Monday, October 31, 2016

Selling Your Pennsylvania Practice

A report from the web page of the Pennsylvania Disciplinary Board

On September 23, 2016, the Supreme Court of Pennsylvania adopted amendments to Rule 1.17 of the Pennsylvania Rules of Professional Conduct, which governs sale of a law practice.  The changes were published at 46 Pa.B. 6291 (October 8, 2016), and take effect October 23, 2016.

The amendments make the following changes:

  • Sale of an area of practice, as opposed to the entire practice, is now permitted. 
  • The selling lawyer must still cease practice in the area of the sale, but the rule is amended to provide that the selling lawyer may assist the purchaser in the orderly transition of active client matters for a reasonable period after the closing without a fee.
  • The selling lawyer must give written notice to each of the seller’s clients. Previously the rule was not specific about who was to give notice, but the amendment clarifies this is the responsibility of the seller.
  • If written notice cannot be given to a client, transfer of representation of that client to the purchaser will now require the approval of the court with jurisdiction over the matter.

Changes to the comments describe situations in which the prohibition on continuing practice by the seller does not apply. Unanticipated changes in circumstances can remove the prohibition. For instance, if a lawyer sells a practice in order to become a judge, and then is defeated in a retention election, the seller would be allowed to resume the practice of law. A lawyer who takes employment on the staff of a public agency or a legal services entity that provides legal services to the poor, or as in-house counsel to a business, may also continue practicing in the area in the course of that employment.

The comments are also amended to state that the written notice to clients provided by the seller must make clear that the client has 60 days to decide whether to consent to the transfer or make other arrangements. If notice is given, and the client does not respond within the 60 day period, the parties may presume client consent to the sale.

(Mike Frisch)

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