A law firm that can’t be sold?

on 3 June, 2011 Email this Email this - Print this Print this
CoreLegal founder member Ray Fox (from the Bottom Line Consultancy) has some across an unusual situation he’s never encountered before in his many years acting as a broker selling Law Firms. He would welcome any thoughts Click below to find out more

One of my Clients is in an unusual situation.
They have a legally aided practice. They want to sell it.
I have sole agency rights and I’ve found a buyer for them.They have agreed terms.
My Client contacted the LSC to tell them their franchises were being transferred to a new Principal although everything else remains the same – the staff, the offices, etc.
The LSC have said that the legal aid contracts are personal to the Principal and belong to the Principal only – not the firm – and so can’t be transferred.
The LSC have said that the only way forward for my Client is to close the firm down – in other words, she can’t sell it – or she can continue for another year or so when the contact automatically terminates.
Regardless, my Client can’t sell it and therefore the goodwill has no value.
This sounds daft to me and I’ve never come across a law firm that can’t be sold.
I’m wondering whether other law firms have had this problem and how they got round it.
Do leave a comment below or call 01494 483728 if you’ve any observations.

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Topics: Selling law firms
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1 response so far ↓

  • 1 Jason Cobine // Jun 14, 2011 at 10:34 pm

    Ed Austin contributed this via LinkedIn• Clause 3.1 of the Standard Contract 2010 states ‘This contract is personal to you. Subject to Clause 3.2, you must not give, bargain, sell, assign or otherwise dispose of the benefit of any of your rights, or sub-contract, novate or otherwise delegate any of your obligations, under this Contract without our prior written consent. Any breach of this Clause 3.1 shall be a Fundamental Breach.’

    Isn’t the answer to appoint the new people as an Agent under clause 3.2(b)? – with appropriate additional clauses on the way the agent performs – the contract generally requires contractors to ensure that the LSC can effectively control agents, through indirect means.

    Hope that helps Ray

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