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MCLE Test and Answer Sheet

Test No. 46: For What It's Worth (Dec. 1996 LA Lawyer

Instructions for Obtaining MCLE Credits
The Los Angeles County Bar Association certifies that this activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour.

1.Study the CLE article in this issue.

2.Answer the test questions by marking the appropriate boxes. Each question has only one answer. Photocopies of this answer sheet may be submitted; however, this form should not be enlarged or reduced.

3.Mail the answer sheet and the $15 testing fee ($20 for non-LACBA members) to:
Los Angeles Lawyer
P.O. Box 55020
Los Angeles, CA 90055 
Make checks payable to Los Angeles Lawyer.

4.You can also fill in the test form and submit it directly to LACBA by clicking "Submit." To submit your test answers online you will need to pay by credit card. After submitting your answers you will be presented with a screen requesting payment information. This information will be submitted in a secure mode which will allow you to safely transmit your credit card number over the Internet. If you prefer not to pay by credit card, please print this answer sheet and submit your responses by regular mail.

5.Within six weeks, Los Angeles Lawyer will return your test with the correct answers, a rationale for the correct answers, and a certificate verifying the CLE credit you earned through this self-assessment activity.

6.For future reference, please retain the CLE test materials returned to you.
Test Sheet 
Mark your answers to the test by clicking next to your choice.  All questions must be answered.  Each question has only one answer. This test is worth 1 hour of credit.*

1. In what year did California first allow the sale of a law practice?
 A. 1975.
B. 1979.
C. 1989.
D. 1992.

2. "Value" is the same concept as "price."
 Yes.    No.

3. "Book value" is defined as the assets minus liabilities.
 True.    False.

4. "Fair market value" is the only valid valuation technique currently in vogue.
 True.    False.

5. Every practice contains "goodwill."
 A. Yes.    B. No.    C. Maybe.  

6. Which of the following factors will influence the purchase price of a law practice?
 A. Terms of payment.
B. Geography.
C. Size of practice.
D. Repeat history of clients.
E. All of the above

7. Who are the prospective buyers of a law practice?
 A. Attorneys leaving larger law firms.
B. New attorneys seeking to jump-start their careers.
C. Sole and small-firm practitioners.
D. All of the above.
E. None of the above.

8. The Internet currently is used widely for advertising the availability of a law firm for sale.
 True.    False.

9. A nonlawyer can buy a law practice under the new California Rules of Professional Conduct.
 True.    False.

10. A law firm must be sold in its entirety under the Rules of Professional Conduct or it cannot be sold at all.
 True.    False.

11. Does the American Bar Association Model Rule for the sale of a law practice differ from the California rule on the same subject?
 Yes.    No.  

12. Which of the following are requirements for transferring an interest in a law firm in accordance with Rule 2-300 of the Rules of Professional Conduct?
 A. The buying attorney cannot charge increased fees.
B. Confidential information cannot be disclosed to the buying attorney.
C. Conflict-of-interest rules must be followed with the exception of possible modifications pursuant to Rule 2-300 of the Rules of Professional Conduct.
D. A and C.
E. None of the above.
F. All of the above.

13. There is a conflict of interest between the desire of the attorney to sell his or her law practice for the largest sum possible and the rule that requires referrals only to a competent attorney.
 A. Yes.
B. No.
C. Maybe.

14. If the buyer's minimum hourly rate is $250 and the seller’s minimum hourly rate is $175, are there any limitations on the fee that the buyer can charge to the buyer's new clients?

15. How and when will clients learn of the sale of their attorney’s practice?
 A. When they receive their next bill.
B. When they receive notice from the selling attorney.
C. When they receive notice from the buying attorney.
D. There are no applicable notice requirements.  

16. Client confidentiality prevents discussion about specific clients or their matters.
 True.    False.  

17. The attorney is the person best qualified to negotiate the sale of the attorney’s practice.
 Yes.    No.  

Stephanie is a young attorney who wants to grow her practice quickly. She thinks buying an existing practice will give her the boost she needs.

18. What steps should she take to locate and then purchase an existing practice? 
 A. Advertise in local legal publications.
B. Contact a headhunter.
C. Ask her banker to spread the word among the banker’s attorney/customers.
D. Connect with an older attorney and arrange a buy-in.
E. All of the above.
F. None of the above.

19. One or both parties to the sale transaction should engage professional negotiators.
 Yes.    No.  

20. What "multiple" should be used to determine the value of a practice?
 A. 10.
B. 7.
C. 4.
D. None of the above.

Address and Billing 
After submitting your answers you will be asked to enter your name, address, and payment information on the next screen. Once you have submitted the current form, you will be switched to a secure mode which will allow you to safely transmit your credit card number over the Internet.

If you do not wish to complete this transaction over the Internet you should print this page and send it to the address listed in Step 3 of the instructions at the top of this page.

Before hitting the "Submit" button please verify that all questions have been answered.

*The Los Angeles County Bar Association has been approved as a continuing legal education provider of Minimum Continuing Legal Education credit by The State Bar of California. This self-assessment activity will qualify for Minimum Continuing Legal Education credit by The State Bar of California in the amount of one hour.

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