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- Making the Decision to Retire
There are lots of reasons why you may be thinking of winding up your practice. It may be the next logical step in your career path, maybe the decision is tied to personal health and well-being or to those of a family member, maybe it was part of your plan from the day you were called to the Bar, maybe it’s tied to changes in the practice of law, or even the escalated use of technology in offices, the courts or agencies, or, perhaps you realize you want or need a change. In any case, you need a plan so that you are better equipped to exit the practice on your terms.
You need to consider how this decision will affect you and your family. This decision could alter your routine, your income, your lifestyle and possibly even your personality. Winding up is a lot of work, as well. The stage ahead could involve different or even longer hours, depending on the task at hand. For a variety of reasons, it is important to involve family in the planning and implementation.
One of the key things to consider is your financial situation. Can you afford to retire? What do you have and what do you need?
This also matters because it can affect what you will do after you retire. Often, making that assessment is a necessary first step in this whole process. It may help you decide whether you want, or need, to pursue a subsequent career, and what that might be.
What Will You Do After You Retire?
What do you want your next stage to be like? Do you want to relax, consult or coach, teach or write, expand into mediation or ADR? Start to consider what you want to do, and why.
This is relevant because the particular membership status you carry with the Law Society will be tied to these goals or subsequent career. If your subsequent career involves providing legal services or giving legal advice, then you will need to remain an active member.
Also consider that post-practice life might be very different than what you envision. In our experience working with lawyers, we have found that sometimes lawyers’ expectations of retirement can be inconsistent with the reality of it all.
A lot of times the lawyers we work with might truly want to retire or wind up. But when it actually happens, or rather, just before it happens, there is stress and some worry. There is also a “reality check” when their life after retirement isn’t what they expected. Sometimes they want to return to practice or some form of providing legal services. If you change your status to inactive or retired or resigned, then you will be required to apply to reinstate if you want to return to one of the active statuses and that involves fees and reinstatement processes.
This is where consideration of the various status options, among other things, is important – and having a talk with certain key people can help.
Who Should You Talk To?
The advance planning component involves engaging in discussions with your family, your staff, your partners and others, including various teams at the Law Society.
Other Professionals – Accountants, Valuators, Lawyers, Tax Advisors
It is strongly recommended that you engage with other professionals including an accountant, financial advisor, business valuator, etc. This is important whether you are a sole practitioner, an employee, have a professional corporation or are retiring from a partnership. There are various financial considerations, not the least of which is advice on the tax consequences you might face on retirement.
If you are retiring from a partnership, closely assess your partnership agreement before you give notice. Perhaps consider retaining outside counsel to interpret the terms of the agreement. Consult with your accountant as the tax and financial ramifications may be complicated, depending on your partnership agreement and your personal situation. You will need to navigate the transitions necessary for your professional corporation, holding corporations and limited liability partnerships. Consider seeking advice from your accountant and from a lawyer who has experience terminating professional corporations and winding up limited liability partnerships.
This guide will not deal expressly with the sale of a practice. However, if you are thinking of selling your practice, consider engaging an impartial professional to provide a valuation. Your own perception of the value of the practice may be subjective or you may need to do certain things to make it more attractive to a successor. Again, consider taxation and other accounting issues.
The Law Society of Alberta
The Law Society is key to your winding up process and you can anticipate having conversations with members of several departments.
- Membership Department: You will need to contact, get information from and work with the Membership department to change your status, address fees, invoices, ongoing communication and more. General enquiries should be directed to Customer Service at 1.800.661.9003 (toll free) or 403.229.4700.
- Trust Safety Department: If you have a trust account or other financial obligations for your firm, you should be in contact with the Trust Safety department to move through the wind up process. You will work closely with them in tandem with the Membership department if you have a trust account.
- Practice Management Department: The Practice Management department is available to provide support and resources on file and client management, storage and destruction of closed files, and guidance in the process.
- Practice Advisors: The Practice Advisors can provide valuable insight and guidance on any ethical issues you may encounter.
A consultation with a professional counsellor during a period of transition is always a good idea. Assist provides free and confidential counselling to Alberta lawyers, articling students, law students and members of their families.
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