An attorney has inquired about the possibility of implementing a business succession plan that involves transferring the equity interest of his or her law firm into a revocable trust. The attorney’s law firm is currently owned through a limited liability entity, and he or she wishes to retain ownership of the equity interest during his or her lifetime while ensuring compliance with professional conduct rules.

The attorney is seeking clarification on whether such a plan is permissible under Rhode Island Rules of Professional Conduct. The Panel has ruled that an attorney may own his or her law firm equity interest via a revocable trust, as long as he or she is the sole trustee, and the successor trustee and beneficiary are also licensed Rhode Island attorneys in good standing.

To comply with Rule 5.4(d)(1), which prohibits non-lawyers from having any kind of ownership interest in a law firm, all ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing. Therefore, if the attorney wishes to transfer his or her equity interest into a revocable trust, he or she must ensure that all involved parties meet these requirements to avoid any legal issues.