88 N.J.L.J. 460
July 15, 1965
Sale of Practice
Division of Fees
Inquiry has been made by an attorney who is retiring from
practice and moving from New Jersey as follows:
I would like to sell my practice for a
stipulated and fixed price to an attorney in
________ County, who has agreed to purchase
the same, payable in installments based upon a
percentage of fees received from my clients,
the aggregate of which shall not exceed the
fixed price, and which price is unrelated to
services rendered by me.
The proposed transaction is improper and violates Canons of Professional Ethics, Canon 34, which provides that the division of fees for legal services between lawyers is proper only when based exclusively upon "a division of service or responsibility." N.J. Advisory Committee on Professional Ethics, Opinion 48, 87 N.J.L.J. 459 (1964). It would also be a violation of Canon 37, unless the consent of the clients involved were secured.
The applicable principle is clearly enunciated in Drinker, Legal Ethics 189 (1963):
A lawyer's clients are not merchandise nor is a law practice the subject of barter. The purchase of a lawyer's practice and good will and the payment therefore to him or to his estate by a percentage of the receipts from his business is improper, since this would constitute a division of his fees with laymen, forbidden by Canon 34.