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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Illinois Legal Ethics

1.17   Rule 1.17 Sale of Law Practice

1.17:100   Comparative Analysis of Illinois Rule

Primary Illinois References:
Background References: ABA Model Rule 1.17, Other Jurisdictions
Commentary:

1.17:101      Model Rule Comparison

[The discussion of this topic has not yet been written.]

1.17:102      Model Code Comparison

[The discussion of this topic has not yet been written.]

1.17:200   Traditional Rule Against the Sale of a Law Practice

Primary Illinois References:
Background References: ABA Model Rule 1.17, Other Jurisdictions
Commentary: ABA/BNA § 91:801, ALI-LGL § 60, Wolfram § 16.2.1

Illinois has no rule permitting the sale of a law practice (as of August 1997). Although Illinois has not adopted Rule 1.17, there is Illinois case law which suggests that the sale of a law practice without the clients' consent is prohibited. In Corti v. Fleisher, 417 N.E.2d 764 (Ill. App. 1st Dist. 1981), an attorney entered into an agreement with a law firm whereby upon termination of the attorney’s employment all files that were referred to the firm by the attorney were to become the property of the attorney and any future fees derived from those files were to be remitted to the attorney. The court, citing the Supreme Court of Kansas, stated "Members of the public who seek the services of an attorney cannot be treated by him as mere merchandise or articles of trade in the marketplace. A client is not an article of property in which a lawyer can claim a proprietary interest, which he can sell to other lawyers expecting to be compensated for the loss of a property right". Corti, 417 N.E.2d at 769. The court noted that the agreement provided for the transfer of files from the firm to the attorney without the permission of the clients. The court held that each client had a right to the counsel of his choice, and the agreement was void and contrary to public policy in that it deprived the clients of their rights to be represented by counsel of their own choice.

The Supreme Court of Illinois has also voided as against public policy a widow's agreement to sell the law practice of her husband in return for a portion of the fees generated by such purchased files. O'Hara v. Ahlgren, Blumenfeld & Kempster, 537 N.E.2d 730 (Ill. 1989). The court held that public policy considerations precluded the fee sharing agreement. The court related that fee sharing agreements between attorneys and non-attorneys have been associated with a variety of harms, including an incentive for a lay person to recommend the services of an attorney with whom he or she will share the fees and the creation of the possibility that the client's rights may be adversely affected. Because the attorneys must share a portion of the fees received from certain clients but not others, the attorneys may be attempted to devote less time and attention to the cases of those clients whose fees they must share. The widow argued that the Illinois Code of Professional Responsibility allowed a law firm to share legal fees with a non-lawyer when a lawyer undertakes to complete the unfinished legal business of a deceased lawyer if the payments are made to the estate of the deceased lawyer and the payments are proportional to the services rendered by the deceased lawyer. The widow argued that Illinois should adopt a new exception allowing for payments for the goodwill of a law practice to the estate of a sole practitioner by a successor attorney even absent any prior association or agreement between the attorneys. The Supreme Court held that the recognized exceptions for payments to attorneys' estates did not present the same type or degree of risks as would the fee splitting provisions of the agreement at issue. However, the court declined to consider whether every contract to sell the goodwill associated with a deceased attorney's law practice would be unenforceable.

1.17:300   Problems in Sale of Practice

Primary Illinois References:
Background References: ABA Model Rule 1.17, Other Jurisdictions
Commentary: ABA/BNA § 91:801, ALI-LGL § 60, Wolfram § 16.2.1

Restrictions in a contract for the sale of a law practice prohibiting the seller attorney from practicing law will be allowed if the limitations are reasonable in nature. In Hicklin v. O’Brien, 138 N.E.2d 47 (Ill. App. 2nd Dist. 1956). In Hicklin, Hicklin purchased a law practice from O’Brien. The purchase contract stated that O’Brien agreed not to practice law in Winnebago County. Shortly after the completion of the sale, O’Brien began practicing law in Winnebago County. Hicklin sued, claiming breach of contract. O’Brien attempted to assert that the contract was void as an illegal restraint of trade. The court held that the restriction was reasonable in that it allowed O’Brien to practice in any county in Illinois other than Winnebago County and it was reasonable because there would be no hardship resulting to the public if O’Brien were restrained from practicing law in Winnebago County. The court stated, without explanation: “It is not necessary for us to determine whether the contract violates some canon of professional ethics.” Id. at 52.