Monthly archive

October 2014

Ethics and the Law: Leaving with a Clean Slate


Toby Boyer, Houston lawyer, told me he wanted to leave this world with a clean slate. Toby knew the end was near, and we tried to help him get his affairs in order. He continued going to court to take care of his clients almost to the day he left this world. A case I was helping him with in another county could not be resolved easily, so Toby said he wanted to give back the fee. I tried to get Toby to keep part of the fee and he said, “No, I want to leave this world with a clean slate.” Not many would have done that, but the client got all his money back.

When we’re leaving this world, announced or unannounced, there are some ethical issues involved. What happens to the client? What happens to the fees? Another lawyer friend died unannounced, and it was amazing how many of the clients said they had paid the fee in full. The lawyer’s partner called the hotline regarding the dilemma. He too was an honorable man, and he stayed on all the cases and received no money since the clients had “paid the full fee.”

When shutting down an office, please refer to the Texas Rules of Disciplinary Procedure. Rule 13.01, Notice of Attorney’s Cessation of Practice, states:

When an attorney licensed to practice law in Texas dies, resigns, becomes inactive, is disbarred, or is suspended, leaving an active client matter for which no other attorney licensed to practice in Texas, with the consent of the client, has agreed to assume re­sponsibility, written notice of such cessation of practice shall be mailed to those clients, opposing counsel, courts, agencies with which the attorney has matters pending, mal­practice insurers, and any other person or entity having reason to be informed of the cessation of practice. If the attorney has died, the notice may be given by the personal representative of the estate of the attorney or by any person having lawful custody of the files and records of the attorney, including those persons who have been employed by the deceased attorney. In all other cases, notice shall be given by the attorney, a person authorized by the attorney, a person having lawful custody of the files of the attorney, or by Chief Disciplinary Counsel. If the client has consented to the assumption of responsibility for the matter by another attorney licensed to prac­tice law in Texas, then the above notification requirements are not necessary and no further action is required.

Charles Thompson, Houston lawyer, has contributed the following, proposing the adoption of a new rule in Texas to aid us all when the day or night comes that we call it quits, announced or unannounced:

Texas Should Adopt ABA Model Ethics Rule 1.17

Many solo practitioners are stunned to learn that you (or your estate) cannot ethically sell your law practice in the State of Texas. Any other profession in the Texas can obtain compensation for the goodwill that has built up over the years of practice. Doctors can, dentists can, accountants can, and lawn-service firms can. All but four states allow for the sale of a law practice. Alabama, Louisiana, and Kansas are the other states that don’t allow sales.

This prohibition becomes a particular hardship when a solo practitioner suddenly dies. There are many ways to skirt the prohibition on sales if both lawyers are living. The “seller” and the “purchaser” can form a partnership where both attorneys are “responsible attorneys” for all the clients’ files, the “buyer” makes a contribution to the partnership, then the seller retires and receives compensation pursuant to the retirement. DR 1.04(h) states that payments are not prohibited to a former partner or associate pursuant to a separation or retirement agreement. But if an estate is involved, the issue becomes quite tricky.

I know this from personal experience. My father was a general solo here in Houston. I had practiced for about a year in the Dallas area because I wanted to “make it on my own.” I was an associate in an insurance defense firm. I was objecting to interrogatories when I got the call that my father had died of heart attack. I suddenly had to handle and eventually close a going law practice while grieving. I do not feel I was able to realize the maximum value from my father’s practice.

DR 1.05(a) makes it impossible to disclose the information needed to properly value a law firm. A lawyer is also prohibited from soliciting the clients of the deceased attorney. DR 7.05.

ABA Model Rule 1.17 would fix this oversight. This rule permits the sale of a law practice, including its goodwill. The rule is as follows:


A lawyer or a law firm may sell or purchase a law practice, or an area of law practice, including good will, if the following conditions are satisfied:

(a)   The seller ceases to engage in the private practice of law, or in the area of practice that has been sold, [in the geographic area] [in the jurisdiction] (a jurisdiction may elect either version) in which the practice has been conducted;

(b)   The entire practice, or the entire area of practice, is sold to one or more lawyers or law firm;

(c)   The seller gives written notice to each of the seller’s clients regarding:

(1)  the proposed sale;
(2)  the client’s right to retain other counsel or to take possession of the file; and
(3)  the fact that the client’s consent to the transfer of the client’s files will be presumed if the client does not take any action or does not otherwise object within ninety (90) days of receipt of the notice.
 If a client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer of a file.

(d)   The fees charged clients shall not be increased by reason of the sale.

It is time that the widows and widowers be compensated for all your hard work upon your death. This rule (or a variation) needs to be adopted by the State Bar.

Remember none of us get out of here alive. None of the lawyers working with me are afraid of dying; we just don’t want to be there when it happens.