We frequently receive questions surrounding the closing of a law practice.  Whether due to retirement, change in careers, or something unplanned, here are some suggested steps to facilitate the process of closing a practice.

Establish a target date for closing the practice

If the closing is due to retirement, allow at least one year to complete.  If it is due to other circumstances, realistically choose a closing date that allows sufficient time to transition clients and matters to other attorneys and orderly close the practice.    Once the closing date is set, establish a timeline with specific dates to keep things moving forward with  evaluation points and leeway for the unexpected.

Inform key persons

Immediate family and key staff will need to know the closing date and general timeline.  In-person meetings are best. Closing the practice is likely a life-changing event for these people as well as the lawyer. Allow time to process the event and ask questions.

Notify clients and address client files

The initial part of this step is compiling a complete list of ALL closed and open, active files and contact information for clients. Closed files in storage will need to be retrieved for disposition.  This can be a daunting task. These steps help expedite the process.

For open files:

• • Determine the status of the file
  • Decide if the necessary legal work will be completed before you close your practice
  • Notify courts, administrative agencies, and other entities

For open files that will not be concluded before the closure of your office:

• • Send a letter recommending the client immediately retain another lawyer
  • Arrange for the client to retrieve their file for delivery to successor counsel
  • Return any unearned portion of the fee

Notify courts, administrative agencies, and other entities

• • File appropriate Notice to Withdraw

Send Sample Letter for Closing Law Practice. This letter refers to a record retention policy for retaining closed files for a period of years. Adapt this letter to reflect your file retention policy.

OBLIC recommends when concluding your representation in a matter to scan and keep a digital copy of correspondence, notes, billing files, and any other documents that might be important if there are subsequent allegations of legal malpractice or disciplinary violations.  Store and backup securely these copies when representation concludes. Give clients their original file including all original documents of legal significance at no charge. Then destroy your paper or electronic version of files pursuant to the terms of your file retention and destruction policy.

For closed files:

• • Follow procedures in the brochure issued by 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
  • If there is no file retention and destruction policy in place, contact clients at last known address and advise of their need to retrieve their file before destruction date at least 60 days from date of notice

For old closed files for clients whose current address is unknown, notice by publication may be a good option

• • See Sample Newspaper Notice.
    • Notice can also be posted on the law firm website noting the date by which clients must contact the firm and pick up their files
  • Return files by mail, electronic communication, or in person
    • Have client sign receipt for file when received
  • Remove documents of legal significance from files not retrieved
    • Turn documents of legal significance over to Office of Disciplinary Counsel
  • Files not retrieved may be destroyed by cross-shredding or incineration
    • If shredding service is used, retain Certificate of Destruction
  • Keep receipts for files retrieved and list of all files destroyed
    • Contact Office of Disciplinary Counsel to have your name added to list of lawyers whose files are destroyed

Close the business side of the practice

• The formation documents used to create the practice will determine what to do to comply with Ohio law when winding down.  Review and follow the requirements specific to the form of legal entity of the firm. 
• If applicable, notify the Ohio Secretary of State and other government entities about employment, workers compensation, and taxation.  Arrange for the secure storage of paper and/or electronic business files.
• Make a complete list of all law firm owned or related real estate documents, leases, utilities, vendors, and insurance policies. 
  • Take appropriate steps to terminate or buy out contracts.
  • Cancel any automatically renewing services or subscriptions, such as office supplies and beverage delivery. 
• If selling or returning IT devices and equipment, be sure all client confidential data is scrubbed from the device. 
• Consider the need to extend coverage for services such as phone and website for a short time after closing the practice.

Conclude professional requirements

IOLTA

• • 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.

Attorney Registration

• • 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 OBLIC

• • Inform OBLIC of your pending decision to close your practice.  Discuss with your OBLIC underwriter the options for an Extended Reporting Endorsement or “tail” coverage.  Begin this process at least 90 days 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 – these options can be discussed with your OBLIC underwriter.

Here are additional resources:

Ohio Ethics Guide: Client File Retention

Ohio Ethics Guide: Switching Firms Guide

Ohio Ethics Guide:  Transition From The Practice of Law to The Bench

OfficeKeeper Chapter 9 Closing, Selling or Acquiring a Law Practice

As always, OBLIC is here to help!  Please let us know how we may be of further assistance.

Gretchen K. Mote, Esq. Director of Loss Prevention Ohio Bar Liability Insurance Co. Direct:  614.572.0620 [email protected]

Merisa K. Bowers Loss Prevention Counsel Ohio Bar Liability Insurance Co. Direct:  614.859.2978 [email protected]