Walsh Appellate Ruling Series
The appropriate valuation of goodwill in marital dissolutions has long been a subject of intense debate and scrutiny in the Arizona Family Law and Appellate Courts. In October 2012, The Arizona Court of Appeals issued a decision (the "Appellate Ruling") in Walsh V. Walsh (I CA-CV 11-0269) that clarifies, and builds upon, a history of precedent cases regarding the appropriate valuation of goodwill In law firms and other professional practices. The Court reversed the trial court's decision that to place a value in excess of the firm's buy-sell agreement on husband's ownership interest in a law practice would require speculation. The Court of Appeals held that:
"In part, on this record the court should not have relied on the realizable benefit approach." and,
"The family court should have considered Husband's personal goodwill in valuing Husband's law practice beyond his stock redemption interest in the firm."