The most common reason why practices close is retirement. Although many lawyers would probably prefer to simply ride off into the sunset when they’ve decided to call it a career, the rules of professional conduct dictate otherwise. The duty of competent representation requires an obligation to protect client interests, which in turn, requires planning and time. Failure to properly plan one’s exit from the profession could harm the interests of clients, as well as cause financial and emotional stress to former partners and family members left to clean up the mess.
Timing
After the decision to retire is made, one must decide when to do it. In light of the tasks to be described in this post, conventional wisdom is that it takes a minimum of six months to accomplish them all. Some may even prefer to take as long a year.
Setting a retirement date is frequently influenced by the status of open files and to what extent, if at all, the soon to be retiring lawyer wants to complete certain matters. Another factor many consider to determine an end date is the status of any long-term liabilities, especially office lease obligations.
Open Files
Review every open file to assess how long the matter will likely last before completion. Do you want see any of the matters to conclusion? Do you want to personally find a lawyer to take any files over? Do you want to simply give some files back to the client and make it the client’s problem to find another lawyer? If you do the latter, make sure you inform the client how and where to pick up the file. When releasing files to either clients or new counsel, keep a copy of the file.
Money Matters
Prepare any final bills and finalize all accounts receivable. Determine when you want to close your general bank account. Do the same for your trust account and make sure that it is or will be fully reconciled. And don’t forget to properly close out your line of credit if you have one
Long and Short Term Obligations
If you lease office space and your retirement end date does not coincide with your lease’s end date, have you either found a subtenant or worked out an arrangement with the landlord? Do you have any equipment, subscriptions, memberships, directory listings, advertising or other vendor commitments to cancel? What will you do with your website?
Insurance
Notify your malpractice carrier. Purchase a tail policy if needed. Are any changes needed to your family or own health, life or disability coverage?
Furniture, Fixtures, etc.
Find buyers or a place to donate.
Closed Files
Perhaps the most daunting task soon to be retired practitioners face is what to do with all of those closed files that are usually either tucked away in the office’s basement or in off site storage. Although many have attended CLE’s over the years reminding them of the importance of having a record retention policy, the reality is the advice typically falls upon deaf ears. The popular path of least resistance is to store the files and reason “I’ll just deal with it when I have to.”
There are no hard and fast rules regarding the disposal of closed files. Although a variety of state Bars publish guidelines, some are not very helpful. For example, one Bar suggests, “clients should be told where their closed files will be stored and whom they should contact in order to retrieve them.” Another recommends, “arrange for the safekeeping for client files… [and determine] who will be the caretaker of the stored client files.” Both seem to wrongly imply that files should never be destroyed and always be available.
Of course, the issue is further complicated since may guidelines and checklists have not been updated with advice about the proper handling of electronic client files.
Here’s my take on what to do.
Everyone seems to agree that anything that is the property of the client should be returned. This would include wills, stock certificates, original signed contracts, promissory notes, deeds, mortgages, etc.
What to do with everything else? Go back to your first year of law school and ask yourself, “what would a reasonable lawyer do?” Factors to consider:
- Do you have a file retention policy that your clients know of?
- Will the client likely need any file contents?
- Statute of limitations for both the client’s matter as well as legal malpractice
When in doubt check with either your state bar, state regulatory office and malpractice carrier.
Last Steps
Enjoy a healthy and satisfying retirement!
