A and B had been associated in the practice of the Law for a number of years. They used the name of “A & B” although they were not partners, in the sense that they maintained separate accounts and separate staffs and did not share profits, though work done by one associate for the clients of the other was paid for by way of a percentage of the service charge billed for that work.
Several years ago, one of them was to undergo an operation and they rather quickly prepared and signed an agreement which provided that on the death of either, the survivor should take over the others business and continue to use the name of “A & B”, and for eight years thereafter would pay to the wife and children of the decedent thirty percent of the “net service charge of the business taken over or any other business directly resulting there from.” It was not necessary that any part of the services should have been performed before death.
A recently died leaving only two grown children (his wife having previously died). B, wishing to honor his obligation, is considering with these children and the attorney for A’s Estate a new agreement which carries out the substance of the earlier agreement. The primary purpose of the new agreement is to specify the manner in which the net service charge is to be determined.
B has been informed that there may be some question about the legality and ethics of such an agreement with reference to sharing of fees with a non-lawyer. Before signing the new agreement, he wishes to be advised concerning these points.
The carrying out of this agreement would be inconsistent with Canon 34. The good will of a legal practice is not an asset “which either [a lawyer] or his estate can sell” ABA 266. The proposed payments would represent an improper division of fees with non-lawyers and would also constitute a payment for something other than service rendered or responsibility assumed. N. Y. City 100; M, Y. City 679. In as much as the payments are to be made irrespective of whether any services were rendered before death, the arrangement would be improper even if A and B had been partners. N. Y. City 706.
In so far as the inquiry pertains to the legality of the arrangement, this is a matter on which the Committee expresses no opinion.
Dated: January 23, 1958, New York.