Closing a small law practice – The short list
Whether you are changing careers, retiring or merging with
another firm, there are many reasons why you might need to close
your law office. Even if you don't have plans to do so any time
soon, it is prudent to prepare a succession plan for when the time
comes (particularly if due to unforeseen circumstances) to make the
process as seamless as possible. With a plan in place, you'll know
exactly what needs to be done and how to do it within the confines of your
fiduciary duties. Here are five essential steps that you'll
need to build into your plan:
1. Notify Clients. First take stock of
your open matters. For those matters that you have time to
complete, do so. For ongoing matters that you cannot finalize, you
must take necessary steps to ensure that your withdrawal does not
have a "material adverse effect on the interests of the client"
(Rule 1.16(b)). As such, you should provide written notice of your
intent to withdraw from representation. It is important to provide
your clients with the opportunity to select new counsel, and
adequate time to do so. For matters pending before a tribunal, you
will need to obtain leave of court to withdraw from a matter.
2. Return Client Files. Whenever
possible, return original files to clients. If you must retain
certain original files, be sure to inform clients of where the
files will be stored and whom to contact to retrieve those files.
For all other files, obtain informed consent from your client to
destroy their files pursuant to the
Professional Rules of Conduct. The simplest way to do this is
by conveying your retention and disposition schedule to the client
at the outset of the engagement via your fee agreement. For ongoing
matters that require successor counsel, you'll need consent from
your client before transferring files to another law firm.
3. Protect Yourself and Your Family. Most
(if not all) malpractice insurance policies are "claims-made,"
which means the only policy that will protect you is one that is in
effect at the time in which a claim is made against you for
malpractice, not the policy that was in effect at the time the
events occurred giving rise to the claim. Thus, you should discuss
"tail" coverage with your malpractice provider. Many providers
offer free tail coverage so long as you have had premium coverage
in effect for a certain number of years (typically 2-3) and you
retire altogether from the practice of law.
4. Account for Unearned Fees. For work
that has and will not be completed, you must account to your
clients for any unearned fees. Your trust
account reconciliation records should provide the necessary
information with regard to each client and the funds that remain in
your trust account. If you cannot locate your client or cannot
identify the owner of the funds, the funds will likely escheat to
the IOLTA Committee (see proposed
resolution currently pending before the SJC). For further
assistance in closing out your IOLTA account, contact the IOLTA Committee or Board of Bar Overseers.
5. Notify the BBO. Finally, you should
notify the Board of Bar Overseers of your new address, and if you
are retiring, change your status.
Tip courtesy of Heidi Alexander, Law Office
Management Assistance Program.
Published October 16, 2014
To learn more about the Law Practice Management
Section, which is complimentary for all MBA members,
contact LPM Section Chair Cynthia E.
MacCausland or Vice Chair Damian J.