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Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


New Mexico Legal Ethics

1.17 Rule 1.17 Sale of Law Practice

1.17:100 Comparative Analysis of New Mexico Rule

“A lawyer or a law firm may sell or purchase a law practice or an area of 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 jurisdiction in which the practice has been concluded.

B.        The entire practice or the entire area of practice is sold to one or more lawyers or law firms;

C.        The seller gives written “notice” to each of the seller’s clients for whom the attorney is performing ongoing legal service at the time of the sale or for whom the attorney has performed any legal services within twelve (12) months prior to the date of sale regarding:

            (1)        the proposed sale and that the seller has ceased to engage in the private practice of law or in the area of practice that has been sold;

            (2)        the name and address of the purchaser;

            (3)        the client’s right to retain other counsel or to take possession of the file; and

            (4)        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 sixty (60) days of receipt of the notice;

D.        If the client cannot be notified by written notice, the representation of that client may be transferred to the purchaser only:

            (1)        upon entry of an order authorizing the transfer by a court having jurisdiction; or

            (2)        by publishing notice once a week for two (2) consecutive weeks in a newspaper of general circulation in the county in which the seller’s principal office is located setting forth the matters specified in Subparagraphs (1), (2), (3), and (4) of Paragraph C of this rule, but not containing the name of the client.  The published notice shall also contain the address where any person entitled to do so may object to the proposed transfer or claim the files within sixty (60) days after the final date of publication; and

E.         The fees charged clients shall not be increased by reason of the sale.”

 

1.17:101   Model Rule Comparison

While NMR 16-117 largely tracks MR 1.17, NMR 16-117 changes several provisions of the Model Rule concerning the notice that a lawyer or a law firm must provide to clients regarding the sale of a law practice or an area of law practice.  Where the Model Rule requires the seller to give written notice to each of the seller’s clients, the New Mexico Rule qualifies “the seller’s clients” by adding “for whom the attorney is performing ongoing legal service at the time of the sale or for whom the attorney has performed any legal services within twelve (12) months prior to the date of sale.”  Also, where under the Model Rule the lawyer or law firm which is undertaking a sale must notify its clients regarding “the proposed sale,” the New Mexico Rule also requires notice “that the seller has ceased to engage in the private practice of law or in the area of practice that has been sold.” The New Mexico Rule also requires the lawyer or law firm undertaking a sale to notify clients of “the name and address of the purchaser.”  Further, under the Model Rule the client’s consent to the transfer of the client’s files will be presumed if the client does not take action within ninety (90) days of receipt of the notice, the presumption period in New Mexico is sixty (60) days.

NMR 16-117 also contains a provision not found in the Model Rule which provides that if the client cannot be notified by written notice, the representation of that client may be transferred to the purchaser “by publishing notice once a week for two (2) consecutive weeks in a newspaper of general circulation in the county in which the seller’s principal office is located setting forth” the required information “but not containing the name of the client.  The published notice shall also contain the address where any person entitled to do so may object to the proposed transfer or claim the files within sixty (60) days after the final date of publication.” 

The 2008 Committee Commentary to NMR 16-117 is substantially the same as the ABA Comment, except New Mexico Comment 7 addresses the publication of constructive notice addressed in NMR 16-117(D)(2).   Also, Comment 8 to the New Mexico Rule states “the requirement of actual notice as well as constructive notice suffices.” 

The ABA Comment to MR 1.17 contains three provisions not found in the New Mexico Commentary.  New Mexico did not adopt the following language:

(a) “Some states are so large that a move from one locale therein to another is tantamount to leaving the jurisdiction in which the lawyer has engaged in the practice of law.  To also accommodate lawyers so situated, states may permit the sale of the practice when the lawyer leaves the geographical area rather than the jurisdiction.”

(b) “For example, a lawyer with a substantial number of estate planning matters and a substantial number of probate administration cases may sell the estate planning portion of the practice but remain in the practice of law by concentrating on probate administration; however, that practitioner may not thereafter accept any estate planning matters.  Although a lawyer who leaves a jurisdiction or geographical area typically would sell the entire practice, this Rule permits the lawyer to limit the sale to one or more areas of the practice, thereby preserving the lawyer’s right to continue practice in the areas of the practice that were not sold.” 

(c) “Since some clients cannot be given actual notice of the proposed purchase of a law practice or area of law practice and thus “cannot themselves consent to the purchase or order any other direct disposition of their files, the Rule requires an order from a court having jurisdiction authorizing their transfer or other disposition. The Court can be expected to determine whether reasonable efforts to locate the client have been exhausted, and whether the absent client’s legitimate interests will be served by authorizing the transfer of the file so that the purchaser may continue the representation.”

 

1.17:102   Model Code Comparison

 

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

 

1.17:300 Problems in Sale of Practice