For some lawyers who are in sole practice, retiring will mean closing or selling the practice. In this case, it won’t be a matter of just shutting the door and leaving. A series of regulatory, practical and procedural steps need to be taken. It pays to plan the process carefully and well in advance.

Communicate with clients

Closing – Let your clients know that your practice is closing. Consider placing public notices in local publications and LawTalk or LawPoints (to let lawyers know also). This enables clients to have enough notice to instruct another firm of their choice if they wish.

Selling – All clients must be informed of the change in ownership in advance of it occurring. If clients are transferring to either another firm or the purchasing firm, the lawyer or firm needs to receive the clients’ authorities to take over any ongoing work.

Advise the Law Society

All lawyers must advise the Law Society as soon as practicable of any information that the Law Society keeps on the register about any changes. If the firm is incorporated, you will also need to notify the Companies Office.

Staff

Any staff should be fully informed of all intentions and developments. New contracts may need to be written to cover any run-down period.

Client files and deeds

Archiving closed files is one of the highest costs of closure and you need to manage this actively and ensure that closed files are archived, scanned or destroyed promptly where appropriate. The Law Society recommends you keep a detailed record of which files and deeds are transferred to other firms, and that the Law Society Registry is advised which firm receives these so that any future client queries can be answered. Client authority is needed to transfer files and deeds to another lawyer. Check that any action taken complies with any letter of engagement terms entered into at the time of instructions.

Professional indemnity insurance

Timely discussion should take place with insurers or brokers in relation to any professional indemnity policy. The lawyer needs to remain clear over what matters do and don’t remain covered and when the period of cover ceases.

Undertakings

Lawyers remain responsible for undertakings given when in practice. They should therefore discharge or be released from any undertakings wherever possible.

Continuing trusteeships

If a lawyer has been acting as a personal representative or trustee, then following the closure or sale of the practice they will need to consider whether they should continue to act in a personal or professional capacity or not at all. To continue to act in a professional capacity, the lawyer will need to continue to hold a practising certificate and practise through a permitted structure. To act in a private capacity the former lawyer will not be able to refer to themselves as a lawyer.

Executor of a will

If you have been appointed as an executor of a will in your professional capacity, you will need to write to those clients with a view to advising them to consider changing their wills.

Trust accounts

When closing a practice with a trust account, it is important that lawyers undertake several key steps in order to comply with the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (Regulations) and the Lawyers and Conveyancers Act (Lawyers: Practice Rules) Regulations 2008.

The practitioner must in a timely manner:

• notify the Law Society Registry – registry@lawsociety.org.nz – the intended date of closure;
• reconcile the trust account and any interest bearing deposit (IBD) accounts up to the date of closure;
• complete a full back up of the accounting records at that date;
• close all trust bank accounts and IBD accounts at the due date and issue final RWT certificates as required;
• refund credit balances to clients; and
• provide the Law Society Inspectorate copies of the final bank statements showing a zero balance, together with a letter from the bank confirming that the account is now closed.

Even if there is a nil balance, there may be a requirement for the trust bank account to be held open for a period of time to collect debtor monies payable by automatic direct credit (only). In these circumstances the lawyer must remain in practise on own account and paying the applicable fees.

Monthly trust account certificates must continue to be filed until the trust account is closed.

Under r 15(1) of the Regulations, if a practice ceases to provide regulated services the practice must immediately:

• deliver all unused trust account receipt forms relating to the practice to the relevant society or dispose of them as directed by that society;
• ensure all trust accounts are closed and all money in them paid to persons entitled; and
• if software generates receipt forms electronically, take appropriate steps to ensure that no further trust account receipts are generated.

Lawyers must retain all trust account records for a period of at least six years from the date of the last recorded transaction in the trust account.

Media

If the practice has a web, print or social media presence, these may need to be removed or updated. You may also need to update your own personal online profile such as LinkedIn.

Exit review

The Law Society Inspectorate must be advised of the decision to close the trust account and may carry out an exit review. Please ensure all records are complete and up to date.

Lawyer nominee company lending

Where the lawyer has a nominee company, either inactive or still with current lending, it will be necessary to take steps to close this operation.

The Law Society has prepared a practice briefing on closing down or selling a practice.