Section 11 - Closing Your Practice
A smooth law firm transition – whether it is due to voluntary considerations like retirement or a new job or involuntary issues such as illness, death or disbarment – is a lawyer’s responsibility.
Whether it is due to a new position, illness, or future retirement, lawyers should have plans in place to facilitate closing or transitioning his or her practice. A lawyer’s clients and family are owed that diligence and fiduciary responsibility.
What happens with no planning? You could have potential violations of the Louisiana Rules of Professional Conduct with risk to both clients and family. Consider distraught family members handling legal issues regarding client files and funds.
It Is Inevitable
When a lawyer stops practicing law varies. If you get a call regarding a lawyer-friend’s death, what should you do? Consider
Rule XIX Section 27.
SECTION 27 APPOINTMENT OF COUNSEL TO PROTECT CLIENTS’ INTERESTS WHEN RESPONDENT IS TRANSFERRED TO DISABILITY INACTIVE STATUS, SUSPENDED, DISBARRED, DISAPPEARS, OR DIES
- Inventory of Lawyer Files.
If a respondent has been transferred to disability inactive status, or has disappeared or died, or has been suspended or disbarred and there is evidence that he or she has not complied with Section 26, and no partner, executor or other responsible party capable of conducting the respondent’s affairs is known to exist, the presiding judge in the judicial district in which the respondent maintained a practice or a lawyer member of the disciplinary board should the presiding judge be unavailable, upon proper proof of the fact, shall appoint a lawyer or lawyers to inventory the files of the respondent, and to take such action as seems indicated to protect the interests of the respondent and his or her clients.
- Protection for Records Subject to Inventory.
Any lawyer so appointed shall not be permitted to disclose any information contained in any files inventoried without the consent of the client to whom the file relates, except as necessary to carry out the order of the court which appointed the lawyer to make the inventory.
Plan Ahead
Do not rely on luck or the grace of others. Have proper planning in place for transition. Office practices to consider in anticipation of eventually closing or transitioning a lawyer’s practice include:
- Selecting a “transitional lawyer” with emergency access to passwords and calendar and accounts.
- Transitional lawyer issues:
Are there any conflicts?
Who do you represent?
Is this a voluntary or compensated position?
- Having financial clarity including regular reconciliation of a lawyer’s trust account.
- Financial clarity:
Why needed?
What kind of fee is it? Is a refund owed?
To whom do funds in the operating and trust accounts belong?
- c) Having a method of distinguishing active files and important deadlines.
- Active files and deadlines:
Failure to have a plan in place puts clients, the firm and/or your estate at risk.
- d) Having a file retention/destruction policy.
- What happens to the files?
Whose responsibilities are the files?
Storage? Review? Transfer? Destruction?
Recognizing that there could be numerous reasons for closing a firm, from death to disbarment, please consider the following general checklists.