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                                             88 N.J.L.J. 460
                                            July 15, 1965

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 80

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.

This principle finds ample support in numerous authorities. Drinker, supra, at p. 161; A.B.A. Comm. on Professional Ethics and Grievances, Opinion 266 (1945); Ass'n. of the Bar, City of N.Y., Committee on Professional Ethics, Opinion 272 (1933). See also N.J. Advisory Committee on Professional Ethics, Opinion 25, 87 N.J.L.J. 19 (1964).
    As was aptly said in Ass'n. of the Bar, City of N.Y., Committee on Professional Ethics, Opinion 633 (1943), clients are not merchandise, lawyers are not tradesmen, and an attempt to barter clients is inconsistent with the best concepts of a lawyer's professional status.
    In holding the proposed arrangement to be unethical, we do not mean to indicate that there cannot be a reasonable agreement to pay the retiring attorney a proportion of the fees received from matters pending at the time of his retirement, or an agreed sum in lieu thereof, providing such sum represents a bona fide evaluation of the fees earned but uncollected at the time of retirement. See Drinker, supra, at p. 189; Canon 12; American Bar Association, Committee on Professional Ethics, Opinion 266 (1945).

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