Law firm and professional practice acquisition in Austria: client base, data protection and professional rules

Several routes are available for the acquisition of a law firm or practice. A frequent route is the entry into an existing professional vehicle, for example through the acquisition of shares in a law or audit GmbH. Here the share deal logic applies: the company remains in place and the acquirer enters as a new shareholder.

A second possibility is the classical sale of a practice in which a sole proprietorship or a practice is transferred as an economic unit. Structurally this route resembles an asset deal: premises, inventory, ongoing mandates or treatment relationships and the client or patient base are transferred together. The choice of structure should be guided by professional law requirements and tax considerations.

A third variant is the gradual admission: a new partner first enters as an employed practitioner or junior partner and gradually takes on shares, often combined with the later departure of the existing owner. How these routes differ at base is shown by the post on share deal and asset deal. A deeper view on succession is provided by our topic page on business succession.

The client or patient base is the economic core of a law firm or practice takeover. It consists of personal data whose transfer is governed by the GDPR. A simple handover of files is problematic under data protection law because the seller may pass on the data of those affected for a different processing only under narrow conditions.

Common models inform the clients or patients before the handover and either obtain their express consent to the file transfer or give them an opportunity to object. For sensitive data, such as health data, stricter requirements apply. Professional confidentiality duties also play a role and require that the new practitioner is subject to the same duties.

The acquirer should document the inherited data carefully and integrate them into its own processing activities. A deeper view on the handling of personal data in the transaction context is provided by the post on data protection due diligence.

Every law firm or practice acquisition requires the acquirer to hold the necessary professional admission. For lawyers this is the entry on the list of lawyers, for notaries the appointment as a notary, for tax advisers and auditors the corresponding appointment. For doctors and dentists the medical licence and, where applicable, the public health insurance contract are needed. The assessment under professional law lies with the competent professional bodies and the respective codes.

In addition, professional codes govern advertising, mandate acceptance, conflicts of interest and confidentiality. They protect the public interest in an integer exercise of the profession and shape the acquisition process. Brandauer Rechtsanwälte accompanies the civil side and the contract design; the assessment of professional code questions in detail, such as advertising restrictions or conflicts of interest in the individual case, is to be aligned with the competent professional body.

In the contract the professional law duties should be expressly observed. Non-compete clauses of the seller, garden leave arrangements and the protection of joint clients or patients are delicate points; they can only be agreed to the extent permitted by the professional codes and competition rules. The concept of non-compete clause is explored in the glossary entry on the non-compete clause.

On a sale of practice the employment relationships of the existing staff transfer to the acquirer under the conditions of a transfer of business under the Employment Contract Law Adaptation Act. On a takeover through a share acquisition the staff remains with the company and thus part of the unit. A well-prepared handover strengthens the bond and stabilises the client or patient base.

The premises of the practice are a topic of their own. On a share acquisition the lease remains with the company; on an asset deal a transfer of contract is needed, which as a rule requires the consent of the landlord. Early clarification of the lease conditions avoids delays at the effective date.

Ongoing mandates or treatment relationships are particularly sensitive. They cannot simply be transferred without involvement of those affected; depending on the profession, special duties apply to the handover of files, to the maintenance of confidentiality and to the continuity of care or representation. An initial assessment of the risks is provided by our M&A transaction risk profile.