Now You Can Retire…Or Not
July 29, 2013
At its last quarterly meeting in July 2013, the Ethics Committee voted to adopt a proposed change to Rule 1.17 Sale of a Law Practice, which would permit a lawyer to continue to work for the law practice as an employee after its sale. The current rule prohibits the selling attorney from engaging in the private practice of law for the same firm, except as an independent contractor. The concern raised by Mel Wright, the Executive Director of the Chief Justice’s Commission on Professionalism, is that many senior lawyers would like to retire, but do not think they can afford to do so. Mr. Wright noted that he has seen dentists sell their practices to new dentists who are just starting out. The senior dentist agrees to stay on during a transitional period, introducing the new dentist to his patients and assisting in any way he can with the transition. The senior dentist can be paid for his services during this transition time as an employee (receiving benefits), and then can receive additional payments into retirement. The new dentist gets an established practice in exchange.
This symbiotic relationship seems like a win-win for everyone involved if expanded to law practices. The new lawyer gets a mentor and an introduction to an established client base, and the senior lawyer can help ensure his practice is transferred to a capable and qualified individual while still receiving income. And clients? Well perhaps they benefit the most by a smooth transition.
The proposed revised rule makes clear in the comment that the practice, once purchased, may retain the same firm name under certain conditions in Rule 7.5, but the seller’s retirement must be indicated on the letterhead or other communications as necessary to avoid misleading the public. If the seller becomes an employee of the firm in his or her “retirement,” then the letterhead and other communications must indicate in some fashion that the seller is no longer the owner. An “of counsel” designation by the seller’s name would be sufficient.
Bottom Line: this proposed rule gives attorneys more choices going into retirement. You gotta like that.