Retirement is the most common reason OBLIC policyholders close a law practice. Other reasons include election or appointment to the judiciary or other public office, the start of a new firm, or the assumption of some other non-private practice employment. Whatever the reason, here are steps we recommend be followed when closing your law practice.
1. Decide on the proposed date to close your practice.
Ideally, you should give yourself at least 1 year to close your practice. You will have a better idea of the timeline as you begin the process. Stay flexible and adjust the date if you need more time. This is something you do once, so it is important to take sufficient time to get it right!
2. Inform key people of your plans.
Inform your immediate family and key staff of the proposed retirement date. You will need their cooperation and assistance. This may be an emotional time especially for those who have worked with you for many years. Allow time to relate the information in a personal, unhurried manner.
3. Prepare a complete list of ALL closed and open files and notify clients.
If you have files in closed storage, you will need to retrieve them for further disposition. For open files, you will need to determine the status of the file, whether you will be able to complete the necessary legal work before you close your practice, and the amount of ALL unearned legal fees to be refunded to your clients if you cannot complete the representation. Notify courts, administrative agencies, and other entities where you practice.
For open files that will not be concluded before the closure of your office, send a letter recommending the client immediately retain another lawyer to assume the representation and make arrangements for the client to retrieve their file for delivery to successor counsel. Return any unearned portion of the fee. See Sample Letter for Closing Law Practice.
When concluding your representation in a matter, we recommend that you scan and keep a digital copy of your correspondence, notes, and billing files, as well as any other documents you might feel important to your defense should subsequent allegations of legal malpractice or disciplinary violations be made. 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.
As outlined in the brochure issued by the Office of Disciplinary Counsel, Managing Client Files & Trust Accounts, if you have a file retention and destruction policy, you can continue to return to clients the closed files in accordance with your policy, to the extent this process can be accomplished within your timeline. If you have files that predate your file retention and destruction policy, or you have no file retention and destruction policy, contact clients at their last known address to advise of your retirement and their need to retrieve files before the scheduled destruction date.
Your letter should allow 60 days from date of notice for clients to retrieve their file. The files can be delivered to clients via mail, electronic communication, or in person, depending on their preference. Regardless of how the file is returned, have the client sign a receipt for the file and then maintain a copy of these signed receipts for your records.
If you have old closed files, 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.
If there are documents of legal significance in the files that are not retrieved, turn the documents of legal significance over to the Office of Disciplinary Counsel (ODC). Files that are not retrieved should be destroyed by cross-shredding or incineration. If you use a document destruction service, request a certificate of destruction. Keep a list of files that are destroyed. See also Ohio Ethics Guide: Client File Retention.
4. Follow all steps to close the business side of your practice.
The formation documents used to create your practice will dictate what you will need to do to comply with Ohio law when winding down. Review and follow the requirements specific to form of legal entity of your firm. If applicable, you will need to notify the Ohio Secretary of State and other government entities regarding employment and taxation. Arrange for the secure record storage of paper and/or electronic business files.
Make a complete list of all real estate, 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 you are selling or returning IT devices and equipment, be sure all client confidential date is scrubbed from the device. Consider if you will need to extend coverage for services such as phone and website for a short time after you close your practice.
5. Address the professional aspects of your practice.
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. 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 your bank to close your IOLTA. You will need to make sure that you deposit the amount of funds needed to cover any final transaction fees to close the account, so it does not “go negative’ and trigger an automatic statutory report to the Office of Disciplinary Counsel. If you have questions about your IOLTA, contact the Ohio Access to Justice Foundation.
Decide if you will change your Attorney 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. You may also wish to consider Emeritus Pro Bono Status.
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 with adequate time to consider your options. While Ohio’s legal malpractice statute of repose takes effect on June 16, 2021, it is yet to be determined how the statute will be applied and the impact that may have on legal malpractice insurance.
6. Complete these steps and enjoy retirement!
For additional options please see:
As always, OBLIC is here to assist you! If you have questions about this or any other loss prevention topic, please do not hesitate to contact me.
Gretchen Mote, Esq.
Director of Loss Prevention