Dealing with open files

As you close down your practice, here are some suggestions for dealing with open files. Some of these ideas may not apply in your specific situation.

1. Decide when you will stop accepting new files to allow an orderly winding up of your practice.
2. Finalize as many open files as possible, ensuring that all final reporting is completed prior to wind-up.
3. Consider whether you have any ongoing obligations, such as undertakings, and make arrangements to be relieved of them or to have them transferred to another lawyer. Consider, too, whether clients may be expecting you to take care of things like renewals, options, etc.
4. Review wills to determine whether you have agreed to be executor or trustee. If you no longer wish to act in that capacity, consider asking the testator to revise the will or to add a codicil to appoint someone else. If the testator cannot be located, you may attach a renunciation to the will.
5. If you have any original documents held in safekeeping, determine if they are held on undertakings, on trust conditions, or on an agreement that will continue to apply. Seek written instructions from the necessary parties to alter the arrangements and to transfer the documents to a new location.
6. Write to clients with open files to notify them that you will be closing your practice and they will need to retain a new lawyer. Ask them to either pick up the original file or sign an authorization for you to release the file to a new lawyer. In this letter, tell the client about important deadlines.
7. Before transferring files to other lawyers, give them an opportunity to check for conflicts of interest.
8. If a client is picking up a file, give a date by which it should be picked up. Make a copy of the file for yourself. Ask clients to sign a receipt acknowledging that they received their files.
9. For each active file being transferred to another lawyer, prepare a detailed memo on the nature of the file and the work that remains to be done. Clearly note limitation, trial, chambers, discovery, or other pertinent dates. Keep a copy for your own records.
10. For cases that have dates set for questioning, court appearances, or hearings, discuss with the client how to proceed. Where appropriate, request new dates. Send written confirmations of these new dates to opposing counsel and to the client.
11. Legal Aid certificates cannot be transferred to another lawyer. You should notify the appropriate Legal Aid office of the files that are affected, and your reason for withdrawing, and send a final bill, marked ‘Final.’ The client will need to be notified, instructed to contact Legal Aid and to seek a new certificate. (a note of caution: given recent changes to Legal Aid, the client may no longer be eligible and a new certificate may not be issued)
12. Choose a date on which you will check to see if all of your cases have one of:
    • a filed Notice of Ceasing to Act
    • a filed Notice of Change of Solicitors
    • when necessary, evidence of authority to withdraw
13. Seek instructions from corporate clients for new addresses for their registered offices, prepare the necessary resolutions and notices, and file a notice of change form with the Registrar of Companies.
14. File a change of address notice at the Land Titles Office if named in any builders’ liens, caveats, certificates of lis pendens, etc.
15. To inform the public and any clients you have not been able to reach, place an ad in the local newspaper that the practice will be closing on a specific date and who to contact after that date.

Dealing with closed files

1. Review closed files to determine whether they should be stored, destroyed, returned to the client, or transferred to the lawyer who will be assuming ongoing files. Check for anything belonging to the client but not in the client’s file, such as items in your safety deposit box. Return all property held in safekeeping to its owners.
2. Where file information is stored in electronic format, consider how and where it will be stored and retrieved after wind-up.
3. Decide whether you will store any original wills or transfer them to another lawyer. Remember that you will continue to be responsible for any original wills in your possession.
4. Let the Law Society’s Records department know where your closed files are located.

Finances

1. Review your time records and files:
   a. Prepare and send out accounts for unbilled work in progress and outstanding disbursements.
   b. If the billing is on a contingency fee basis, refer to the provisions in the contingency fee agreement relating to the amount to be paid if the lawyer withdraws, otherwise you will have to transfer the file to a new lawyer on trust conditions and once the matter is concluded the new lawyer will need to so advise you and a quantum meruit allocation will have to be applied.
2. Note that even after you cease membership in the Law Society or take inactive status, you may collect fees for work done while you were practicing. You may also be compensated for files transferred to another lawyer by receiving a percentage of future billings for work done by your practice.
3. Review trust accounts. After billing clients and deducting fees and disbursements where appropriate, return trust funds to the clients or as directed in writing by the clients.
4. If trust money is held under agreements with or undertakings to third parties, get the consent of those parties before transferring the money.  If the money is held in trust, get the transferee lawyer to assume the trust conditions and get the entrustor to agree to substitute the transferee lawyer as the new entrustee.
5. If you hold any unclaimed trust funds or funds that you cannot attribute to a client, Law Society Rule 119.27sets out the procedure for paying them to the Law Society.
6. When all trust money has been disbursed, inform the bank that the trust accounts can be closed.
7. Prepare your final accounting form and file it with the Law Society as required).
8. Pay any outstanding firm liabilities including payroll, income tax withholding, trade debts, GST, WCB, etc.
9. Determine whether it will be necessary to leave open a general account with a reserve to satisfy any outstanding obligations or for receipt of any accounts receivable after your practice is closed.

Staff

1. Give staff sufficient notice of termination or compensation in lieu of notice. Verify statutory notice requirement.
2. Make arrangements to cancel or otherwise deal with any employee benefit plans.
3. Direct your accountant or bookkeeper to prepare Records of Employment, calculate all necessary holiday pay or other benefits accrued, prepare T-4 slips and make all necessary remittances to Revenue Canada.
4. If you have an articling student, make arrangements to assign the articles to another lawyer who is qualified to act as a principal.

Premises and office equipment

1. Contact your landlord as soon as possible and, if necessary, make arrangements to sublet or assign your lease.
2. Contact law schools, community colleges, and courthouse libraries to see if anyone will purchase all or part of your library. Notices in the local courthouse barristers’ lounge or in a Canadian Bar Association newsletter might also locate buyers. You can also check with the Legal Archives Society of Alberta if you think you might have items of historical interest.
3. Dispose of office furniture and equipment
   • Where equipment has been leased, contact leasing companies to end leases and maintenance agreements or to arrange assignments.
   • When neither cancellation nor assignment is possible, have sufficient funds available to continue the payments on the leases or to pay them out.
4. Notify publishers of legal directories and cancel subscriptions to books and journals and terminate any on-line advertising.
5. Send letters to all suppliers advising them that the practice will be closing and notifying them of the address to which future correspondence may be directed.
6. Notify public utilities.
7. Arrange to forward your telephone calls and mail.
8. If you have a website, consider running a notice for a short time advising that the practice is now closed and providing new contact information.

Memberships

1. Discuss membership status with the Law Society. You’ll find the forms required to resign or become an inactive member. A partial refund on a pro-rated basis may be possible if you move to inactive or retired status.
2. If you’ve paid for a Canadian Bar Association membership within the past month, contact the national office at 1.800.267.8860 to ask for a refund.

Professional liability insurance

1. Mandatory coverage — Contact ALIEX to terminate your coverage if you are not going to be in private practice. You will still be covered for future claims arising from professional services rendered while you were insured, subject to the terms in place at the time the claim is reported.
2. Excess insurance — If you have excess coverage, check the policy for deadlines and terms for extending coverage to future claims. Excess insurance policies do not provide coverage for future claims unless you specifically arrange for it. If you purchased excess coverage through the Law Society’s program, contact ALIEX; if elsewhere, contact your insurance broker. If you will be practicing with a new firm, check to see if they have excess coverage that protects you for prior acts.

Other

1. Consider who else you need to tell about closing your office.
2. Appointments under a Power of Attorney remain (subject to any specific provisions in the document) in full force and effect regardless of whether you are practicing – contact any clients if you do not wish to continue acting and seek instructions.
3. Your status as a commissioner for oaths and notary public is dependent on your status with the Law Society of Alberta. For further information on what you can do, refer to the article “Am I a Commissioner or Notary?” on Practice Advisors’ page of the Law Society website.
4. If you are leaving the practice of law, consider the reinstatement requirements should you return to practice in the future.
5. If you are no longer practicing law, but are still acting as estate trustee, mediator, and immigration consultant or otherwise providing services that are often, but not exclusively provided by lawyers, ensure that you are clear to clients and others in which capacity you are acting.