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.
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Delaware Legal Ethics
1.17 Rule 1.17 Sale of Law Practice
1.17:100 Comparative Analysis of Delaware Rule
1.17:101 Model Rule Comparison
The Model Rule allows a state to choose between “in the geographic area’ or “in the jurisdiction” in section (a). Delaware chose “in the jurisdiction.” In the paragraph between sections (c) and (d), the Delaware Rule adds a sentence that states that if a rule of a tribunal, before which a matter is pending, requires approval of substitution of the buyer for the seller of a law firm, such approval must be granted before the matter can be included as part of the sale. There are other minor clarifying word changes.
Delaware’s Comment  does not include language at the end of the paragraph dealing with large states.
1.17:102 Model Code Comparison
There is no counterpart in the Model Code.
1.17:200 Traditional Rule Against the Sale of a Law Practice
Comment 1 to DLRPC Rule 1.17 states that: “The practice of law is a profession, not merely a business. Clients are not commodities that can be purchased and sold at will.” DLRPC Rule 1.17 cmt. 1. That being said, DLRPC Rule 1.17 does allow the sale of a practice so long as the conditions laid out in the rule are met. The rule and its corresponding comments balance the interest of lawyers to gain compensation from the sale of their practice and the flexibility to live in our mobile society while protecting the interest of clients. Comment 6 reflects this, protecting “those clients whose matters are less lucrative and who might find it difficult to secure other counsel if a sale could be limited to substantial fee-generating matters.” DLRPC Rule 1.17 cmt. 6.
There appear to be no pertinent Delaware specific court decisions or ethics opinions on this subject.
1.17:300 Problems in Sale of Practice
In E.E.C. v. E.J.C., the difficult process of assigning a worth to a sole proprietorship in a law firm during divorce proceeding is addressed. Since there is little or no information about the sale of law firms, determining the firm’s fair market value proved more difficult than a standard small business. The Court concluded that rather than looking at capitalized earnings, the value was to be determined by looking at “the sum of the office’s tangible assets, based on current market value, in excess of its liabilities, its accounts receivable and work in progress.” E.E.C. v. E.J.C., 457 A.2d 688, 694 (Del. 1982)