• Tue. Dec 5th, 2023

Rhode Island Lawyers Weekly: “Attorneys and Business Succession Planning: Understanding Rule 5.4(d)(1)


Nov 20, 2023

A Rhode Island attorney is seeking clarification on whether they can transfer their law firm equity interest into a revocable trust as part of a business succession plan. The attorney practices law through a limited liability entity in which they own an equity stake and wish to continue owning the equity interest during their lifetime. However, the attorney is unsure if the Rules of Professional Conduct permit such a plan.

The Panel’s opinion is that an attorney may own their law firm equity interest via a revocable trust, provided that they are the sole trustee, and the successor trustee and beneficiary are also licensed Rhode Island attorneys in good standing. The guidance from other states makes it clear that non-lawyers are not allowed to have any kind of ownership interest in a law firm via a revocable trust. Therefore, all ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing for compliance with Rule 5.4(d)(1). As such, the inquiring attorney may transfer their equity interest in their law firm into a revocable trust, as long as all parties involved are licensed Rhode Island lawyers in good standing.

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