Rule 1.17.Sale of Law Practice 
 A lawyer or law firm may sell or purchase a private law practice, including 
 good will, if the following conditions are satisfied: 
  
 (a)The entire practice is sold to one or more lawyers or law firms. 
  
 (b)The fees charged clients shall not be increased by reason of the sale, 
 and a purchaser shall not pass on the cost of good will to a client.  The 
 purchaser may, however, refuse to undertake the representation unless the 
 client consents to pay fees regularly charged by the purchaser for rendering 
 substantially similar services to other clients prior to the initiation of 
 the purchase negotiations, except that any written fee agreements between 
 seller and clients must be honored. 
  
 (c)Written notice of the pending sale shall be given at least sixty days 
 prior to the date of transfer of responsibility for the client's file. 
 Incident to the sale the seller shall provide to such client, via certified 
 mail, return receipt requested, directed to the client's last known 
 address, written notice, 
 which shall include: 
  
 (1)Notice of the fact of the proposed sale; 
  
 (2)The identity of the purchaser; 
  
 (3)The terms of any proposed change in the fee agreement permitted under 
 paragraph (c); 
  
 (4)Notice of the client's right to retain other counsel or to take 
 possession of the file; and 
  
 (5)Notice that the client's consent to the transfer of the client's 
 file to the purchaser will be presumed if the client does not retain other 
 counsel or otherwise object within 60 days of receipt of the notice. 
 If the purchaser has identified a conflict of interest that the client cannot 
 waive and that prohibits the purchaser from undertaking the client's matter, 
 the notice shall advise that the client should retain substitute counsel to 
 assume the representation and arrange to have the substitute counsel contact 
 the seller. 
  
 (d)The notice may describe the purchaser's qualifications, including the 
 seller's opinion of the 
 purchaser's suitability and competence to assume representation of the 
 client, 
 but only if the seller has made a reasonable effort to arrive at an informed 
 opinion. 
  
 (e)If certified mail is not effective to give the client notice, the 
 seller, or the purchaser in the event the selling lawyer is deceased or 
 disabled, shall take such steps as may be reasonable under the circumstances to 
 give the client actual notice of the proposed sale and the other information required in 
 paragraph (c).  If no response to the notice is received 
 within 60 days of the mailing of such notice, or in 
 the event the client's rights would be prejudiced by a failure to act during 
 that time, the purchaser may act on behalf of the client until otherwise notified by the client. 
  
 (f)The sale of the goodwill of a law practice may be conditioned upon 
 the seller ceasing to engage in the private practice of law for a reasonable 
 period of time within the geographical area in which the practice had been 
 conducted. 
  
 (g)If substitution of the purchasing lawyer or law firm in a pending 
 matter is required by the tribunal, the purchasing lawyer or law firm shall 
 provide for same promptly. 
  
 (h)Admission to or withdrawal from a partnership or professional 
 company, retirement plans, and similar arrangements, or a sale limited to 
 tangible assets of a law practice is not a purchase or sale for purposes of 
 this rule. 
  
 (i)Notwithstanding Rule 1.5(d), the purchase price for the practice may be based 
 upon a portion of the fees collected from the clients of the law practice, even if the division 
 of such fees is not in proportion to the services performed or the responsibilities assumed by 
 the seller and purchaser. 
  
 

                                                                
ANNOTATIONSSource: 
 Entire rule added June 12, 1997, effective July 1, 1997; 
 (i) added and adopted and comment amended and adopted April 18, 2001, effective July 1, 
 2001. 
  
  
  
 COMMENT 
 This rule permits a selling lawyer, law firm, or the representatives of a deceased, 
 disabled or disappeared lawyer to obtain compensation for the reasonable value of a private 
 law practice in the same manner as withdrawing partners or shareholders of law firms.  See 
 Rules 5.4 and 5.6.  This rule does not apply to the transfer of responsibility for legal 
 representation from one lawyer or firm to another when such transfers are unrelated to the 
 sale of a practice.  For transfer of individual files in other circumstances, see Rules 1.15(b) 
 and 1.16(d). 
  
 A lawyer participating in the sale of a law practice is subject to the ethical standards that 
 apply when involving another lawyer in the representation of a client.  These include, for 
 example, the seller's obligation to act competently in identifying a purchaser qualified to 
 assume the representation of the client and the purchaser's obligation to undertake the 
 representation competently, Rule 1.1; the obligation to avoid disqualifying conflicts and to 
 secure client consent after consultation for those conflicts that can be waived, Rule 1.7; and 
 the obligation to protect information relating to the representation, Rules 1.6 and 1.9. 
  
 All elements of client autonomy, including the client's absolute right to discharge a 
 lawyer and transfer the representation to another, survive the sale of the practice. 
  
 Selling Entire Practice 
 When a lawyer is closing a private practice, the lawyer may negotiate with a purchaser 
 for the reasonable value of the practice that has been developed by the seller.  A seller may 
 agree to transfer matters in one legal field to one purchaser, while transferring matters in 
 another legal field to a separate purchaser.  However, a lawyer may not sell individual files 
 piecemeal. 
  
 The seller remains responsible for handling all clients' matters until the files are 
 transferred under this rule. 
  
 Termination of Practice by the Seller 
 The requirement that all of the private practice be sold is satisfied if the seller in good 
 faith makes the entire practice available for sale to one or more purchasers.  The fact that a 
 number of the seller's clients decide not to be represented by the purchaser but take their 
 matters elsewhere, therefore, does not result in a violation.  Neither does a return to private 
 practice as a result of an unanticipated change in circumstances result in a violation.  For 
 example, a lawyer who has sold the practice to accept an appointment to judicial office does 
 not violate the requirement that the sale be attendant to cessation of practice if the lawyer 
 later resumes practice upon being defeated in a retention election for the office. 
  
 The requirement that the seller cease to engage in the private practice does not prohibit 
 employment as a lawyer on the staff of a public agency or a legal services entity which 
 provides legal services to the poor, or as in-house counsel to a business. 
  
 The rule permits a sale attendant upon retirement from the private practice of law within 
 the state of Colorado.  Its provisions, therefore, accommodate the lawyer who sells the 
 practice upon the occasion of moving to another state. 
  
 Conflicts 
 The practice may be sold to one or more lawyers or firms so long as the seller presents 
 all clients with the opportunity to obtain competent representation. 
  
 Since the number of client matters and their nature directly bear on the valuation of good 
 will and therefore directly relate to selling the law practice, conflicts that cannot be waived 
 by the client and that prevent the prospective purchaser from undertaking the client's matter 
 should be determined promptly.  If the purchaser identifies a conflict that the client cannot 
 waive, information should be provided to the client to assist in locating substitute counsel. 
 If the conflict can be waived by the client, the purchaser should explain the implications and 
 determine whether the client consents to the purchaser undertaking the representation.  Initial 
 screening with regard to conflicts, for the purpose of determining the good will of the 
 practice, need be no more intrusive than conflict screening of a walk-in prospective client 
 at the purchaser's firm. 
  
 Client Confidences, Consent and Notice 
 Negotiations between the seller and prospective purchaser prior to disclosure of 
 information relating to a specific representation of an identifiable client can be conducted in 
 a manner that does not violate the confidentiality provisions of Rule 1.6 just as preliminary 
 discussions are permissible concerning the possible association of another lawyer or mergers 
 between firms, with respect to which client consent is not required.  Providing the purchaser 
 access to client-specific information relating to the representation and to the file, however, 
 requires client consent.  The rule provides that before such information can be disclosed by 
 the seller to the purchaser the client must be given actual written notice of the fact of the 
 contemplated sale, including the identity of the purchaser, and must be told that the decision 
 to consent or make other arrangements must be made within 60 days.  If nothing is heard 
 from the client within that time, consent to the transfer of the client's file to the identified 
 purchaser is presumed. 
  
 A lawyer or law firm ceasing to practice cannot be required to remain in practice 
 because some clients cannot be given actual notice of the proposed purchase.  The purchaser 
 may represent those clients who cannot be given actual notice of the proposed purchase or 
 are not available to consent to the purchase or direct any other disposition of their files until 
 otherwise notified by the client.  The purchaser shall preserve the confidences of the client. 
  
 Fee Arrangements Between Client and Purchaser 
 Paragraph (c) is intended to prohibit a purchaser from charging the former clients of the 
 seller a higher fee than the purchaser is charging the purchaser's existing clients.  The sale 
 may not be financed by increases in fees charged the clients of the practice that is purchased. 
 Existing agreements between seller and the client as to fees and the scope of the work must 
 be honored by the purchaser, unless the client consents after consultation. 
  
 Adjustments for differences in the fee schedules of the seller and the purchaser should 
 be made between the seller and purchaser in valuing good will, and not between the client 
 and the purchaser.  If a written fee agreement exists between the seller and a client, the 
 purchaser may not refuse to undertake the representation unless the client consents to pay 
 the higher fees the purchaser usually charges.  To prevent client financing of the sale, the 
 higher fee the purchaser may charge must not exceed the fees charged by the purchaser for 
 substantially similar service rendered prior to the initiation of the purchase negotiations. 
  
 Deceased, Disabled or Disappeared Lawyer 
 Even though a nonlawyer seller representing the estate of a deceased, disabled or 
 disappeared lawyer is not subject to the Colorado Rules of Professional Conduct, a lawyer 
 who participates in a sale of a law practice must conform to this rule.  Therefore, the 
 purchasing lawyer must see that its requirements are met.