Under Vermont Opinion 88-03, what limits applied to selling a law practice and notifying its clients?
Apply this to your situation
This page answers the general question as of 1988. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
One lawyer planned to retire and negotiate the sale of the practice to a lawyer newly associated with it. The committee said that, under the ethical authorities it discussed, tangible assets and accounts receivable could be sold, but the firm's goodwill could not. It identified client choice, client confidences, and the personal nature of a lawyer's relationship with clients among the reasons.
The retiring lawyer had to tell clients that they could choose other counsel and take their files. A notice could encourage clients to use the buying lawyer's services, but the committee pointed to former DR 2-101 on lawyer communications and cautioned against misrepresentations. It also said the buyer had to take reasonable steps to assure the seller gave the required notice.
If the seller left the buyer's practice entirely, the committee identified former DR 2-107(a) as governing compensation and noted its exception for a former partner or associate under a separation or retirement agreement. If the seller remained of counsel, compensation could not merely disguise payment for goodwill. Former DR 2-106 still applied to fees charged to clients.
Currency note
This opinion was issued in 1988, before Vermont's 1999 adoption of the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement.
Common questions
Q: Could the retiring lawyer sell the firm's goodwill to the incoming lawyer?
A: The committee said no under the authorities it applied, although it distinguished the sale of tangible practice assets and accounts receivable.
Q: What notice did the retiring lawyer owe clients?
A: The opinion said the seller had to inform clients of their right to retain other counsel and to take possession of their files.
Q: Could the retiring lawyer be paid while remaining of counsel?
A: The opinion found no substantial ethical constraint on that compensation arrangement so long as it did not merely disguise a payment for firm goodwill.
Background and rules framework
The opinion addressed the proposed sale and retirement under former DR 2-101 on communications about lawyers' services, DR 2-107(a) on compensation when the seller left the practice, and DR 2-106 on client fees. It cited ABA Formal Opinion 266 (1945) in discussing the historical treatment of goodwill.
Citations and references
Former Vermont disciplinary rules:
- DR 2-101, DR 2-107(a), and DR 2-106.
Other opinions cited:
- ABA Formal Opinion 266 (1945).
See also
- Vermont Ethics Op. 97-08: Closed client files
- Vermont Ethics Op. 99-07: Client files and attorney liens
Source
- Landing page: VBA sale of a law practice entry
- Original PDF: Vermont Advisory Opinion 88-03
- Rules history: Vermont Rules of Professional Conduct, “These rules apply to lawyer conduct after September 1, 1999.”
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