Concept
The Cessation Requirement
Sale of a law practice as a permitted restriction (Rule 1.17(a))
The Cessation Requirement
Rule 1.17(a) makes the seller's exit the first condition of a sale. The seller must cease to engage in the private practice of law, or in the area of practice that has been sold, in the geographic area or the jurisdiction in which the practice has been conducted, and each jurisdiction may elect either version of that last phrase.1 A seller who keeps practicing in what was sold, in the place where the practice was conducted, has not met the condition.
That single sentence of the rule sets two limits on the seller's duty. One concerns subject matter: the seller gives up either the private practice of law generally or only the area that was sold. The other concerns place: the seller gives up practice only where the practice has been conducted. The duty is the overlap of the two, so the next two subsections take them one at a time, subject matter first.
The condition presupposes a seller who can choose to leave. A lawyer who has died, become disabled, or disappeared cannot cease anything, yet practices of such lawyers are sold under Rule 1.17, and Rule 5.4(a)(2) lets the buyer pay the agreed purchase price to the estate or other representative.2 Flexibility in Cessation takes up how the duty applies in those cases.
Practice or Area Sold
What the seller must stop doing depends on what the seller sold. A seller of the whole practice ceases private practice in the relevant place, and a seller of only one area ceases practice in that area.3 The duty tracks the sale: the seller gives up what was sold and nothing more, so every field outside the sale stays open.
The Model Rule allows either kind of sale. Rule 1.17(b) permits a sale of “[t]he entire practice, or the entire area of practice” to one or more lawyers or firms, though a handful of states still require that a practice be sold whole.4 Where the area option exists, a lawyer who wants to wind down toward retirement, to concentrate on another field, or who has simply lost interest in one field can transfer that field and keep practicing law in other respects within the same geographic area or jurisdiction.5 Clients gain as well. Selling an area to a lawyer with a particular interest in that field increases the chance that knowledgeable counsel will continue to serve them.6
The rule does not define a practice area, but Comment 5 shows that the category is flexible. A lawyer may sell “the estate planning portion of the practice but remain in the practice of law by concentrating on probate administration.”7 The seller who hands over every estate-planning matter has ceased practice in the area sold, so Rule 1.17(a) is satisfied, and the probate work that remains does not disturb the sale.
Staying in a neighboring field is permitted, but staying in the field that was sold is not.
The rule asks one question: does the seller still practice in the area sold? Wills and trusts are estate planning, so he does. The probate work was never the problem, and the number of clients who stayed with him is no part of the test.
The freedom to carve out an area has an edge. A seller and buyer may not define a practice area so thinly that they are effectively trading individual client matters. Whether the whole practice or an area is sold, it must be sold in its entirety, and the rule does not permit the sale of individual client matters or segments of an area. The parties may not “skim off” the more lucrative elements and leave the remaining clients unserved or left to find new counsel on their own.8
A genuine area is sold whole. If the purchaser cannot accept a particular client matter because of a conflict of interest, Comment 6 treats the requirement as still satisfied.9
On an exam, ask what the seller does after closing. Practice in a different area is consistent with the sale. Practice in the area sold defeats it. A thin label attached to a single matter fails because no area was sold in the first place.
Geographic Reach
The same sentence of Rule 1.17(a) that fixes what the seller gives up also fixes where. The seller must cease practice in the place “in which the practice has been conducted.”11 The Model Rule prints that place in brackets as two alternatives, “in the geographic area” and “in the jurisdiction,” and a jurisdiction may elect either one.12 Which version governs therefore depends on the text a particular state adopted. The anchor is the same under both: the duty is measured by the place where the practice was actually conducted.
The versions differ in how far the duty runs from that anchor. Under the jurisdiction version, the seller stops throughout the jurisdiction in which the practice was conducted, including parts of it where the seller never kept an office. Under the geographic-area version, the seller stops in the area where the practice was conducted. The rule text gives no distance or size test for that phrase, so do not supply one. The choice of version matters only when the seller's new work is in a different part of the same jurisdiction. A seller who reopens in the same city fails the condition under either version. A seller whose practice was conducted in one state and who moves to another state satisfies it under either version. An exam question that turns on the choice will say which version the state adopted.
Neither version asks the seller to leave the profession. Both stop at the edge of the place where the practice was conducted.
Compare a seller who goes back to work in the same place.
The two lawyers differ only in where they went back to work.
The place limit combines with the limit on what was sold. A seller who sold only an area of practice must stop practicing in that area, in the place where the practice was conducted, and nothing more.13 Such a seller remains free to practice other fields in that same geographic area or jurisdiction.14 By the rule's terms, the seller is also free to practice the area sold in a place where the practice was never conducted.