SUBJECT: Transfer of practice for a lump sum
by attorney elected as judge
The inquiring party been (sic) recently elected to the bench and is concerned as to the propriety of his proposed "practice transfer agreement." He specifically asks whether he may transfer his practice to a purchasing attorney for a lump sum. The consideration recited from the seller to the purchaser includes: (a) the seller's development of a twenty-year law practice; (b) the physical transfer of client's files and other documents; (c) the purchaser's entitlement to use of a long standing business telephone number; and (d) the likelihood that some portion of seller's current and former client's may elect to retain the purchaser as their attorney.
Under Canon 5D(1), a judge shall not engage in financial and business dealings that may reasonably be perceived to exploit the judge's judicial position or that would involve the judge in frequent transactions or continuing business relationships with lawyers or other persons likely to come before the court on which the judge serves. No violation of Canon 5D(1) appears in this situation where the practice is valued at a point in time before the prospective judge assumes the bench. The Committee would remind the inquiring party that pursuant to Opinion 93-38, a prospective judge selling a law practice should not profit from future judicial standing in community. Assuming that the inquiring prospective judge's practice has been valued in an arms length transaction based upon the best reasonable estimates of the present value of the practice, the Code of Judicial Conduct would not prohibit this transaction which involves the transfer of a practice for a lump sum payment. Should the inquiring party elect to take a promissory note for a portion of the lump sum, as he has telephonically advised that he may do, such fact would not affect the Committee's view so long as the future payments remain irrevocably tied to the actual value of the practice at the time of the transfer.
The committee is expressly charged with rendering advisory opinions interpreting the application of the Code of Judicial Conduct to specific circumstances confronting or affecting a judge or judicial candidate. Its opinions are advisory to the inquiring party, to the Judicial Qualifications Commission and to the judiciary at large. Conduct that is consistent with an advisory opinion issued by the committee may be evidence of good faith on the part of the judge, but the Judicial Qualifications Commission is not bound by the interpretive opinions issued by the committee. Petition of the Committee on Standards of Conduct for Judges, 327 So.2d 5 (Fla.1976).
Dated this 23rd day of December, 1996.
Charles J. Kahn, Jr.
Chairman, Committee on Standards of Conduct Governing Judges
Participation Members: Judges Cardonne, Dell, Green, C. Kahn, L. Kahn, Rushing, Silverman, Tolton and Attorney Novicki
cc: All Committee Members
Office of the State Courts Administrator (name of judge deleted from this copy)