## Facts

- Margaret and Leo Prahinski married in 1965; during the marriage Leo earned a law degree and opened a solo law practice focused mainly on real estate transactions.
- Margaret worked in the practice, first as a secretary and later as an office manager.
- After the parties separated, Margaret filed for divorce in 1986.
- The trial court treated Leo’s law practice as marital property and included a goodwill component in valuing the practice for a monetary award, awarding Margaret one-half of the court-determined goodwill value.
- Leo objected, arguing any goodwill was inseparable from his personal reputation and continued services and therefore was not a transferable business asset.
- The intermediate appellate court held the practice’s goodwill was personal to Leo and not divisible marital property, and remanded for recalculation of the monetary award and related financial determinations.
- The state’s highest court reviewed whether goodwill of a solo law practice can constitute marital property under Maryland’s equitable distribution scheme.

## Issues

1. Whether the goodwill of a solo law practice that depends on the attorney’s personal reputation and continued presence constitutes marital property subject to inclusion in a monetary award on divorce.

## Decision

- The court held that goodwill is marital property only if it is a business asset with value independent of any particular individual’s continued presence or reputation.
- It concluded that the goodwill of Leo’s solo law practice was inseparable from Leo’s personal reputation and services and lacked independent market value.
- The court affirmed the intermediate appellate court’s exclusion of the solo practice goodwill from marital property.
- The case was remanded for recalculation of the monetary award (and related financial determinations) without including goodwill as a marital asset.

## Legal Principles

- Professional goodwill is marital property only when it is a marketable business asset with value independent of the continued presence or reputation of a particular professional.
- If goodwill depends on an individual professional’s personal reputation and ongoing services, it is personal goodwill and is not marital property.
- Marital-property valuation rests on fair market value; an asserted asset must be one that would transfer between a willing buyer and willing seller.
- Ethical and practical features of legal practice (including the personal nature of client relationships) limit treating a solo practitioner’s client-based expectations as a transferable asset for equitable distribution.

## Conclusion

Maryland excluded personal goodwill of a solo law practice from the marital estate, holding that only goodwill with independent, transferable market value may be treated as marital property in divorce monetary award calculations.


Prahinski v. Prahinski, 321 Md. 227, 582 A.2d 784 (Md. 1990)