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Minnesota Rules of Professional Conduct

Rule 1.17Sale of Law Practice

(a)

A lawyer shall not sell or buy a law practice unless:

(1) the seller sells the practice as an entirety, as defined in paragraph (c) of this rule, to a lawyer or firm of lawyers licensed to practice law in Minnesota; and

(2) the seller sends a written notification that complies with paragraph (d) of this rule to all clients whose files are currently active and all clients whose inactive files will be taken over by the buying lawyer or firm of lawyers.

(b)

The buying lawyer or firm of lawyers shall not increase the fees charged to clients by reason of the sale for a period of at least one year from the date of the sale. The buying lawyer or firm of lawyers shall honor all existing fee agreements for at least one year from the date of the sale and shall continue to completion, on the same terms agreed to by the selling lawyer and the client, any matters that the selling lawyer has agreed to do on a basis or for a reduced fee.

(c)

For purposes of this rule, a practice is sold as an entirety if the buying lawyer or firm of lawyers assumes responsibility for at least all of the currently active files except those that deal with matters that the buying lawyer or firm of lawyers would not be competent to handle, those that the buying lawyer or firm of lawyers would be barred from handling because of a conflict of interest, or those from which the selling lawyer is denied permission to withdraw by a tribunal in a matter subject to Rule 1.16(c).

(d)

The written notification that the selling lawyer must send pursuant to paragraph (a)(2) of this rule must include at a minimum:

(1) a statement that the law practice of the selling lawyer has been sold to the buying lawyer or law firm;

(2) a summary of the buying lawyer's or law firm's professional background, including education and experience and the length of time that the buying lawyer or members of the buying law firm have been in practice;

(3) a statement that the client has the right to continue to retain the buying lawyer under the same fee arrangement as the client had with the selling lawyer or to have the client's complete file sent to the client or to another lawyer of the client's choice.

(e)

If the written notification described in paragraph (d) has actually reached the client through personal service or by certified mail, the notification may include a provision stating that if the client does not respond to the buying lawyer by ninety days from the date that the client receives the notification, the client's silence shall be deemed to be the client's waiver of confidentiality and the client's consent to the buying lawyer representing the client in the matter that was the subject of the selling lawyer's representation. The client's failure to respond within that time shall be such a waiver and consent.

(f)

The transaction may include a promise by the selling lawyer that the selling lawyer will not engage in the practice of law for a reasonable period of time within a reasonable geographic area and will not advertise for or solicit clients within that area for that time.

(g)

The selling lawyer shall retain responsibility for the proper management and disposition of all inactive files that are not transferred as part of the sale of the law practice.

(h)

For purposes of this Rule, the term "lawyer" means an individual lawyer or a law firm that buys or sells a law practice.

(Added effective January 1, 1996; amended effective October 1, 2005.)

Comment

[1] A representative of a deceased, disabled or disappeared lawyer may sell the lawyer's law practice under the same restrictions as imposed by this rule. See Rule 5.4(a)(4).

[2] Rule 1.6(b)(11) on Confidentiality of Information permits disclosure of information necessary to detect and resolve conflicts of interest arising from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client. Within these limits a selling lawyer may disclose to the potential buying lawyer such information necessary for the buying lawyer to detect and resolve conflicts of interest that may arise as a result of the transfer of ownership. Disclosure of information beyond that authorized by Rule 1.6(b)(11) will require the selling lawyer to obtain from the affected client a waiver of confidentiality.

[3] The selling lawyer should consider extending malpractice insurance for some reasonable period of time following the sale to insure against losses arising from errors that might come to light after the sale.

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