Court Opinion

ID: 6759016
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:47.26351+00
Date Added: 2024-06-11T16:02:32.392693
License: Public Domain

Celebrezze, C.J.,
concurring. I concur in the majority’s decision to the extent it holds that appellant’s rights and interests must be determined by the provisions of the partnership agreement which, in this case, does not allow payment for goodwill to a withdrawing partner. However, I part company with the majority in their dictum which allows payment for goodwill “upon dissolution of the business” if agreed to by the contracting law partners.
In my opinion both lower courts correctly held that goodwill is not a distributable asset of a law firm. I recognize that while goodwill is often personal to an attorney, a reputable firm may also have acquired goodwill which is of benefit to a law firm just as it is of value to business partnerships. Cf. Snyder Mfg. Co. v. Snyder (1896), 54 Ohio St. 86. Appellee “Turner” law partnership appears to be such a law firm. There is evidence of client loyalty to the “Turner firm” and not just to individual partners. See Dugan v. Dugan (1983), 92 N.J. 423, 433, 457 A. 2d 1, 6, where the Supreme Court of New Jersey, in the context of a divorce proceeding, recognized goodwill as being in the enhancement of future earning capacity, because of reputation, leading to probable future patronage from existing and potential law clients.8 Additionally, I do not believe the excess earnings discussed by the appellate court as resulting from goodwill are necessarily “excessive fees.” Rather, the value of a firm’s goodwill is the additional business generated because of the firm’s ability to attract clients as a result of its name, physical location, or the concomitant reputation of its members.
Although I believe goodwill exists and is therefore ascertainable, I nevertheless agree with the lower courts’ determinations that it may not ethically be compensable to a withdrawing partner in Ohio. Although DR 2-107(B) allows for payment to a retiring partner or associate pursuant to a separation agreement, I do not believe it permits a former partner to receive a portion of future services rendered by the firm in settlement of goodwill. See, generally, ABA/BNA Lawyers’ Manual on Professional Conduct (1984) 41:703 and 91:801, and the cases cited therein. Rather, I believe this section of the Code of Professional Responsibility was intended to allow a firm to gradually pay off a partner’s tangible interest in a firm and to allow for reasonable retirement payments. I find that the policy and ethical concerns of the court in Siddall v. Keating (1959), 8 App. Div. 2d 44, 185 N.Y. Supp. 2d 630, affirmed (1959), 7 N.Y. 2d 846, 196 *66N.Y. Supp. 2d 986, are equally valid today. See, e.g., In re Silverberg (1980), 75 App. Div. 2d 817, 427 N.Y. Supp. 2d 480, which found that an agreement that provided, inter alia, for payment for goodwill, between former partners, was an unethical division of legal fees without regard to services actually rendered and was void as against public policy.
In a strikingly similar case to the one at bar the Supreme Court of Iowa recently recognized that in some cases (such as divorce) the goodwill of a law practice may properly be valued. However, it held that “the transfer or withdrawal of a portion of a law practice * * * is not such a situation.” Bump v. Stewart, Wimer & Bump, P.C. (Iowa 1983), 336 N.W. 2d 731, at 737. I agree with the Iowa court, and the authorities it cites in support of the proposition that “* * * placing a ‘price tag on the goodwill of a law practice’ is contrary to public policy * * Id.
Based on the foregoing, I believe today’s majority has taken one step forward in contract law and two steps backward in the realms of legal ethics and public policy by expressing approbation of goodwill bargains between attorneys.

 The majority opinion relies heavily on portions of the Supreme Court of New Jersey’s decision in Dugan, supra, which recognized goodwill as having value in the dissimilar context of a divorce proceeding. However, the majority opinion ignores later portions of the New Jersey decision which clearly reiterated the prevailing view that goodwill can not be sold or protected through a restrictive covenant by a solo practitioner. “ * * [Clients are not chattels or merchandise and a lawyer is not a tradesman.’ ” Id. at 437, 457 A. 2d at 8.