By Brooke Ottesen and Deanna Brocker, The Brocker Law Firm, P.A.
Closing a law practice
takes time and planning. The most important considerations, outside of ethical
responsibilities, are to start early, create and utilize a timeline and
checklist, and update it often. The process should ideally be implemented over
a period of six months to one year.
Ensuring your clients
and their files are taken care of should be a principal concern once you have
made the decision to close your practice and have informed staff of your plans. Although individual circumstances will
dictate how much time you have available, attempt to complete and close out as
many clients as possible.
The following is a form
checklist that you can modify to your particular circumstances:
Closed Client Files:
Determine if any inactive clients should
be notified. If the file or client
matter has been closed for more than six years, the file may be destroyed as
long as client confidentiality is preserved.
If six years or less, the files should be retained and the client
notified how you will be storing the files and how the file may be retrieved.
Create a record of all destroyed files.
Remaining Active Clients and Files:
Calculate any accounts receivables and try
to collect the balances before making the announcement if possible.
Prepare a letter for all active clients.
Advise the clients about the termination of the representation; the status of
their cases and any pending deadlines; the need to retain new representation,
if necessary; and how to receive their files. Try to contact clients personally
first, if possible, before sending the letter.
Get the client’s prior consent, if you
are planning to transfer any files to a new lawyer.
Prepare and file withdrawal motions
It is a good idea to keep at least an
electronic copy of all files.
Determine if you may need to refund
money to any of your clients, particularly in the case of flat fees designated
as "earned upon receipt.”
Resign from any fiduciary position held,
such as administrator, executor, etc. that cannot be completed.
Review accounts payable and contact
vendors to arrange payment of bills.
Check for fee sharing and fees owed to
Reconcile and close trust and fiduciary
accounts. Disburse funds held in your
trust account to appropriate client or third parties with final accounting to
Research current escheat law if you have
unclaimed funds in your trust account.
Notify the State Bar when the trust and
fiduciary accounts are closed.
Preserve the financial records for the
appropriate period of time. Trust records must be maintained for six years.
Determine if there is other non-cash
client property being held that must be returned to the client.
Determine a closure date for all other
Terminate all bank account direct pay
arrangements from the operating account.
Determine which state and federal
offices should be contacted.
Discuss filing final tax returns with an
Cancel any credit in the name of the
Cancel all relevant insurance including
office, liability, etc., but only after operations have ceased. Discuss the timing with your insurance agent.
Determine need for professional
liability tail coverage that would cover you for any malpractice claims that
arise after you have stopped practicing for malpractice incurred while you were
Consider COBRA options for health
Determine rollover options for
retirement plan for you and staff.
Determine if life and disability
insurance may be rolled into a personal policy.
Bar and Bar Associations:
Call the membership department at the
N.C. State Bar to update membership records with your status and any new
contact information. You may submit a petition for transfer to inactive status,
which must be received by December 31st to avoid dues for the
Contact all other associations and
professional organizations to update membership records with your status and
new contact information.
Equipment, Furniture, and Office
Scrub computers, digital copiers, and
other electronic devices, including smart phones, of software and client
information to ensure confidential information is not compromised.
Consider how to dispose of equipment,
furniture, and office supplies.
Determine move date and arrange moving
Coordinate with the landlord if rental
Dissolve the business entity.
Terminate all firm e-mails accounts and
any social media sources.
Consider setting up a static web page on
your website with information on the closure of the firm and where client files
are being stored.
Cancel subscriptions and on-line
Cancel vendor accounts including courier
and express accounts.
Cancel any advertisements by the firm
and any legal directory listings.
Determine whether a post office box is
needed for post-dissolution mail.
Disconnect utilities including
phone. Determine whether the firm needs
to maintain the number for a period of time with a recording that gives
information regarding the dissolution and client files.
Determine what disclosures should be
made to employees concerning termination of employment.
This list is not
comprehensive and does not cover every situation. Hopefully, it may serve as a
starting point for building and completing your own checklist so you can be
confident that when you turn off the lights, no one is left in the dark.