<p>1 Member, New Mexico Bar; Regents Professor of Management, Anderson Schools of
Management, University of New Mexico.
2 Homer H. Clark, Jr., The Law of Domestic Relations in the United States, 2nd Ed. 589
3 Allen M. Parkman, "Human Capital as Property in Celebrity Divorces," 29 Fam. L. Q.
141 (1995), Allen M. Parkman, "A Systematic Approach to Property in Divorces," 12 Fam.
Advocate 34 (1989), and Allen M. Parkman, "Human Capital as Property in Divorce
Settlements," 40 Ark. L. R 439 (1987).
4 Willard H. Da Silva, "Property Subject to Equitable Distribution," in John P. McCahey,
ed., Valuation & Distribution of Marital Property 18-4 (1984).
5 Allen M. Parkman, "The Treatment of Professional Goodwill in Divorce Proceedings,"
18 Fam. L. Q. 213 (1984).
A Systematic Approach to Valuing the Goodwill
of Professional Practices
Allen M. Parkman1
in Ronald L. Brown, Valuing Professional Practices & Licenses, 3rd Ed.
(Englewood Cliffs, NJ: Prentice-Hall, 1998), 6-1 - 6-18.
Property divisions have replaced alimony as the primary device for arranging the financial
relationships between spouses at divorce.2 However, the courts do not have a clear understanding
of what is property and how it should be valued causing them to address these issues in an ad hoc
manner.3 They are not given much guidance because the equitable distribution statutes in the vast
majority of jurisdictions define "marital property," but usually ignore the more basic definition of
"property."4 In no area is this ad hoc approach more visible than the courts' consideration of the
goodwill of professional practices.5 This goodwill has become an area of dispute in property
settlements at divorce because of the lack of an understanding of what is goodwill, how it is
created and how it should be valued. This chapter clarifies how goodwill should be treated at
divorce by analyzing the difference between the business goodwill of the professional enterprise
and the personal goodwill of the professional individual. Initially, th