Advisory Opinion: 1658

Year Issued: 1996

RPC(s): RPC 1.5(e); 7.2(c); 7.3(a)

Subject: Sale of law practice; sales price based on percentage of fees; sale over a period of time

[The inquiry concerned] the purchase of a law practice. The Committee reviewed the first question of whether the sales price of a law practice can be based on a percentage of the gross fees generated by the transferred clients. The Committee determined that this would violate RPC 1.5(e). However, it would be permissible to annually adjust the sale price based on the gross receipts of legal fees from transferred cases.

The second issue is whether it is permissible to sell a law practice gradually over a period of time. The Committee decided that under the current Rules of Professional Conduct, selling a law practice gradually over a period of time is prohibited because, in effect, it is the lawyer's clients that are being sold in violation of RPC 7.2(c) and 7.3(a).

Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.