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This inquiry raises the following questions:
First:
May a practicing attorney ethically sell
his income tax business to another attorney?
Second:
May a practicing attorney ethically inform
his income tax clients that his income tax business has been sold
to another attorney?
Third:
May the attorney-buyer of the income tax
business ethically notify the income tax clients of the attorney-seller
that he has acquired the latter's income tax business?
Fourth:
May a practicing attorney ethically sell
his income tax business to a layman?
Fifth:
May the attorney-buyer of the income tax
business employ the secretary of the attorney-seller and give her
a percentage of the income from the income tax business?
For
the reasons hereinafter stated, all questions are answered in the
negative.
INTRODUCTION
The
following observations are applicable to all questions raised:
When
an attorney engages in the practice of law, he necessarily holds
himself out as an attorney, and if his practice consists, among
other things, of doing income tax work, a distinction between his
professional practice and his income tax business is not a permissible
distinction. Under such circumstances, he cannot occupy the dual
positions of a lawyer and a layman. Thus in Formal Opinion No. 305,
ABA, March 22, 1962, it was recognized that a person who is a lawyer
cannot free himself of the ethical restraints of the profession
in carrying on an activity which constitutes the practice of law
merely by claiming that he is to be regarded as a layman for a particular
purpose. And in State ex rel. Nebraska State Bar Association v.
Butterfield, 172 Neb. 645, the court held that the preparation of
income tax returns by an attorney, during the time of his suspension,
constituted the practice of law "whether or not it might under
some circumstances be properly preformed by others not admitted
to the bar". The court said (p. 649):
The
respondent admits that he prepared . . . income tax returns during
the period of his suspension. Admittedly respondent performed such
work prior to his suspension . . . It seems clear to us that the
doing of such work is within the province of a lawyer to do. It
is properly identified as the practice of law, whether or not it
might under some circumstances be properly performed by others not
admitted to the bar.
First:
If a practicing lawyer sells his income
tax business, he sells a part of his professional practice, not
a nonprofessional business. Formal Opinion 266, ABA, June 2, 1945,
says:
The
good will of the practice of a lawyer is not, however, of itself
an asset, which either he or his estate can sell. As said by the
Committee on Professional Ethics of the New York County Lawyer's
Association in its Opinion 109 (October 6, 1943):
Clients
are not merchandise. Lawyers are not tradesmen. They have nothing
to sell but personal service. An attempt, therefore, to barter in
clients, would appear to be inconsistent with the best concepts
of our professional status.
Second:
Notification of sale is not ethically permissible
because there is nothing to sell.
Third:
Notification of
acquisition is not permissible because there is nothing to sell.
Fourth:
A practicing attorney cannot sell a part
of his professional practice to a layman, or to a lawyer.
Fifth:
The fifth question requires a negative answer because fee splitting
with a layman is not permissible. (It is assumed that the secretary
is not a lawyer.) DR 3-102, Code of Professional Responsibility,
provides:
A lawyer
or law firm shall not share legal fees with a non-lawyer . . .
The
sale of a lawyer's practice ordinarily would require the transfer
of at least some of the files. If an income tax practice were sold,
it would be necessary, for example, that the buyer have knowledge
of depreciation schedules. It is readily apparent that the sale
of a professional practice probably would result in a wholesale
violation of the confidences of clients, Canon 4, Code of Professional
Responsibility.
Generally
speaking, the attorney-client relationship is a consensual relationship
which is preceded by the exercise of the selective process by the
client. The sale of a lawyer's professional practice contains neither
of the two essential ingredients.
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