Guide to Closing Your Practice for Paralegals

* The information contained in this guide is not a substitute for the paralegal’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
Special Appointments and Obligations
Office Premises, Equipment, Employees and Public Notice
Notice to the Law Society of Upper Canada
Notice to Professional Liability Insurer
Practice Closure or Transfer Due to Illness, Disability or Death

Appendices

    Appendix 1 - Sample Notices
    Appendix 2 - Active File Tracking Chart
    Appendix 3 - Letter to Client Advising or 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 Files, Funds or Other Property
    Appendix 8 -Transfer Memo to File or New Legal Representative
    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 -Office Inventory Checklist
    Appendix 13 -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 Professional Liability Insurer
    Appendix 17 -Letter from Replacement Paralegal or Lawyer to Client
    Appendix 18 -Letter from Replacement Paralegal or Lawyer to Law Society and Professional Liability Insurer

List of Resources


 

Introduction

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, appointment to a board or tribunal, 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. Paralegals often underestimate the time and effort required to effectively conclude a legal services 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.

This Guide to Closing Your Paralegal Practice was created to help you plan for and fulfill professional conduct responsibilities when transferring or closing a legal services practice. 1 Whether the decision to conclude your practice has been made or you are planning ahead for such time, this 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 honouring all trust conditions and ongoing obligations; 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 legal services 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. 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 may need to transfer 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 will no longer be providing legal services at all, 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 paralegal or lawyer, or are closing your practice to join a firm, you may advise clients of the new contact information for the individual purchasing or taking over your practice but, ultimately, the choice of legal representative rests with the client. If you are transferring active files to another paralegal or lawyer, the paralegal or lawyer receiving the file must check for conflicts to ensure they do not have a disqualifying conflict of interest as outlined in Rule 3.04 of the Paralegal Rules of Conduct or Section 3.4 of the lawyers’ 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 Rule 3.08 of the Paralegal Rules of Conduct. A paralegal 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
    • that 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 Practice Closure or Transfer) and provide written notice that advises
    • the legal services 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, paralegal or lawyer that has agreed to continue with the file, if applicable
    • clients may direct their files to the paralegal or 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 paralegal or 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 legal representative. 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 legal representative.
  • More information on managing closed client files can be found in the Guide to Retention and Destruction of Closed Client Files for Paralegals.
  • 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 legal representative or the client, prepare a transfer memo (see Transfer Memo to File or New Legal Representative) to the new paralegal, lawyer or the file that includes
    • a summary of the file
    • important dates
    • important tasks
    • important issues
    • important facts
    • limitation periods
     
  • Where you have been named as the legal representative for a client matter in court or tribunal records, the rules of the court or tribunal may require you to file an application or notice that
    • appoints the new legal representative to whom the client’s file has been transferred
    • advises of the client’s intent to act on his or her own behalf, or
    • removes you as the legal representative of record
     
  • Notify the Law Society’s By-Law Administration Services department in writing to advise what paralegal or 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

Paralegals 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, paralegals 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 paralegal. These may include copies of original client documents, copies of draft and final agreements, the paralegal’s personal notes, copies of correspondence (including e-mails, memos or notes relating to client communications), all of which are kept for the paralegal’s benefit and at the paralegal’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 paralegal’s discretion and depends on a number of factors, such as the limitation period for actions against paralegals, 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 for Paralegals.

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 Rule 3.07 of the Paralegal Rules of 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 paralegal or 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 legal representative 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 paralegal or 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 3.07(6).

Closed Files Containing Only Paralegal’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 paralegal or 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 Rule 3.03 of the Paralegal Rules of 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 paralegals
    • the nature of legal work performed (e.g. litigation files that may be subject to appeal should be kept longer than summary conviction files with 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 Rule 3.03 of the Paralegal Rules of 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 Paralegal or Lawyer

  • Consider the potential consequences prior to transferring closed files to another paralegal or lawyer. Closed files should only be transferred after you have determined
    • the receiving paralegal or 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.

Upper Canada

  • Notify the Law Society’s By-Law Administration Services department to advise what paralegal or 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 2.02 of the Paralegal Rules of Conduct states that a paralegal must fulfill every undertaking given and honour every trust condition once accepted. It further provides that the person receiving the undertaking is entitled to expect that the paralegal 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 paralegal that the paralegal must honour personally.

As such, all undertakings, trust conditions or ongoing obligations must be satisfied before your practice is closed or transferred to another paralegal or lawyer. If this is not possible or practical, you must advise the client and the successor paralegal or lawyer of the nature of the undertaking or obligation. You must determine whether the successor legal representative will honour your given undertaking 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.

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 or original client documents.

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 conditions or obligation prior to the practice closure or transfer, obtain
    • the successor legal representative’s commitment, in writing, to honour the undertaking, trust conditions or meet the obligation
    • a release from strict compliance with the undertaking, trust conditions or other obligation, in writing, from the person to whom it was originally given
     
  • If you cannot honour a trust condition before you close your legal services practice or cease to provide legal services and the terms of the trust condition cannot be amended in writing on a mutually agreeable basis, the subject of the trust condition should be immediately returned to 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 any 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 paralegal or lawyer, the reporting letter to the client is not complete, specifically bring this to the attention of the successor legal representative.

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Client Funds, Accounting, Books and Records

Rule 3.07 of the Paralegal Rules of Conduct provides that a paralegal 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 paralegal must also comply with the money handling and bookkeeping requirements of By-Law 9. Upon ceasing to provide legal services, 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 paralegal or 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 Rule 3.07 of the Paralegal Rules of 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 paralegal 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 Account. This 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 Paralegals.
  • 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 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 paralegal or 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 ceasing to provide legal services a paralegal must return to the client (or per the client’s direction) any other client property that may be in the paralegal’s custody. Such property may include items of value or original client documents, 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 paralegal to hold original client 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 paralegal has completed the services he or she was retained to provide.

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 client documents (e.g. passport, promissory note)
    • 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 an organizational client, the principals or agents of the organization), making reasonable efforts to locate those for whom you do not have a current address.
  • Contact clients (or organizational principals or agents) to seek instructions regarding any property you hold in trust (see Letter to Client Advising of Practice Closure or Transfer and Clause in Letter Re: Client Funds, Documents or Property in Trust) and provide written notice that advises
    • the legal services practice is closing, and when
    • the contact information of the firm, paralegal or lawyer that has agreed to take over safekeeping of the client’s property, if applicable
    • that clients may direct their property to the paralegal or lawyer of their choice, if they prefer
    • that clients may attend the office to retrieve their property
     
  • Where you have been named by a client as estate trustee, attorney or corporate director, there are special obligations that may continue after you have closed or transferred your practice. If you do not intend to act in any of these additional roles, you must advise the client of this in your written notice. See the Special Appointments and Obligations section of this Guide.
  • Where client property is to be transferred to another paralegal or 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 legal representative. See Direction to Transfer Client File, Funds or Other Property.
  • Where, after making adequate inquiries, the client (or organizational 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 Rule 3.07 of the Paralegal Rules of 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 paralegal or lawyer for continued preservation and safekeeping
     
  • Advise the Law Society’s By-Law Administration Services department whether you will continue to hold client property or provide the name and contact information of the paralegal or lawyer who has agreed to take over safekeeping of original client documents or other client property after closing or transferring your practice. See Letter to Law Society of Upper Canada.

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Special Appointments and Obligations

A paralegal who has been appointed to or has taken on a role that is in addition to the provision of legal services may have special obligations that do not necessarily end with the closure or transfer of the legal services 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, notary public, or commissioner for taking affidavits.

Checklist


Estate Trustee or Attorney Under Power of Attorney

  • Where you have previously agreed to the appointment for a relative, friend, or colleague, your personal 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 provide legal services to the public.

Director of Corporation

  • Where you have previously agreed to the appointment for a relative, friend, colleague, or client, your personal appointment as a corporate director (subject to the specific provisions of the original appointment) remains in full force regardless of whether you continue to provide legal services.
  • If you intend to continue to act as a corporate director, you should provide appropriate confirmation to the corporation (or its principal or agents) of this intention, including indicating your intention in your written notice regarding the closing or transfer of your legal services practice.
  • If you do not wish to continue to act as a corporate director, you should
    • advise the client (or its principal or its agents) of this in your written notice regarding the closure of your legal services 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 to return any original corporate documents and property that you held as corporate director to the client or direction for transfer to another lawyer or paralegal, if applicable
     

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 not providing legal services, have been exempted from the requirement to pay annual fees and submit annual filings or have surrendered your licence to provide legal services), ensure that the relevant statute permits you to continue to commission affidavits or notarize documents.
  • Regardless of your status, when you cease to provide legal services and carry 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, legal 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, CD-DVD drive, 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), legal 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 Rule 3.03 of the Paralegal Rules of 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 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 paralegal or 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 legal 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.
  • 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 should be provided to your chosen professional liability insurer as soon as possible to ensure appropriate and seamless coverage. Contact your insurer to discuss your options.

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 the 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.
  • Where your practice closure or transfer will impact the field placement of a paralegal student that you supervise, ensure that the student advises his or her field placement coordinator of the situation. Subject to approval, the student may arrange to have the field placement moved to another qualified paralegal or lawyer or to continue his or her field placement with the paralegal or lawyer who is taking over or purchasing your 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 legal association offices, law libraries, 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 no longer providing legal services at all, your annual fees may be adjusted.

There are special considerations where you cease to provide legal services because you have been appointed to a board or tribunal, or you intend to apply to surrender your licence to provide legal services or to apply for an exemption from further Law Society fees and filings. There are other considerations if you later wish to return to the provision of legal services. For more information regarding these, refer to the Law Society’s Status Changes and Fees, Filings, Insurance pages online.

Also, if your practice is a limited liability partnership, you provide legal services through a professional corporation or you do so in connection with non-licensees, there may be additional Law Society reports or notices required. These are in addition to any legally required notices or reports. To discuss any additional Law Society requirement related to the business structure of your practice, contact the By-Law Administration Services 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 By-Law Administration Services department in writing about your practice closure or transfer and provide the location of closed files, original client documents, client property, status of trust accounts and new contact information. See Letter to Law Society of Upper Canada.
  • If you are no longer providing legal services but are still providing services that may be provided by paralegals in conjunction with legal services (e.g. acting as estate trustee, attorney, corporate director, commissioner, notary public or as a mediator), ensure that you make it clear to clients and others that you are not acting as a paralegal.
  • If you are maintaining your licence but changing to a status where you are not providing legal services at all, 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 cease and later wish to return to the provision of legal services, you may change your status and there will be a subsequent re-adjustment of your fees.

Appointment to Board or Tribunal

  • Pursuant to section 31.(1) of the Law Society Act, if you have received an appointment to an eligible board or tribunal you may have your licence to provide legal services 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 By-Law Administration Services department in writing about your practice closure or transfer and provide the location of closed files, original client documents, client property, status of trust accounts and new contact information. See Letter to Law Society of Upper Canada.
  • Currently, paralegals eligible to apply for an abeyance are those appointed full-time as members of the Ontario Municipal Board or 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 received an appointment to an eligible board or tribunal and wish to request abeyance, you must provide a copy of the Order in Council as proof of the 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 your appointment to the board or tribunal ends and you later wish to resume the provision of legal services you may request in writing to restore your licence, after which you will be required to pay the annual fee and file the Paralegal Annual Report. If you do not intend to return to providing legal services (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 Provide Legal Services

  • If you wish to surrender your licence to provide legal services 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 Provide Legal Services.
  • Note that separate notice to the By-Law Administration Services department about the location of closed files, original client documents, client property, status of trust accounts and new contact information is not required because this information will be captured in your application for surrender.
  • 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 be able to surrender your licence.
  • To be eligible to surrender your licence to provide legal services you must be in good standing and no longer providing legal services. By surrendering your licence you relinquish your entitlement to provide legal services in Ontario.
  • 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 provision of legal services you may apply to be re-licensed to provide legal services. 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 Paralegal Annual Report.

Exemption From Annual Fees and Filings

  • If you wish to permanently retire from the provision of legal services 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 the By-Law Administration Services department about the location of closed files, original client documents, client 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 providing legal services, or be permanently incapacitated and unable to provide legal services. Once exempted, you are formally retired from the provision of legal services in Ontario.
  • 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 provision of legal services, 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 providing legal services is also required. After your status change you will be required to pay the annual fee and file the Paralegal Annual Report.

Additional Notices

    • Where you provided legal services 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 By-Law Administration Services 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 your 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 Professional Liability Insurer

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 your chosen professional liability insurer, and should be done as soon as possible to ensure appropriate and seamless coverage. Contact your professional liability insurer directly for all inquiries regarding professional liability insurance matters.

Checklist


 
  • Assess your insurance coverage needs once the practice is closed and contact your professional liability insurer directly to discuss the insurance options that will work best for you.
  • Notify your professional liability insurer as far in advance as possible prior to closing or transferring your practice and advise whether you will still be providing legal services (e.g. with a firm or as an in-house legal services provider) or changing to a status where you will not be providing legal services at all. Because there may be a 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 Professional Liability Insurer.
  • Determine if you are entitled to a pro-rated refund of insurance coverage to the day of any premium you have paid, and whether any waiting period applies.
  • Consider purchasing run-off coverage 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 paralegal’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 paralegal in a small firm you should make arrangements for a replacement paralegal or 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 paralegal or lawyer can continue, close or transfer your practice on your behalf. Ideally, such preparations for the unexpected should be made shortly after you open your legal services 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 paralegal that has not put such contingency plans in place, review the Checklist for the Replacement Paralegal Who Takes Over The Paralegal Practice of Another Paralegal in The Contingency Planning Guide for Paralegals 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 paralegal 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 paralegal can return to his or her practice, or until the practice can be transferred to you or another paralegal or lawyer.
  • Determine whether the paralegal has an office manual outlining the procedures for the operational aspect of the legal services practice that you may review. If not, meet with the paralegal’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 paralegal’s outstanding client matters, whether you ultimately take over the matters or refer the clients to another paralegal or lawyer.
  • Review the paralegal’s reminder or calendaring system to determine immediate or impending deadlines and appearances that must be addressed on the paralegal’s behalf.
  • Briefly review the paralegal’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 paralegal’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 paralegal can return to his or her practice or the practice can be transferred.
  • Review the paralegal’s accounts receivable to ensure that his or her financial obligations continue to be fulfilled until the paralegal can return to his or her practice or the practice can be transferred.
  • Ensure that you fulfill the paralegal’s obligations regarding his or her employed staff, including payroll, benefits and remittances for income tax, Employment Insurance and Canada Pension Plan.
  • Advise the paralegal’s clients in writing of the paralegal’s inability to continue to act, and why. Indicate whether you are able to assist in the matter or the client must obtain another paralegal or lawyer, and whether you can refer the clients to an appropriate legal representative. See Letter From Replacement Paralegal or Lawyer to Client.
  • Notify the Law Society of Upper Canada and the paralegal’s chosen professional liability insurer to advise that the paralegal is temporarily or permanently unable to provide legal services, providing relevant dates and details. See Letter From Replacement Paralegal or Lawyer to Law Society and Professional Liability Insurer.

 

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List of Resources 

Articles, Guides and Resources  



 

Law Society of Upper Canada

 

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

Websites


 

Canada Revenue Agency
Employment and Social Development Canada
Law Society of Upper Canada

 

Telephone Numbers


 

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 and Statutes


 

Law Society Act
Paralegal Rules of Conduct
By-Laws made pursuant to 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
Notaries Act
Income Tax Act (Canada)
Substitute Decisions Act, 1992

 

Forms


 

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