The prohibition on fee splitting by professionals is alive and well in New York. The sale of a dental practice from one dentist to another was found to violate the state’s prohibition against fee splitting because the purchase price was to be paid, in part, based on a percentage of the future revenue of the practice.
The appellate court, in Advanced Dental of Ardsley v. Brown,[1] dismissed allegations that the buyer failed to pay the purchase price and refused to enforce the purchase agreement because the court found that the contract was illegal and unenforceable in that it violated New York’s prohibition against fee splitting.
This ruling serves as an important reminder of the need to properly structure professional practice transactions so as to ensure the legality of purchase and sale agreements.
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[1] 2024 WL 3434226 (July 17, 2024)