Guide To Closing Your Practice for Lawyers

The information contained in this guide is not a substitute for the lawyer’s own research, analysis and judgment. The Law Society of Upper Canada does not provide substantive legal advice or opinions.

Introduction to the Guide
Active or Open Client Files
Closed Client Files
Outstanding Undertakings, Trust Conditions, Obligations, Reporting to the Client
Client Funds, Accounting, Books and Records
Other Client Property
Estate Trustee or Attorney, Other Appointments
Office Premises, Equipment, Employees, and Public Notice
Notice to the Law Society of Upper Canada
Notice to LawPRO®
Practice Closure or Transfer Due to Illness, Disability, or Death 
List of Resources

Appendices  

Appendix 1 - Sample Notices
Appendix 2 - Active File Tracking Chart
Appendix 3 - Letter to Client Advising of Law Practice Closure or Transfer
Appendix 4 - Clause in Letter Re: Client Funds, Documents or Property in Trust
Appendix 5 - Direction To Transfer Client File, Funds or Other Property
Appendix 6 - Client Request For File, Funds or Other Property
Appendix 7 - Client Acknowledgement Of Receipt Of File, Funds or Other Property
Appendix 8 - Transfer Memo To File Or New Lawyer
Appendix 9 - Closed File Tracking Chart
Appendix 10 - Reporting Letter to Client: Matter Complete
Appendix 11 - Reporting Letter to Client: Matter Not Complete
Appendix 12 - Law Office Inventory Checklist
Appendix 13 - Law Office List Of Contacts
Appendix 14 - Letter To Service Provider or Supplier
Appendix 15 - Letter To Law Society Of Upper Canada
Appendix 16 - Letter To LawPRO®
Appendix 17 - Letter From Replacement Lawyer to Client
Appendix 18 - Letter From Replacement Lawyer to Law Society and LawPRO®
 

Introduction to the Guide

There are many circumstances in which you or those acting on your behalf may have to deal with the transfer or closing of your practice: the sale of a practice, a change in career, joining a firm, judicial or other appointment, formal retirement, or sudden illness or death. Where the practice involved is a sole proprietorship or a small firm the impact is greater than it would be on a larger firm, as there may be no one available to immediately continue, transfer, or close the practice in an orderly manner.

Your duty of competent representation includes the obligation to take appropriate steps to safeguard your clients’ interests in all circumstances. Ideally, you should prepare for the closure of your practice well before it is required and should have in place contingency plans that deal with the unexpected need to have someone else continue, transfer, or close your practice on your behalf. Lawyers often underestimate the time and effort required to effectively conclude a law practice. Failure to properly plan or prepare for both anticipated and unexpected departures from your practice may expose your clients to significant damages or prejudice, and subject colleagues or family members to financial and emotional stresses associated with the transfer or closing process.

The Law Society of Upper Canada and LawPRO® have created this Guide to help you plan for and fulfill your professional conduct responsibilities when transferring or closing your law practice. Whether the decision to conclude your practice has been made or you are planning ahead for such time, the Guide outlines the various issues that you will need to address. These may include transferring active or open files; custody or destruction of closed files; maintaining firm books and records; satisfying outstanding undertakings and ongoing obligations; honouring all trust conditions; addressing accounting and filing requirements; handling client property; dealing appropriately with personnel and office matters; and satisfying all change of status notice requirements.

The Guide is divided into sections that deal with the different aspects of closing or transferring a law practice, some of which may not apply to all practices or in all situations. Each section provides a brief overview, a checklist, and references to relevant articles and sample documents that are contained in the appendices to the Guide. All sample documents should be reviewed and, if needed, modified appropriately for your individual use. Where relevant, links and/or contact information for outside organizations have been included, which are accurate at the date listed on this Guide.

 

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Active or Open Client Files

When closing or transferring a practice, you must determine which ongoing client matters you can complete before the practice is concluded. Even where you have planned in advance for the closing of your practice, it is likely that there will be some active files that you are unable to complete before the scheduled date of closure and you may need to transfer them to another lawyer or to the client. Often, in the event of an unexpected practice closure, all active and ongoing files may need to be transferred elsewhere.

You should prioritize by initially working on matters that can be completed promptly. If you are leaving the practice of law, you should decline new matters or only accept matters that will be resolved prior to the scheduled closing date. Clients whose matters you cannot complete should be notified as soon as possible that your practice will be closing, so that they have sufficient time to find and retain a new legal representative. Where you are selling or transferring your practice to another lawyer or are closing your practice to join a firm, you may advise clients of the new contact information for the lawyer purchasing or taking over your practice but, ultimately, the choice of lawyer rests with the client. If you are transferring active files to another lawyer, check for conflicts to ensure the receiving lawyer does not have a disqualifying conflict of interest as outlined in Section 3.4 of the Rules of Professional Conduct.

If you have outstanding client matters that will not be completed before the closure of your practice, you are effectively withdrawing from representation and must comply with Section 3.7 of the Rules of Professional Conduct. A lawyer may only withdraw service if there is good cause and on reasonable notice to the client.

Checklist


 
  • Consider placing a notice in the local newspaper and/or the Ontario Reports to announce the practice closure.  See Sample Notices.
  • Review your active file list and note important dates, scheduled appearances, deadlines, and limitation periods for each matter.
  • Identify files that may be completed prior to closing and files that cannot and must be transferred. See Active File Tracking Chart.
  • Complete work on all open files that you have retained before the office is closed.
  • Prior to contacting clients whose matters you cannot complete, confirm that you can provide the client with reasonable notice of withdrawal, also ensuring
    • the client’s interests are protected to the best of your ability
    • the client is not deserted at a critical stage of the matter or when withdrawal would put the client in a position of disadvantage
    • governing statutory provisions or rules of court are followed, if applicable
     
  • In matters that cannot be completed, contact clients to seek instructions regarding the transfer of their matter (Letter to Client Advising of Law Practice Closure or Transfer) and provide written notice that advises
    • the law practice is closing or being transferred, and when this will occur
    • you will no longer be able to continue acting on the clients’ behalf
    • the contact information of the firm or lawyer that has agreed to continue with the file, if applicable
    • clients may direct their files to the lawyer of their choice, if they prefer
    • clients may attend at the office to pick up their file
     
  • Where client files are to be transferred to another lawyer, whether arranged by you or selected by the client, obtain a written direction from the client directing you to transfer the file and any applicable funds held in trust to the new lawyer. See Direction to Transfer Client File, Funds or Other Property.
  • Where the client would like the file, obtain a written request confirming the address to which the file and other client property are to be delivered. See Client Request for File, Funds or Other Property.
  • Where the client is to pick up the file and other client property, obtain a written acknowledgement of receipt from the client. See Client Acknowledgement of Receipt of File, Funds or Other Property.
  • Consider whether you should make and retain copies of file documents, for your own benefit and at your own cost, before transferring the file to the client or another lawyer.
  • More information on managing closed client files can be found in the Guide to Retention and Destruction of Closed Client Files.
  • Where, after making reasonable efforts, the client cannot be located and you do not have instructions from the client regarding transfer of his or her ongoing matter, consider sending a written notice by registered mail to the client’s last known address to advise that the practice is closing and retain a copy of the notice and the delivery receipt for your file.
  • For files to be transferred, either to a new lawyer or the client, prepare a transfer memo (see Transfer Memo to File or New Lawyer) to the new lawyer or the file that includes
    • a summary of the file
    • important dates
    • important tasks
    • important issues
    • important facts
    • limitation periods
     
  • If required, you may remove yourself as lawyer of record by
    • filing a Notice of Change of Lawyer that appoints new counsel to whom the file has been transferred
    • filing on the client’s behalf a Notice of Intention to Act in Person, or
    • bringing a motion for an Order that removes you as lawyer of record
     
  • Notify the Law Society’s Administrative Compliance department in writing to advise what lawyer will be taking over active or open files and closed files, if applicable. See Letter to Law Society of Upper Canada.

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Closed Client Files

Lawyers leaving or closing a practice are often unsure of what to do with closed client files. Determining what to do with closed files will depend on who owns the file or, more accurately, who owns the documents stored in the closed file.

Ideally, lawyers should have a file closing procedure in place such that all client documents are returned to the client before or when the file is closed. If this procedure is followed for every file, the only documents remaining in closed files at the time of a practice closure or transfer will be documents that belong to the lawyer. These may include copies of original client documents, copies of draft and final agreements, the lawyer’s personal notes, copies of correspondence (including e-mails, memos or notes relating to client communications), all of which are kept for the lawyer’s benefit and at the lawyer’s expense.

Where closed files have already been purged of all documents or property belonging to the client, you may wish to preserve the file for a period after your practice has been closed or transferred to defend against any future claims or complaints against you. The retention period for closed files is at the lawyer’s discretion and depends on a number of factors, such as the limitation period for actions against lawyers, the nature of the original matter, and the outcome. For issues to consider see the Law Society’s Guide to Retention and Destruction of Closed Client Files.

If you not have followed the recommended procedure and a closed file contains documents that belong to or are the property of a client or former client, you have an obligation to preserve these in accordance with By-Law 9 and Section 3.5 of the Rules of Professional Conduct. You must deliver the documents to the client (or to his or her direction), continue to preserve the documents (either personally or by transferring to another lawyer) and, in some cases, you may decide to return the entire closed file to your client. Prior to transferring a closed file to another lawyer or delivering it to a client, you should consider the potential consequences of doing so.

A review of your closed file list will assist you to determine which files contain client documents, which files may be destroyed in a manner that maintains client confidentiality, and which files should continue to be preserved, and for how long.

Checklist


Closed Files Containing Clients’ Documents or Property

  • Review closed files list to determine which files may still contain documents or property that belong to the client.
  • Deliver documents or property from the file to the client by registered mail or have the client retrieve them from the office, signing an acknowledgment of receipt.
  • If the client cannot be located for the return of documents you must
    • continue to preserve and maintain the client’s documents indefinitely or until the client provides you with instructions, or
    • transfer the file to another lawyer for continued preservation and safekeeping
     
  • If there is any dispute as to who is entitled to client documents or property or you are unsure as to the proper person to receive them, you must make application to a tribunal of competent jurisdiction for direction as required by Rule 3.5-7.

Closed Files Containing Only Lawyer’s Copies of Documents

  • Once closed files have been purged of client documents or property and they contain only documents that belong to you, review your files to determine whether you will
    • destroy the closed file, in a manner that preserves client confidentiality
    • retain all or part of the closed file, for how long and in what medium
    • transfer the closed file to another lawyer
    • deliver the closed file to the client
     
  • Note that your obligations to maintain certain records, financial and otherwise, will continue after you close or transfer your practice. See the Client Funds, Accounting, Books and Records section of this Guide.

Destruction of Closed Files

  • Review your closed file list to determine which files may be destroyed upon the closure or transfer of your practice and which should continue to be retained for a period before destruction. See Closed File Tracking Chart.
  • Even where you decide to continue retaining closed files, you may first reduce the bulk or size of them by destroying certain contents, such as multiple or excess copies of individual documents or copies of documents that came from an outside source and can easily be reacquired.
  • If you choose to destroy closed client files or certain file contents you must do so in a manner that preserves client confidentiality in accordance with Section 3.3 of the Rules of Professional Conduct, such as shredding or incineration. Where closed files or file contents are in non-paper or electronic format, special steps may need to be taken to ensure proper deletion and physical destruction.
  • If you choose to outsource the destruction of closed client files, regardless of the medium, ensure that the third-party provider is reputable and will ensure that the files remain secure until they are destroyed.

Retention of Closed Files

  • Review your closed file list to determine which files should continue to be retained and for how long. See Closed File Tracking Chart.
  • Determine what file contents you wish to retain, considering
    • potential complaints against you or claims for errors or omissions
    • the length of the limitation period for actions against lawyers
    • the nature of legal work performed (e.g. real estate files should be kept longer than criminal files involving expired appeal periods)
    • the period during which the legal documents created for the client may impact the client’s interests
    • whether the client had diminished capacity or was a minor at the time legal services were performed
    • the results you obtained for the client in the matter
    • the client’s attitude or character towards you and the outcome of the matter
     
  • Determine if any contents of the closed paper file may be converted to electronic or other non-paper form, considering legal and regulatory requirements as well as the trustworthiness, readability and accessibility of the converted form.
  • Create a retention schedule outlining how long files will be retained, at what interval(s) they will be reviewed, and when eventual destruction may occur.
  • Where closed file information is in electronic format and that information is to be preserved, determine where and how the data and its back-up media will be stored, archived and retrieved after the practice closure or transfer.
  • Determine where to physically store your closed files, paper or electronic, to maintain confidentiality in accordance with Section 3.3 of the Rules of Professional Conduct and to protect file contents from damage or destruction.
  • If you choose to store closed client files with a third-party provider, whether they are in paper or electronic form, ensure that the third-party provider is reputable and will ensure that your files remain secure and confidential.

Transfer of Closed Files to Another Lawyer

  • Consider the potential consequences prior to transferring closed files to another lawyer. Closed files should only be transferred after you have determined
    • the receiving lawyer has agreed to retain the files for a certain period and to allow you access to those files for the duration of that period, or
    • you no longer require access to the documents contained in the closed file
     
  • For your records, maintain a list of the closed files that were transferred, to whom and when, with a summary of the file contents.

Delivery of Closed Files to Client

  • Consider the potential consequences prior to delivering a closed file to the client. A closed file should only be delivered to the client where you have determined you no longer require access to the documents contained in the closed file.
  • Remove all your personal notes made to, or stored in, the file.
  • Obtain the client’s written acknowledgement indicating receipt of the only remaining copy of the client’s documents in the closed client file. Retain this for your records.

Notice to Law Society of Upper Canada

  • Notify the Law Society’s Administrative Compliance department to advise what lawyer will be taking over active or open files and closed files, if applicable. See Letter to Law Society of Upper Canada.

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Outstanding Undertakings, Trust Conditions, Obligations, Reporting to the Client

Rule 7.2-11 of the Rules of Professional Conduct states that lawyers must fulfill every undertaking given and honour every trust condition once accepted. The commentary to the Rules of Professional Conduct provides that the person receiving the undertaking is entitled to expect that the lawyer giving the undertaking will honour it personally, unless the undertaking clearly indicated otherwise at the time it was given. Likewise, trust conditions are obligations on the accepting lawyer that the lawyer must honour personally.

As such, all undertakings, trust conditions, and ongoing obligations must be satisfied before your practice is closed or transferred to another lawyer. If this is not possible or practical, you must advise the client and the successor lawyer of the nature of the undertaking, trust condition, or obligation. You must determine whether the successor lawyer will honour your given undertaking, trust condition, or obligation, whether you must satisfy these, or whether you may be relieved from strict compliance by the person to whom you gave the undertaking, the trust condition, or to whom you owe the obligation. If you cannot honour a trust condition before you close or transfer your practice and its terms cannot be amended in writing on a mutually agreeable basis, the subject of the trust condition should be immediately returned to the person imposing the trust condition.

Finally, you must deliver a reporting letter to every client with outstanding issues, whether or not a final bill will be rendered for any outstanding fees and/or disbursements. See the section on Other Client Property for the special obligations that exist when you hold client property other than funds, including valuable items, original wills or powers of attorney, or corporate records.

Checklist


 
  • Review each file to determine whether you have any outstanding undertakings, trust conditions, or other obligations.
  • Satisfy outstanding undertakings, trust conditions, or obligations before you close or transfer the practice, where possible.
  • If you cannot satisfy the undertaking, trust condition, or obligation prior to the practice closure or transfer, obtain
    • the successor lawyer’s commitment, in writing, to honour the undertaking or trust condition, or to meet the obligation
    • a release from strict compliance with the undertaking, trust condition, or other obligation in writing, from the person to whom it was originally given
     
  • If you cannot honour a trust condition before you close or transfer your practice and its terms cannot be amended in writing on a mutually agreeable basis, the subject of the trust condition should be immediately returned to the person imposing the trust condition
  • If you are delivering the file to the client, ensure that the reporting letter clearly outlines any unfulfilled undertakings given on behalf of the client, pending trust conditions, outstanding obligations, and/or other issues and provides an explanation as to how these are to be dealt with and by whom.  See Reporting Letter(s) to Client.
  • Complete all reporting letters before the practice is closed or transferred and while you have professional liability insurance coverage (as this is considered providing legal advice, opinions or services).
  • If, at the time of transfer of the file to another lawyer, the reporting letter to the client is not complete, specifically bring this to the successor lawyer’s attention.

Legal Aid Files

  • Submit completed accounts to the appropriate Legal Aid Office.
  • Bill and report to Legal Aid any matters where work on the file is incomplete.
  • Advise the Legal Aid office in writing that you are closing or transferring your practice and the date the closure or transfer becomes effective.
  • In your written notice to the client advising that you are closing or transferring your practice, inform the client that he or she must contact the Legal Aid Office to apply for a change of lawyer.
  • If the client has directed that the file be transferred to another lawyer, advise the Legal Aid office in writing of the closure or transfer of your practice and of the transfer of the file to the successor lawyer.
  • Contact the Legal Aid Office or Director in your area for information on what further steps you may need to take.

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Client Funds, Accounting, Books and Records

Section 3.5 of the Rules of Professional Conduct provide that a lawyer has the obligation to safeguard all client property, including money, as a careful prudent owner would. Where funds are being held on the client’s behalf, the lawyer must also comply with the money handling and bookkeeping requirements of By-Law 9. Upon leaving practice, all client funds held in trust must be accounted for and all accounting records and filings must be accurate and current as of the date you close or transfer your practice. If you have unclaimed funds in trust, you may apply to transfer these funds to the Law Society of Upper Canada for continued safekeeping, in accordance with By-Law 10. Your obligations to maintain certain records, financial and otherwise, will continue after you close or transfer your practice. You must continue to comply with the Law Society’s By-Laws and other legislation relating to your firm’s records.

Checklist


Client Funds

  • Contact clients to seek instructions regarding any funds you hold in trust (see Letter to Client Advising of Law Practice Closure or Transfer and Clause in Letter Re: Client Funds, Documents or Property in Trust).
  • If you hold client funds in trust on the date you close or transfer your practice, you may
    • apply them to the outstanding account in accordance with By-Law 9, where an account has been delivered to the client for fees and disbursements that remain outstanding and there is no other right or claim to the funds
    • return the funds to the client, or
    • obtain a written direction from the client to transfer the funds to the client’s new lawyer (see Direction to Transfer Client File, Funds or Other Property)
     
  • If the client does not claim the funds in trust, does not provide direction regarding the funds or cannot be located
    • you must retain the funds in your trust account in accordance with the requirements under Section 3.5 of the Rules of Professional Conduct and s. 59.6 of the Law Society Act, or
    • depending on the circumstance, you may make an application under By-Law 10 to deliver the funds to the Law Society of Upper Canada, Unclaimed Trust Fund
     
  • To transfer funds to the Unclaimed Trust Fund pursuant to By-Law 10
    • you must be unable to determine who is entitled to the funds or you have been unable to locate the person entitled to the funds after reasonable efforts over a period of at least two years
    • an application form must be submitted by the lawyer responsible for the trust account and a separate application must be made for each file or matter (see Unclaimed Trust Funds Licensee Application Form)
    • once you are approved to deposit to the Unclaimed Trust Fund, a cheque is made payable to the Law Society of Upper Canada in trust in the amount permitted
    • you must inform the Law Society if any new information relating to the person who is or may be entitled to the funds comes to your attention
  • For more information contact the Unclaimed Trust Fund voice mail at 416-947-3300 extension 3312 or toll-free at 1-800-668-7380 extension 3312.

Trust Accounts

  • If you maintain trust funds in your account after your practice has been closed, you must continue to comply with the Law Society’s trust accounting and annual filing requirements set out in By-Laws 9 and 8, respectively.
  • Close the trust account only when the balance is zero and all funds have been distributed and accounted for.
  • Notify the bank to request that the trust account be closed and ask for confirmation in writing or a final bank statement showing that the trust account has been closed.
  • Upon closing any mixed trust account, complete and remit to the Law Society of Upper Canada the Report on Opening or Closing a Trust AccountThis information will be shared with the Law Foundation of Ontario.

General Accounts

  • Consider whether you will need to continue to operate these accounts for a period of time after the practice is closed, for either accounts payable or accounts receivable.

Collecting Accounts Receivable

  • Prepare and deliver final bills or accounts.
  • Continue to collect accounts receivable after the closure or transfer of your practice.
  • Consider selling your accounts receivable if you sell or transfer your practice.

Books and Records

  • Review books and records requirements in By-Law 9 or see the Bookkeeping Guide for Lawyers.
  • Retain books and records for trust accounts for the ten full fiscal years immediately preceding the most recent fiscal year end [sections 18 and 23(2) of By-Law 9].
  • If applicable, retain valuable property records for other client property held in trust for the ten full fiscal years immediately preceding the most recent fiscal year end [sections 18.9 and 23(2) of By-Law 9].
  • If applicable, retain records for mortgages or other charges on real property held in trust for the ten full fiscal years immediately preceding the most recent fiscal year end [section 23(2) of By-Law 9]. 
  • Retain books and records for general accounts for the six full fiscal years immediately preceding the most recent fiscal year end [section 23(1) of By-Law 9].
  • Retain client identification and verification of identity information and records for minimum of six years from [section 23(14) of By-Law 7.1]
    • the date you completed the work done for clients on matters that were concluded prior to closing or transferring your practice
    • the date you transferred the file to another lawyer or to the client on matters that were active or ongoing at the time of closing or transferring your practice
     
  • Review the requirements in the Income Tax Act (Canada), to determine any legal requirements to maintain financial or other records relating to your practice.

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Other Client Property

As with client funds, upon leaving practice, the lawyer must return to the client (or per the client’s direction) any other client property that may be in the lawyer’s custody. Such property may include items of value, original wills or power of attorney documents, corporate books or seals, and may have been stored by you in a fireproof safe or safety deposit box. You must continue to care for such client property until you have obtained from its rightful owner instructions regarding its delivery or, if that is unavailable, an order of a tribunal of competent jurisdiction that directs you how to deal with the property.

Though it may be common for a lawyer to hold original wills, powers of attorney or corporate documents and items in trust after initial services have been completed for the client, ideally, client funds and valuable property held in trust should be returned to the client as soon as the lawyer has completed the services that he or she was retained to provide.

Whether or not you hold original wills or powers of attorney, where you have been named as an estate trustee or an attorney, there are special obligations that may continue after you have closed or transferred your practice. You may have similar obligations where you have been named as director of a corporation that you also represented as a client. These and other obligations related to special appointments are discussed in further detail in the Estate Trustee or Attorney, Other Appointments section of this Guide.

Checklist


  • Review your files and records, including those that relate to items stored both offsite and at your office,  to identify those clients for whom you hold
    • original wills
    • original power of attorney documents
    • corporate books, seals and records
    • valuable client property
    • access key(s) to safety deposit box(es) rented by the client
     
  • Prepare a current contact list for such clients (or in the case of a corporate client, the principals or agents of the corporation), making reasonable efforts to locate those for whom you do not have a current address.
  • Contact clients (or corporate principals or agents) to seek instructions regarding any property you hold in trust (see Letter to Client Advising of Law Practice Closure or Transfer and Clause in Letter Re: Client Funds, Documents or Property in Trust) and provide written notice that advises
    • the law practice is closing, and when
    • the contact information of the firm or lawyer that has agreed to take over safekeeping of the client’s property, if applicable
    • clients may direct their property to the lawyer of their choice, if they prefer
    • clients may attend the office to retrieve their property
     
  • Where you have been named as estate trustee, attorney or corporate director, there are special obligations that may continue after you have closed or transferred your practice, whether or not you hold the original will, power of attorney document or corporate records. If you do not intend to act in any of these additional roles, you must advise the client of this in your written notice.
  • Where client property is to be transferred to another lawyer, whether arranged by you or selected by the client, obtain a written direction from the client directing you to transfer the property to the new lawyer. See Direction to Transfer Client File, Funds or Other Property.
  • Where, after making adequate inquiries, the client (or corporate principals or agents) cannot be located and you do not have instructions regarding transfer or return of client property, send a written notice to the client’s last known address by registered mail to confirm that the practice is closing and how the property will continue to be preserved, and retain a copy for your file. Per Section 3.5 of the Rules of Professional Conduct, you must
    • continue to preserve and maintain the client’s property indefinitely or until the client provides you with instructions, or
    • transfer the property to another lawyer for continued preservation and safekeeping
     
  • Advise the Law Society’s Administrative Compliance department whether you will continue to hold client property described above or provide the name and contact information of the lawyer who has agreed to take over safekeeping of original wills, powers of attorney or other client property after closing or transferring your practice. See Letter to Law Society of Upper Canada.

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Estate Trustee or Attorney, Other Appointments

A lawyer who has been appointed to or has taken on a role that is beyond the scope of a lawyer may have special obligations that do not necessarily end with the closure or transfer of the law practice. Such special obligations or considerations may arise where you have been named as an estate trustee of a will or attorney under a power of attorney, where you have been appointed as a corporate director or as a notary public, or have acted as a commissioner for taking affidavits.

Checklist


Estate Trustee or Attorney Under Power of Attorney

  • Whether or not you hold the original will or power of attorney document, your appointment as estate trustee (subject to the specific provisions of the will) or attorney (subject to the specific provisions of the power of attorney) remains in full force or effect regardless of whether you continue to practise law.
  • If you intend to act as estate trustee or attorney, confirm this in your written notice to the client advising of the closure or transfer of your practice.
  • Note that, if you act as estate trustee or attorney at the time of closing or transferring your practice, depending on whether you are doing so for clients or for related persons as defined by section 251 of the Income Tax Act (Canada), you may be limited in your ability to apply to surrender your licence to practise law or to apply for an exemption from annual fees and filings. For details, see the Notice to the Law Society of Upper Canada section of this Guide.
  • If you do not wish to act as estate trustee or attorney and can reach the client
    • advise the client of this in your written notice regarding the closure or transfer of your practice
    • if you are unable to assist the client with any required amendments to the will or power of attorney documents, recommend that he or she seek legal advice from another lawyer for this purpose
    • obtain the client’s written direction for the return of the original will or power of attorney document to him or her, or for its transfer to another lawyer
     
  • If you do not wish to act as estate trustee or attorney and, after reasonable efforts, cannot locate the client obtain instructions regarding the return or transfer of the original will or power of attorney document
    • prepare a Renunciation of Right to a Certificate of Appointment of Estate Trustee (or Succeeding Estate Trustee) with a Will in compliance with the Rules of Civil Procedure, if applicable, and attach it to the original will
    • prepare a letter of resignation as attorney in compliance with the Substitute Decisions Act, 1992, if applicable, and attach it to the original power of attorney document
    • send a written notice to the client’s last known address by registered mail to confirm that the practice is closing and that you do not intend to act as estate trustee or attorney and to provide the contact information for the lawyer who will continue to preserve the original will or power of attorney document (you or otherwise), and retain a copy of the notice and delivery receipt for your file
     

Director of Corporation

  • Whether or not you hold corporate books, seals or records, your appointment as a corporate director (subject to the specific provisions of the original appointment) remain in full force regardless of whether you continue to practise law.
  • If you intend to continue to act as a corporate director, confirm this in your written notice to the client (or its principal or agents) advising of the closure or transfer of your practice.
  • If you do not wish to continue to act as corporate director you should
    • advise the client (or its principal or agents) of this in your written notice regarding the closure or transfer of your practice
    • determine whether any additional notices of resignation are required (e.g. by provincial or federal statute) and who will file them
    • obtain the client’s written direction for the return of the original corporate documents and property or for its transfer to another lawyer
     

Commissioner For Taking Affidavits, Notary Public

  • Review the Commissioners for Taking Affidavits Act and the Notaries Act, as the ability to commission affidavits or notarize documents is not regulated by the Law Society. These statutes apply where you have exercised your powers as a commissioner for taking affidavits and where you have been previously appointed as a notary public.
  • Where your Law Society status has changed (e.g. you are now in a non-practising status, have been exempted from the requirement to pay annual fees or submit annual filings or have surrendered your licence to practice law), ensure that the relevant statute permits you to continue to commission affidavits or notarize documents.
  • Regardless of your status, when you cease to be a practising lawyer who carries professional liability insurance, you should ensure that you do not provide any legal advice when exercising your powers as a commissioner or a notary public.

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Office Premises, Equipment, Employees, and Public Notice

Apart from client matters, when you close or transfer a practice you may be required to deal with a number of administrative or business matters that relate to office premises, equipment, and employees and to posting public notice about the closure or transfer of your practice.

Checklist


Office Premises

  • Where you own office space, determine whether you should sell, rent or use the premises for some other purpose.
  • Where you rent office space, review your lease or contact the landlord to determine whether you may cancel the lease, assign the lease or sublet the premises. If none of these is possible, set aside funds to continue lease payments or to pay out the lease completely.
  • Where you share office space, review the joint lease or agreement with colleagues or officemates to determine your responsibilities, if any.
  • Remove firm name from building exterior, building directory, office door and window.
  • Return building security entrance cards, door and mail keys, and parking passes.
  • Provide contact information to property manager or building superintendent where you may be reached for any outstanding issues.
  • Cancel all maintenance or cleaning services.

Office Inventory

  • Compile an inventory of the systems, equipment, furniture, law library and supplies of your law office. See Law Office Inventory Checklist and Law Office List of Contacts.
  • Inventory communications equipment, noting whether you own or lease
    • desktop and cellular or smart phones
    • handsets, headsets, earpieces
    • answering machines
    • facsimile machines
    • accessories (e.g. cables, wires, batteries, chargers)
    • call routing, management or voicemail system
     
  • Inventory computer equipment, noting whether you own or lease
    • desktop and laptop models, personal digital assistants (PDAs)
    • peripherals (e.g. keyboard, monitor, mouse, printer, scanner, webcam, microphone, speakers, external modem or router)
    • hard drives, back-up drives, portable drives and servers
    • portable memory storage (e.g. memory stick, USB flash drive)
    • accessories (e.g. monitor or tower stands, cables, wires, batteries, chargers, power bars, surge protectors)
     
  • Inventory other office equipment, noting whether you own or lease
    • photocopiers
    • paper shredders
    • dictation equipment
    • debit/credit imprint or point-of-sale machines
     
  • Inventory office furniture (e.g. desks, tables, seating, filing, shelving and storage) and accessories (e.g. coat racks, décor, small appliances), law library and office supplies.

Disposal of Office Inventory

  • Where you own equipment, furniture or other items inventoried above, determine whether you should sell, donate, discard or retain for another use.
  • Note that it is almost impossible to completely erase the information stored on a hard drive. To comply with Section 3.3 of the Rules of Professional Conduct, consider using a program that wipes or erases information from your computer to ensure that no confidential client information remains before disposing of the hard drives or destroying the hard drives.
  • Where you wish to sell or donate equipment, furniture or other items, consider posting this information with your public notice of practice closure or transfer (mentioned below).
  • Where you rent equipment or furniture inventoried above, review your lease to determine whether you may cancel or assign the lease. If neither termination nor assignment is possible, set aside funds to continue lease payments or to pay out the lease completely.
  • Review equipment maintenance or service contracts to determine whether to terminate, assign, or pay out.

Service Providers and Suppliers

  • Notify all service providers and suppliers of the practice closure or transfer and provide contact information where you may be reached for any outstanding issues.  See Letter to Service Provider or Supplier.
  • Cancel service for telephone, facsimile and Internet access. Cancel any other utilities, if applicable.
  • Cancel listings in general directories (e.g. Yellow Pages), legal directories (e.g. Ontario Lawyers Phone Book, Canada Law List, Martindale and Hubbell) and referral services, both paper and online versions. Ensure that links to your website are removed.
  • Consider changing your voicemail greeting and website for a limited time to advise the practice is closed and to provide contact information of the lawyer who has taken over or purchased your practice, if applicable. Consider creating an automatic e-mail reply that advises of the same.
  • Where you have contracted offsite storage space (e.g. for closed files), determine whether it is still required. If not, review contract to determine cancellation terms.
  • Where you have rented a safety deposit box that has been emptied of its contents, cancel the rental and return any access key(s) to the bank. Where you have been given an access key to a safety deposit box rented by a client, return that to the client.
  • Where you have a secure document box for the exchange or service of legal documents, cancel the subscription or membership with the document exchange service provider.
  • Provide change of address to post office and arrange for mail forwarding service. Cancel any arrangements with third-party mailing or other business services.
  • Review memberships in local law associations and other professional organizations to determine whether you will retain or cancel. Provide new contact information to those you will retain.
  • Review your subscriptions to reports or journals to determine whether you will retain or cancel. Provide new contact information for those you will retain.
  • Review your non-trust bank accounts, lines of credit, and credit cards to determine whether you still require any of these accounts, may use them for another purpose or will close or cancel. Provide new contact information for those that will remain open.
  • Cancel business or commercial insurance policies related to your practice.

Employees

  • Provide sufficient notice of termination or compensation in lieu of notice, in compliance with applicable law.
  • Prepare a Record of Employment for each staff member. Obtain necessary forms from Employment and Social Development Canada.
  • Pay employees accrued benefits, such as vacation pay, if applicable.
  • Submit income tax withheld to Canada Revenue Agency.
  • Prepare and deliver T-4 slips.
  • Submit Canada Pension Plan and Employment Insurance payments withheld.
  • Submit any other employer contributions (e.g. group benefits, group retirement savings or private pension plan), if applicable.
  • Ensure that articling students have their articles assigned to another qualified principal.  If you are transferring or selling your practice, the student may consider continuing articles with the lawyer who is taking over or purchasing the practice.

Public Notice

  • Consider posting notice of the practice closure or transfer (see Sample Notices) in
    • the lobby of your office building or your office door
    • local law association offices, law libraries, barristers’ or courthouse lounges
    • legal publications (e.g. Ontario Reports, legal magazines), both paper and online versions
    • other publications (e.g. local or regional newspapers, community magazines), both paper and online versions
    • online bulletin boards or websites
     

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Notice to the Law Society of Upper Canada

It is likely that closing or transferring your practice will result in a change of your status with the Law Society of Upper Canada. Notice of the closure or transfer and your changing status must be provided to the Law Society and should be given as far in advance as possible to ensure that your records are accurate and, where you are leaving the practice of law, your annual fees may be adjusted.

There are special considerations where you are leaving practice for a judicial appointment, you intend to apply to surrender your licence to practice law or for an exemption from further Law Society fees or filings, or you wish to subsequently return to the private practice of law. For more information regarding these, refer to the Status Changes and Fees, Filings, Insurance pages online.

Also, where your law practice was a limited liability partnership, you have practiced law through a professional corporation or you did so in connection with non-licensees, there may be additional Law Society reports or notices required. These are apart from any legally required notices or reports. To discuss any additional Law Society requirement related to the business structure of your practice contact the Law Society’s Administrative Compliance department via the Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.

Checklist


 

Change in Status

  • Notify the Law Society in writing of your intention to close or transfer your practice. Provide the effective date, any change in your status, and your new contact information. See Law Society of Upper Canada Notice of Change of Information.
  • If applicable, notify the Law Society’s Administrative Compliance department in writing about your practice closure or transfer and provide the location of closed files, original wills and power of attorney documents, corporate records and property, status of trust accounts and new contact information. See Letter to Law Society of Upper Canada.
  • If you are no longer practising law but are still providing services that are often, but not exclusively, provided by lawyers, ensure that you make it clear to clients and others that you are not acting as a lawyer. Examples may include acting as estate trustee, corporate director, commissioner, notary public or as a mediator.
  • If you are maintaining your licence but changing to a non-practising status, there may be a reduction in your annual fees and you may be entitled to request a refund of any credit balance resulting from the pro-rated adjustment of your fees.
  • Note that, if you are leaving the practice of law and subsequently wish to return to practice, you may change your status but there may be private practice re-entry requirements that you must fulfill.

Appointment to Judicial Office

  • Pursuant to section 31(1) of the Law Society Act, if you have been appointed to judicial office, you may have your licence to practise law placed in abeyance, thereby exempting you from the requirements to pay the annual fee and submit annual filings.
  • If applicable, notify the Law Society’s Administrative Compliance department in writing about your practice closure or transfer and provide them with the location of closed files, original wills and power of attorney documents, corporate records and property, status of trust accounts and new contact information. See Letter to Law Society of Upper Canada.
  • Lawyers eligible for abeyance are those appointed full-time as
    • judges of any federal, provincial or territorial court
    • masters or case management masters of the Superior Court of Justice
    • prothonotaries of the Federal Court of Canada
    • members of the Ontario Municipal Board
    • members of a tribunal that has a judicial or quasi-judicial function and that is named in the regulations for the purpose of section 31(1) of the Law Society Act
     
  • Where you have been appointed to judicial office and wish to request abeyance, you must provide a copy of the Order in Council as proof of the judicial appointment with your written request to the Law Society.
  • Upon abeyance of your licence, you will be exempt from the payment of the annual fee and will be entitled to request a refund of any credit balance resulting from the pro-rated adjustment of your fees.
  • Note that, if you cease to hold office as described above and you later wish to resume the practice of law, you may request in writing to restore your licence, after which you will be required to pay the annual fee and file the Lawyer Annual Report. There may also be private practice re-entry requirements that you must fulfill. If you do not intend to return to practice (and you are eligible), you may request to be placed directly into an exempted status, wherein you will remain exempted from the annual fees and filings.

Surrender of Licence to Practice Law

  • If you wish to surrender your licence to practise law you must submit to the Law Society a formal application accompanied by supporting documentation, in accordance with By-Law 4. See Application to Surrender Licence to Practise Law.
  • Note that separate notice to the Administrative Compliance department about the location of closed files, original wills and power of attorney documents, corporate records and property, status of trust accounts and new contact information is not required because this information will be captured in your application for surrender.
  • To be eligible to surrender your licence to practice law you must be in good standing and no longer practicing law. By surrendering your licence, you relinquish your entitlement to practise law in Ontario.
  • If you are acting as estate trustee or attorney only for related persons, as defined by section 251 of the Income Tax Act (Canada), you may be eligible to apply to surrender your licence to practise law. If you act as estate trustee or attorney for non-related persons, you may not surrender your licence.
  • Upon surrendering your licence you are no longer required to pay the annual fee and will be entitled to request a refund of any credit balance resulting from the pro-rated adjustment of your fees.
  • Note that if you surrender your licence and later wish to resume the practice of law you may apply to be re-licensed to practise law. You must submit the required documents and application fee and, after re-licensing, you will be required to pay the annual fee and file the Lawyer Annual Report. Also, there may be private practice re-entry requirements that you must fulfill.

Exemption From Annual Fees and Filings

  • If you wish to permanently retire from the practice of law you must submit to the Law Society a formal application accompanied by supporting documentation, in accordance with By-Law 5. See Application for Exemption From the Requirement to Pay Annual Fee and to Submit an Annual Report.
  • Note that separate notice to Administrative Compliance about the location of closed files, original wills and power of attorney documents, corporate records and property, status of trust accounts and new contact information is not required because this information will be captured in your application for exemption.
  • To be eligible for exemption from the annual fees and filings you must be in good standing and be either over 65 years of age and no longer practicing law, or be permanently incapacitated and unable to practise law. Once exempted, you are formally retired from the practise of law in Ontario, though you may continue to practise law through a program approved by Pro Bono Law Ontario (PBLO).
  • If you are acting as estate trustee or attorney only for related persons, as defined by section 251 of the Income Tax Act (Canada), you may be eligible to apply for the exemption from both the annual fees and filings. If you act as estate trustee or attorney for non-related persons, you may be eligible to apply for an exemption from the requirement to pay the annual fee, however, you must still
    • declare the trusteeship to the Law Society, via your application for exemption
    • continue to file the Lawyer Annual Report
    • continue to be subject to the Spot Audit program, and
    • file the appropriate exemption forms each year with LAWPRO® to confirm your status as exempt from payment of insurance premium levies
     
  • Upon exemption you are no longer required to pay the annual fee and will be entitled to request a refund of any credit balance resulting from the pro-rated adjustment of your fees.
  • Note that if you are granted an exemption and later wish to resume the practice of law, outside of a program approved by Pro Bono Law Ontario (PBLO), you may do so upon written request to the Law Society. If the exemption application was based on incapacity, an original letter from a qualified medical practitioner that states you are fit to return to practice is also required. After your status change you will be required to pay the annual fee and file the Lawyer Annual Report. Also, there may be private practice re-entry requirements that you must fulfill.

Additional Notices

  • Where you practiced law through a professional corporation that will no longer be used, you must surrender the Certificate of Authorization in compliance with By-Law 7. See Application for Permission to Surrender Certificate of Authorization. For assistance, contact the Law Society’s Administrative Compliance department via the Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.
  • Where the Law Society has received notice of or approved the practice arrangement, include in your letter to the Law Society that the closure or transfer of your practice will result in the dissolving of the arrangement. Arrangements may include
    • a limited liability partnership
    • a multi-discipline practice or partnership
    • an affiliation
     

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Notice to LawPRO®

Because closing or transferring your practice is also likely to result in a change to your insurance coverage requirements, notice of the closure or transfer must be provided to LawPRO® and should be done as soon as possible to ensure appropriate and seamless coverage. Contact LAWPRO® for all inquiries regarding professional liability insurance matters at 416-598-5899 or toll-free at 1-800-410-1013, or visit their website at www.lawpro.ca.

Checklist


 
  • Assess your insurance coverage needs once the practice is closed and contact LawPRO® directly to discuss the insurance options that will work best for you.
  • Notify LawPRO® at least 60 days prior to closing or transferring your practice and advise whether you will still be practising law (e.g. with a firm, as in-house counsel or through a program approved by Pro Bono Law Ontario) or changing to a non-practising status. Because there is a 60-day waiting period on run-off buy-up policies, notification should be made as early as possible to avoid gaps in your coverage. See Letter to LawPRO®.
  • Obtain pro-rated refund of insurance coverage to the day of any premium you have paid, noting that any refund will be back-dated a maximum of 30 days.
  • Consider purchasing run-off coverage in excess of the $250,000.00 automatically available to protect against any future claims that may arise after the practice has been closed. Note that run-off insurance coverage only covers work done before your change in status and does not cover work done after that.

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Practice Closure or Transfer Due to Illness, Disability, or Death

A lawyer’s duty of competent representation includes safeguarding client interests in the event of his or her death, disability, impairment, or incapacity. Ideally, as a sole practitioner or a lawyer in a small firm you should make arrangements for a replacement lawyer to step into your practice in the event that you are unable to continue. All critical information regarding client matters and the operation of your practice should be stored in a location that can be easily and efficiently accessed so that your replacement lawyer can continue, close, or transfer your practice on your behalf. Ideally, such preparations for the unexpected should be made shortly after you opened your law practice or firm.

However, in the event that you are consulting this Guide because you have been asked to assist in managing or concluding the practice of a lawyer that has not put such contingency plans in place, review the Checklist for the Replacement Lawyer Who Takes Over the Law Practice of another Lawyer contained in The Contingency Planning Guide for Lawyers and consider the information outlined below. For guidance, contact the Law Society’s Trustee Services department at 416-947-3315 or toll-free 1-800-668-7380 extension 3315.

Checklist


 
  • Depending on the situation, determine whether the lawyer has a power of attorney for property in place for his or her practice, trust account(s) and general account(s) or a will that provides instructions for these. If not, discuss with the financial institution what will be required to continue to manage the trust and general funds until the lawyer can return to practice, or until the practice can be transferred to you or another lawyer.
  • Determine whether the lawyer has an office manual outlining the procedures for the operational aspect of the law practice that you may review. If not, meet with the lawyer’s support staff to discuss these procedures.
  • Do an initial check for conflicts to ensure that you are not precluded from assisting with any of the lawyer’s outstanding client matters, whether you ultimately take over the matters or refer the clients to another lawyer.
  • Review the lawyer’s reminder or calendaring system to determine immediate or impending deadlines and appearances that must be addressed on the lawyer’s behalf.
  • Briefly review the lawyer’s open files to familiarize yourself with current client matters and to determine which matters you can assist with, and those you will refer out.
  • Review the lawyer’s time and billing records to determine which clients can be billed for services already rendered. Prepare and deliver invoices and ensure payment to manage the accounts receivable until the lawyer can return to practice or the practice can be transferred.
  • Review the lawyer’s accounts receivable to ensure that his or her financial obligations continue to be fulfilled until the lawyer can return to practice or the practice can be transferred.
  • Ensure that you fulfill the lawyer’s obligations regarding his or her employed staff, including payroll, benefits and remittances for income tax, Employment Insurance and Canada Pension Plan.
  • Advise the lawyer’s clients in writing of the lawyer’s inability to continue to act, and why. Indicate whether you are able to assist in the matter or the client must obtain another lawyer, and whether you can refer the clients to an appropriate lawyer. See Letter From Replacement Lawyer to Client.
  • Notify the Law Society of Upper Canada and LawPRO® to advise that the lawyer is temporarily or permanently unable to practise law, providing relevant dates and details. See Letter From Replacement Lawyer to Law Society and LawPRO®.

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List of Resources

Articles, Guides and Resources


 

Law Society of Upper Canada

Bookkeeping Guide for Lawyers
Client Service and Communication Guideline
File Management Guideline
Financial Management Guideline
Guide to Retention and Destruction of Closed Client Files
Trustee Services
Unclaimed Trust Fund

LawPRO®

E&O Insurance
Professional Liability Insurance for Retired Lawyers, Estate Trustees, Emeritus Lawyers, Judges and Others No Longer Engaged in the Practice of Law

Websites


 

Canada Revenue Agency
Employment and Social Development Canada
Legal Aid Ontario
LawPRO®
Law Society of Upper Canada 

Telephone Numbers


 

LawPRO® 1-800-410-1013 or 416-598-5899
Law Society of Upper Canada 1-800-668-7380 ext. 3315 or 416-947-3315
Unclaimed Trust Funds 1-800-668-7380 ext. 3312 or 416-947-3300 ext. 3312 

Rules, Regulations, and Statutes


 

Law Society Act
Rules of Professional Conduct
By-laws pursuant to the Law Society Act

By-Law 4: Licensing
By-Law 5: Annual Fee
By-Law 7: Business Entities
By-Law 7.1: Operational Obligations and Responsibilities
By-Law 9: Financial Transactions and Records
By-Law 10: Unclaimed Trust Funds

Commissioners for Taking Affidavits Act
Income Tax Act (Canada)
Notaries Act
Substitute Decisions Act, 1992
Rules of Civil Procedure

Forms


 

Application for Exemption from the Requirement to Pay the Annual Fee and to Submit the Lawyer Annual Report (under By-Law 5 and 8)
Application for Permission to Surrender a Certificate of Authorization (under Part II of By-Law 7)
Application for Surrender of Licence to Practise Law (under By-Law 4)
Report on Opening or Closing a Trust Account
Notice of Change of Information
Unclaimed Trust Fund Programme, Licensee Application Form

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