A Rhode Island attorney is seeking clarification on whether he or she may transfer his or her 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 he or she owns an equity stake.

The attorney wishes to continue owning the equity interest during his or her lifetime, but is unsure whether the Rules of Professional Conduct permit such a plan. The Panel has issued an opinion 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.

The Panel found guidance from other states on the issue, which make it clear that non-lawyers are not permitted 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 to comply with Rule 5.4(d)(1). As a result, the inquiring attorney may transfer his or her equity interest into a revocable trust as long as all trustees, successor trustees, if any, and beneficiaries are licensed Rhode Island lawyers in good standing.