Closing your law practice may be one of the most difficult professional decisions of your career. Whether you are considering retirement, a career change or something unplanned arises, this article offers suggested steps to facilitate closing your practice.
First, establish a target date for closing the practice. Choose a date that realistically allows sufficient time to orderly conclude matters and transition clients to other attorneys. How much time is necessary depends on a number of factors including your area of practice, scheduled court dates, volume of active matters and whether your current firm can absorb your caseload. If the closing is due to retirement, it can often take at least a year to complete the process.
Once the closing date is set, establish a timeline with specific dates to keep things moving forward with evaluation points. Though flexibility may be necessary, being intentional about adhering to your timeline is important to ensure that you meet your target date.
Discuss your plans to close the practice with key persons. Immediate family and key staff will need to know that you plan to close your practice and their role in assisting you to do so. Closing the practice is likely a life-changing event for everyone near and dear to you. Allow time to process the event and ask questions, along with giving them the opportunity to understand the timeline, necessary steps and their role(s).
Address client files. Compile complete lists of all open files and closed files, along with contact information for clients. Closed files in storage will need to be retrieved for disposition.
A complete spreadsheet that includes location of all files, client contact information and matter status will be useful to assign tasks and track progress. It can be a daunting task but these steps should help expedite the process.
Once a list of open files is compiled, determine how to approach each matter. If the scope of work can be completed prior to your target closing date, identify tasks and calendar dates to complete the work.
Notify clients and return files. Send a letter, like this sample letter for closing a law practice. This letter refers to a record retention policy for closed files for a period of years. Adapt this letter to reflect your file retention policy.
If the work necessary to conclude an active, open matter cannot be reasonably accomplished before your target closing date, notify the client in writing. Notification should include the recommendation that the client immediately retain another attorney, arrange to retrieve the complete client file, including work product, and provide the client with an accounting for any retainer balance. If the matter is pending with a court or administrative agency, determine whether a motion for leave to withdraw is necessary. Review and comply with local rules on withdrawing.
For closed files, follow procedures in the brochure issued by the Ohio Office of Disciplinary Counsel, Managing Client Files & Trust Accounts. Continue to adhere to your file retention and destruction policy if one was in place. However, in the absence of a file retention and destruction policy, contact clients at their last known address and advise them of their need to retrieve their file before its destruction date, which should be at least 60 days from the date of the notice.
For closed files for clients whose current address is unknown, notice by publication may be a good option. (This sample newspaper notice gives a suggested format.) Notice can also be posted on the law firm’s website, noting the date by which clients must contact the firm and pick up their files. Allow clients at least 60 days from date of notice to retrieve their files. Have clients sign a receipt upon retrieving their file.
A lawyer is not required by the Rules of Professional Conduct to maintain a former client’s file for a minimum period of time after termination of representation. (But IOLTA requirements might. See below.) Unless the file is returned to the client at termination, the retention period of a client file should be determined by whether the file will be needed to protect the interests of the former client. See Opinion 2019-6 Ethical Obligation to Deliver a Former Client's File.
OBLIC recommends that at the conclusion of each matter, attorneys scan and retain a digital copy of correspondence, notes, fee agreements, billing records and any other important documents. Then attorneys should give clients their original file, including all original documents of legal significance at no charge, obtaining a receipt for the file. Securely store and backup digital copies and receipts when representation concludes. These records could be important if there are later allegations of legal malpractice or disciplinary violations.
For files that are not retrieved by clients, remove documents of legal significance from files and turn those documents over to the Office of Disciplinary Counsel. The remainder of files not retrieved may be destroyed by cross-shredding or incineration. If you use a shredding service, retain the certificate of destruction.
OBLIC recommends that attorneys keep receipts for files retrieved and a list of destroyed files indefinitely. You may wish to contact the Office of Disciplinary Counsel to have your name added to its list of lawyers whose files are destroyed.
Close the business side of the practice. You may wish to terminate your firm’s legal entity. The formation documents used to create the practice entity will determine what to do to comply with Ohio law when winding down your practice. Review and follow the requirements specific to the form of legal entity of the firm. Comply with requirements of the Ohio Secretary of State, if applicable.
Working with your CPA or accountant, you may need to notify government entities about your retirement or firm closure to wrap up unemployment, worker’s compensation, taxation or other regulatory accounts. Arrange for the secure storage of paper and/or electronic business files.
As a solo practitioner, you may also wish to make a complete list of your practice-related real estate documents, leases, utilities, vendors and insurance policies. Take appropriate steps to terminate contracts and recurring subscriptions or services including office services, such as office supplies and beverage delivery.
For your IT devices and equipment, be sure all client confidential data is scrubbed from the device before destroying or recycling the device. You may wish to consider the need to extend services such as phone and website for a short time after closing the practice, as these services may be necessary to notify prior clients of your departure from private practice or for other good reasons. However, be vigilant to decline any requests for representation after you have concluded practice.
Conclude professional requirements. Conduct a final reconciliation of your IOLTA. Funds should correlate with work being completed for clients or refunded to clients. Any unclaimed funds remaining in the IOLTA must be turned over to the Ohio Department of Commerce Division of Unclaimed Funds in the new category of Attorney Unclaimed Funds.
Keep IOLTA records pursuant to Ohio Rules of Professional Conduct 1.15 for seven years. Remember - this requirement includes maintaining a copy of the fee agreement, if any. These records should be kept securely with the final lists of open, closed and destroyed client files. Rule 1.15 allows IOLTA records to be kept electronically.
Work closely with the bank to close the IOLTA. Make sure to deposit the amount of funds needed to cover any final transaction fees to close the account so it does not result in a negative balance which would trigger an automatic statutory report to the Office of Disciplinary Counsel.
For questions about your IOLTA, contact the Ohio Access to Justice Foundation.
Decide whether to change registration status with the Ohio Supreme Court. Remember that retirement or resigned status is final and irrevocable. Inactive status is an alternative for an attorney who wishes to stop practicing law without surrendering his or her law license, while preserving the ability to resume the practice of law at a later date. Emeritus pro bono status is another option.
Contact your legal malpractice insurer to inform them of the pending decision to close your practice. Discuss with your underwriter the options for an extended reporting endorsement or “tail” coverage. Begin this process in advance of the closing date to allow adequate time to consider your options.
Ohio’s legal malpractice statute of repose took effect on June 16, 2021. It is yet to be determined how the statute will be applied (prospectively or retroactively) and thus, its impact on future exposure to potential legal malpractice claims. This consideration is one of many in evaluating the need and options for “tail” coverage to be discussed with your underwriter.
Successfully close your practice! Following the steps in this article can assist in the decision to close your practice. With appropriate planning, attorneys can look ahead to the next phase of a new career path or an active retirement.
