would imply that the seller would urge and solicit the established clients to give their business to the purchaser. Such solicitation, if engaged in, would inevitably result in giving a preferred position to the highest obtainable bidder for the law practice, which is not the basis on which an attorney should be retained. (ABA Opinion 266). Also involved in the purchase or sale of an "established clientele" would be the question of confidence of clients. Canon 34 states that "the duty to preserve his clients' confidences outlasts the member's employment," and ABA Opinion 266 states that "Every lawyer's files contain confidential information from clients which neither he nor his heirs or personal representatives may properly disclose without the client's express permission."

Upon the death or retirement of a lawyer, it has been held proper to advertise for sale his library, office equipment, and unexpired lease. It is suggested that such an advertisement could properly read:

"For sale: Law library and office equipment of [ ]of [ ] , Texas. Purchaser can take over established office lease if desired. Experienced secretary also available. Good location for competent, reliable lawyer. Contact for further information."(9-0.)

Tex. Comm. On Professional Ethics, Op. 266 (1963)