When a lawyer with a large firm decides it's time to close up shop, much of the stress associated with the change—such as the massive task of packing up of an entire practice—is offset by the fact that his or her associates and partners can usually take the reigns in a reasonably timely fashion.
Said lawyer must notify clients, fire off a few documents to the law society, prepare memos to file highlighting limitation dates, and, presto, he or she is released knowing that, probably most importantly, the clients are in good hands.
However, when a sole practitioner decides it’s time to close shop, it’s a completely different set of circumstances – and checklists.
When New Brunswick lawyer Marc L. Richard started to think about closing his Beresford practice in 1996, he wasn’t prepared for the lengthy time it would eventually take to complete all the work before he could shut the door permanently.
“The biggest things are to try and complete as much work as you can and to give yourself more time than you think it’s going to take to close it down,” says Richard, who closed his practice to join the Law Society of New Brunswick and currently acts as its executive director. “Some lawyers think within three months they can be closed but it can take up to 18 months. It really takes – and it took me - a whole lot longer than anticipated.”
Selling Your Practice
Most lawyers report that selling a practice isn’t easy for many reasons, says the Law Society of Manitoba’s C.E.O. Allan Fineblit. “Years ago law libraries had great value but not anymore. Books used to be worth a fortune but now you can’t give them away – except maybe to photo studios as background. And clients can’t be sold since they must be given the option to choose where they go, so goodwill tends to be of minimal value.”
When Richard closed his Beresford office, he considered himself “lucky” to sell his practice. “I sold my files for the work in progress and disbursements – but you won’t get that very often. Usually, at least in New Brunswick, a lawyer who sells his practice will just be paid for disbursements on the file.”
Richard added that most of his clients went with the lawyer who was purchasing the office. For clients who did not wish to go with the Richard’s successor, the clients’ new lawyers reimbursed Richard for the time he had billed.
Contacting Clients
Keeping in mind that law society requirements vary from province to province, the Law Society of British Columbia suggests that lawyers notify each client in writing. “We also suggest a newspaper notice advising the clients to contact the lawyer to obtain their open or closed files and original papers and, of course, valuables, wills, and funds in trust. There are a number of things that the client should be getting from the lawyer,” says Barbara Buchanan, practice advisor with Law Society of British Columbia.
Buchanan added that the B.C. law society’s Web site contains, among many other guidelines and requirements, a checklist, a sample newspaper notice, and a sample letter to client pertaining to the winding up of a sole practice.
Richard suggests telephoning clients with active files to request what they wish to have done with their files. “For example, if you have a trial coming up in [the near future], usually that notification is done by phone.”
Files
One key decision to make, according to Buchanan, is whether to return open files to the client or to transfer files to another lawyer. “It’s the client’s choice, of course.”
Richard added that the Law Society of New Brunswick has a lengthy guideline published for members regarding file retention and destruction. “It all depends on what type of matter it is. Some files you have to keep for the rest of your life while others can be partially destroyed after 10 years. But in the practice here in New Brunswick, many lawyers who close their offices will just keep files in their home.”
Notification should also be made to former clients advising of the closing and inviting them to pick up closed files. Again in most provinces, the law society must be informed of where closed files are located.
Pending Matters
When lawyers decide to stop working – particularly for open files - they should try to make a smooth transition for the client, says Buchanan. For an active file, Buchanan suggests preparing a very detailed memo on the nature of the file and the work that remains to be done to highlight important limitations.
“Of course, the lawyer would need to discuss with the client how to proceed and one would hope that the lawyer would plan for their retirement or office closing well ahead of time,” Buchanan added.
“Obviously, the lawyer cannot prejudice a client’s position and simply abandon them last minute,” says Fineblit. “The lawyer has a responsibility to ensure that the transition is seamless. In matters before the court, the lawyer will also have obligations to the court and will need to take the appropriate steps to get off the record. I always advise sole practitioners to find a colleague who is willing and able to step in and facilitate an unexpected transition – either an infirmity or another reason – but for those who don’t, the law society will usually step in to ensure that the clients are not at risk.”
Trust Money
Ultimately, the trust account should be closed – either returned to the client, turned over to the law society, or transferred to a new lawyer – and a final report sent to the law society, says Fineblit. “The money may be held pending the fulfillment of trust conditions and, if that is the case, those same conditions should be imposed on the new lawyer when the money is transferred.”
In circumstances where the client can’t be located or the lawyer doesn’t know to whom the trust money belongs then the money can be paid to the law society.
Insurance
Generally, lawyers need not remain insured after they cease practicing since most policies have tail coverage that covers them for claims arising after they leave practice, related to the work they did while they were practicing, says Fineblit.
Marlane Press is a freelance journalist in Vancouver.
Adapted from National Magazine.