If you're a Louisiana attorney and the sole owner of your law practice, you may assume your license shields your business from the reach of community property laws. Unfortunately, that assumption is wrong.  If your law practice was formed during your marriage, the business itself is considered a community asset that requires partition during the divorce and without the right agreements in place, your practice could become the issue of a valuation dispute. Without the right agreements in place, you could spend thousands or tens of thousands fighting over how to value the practice.

The Conflict: Community Property vs. Ethical Rules

Under Louisiana's community property regime, most property acquired during the marriage is presumed to be jointly owned. This includes businesses and income generated from solo law practices.

But Louisiana's Rules of Professional Conduct—specifically Rule 5.4(d)—prohibit non-lawyers from owning or having any financial interest in a law firm. That includes a spouse, no matter how long they've supported the practice behind the scenes.

So what happens when divorce hits a solo practitioner?

Courts Won't Award Ownership, But Value Is Still in Play

Louisiana courts, like those in many jurisdictions, recognize that a law practice may have community value, even if ownership cannot be transferred. This means the non-lawyer spouse may be entitled to a buyout of their interest, not equity.

The tricky part is valuation, especially for practices built on contingency fees or long-term client relationships.

Louisiana courts have not established a bright-line rule about what should or shouldn't be included in valuing a practice. That's why it's critical for the attorney and spouse to set those boundaries in writing ahead of time.

Unsettled Cases? Why You Should Exclude Them

One particularly thorny issue is whether to include contingency fee cases that haven't settled at the time of separation.

While courts have not explicitly barred their inclusion, these cases present real problems:

• They are inherently speculative;

• The ultimate value is unknown and often years away;

• Including them invites conflict, inflated expectations, and post-divorce accounting nightmares.

Attorneys should consider contractually excluding any pending or unresolved contingency cases from the valuation. Instead, only those cases that have fully settled and been paid as of the valuation date should be included. This approach ensures clarity and aligns with professional ethics.

The Operating Agreement: Your First Line of Defense

If your law firm is a single-member LLC or PLLC, your Operating Agreement (or equivalent governing document) should:

• Confirm that only licensed Louisiana attorneys may hold ownership;

• Expressly prohibit any transfer of interest to a non-lawyer;

• Create a valuation framework that excludes goodwill and speculative future earnings;

• Establish a buyout procedure if a spouse claims a community interest.

But you can't stop there.

You Also Need a Spousal Buy Out Agreement

A customized spousal agreement—executed while the marriage is intact—can:

• Acknowledge the potential for community interest;

• Require the mandatory sale of any claimed interest to the attorney upon divorce filing;

• Exclude unsettled cases from valuation;

• Pre-agree to payment terms and dispute resolution procedures.

Together, the Operating Agreement and Spousal Agreement form a protective shield around your practice.

Conclusion: Protect Your Practice Before Problems Arise

Lawyers are trained to plan for risk. Yet many overlook the risk their own marriage poses to their law practice.

Don't wait for a divorce filing—or worse, a disciplinary issue stemming from impermissible ownership—to take action.

A properly structured Operating Agreement, combined with a thoughtful spousal agreement, ensures compliance with ethics rules, protects your clients, and avoids valuation chaos.

Need help drafting one? At Business Law Group, we counsel Louisiana attorneys on how to protect the integrity and value of their professional practice.

Contact us today to get started.