Death, disability, disappearance, or disbarment
If you participated in the ABA Senior Lawyer’s Division (SLD) webinar “So It's Time: Responsible Planning for Closing the Law Office CE1807SIT” on July 11, 2018, you would know the significance of those words.
The webinar brought together three practitioners to share their expertise on planning the closure of a law practice: Edgar W. Pugh, Jr, Pugh Moak PC of Bloomfield Hills, Michigan; Joan M. Burda of Lakewood, Ohio; and Ted A. Waggoner, Peterson Waggoner & Perkins, LLP of Rochester, IN.
The caption does not include all the reasons you may need to close a practice. I closed a practice in about 72 hours when my reserve unit was activated and deployed; another time I closed the practice in two months to go on the bench. The planning was the same each time.
Surrogate Rule
The rule essentially requires every lawyer who does not have another lawyer in a fiduciary relationship with the lawyer’s clients to have a Surrogate Attorney named with the Supreme Court. Does your state have a “surrogate” rule? Should they have one?
Ted Waggoner discussed how the surrogate rule works in Indiana. Included in his materials are the “Indiana Attorney Surrogate Rule, Best Practices and Forms” published by the Indiana State Bar Association in 2010.
Ed Pugh discussed Michigan’s approach in the absence of a formal rule. In Michigan, the appointment of a receiver in the case of disability, impairment, or incapacity of an attorney is under the direction of the Attorney Grievance Commission.
Planning for Death & Disability
Joan Burda recommended you identify a “triage lawyer” to close, sell, or transfer your practice. Then execute a detailed, written agreement defining the relationship and duties with that lawyer and draft documents necessary to accomplish closure, sale or transfer of the practice.
Make a Checklist
Joan and I discussed the need for checklists. The lists should include bank account numbers, passwords, insurance policies, document locations, client contact information for clients and opposing counsel, court personnel, insurance agents, landlords, and any other entity or person associated with your practice.
Law Practice
The transfer of your practice is subject to the rules and ethical regulations of your state bar. The rules vary from state to state and probably change. I was not allowed to sell my practice under the rules of my state, so I ended up notifying my clients I was closing my practice and sold my furniture. (See “What to Expect When Selling Your Practice” by Peter A. Giuliani)
Clients
You or your representative should give clients a specific date the practice closed or will close and the reasons why, if possible. Once clients are notified, expect them to start hiring other lawyers.
Make arrangements for clients to pick up their files and/or deliver the files to your clients or other attorney of the client’s choosing. GET A RECEIPT.
Know the legal implications of referring your clients to another attorney—i.e., if the other attorney gets sued for malpractice, do you get sued as well for making the referral?
KEEP A COPY OF THE FILES.
Courts
Keep judges, their staffs, and courthouse personnel informed. If your plans are tentative [in my case my deployment plans were cancelled then reinstated], let the courts know the status of your plans so courts can re-schedule cases.
Your best friends in the courthouse can be the court clerks and the secretary/administrative assistants for each judge. Do not forget the court reporters, transcribing services, process servers, and other services you use.
Write each judge, especially the chief administrative judge and clerk of court of every jurisdiction in which you appear, giving them the date of your departure and contact information.
File “withdrawals of appearance” in every case in which your appearance is entered. Do not rely on the ‘other’ attorney to take care of this. As long as your appearance is in the case, you are responsible. Check your local ethics rules. List your client and opposing counsel in the certificate of service.
Insurance: Buy a ‘Tail’ to Your Malpractice Insurance
Talk with your malpractice carrier and the bar counsel of your state bar to insure you understand and implement any requirements of the malpractice insurer or the state bar and highest court’s ethics rules.
My malpractice carrier recommended I purchase a “tail” to my malpractice insurance. It required a one-time payment and insured I was covered against any future malpractice claims.
Review your health, property, and other insurance plans and coordinate with those carriers to be sure any necessary coverage continues, if necessary.
Escrow
This NOT your money. Refund unused escrow funds to your clients. Transfer other funds back to the entity which gave you the funds.
If at the end you have funds you cannot return, find out if you can transfer the funds to your state’s “unclaimed money” fund along with whatever information you have about the source of the funds. The name varies from state to state, so this may take some investigation. The unclaimed money fund will list the money, source and amount, which is easily accessible on the internet.
Check with your state bar to make sure there are no other ethical implications.
Clean Up
Accountant
Get your books in order. Coordinate with your accountant to determine if there is a particular date and/or manner in which you should close your practice. Determine how and where your books should be maintained.
Pay any and all outstanding bills and arrange for other bills to get paid—personal and professional.
You should have your general account in one bank and your escrow account in another. Talk to someone at each bank to insure money is accessible and payments or receipts can be made. Send a letter to each bank setting forth the date of your departure and contact information.
Taxes
If you paid any taxes of any kind, expect the governmental entity to keep in touch. Ten years after I went on the bench, I was still getting letters from the state and county governments threatening me with felony charges for failing to file and/or report or pay income, workers’ compensation, and other taxes on a practice I closed 10 years earlier. Yearly letters telling them I had closed my practice, changed jobs, and moved out of state did not deter the correspondence. After 10 years, the letters stopped coming.
Files
KEEP A COPY OF EVERY FILE YOU TRANSFER. (This is redundantly important.)
Then there is the client who has moved and you cannot find, or in some cases is the guest of a government entity (prison) or deployed. Consider maintaining a current listing in both your state and county bar directories after you leave private practice so you can be located. Determine whether physically and ethically you can file any relevant papers and/or documents with the clerk of court in the last jurisdiction where the client resided. Records filed with the court are generally easily found and available to the client.
Family
Update Your Will and Power(s) of Attorney
This is an opportune time to update any wills, powers of attorney, healthcare powers of attorney, etc. You may need to consider executing a limited power of attorney so someone can oversee your practice and/or write checks from your general and/or escrow accounts.
Dependents
If you have dependents, review guardianship documents, support documents, etc. Notify doctors or other healthcare providers. When I deployed, my ex-wife was the custodial parent. She needed paperwork and identification cards to insure all of my children’s healthcare needs were met during my deployment as well as having access to the commissary, PX, etc. If your dependents are still young, visit the teacher for each child, then the principal. A teacher/principal cannot fix a problem they know nothing about. You will be amazed how caring teachers and principals are when one parent is deployed.
Finally
Again, I invite you to get the transcript and materials for the webinar online, which includes the contact information for each of the panelists.
Don’t forget to turn out the lights!
If you have any tips on this subject please forward them to Richard Goodwin at jagret@gmail.com and we will include them when we update this article.
Richard Goodwin spent almost 20 years in private practice in Maryland and the District of Columbia trying cases in both state and federal courts. He has over 20 years of service as a federal administrative law judge with 4 agencies. He retired from the U.S. Army Reserves in 2002 as a Colonel in the Judge Advocate General’s Corps and was awarded the Legion of Merit and 2 Meritorious Service Medals. He is past chair of the Judicial Division of the American Bar Association. He is a graduate of the College of William and Mary (A.B.), Xavier University (M.B.A.), Northern Kentucky University, Chase College of Law (J.D.).