The Guideline is not intended to replace a lawyer's professional judgment or to establish a one-size-fits-all approach to the practice of law. Subject to Guideline provisions that incorporate legal, By-Law or Rules of Professional Conduct requirements, a decision not to follow the Guideline will not, in and of itself, indicate that a member has failed to provide quality service. Conversely, use of the Guideline may not ensure that a lawyer has delivered quality service. Whether a lawyer has provided quality service will depend upon the circumstances of each case.
Table of Contents
Lawyers leaving the practice of law must address client interests and regulatory requirements at the time of closing the practice and for sometime thereafter. The Closing Down Your Law Practice Guideline provides direction on the appropriate management in active client matters and property, disposal and storage of files and records, trust accounting and banking issues and suggestions relating to personnel and office matters.
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9.2 Active Client Files, Notification to Clients
Lawyers should give notice to existing clients with active ongoing matters
- that the lawyer is leaving the law practice
- name of the lawyer or law firm that will have or has the file
- that clients may direct their files to a lawyer of their choice, if they prefer or
- that the client may attend at the office to pick up the file.
Where the client cannot be located, notice to the client should be in writing delivered to the client's last known address.
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9.3 Withdrawal From Representation
Pursuant to Section 3.7 of the Rules of Professional Conduct a lawyer must not withdraw from representation of a client except for good cause and on reasonable notice to the client.
Any lawyer who has outstanding client matters that will not be completed prior to closing down the practice must comply with the notice provisions of Section 3.7.
In accordance with the Commentary to Rule 3.7-1, appropriate notice will vary with the circumstances. Lawyers should ensure that·
- governing statutory provisions or rules of court or tribunal are followed, if applicable
- client's interests are protected to the best of the lawyer's ability
- client is not deserted at a critical stage of the matter or at a time when withdrawal would put the client in a position of disadvantage or peril.
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9.4 Tribunals, Notice of Change of Representation
Lawyers should, in accordance with relevant statutory provisions or rules of procedure, change or remove their names as "lawyers of record" in outstanding tribunal matters.
Depending on the circumstances and the relevant statutory provisions or rules of procedure relating to the particular tribunal, lawyers may be removed as "lawyer of record"
- by Notice of Change of Lawyers appointing a new lawyer to whom the file has been transferred
- by Order removing the lawyer as lawyer of record
- by the client filing a Notice of Intention to Act in Person.
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9.5 Undertakings and Trust Conditions
Pursuant to Rule 7.2-11 of Rules of Professional Conduct, lawyers must fulfill every undertaking given and honour every trust condition once accepted. The Commentary to Rule 7.2-11 provides that the person to whom the undertaking is given is entitled to expect that the lawyer giving the undertaking will honour it personally. Likewise, a lawyer should not accept trust conditions that cannot be fulfilled personally. When a lawyer accepts property subject to a trust condition, the lawyer must fully comply with such conditions, even if the conditions subsequently appear unreasonable.
Before closing or transferring their practices lawyers should
- complete all undertakings given and honour all trust conditions, or
- obtain a commitment in writing from the lawyer taking over the file(s) to satisfy the outstanding undertaking(s) and honour the trust conditions, and
- provide written notice of the commitment to the person to whom the original undertaking or trust condition was given to ensure that the commitment is acceptable and sufficient to relieve the original lawyer from the undertaking and trust condition obligations.
If a lawyer is unable or unwilling to honour a trust condition imposed by someone else, the subject of the trust condition should be immediately returned to the person imposing the trust condition, unless its terms can be amended in writing on a mutually agreeable basis.
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9.6 Reporting Letters
Lawyers must have professional liability insurance coverage if they render legal advice. In instances where the practice is winding up, the lawyer must ensure that all outstanding reporting letters are completed while mandatory professional liability insurance coverage is in effect.
If the lawyer intends to complete outstanding reporting letters himself or herself, they should be completed
- prior to closing down the practice, or
- after closing down the practice, but only if the lawyer maintains professional liability insurance coverage.
If the lawyer does not intend to complete the letters and the file is being transferred to another lawyer, the matter of outstanding reporting letters should be brought to the attention of the new lawyer.
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9.7 Legal Aid Matters
For completed matters lawyers should submit their final accounts to the Legal Aid office.
For matters that remain outstanding lawyers should submit a final account for legal services that have been completed and
- advise the Legal Aid Area Director, in writing, that the practice is closing
- notify the client that the client must apply for a change of solicitors with the legal aid office , or
- with the approval of the area Legal Aid Director, transfer the file to another lawyer as directed by the client.
For further information lawyers should contact their Legal Aid Area Director or Legal Aid Ontario.
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9.8 Disposal and Storage of Files and Records
9.8.1 Books and Records
Lawyers must retain certain accounting books and records in accordance with legal and regulatory requirements, in particular
- pursuant to The Law Society of Upper Canada requirements in By-Law 9, s.23
- general account records are to be preserved for six (6) years
- trust account records are to be preserved for ten (10) years
- pursuant to the Income Tax Act (Canada), requirements as provided for in that Act and its regulations, including ss. 230(4) to (8) of the Act and Income Tax Information Circular IC78-10R5.
9.8.2 Closed Client Files
As part of closing down a practice, the lawyer must determine how to deal with closed client files. Central to that determination is whether closed client files contain documents or property belonging to the client.
If closed files contain valuable client documents or property, before disposing of client files as part of the closing down of their practices, lawyers must comply with Section 3.5, Preservation of Client's Property of the Rules of Professional Conduct.
Lawyers may wish to, and in some cases may be required to, retain certain closed client files for a period of time after closing down their practice. The reasons for retaining such closed client files include defending against allegations of negligence, meeting statutory obligations, and complying with regulatory requirements.
9.8.3 Retaining or Disposing of Files
It is important for the lawyer to retain closed client files if he or she anticipates that the file may be required for later reference. An example would include the need to defend against potential allegations of misconduct or malpractice.
Client files that should be retained and the length of retention will be determined by the particular circumstances taking into account:
- whether other sources are available to obtain information contained in the file such as information stored in Registry Offices or court records
- lawyer's potential liability for errors and omissions, and any applicable limitation periods.
If the lawyer chooses to destroy client files he or she must ensure that client confidentiality is maintained during destruction or disposal.
Lawyers may choose not to destroy client files and to retain client files indefinitely despite the winding up of their practices or retirement from the practice of law.
9.8.4 Delivering Files to Clients
Assuming former clients can be located, lawyers may deliver closed client files to their client. It is important for lawyers to determine whether it is prudent to do so taking into consideration
- lawyer will have no record (except perhaps a photocopy of the file) in the event of a negligence claim or some other dispute or question concerning the file
- file may contain personal notations by the lawyer that may stimulate unintended controversy.
9.8.5 Transferring Files to Other Lawyer
Subject to Section 3.5 of the, Rules of Professional Conduct the lawyer may transfer custody of closed files to another lawyer for storage and safe keeping.
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9.9 Client's Property
9.9.1 Preservation of Client's Property
If a lawyer holds client property at the time of closing down his or her practice, in accordance with Rules 3.5-2 and 3.5-6 of the Rules of Professional Conduct, the lawyer must
- continue to care for the client's property as a careful and prudent owner would when dealing with like property
- observe all relevant rules and law about the preservation of the client's property.
- return the client property to the client.
If the client cannot be located to return valuable client property, then
- in the event a new lawyer has agreed to maintain custody of the client's property for safe keeping, and subject to any legal requirements to the contrary, the lawyer may transfer client property to the new lawyer who shall treat the property as client property entrusted to his or her care in accordance with Section 3.5, or
- in the event the lawyer is unsure of the proper person to receive client property, then in accordance with Rule 3.5-7, the lawyer shall apply to a tribunal of competent jurisdiction for direction and comply with the tribunal's order, or
- the lawyer may retain custody of the client property in compliance with Section 3.5, and
- the lawyer must notify the By-Law Administration Services department, in writing, to advise where clients may retrieve their property, and,
- the lawyer must send a letter to the client's last known address advising the client of the arrangements for storage of their property in light of the practice closing down.
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Lawyers who have custody of client (testator) wills and are able to locate clients or former clients should, in writing·
- advise clients that the practice is closing down or being sold
- if the practice is being sold or transferred, should advise the client of the name(s), address, and telephone number of the lawyer(s) who will take over the practice, and
- ask for the client's instructions as to whether the will is to be transferred to the new lawyer taking over the practice, to another lawyer as directed by the client, or to be returned to the client.
If the will is to be delivered to a new lawyer or third party, the lawyer should obtain the client's executed direction as to whom the will is to be delivered.
Lawyers who have custody of client wills and are unable to obtain client instructions or directions, as in cases where the client cannot be located, should
- in the event a new lawyer has agreed to take custody of the will, and subject to any legal requirements to the contrary, transfer the wills to the new lawyer who shall preserve client wills in accordance with Section 3.5, or
- in the event the lawyer is unsure of the proper person to receive a client's will, then in accordance with Rule 3.5-7, the lawyer shall apply to a tribunal of competent jurisdiction for direction and comply with the tribunal's order, or
- the lawyer may retain custody of the clients' wills in compliance with Section 3.5, and
- the lawyer must notify the By-Law Administration Services department, in writing, to advise as to the location of client wills, and
- send a letter to the client's last known address advising the client where their will is to be located in light of the practice closing down.
Lawyers should not deliver original wills to a client's last known address unless the lawyer is certain that the client is present to accept it.
Notification of the location of original client wills should be made to the By-Law Administration Services department at 416-947-3300 or toll free 1-800-668-7380.
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9.11 Corporate Books, Seals and Records
Lawyers shall ensure that they comply with any legal requirements respecting the custody and storage of corporate books, seals and records.
In the event lawyers are unsure of the proper person to receive corporate documents and seals, the lawyer should apply to a tribunal of competent jurisdiction for direction in accordance with Rule 3.5-7.
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9.12 Accounting and Banking Issues
9.12.1 Trust Accounts
Lawyers with trust funds on deposit as of the date the practice is closed or sold should
- if fees and disbursements remain outstanding, for which an account has been delivered to the client in accordance with By-Law 9, Part IV, and barring any other claim or right to the funds, apply the funds to the outstanding amount owing, or
- return the funds to the client, or
- on written direction from the client, deliver the funds to the client's new lawyer.
Where the client does not claim trust funds, does not provide a direction for transfer of the funds to a third party, or cannot be located, then the lawyer must either
- retain the funds in his or her trust account in accordance with the requirements for preservation of the client's property set out in Section 3.5 and any applicable legal or regulatory requirements, or
- make application to deliver the unclaimed funds to The Law Society of Upper Canada's Unclaimed Trust Fund, via 416-947-3312 or 1-800-668-7380.
Lawyers who maintain balances in their trust accounts after their practice has been closed shall continue to comply with The Law Society of Upper Canada's trust accounting filing requirements.
Lawyers may only close trust accounts when all trust funds have been accounted for and the balance is zero. Once a trust account has been closed, the lawyer must notify the Law Society of Upper Canada via the Report on Opening or Closing a Trust Account. This information will be shared with the Law Foundation of Ontario.
9.12.2 General Accounts
If accounts receivable remain outstanding lawyers may wish to continue to operate general firm accounts for a period of time after the practice is closed.
9.12.3 Annual Filing
A lawyer closing down his or her practice is required to comply with all The Law Society of Upper Canada filing requirements.
9.12.4 Collecting Accounts Receivable
Lawyers may continue to collect accounts receivable or sell the accounts receivable if the practice is sold or transferred to another lawyer(s).
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9.13 Personnel and Office Matters
Lawyers shall prepare, deliver and file all documentation and deliver remittances as required in law relating to firm personnel, including
- Records of Employment for each employer
- Income Tax withheld
- Canada Pension Plan and Employment Insurance payments withheld
employer contributions to be paid.
9.13.2 Office Premises
It is important for lawyers to review any leases relating to firm premises to determine terms of cancellation, assignment, or if necessary, subletting.
It is important for lawyers to consider how to dispose of firm telephone systems including
- transfer or sale of telephone system and or telephone number
cancellation of telephone service by notice to service provide
cancellation of advertisement in advertising directories
cancellation of listing in telephone or address directories such as
- Yellow Pages
- Martindale and Hubbell
- Ontario Lawyers Phone Book
- Canada Law List.
9.13.4 Lease Equipment
It is important for lawyers to make arrangements to dispose of leased equipment in accordance with the terms of the lease. Typical leased equipment may include
- computer systems
9.13.5 Used Furniture and Office Equipment
Lawyers may wish to consider selling their office furniture to used furniture and equipment dealers.
9.13.6 Law Library
Lawyers may wish to sell their law library to used book companies or by private sale to others.
9.13.7 Building Directory and Signs
It is important for lawyers to consider the removal of their names from any building directory and firm signs.
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9.14 Notices of Change
Lawyers may wish to notify LawPRO to advise that the law practice is to be wound up, ideally sixty (60) days prior to the closing. Lawyers should assess insurance coverage needs once the practice has been closed.
Lawyers may wish to consider whether, in the circumstances, they should purchase additional run-off coverage to protect against any potential claims that may arise after the practice has been closed.
Lawyers should contact LawPRO to review insurance options at 416- 598-5800 or toll free 1-800-410-1013.
9.14.2 Notification to The Law Society of Upper Canada
Shortly before closing down his or her practice, the lawyer should, in writing, notify The Law Society of Upper Canada of the winding down of the practice, the reason for the closing and where future correspondence may be sent.
Pursuant to By-Law 5, lawyers over 65 years of age may apply to continue their membership in The Law Society of Upper Canada without payment of an annual fee.
9.14.3 Boxes at Registry Offices, Court Houses, Document Exchanges
It is important for lawyers to arrange to free up document boxes at registry offices, courthouses or document exchange centres and to provide a forwarding address.
9.14.4 Subscriptions and Publications
Lawyers should consider whether to cancel subscriptions and notify publishers of any address change.
9.14.5 Posting of Notice
Lawyers may wish to prepare a short notice to advise of the disposition of the law practice and post it in appropriate physical or electronic notice boards in
- office building lobby directory
- office door
Registry and Land Titles Offices
- all Court Offices in the area of practice
County Law Association Law Library
- Local Registrar's office
- Appeal Court office
- electronic bulletin boards
- web sites and links
- local newspapers.
9.14.6 Mail and Email Redirection
Lawyers may wish to leave a forwarding address for deliveries with the post office, the superintendent of the building and neighbouring offices.
Lawyers may consider maintaining e-mail services for a short period of time that are automatically programmed to respond and advise of the closing.
Lawyers may wish to consider whether memberships in professional organizations should be terminated or the member status changed.
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9.15.1 Powers of Attorney
Lawyers appointed as attorneys pursuant to a power of attorney should understand that, subject to the specific provisions of the power of attorney, these appointments remain in full force and effect whether or not the lawyer continues to practice law.
Lawyers who do not wish to continue as attorneys pursuant to a power of attorney should contact the clients concerned and obtain the client's instructions on how to proceed.
9.15.2 Notary Public and Commissioner of Oaths
It is important for lawyers to review the relevant statutes relating to commissioners of oaths and notaries, namely Commissioners for Taking Affidavits Act, R.S.O. 1990 c. C.17 and Notaries Act, R.S.O. 1990 c.N6.
Lawyers who cease to practise law should not provide legal advice when acting as commissioner of oaths or notaries.
A lawyer who no longer practises law may be able to continue to act as notary pursuant to the Notaries Act as long as the lawyer's licence to practice law has not ceased (i.e., been suspended, surrendered or revoked) and is not in abeyance. The lawyer must determine the ability to act as notary by reference to the Notaries Act.
In accordance with the Commissioners for Taking Affidavits Act, lawyers are ex-officio commissioners provided that they are entitled to practise law in Ontario. Lawyers who no longer practise law may be able to act as commissioners of oaths provided that no legal advice is given and the commissioning is done on an occasional basis as a public service.
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