Are you a plaintiff’s personal injury lawyer approaching retirement without an exit plan?
Or are you not approaching retirement, and still don’t have a plan that meets the requirements of the Rules of Professional Responsibility, #1.3, which requires lawyers to make reasonable preparations to protect clients in the event of their unexpected inability to practice law? Let us help you solve that problem.
There are many reasons why an attorney may decide to wind down, close, or sell his or her practice. The attorney may be moving, retiring, or entering a new line of work. There is also the possibility that the need to wind down, close up, or sell the practice may not be voluntary. An attorney’s unexpected death or disability may require others to handle closing the practice. This article discusses the merits of a detailed action plan for exiting a personal injury practice and outlines practical steps that attorneys should take towards this end.
Rule 1.3, Minnesota Rules of Professional Conduct (MRPC), requires attorneys to make reasonable preparations to protect clients in the event of their unexpected inability to practice law. There are several ways to comply with this requirement. Attorney partnership agreements or assisting attorney agreements for solo practitioners should be negotiated to designate who will wind down and close up the practice. The agreements should define the nature and scope of that attorney’s responsibilities and determine the amount and method of compensation. A well-organized practice with documented procedures is critical to a smooth and easy closing of a practice by another. A written office manual should contain key details such as:
The office manual should also have an explanation and description of the conflicts system, the calendaring system and backup, time billing records, accounts receivable/payable, an active client file inventory, and a closed file storage location and inventory. The manual should be complete enough for the attorney closing up the practice to be able to promptly identify those client matters needing immediate attention and any matter on which the attorney might have a conflict of interest.
If an attorney does not plan for unexpected practice interruption, the court may have to appoint a trustee to wind up and close out the practice.
If an attorney or the representative of a deceased, disabled or disappeared lawyer is selling a practice, MPRC Rule 1.17 will be of particular importance. This rule mandates that an attorney may not sell off only the most lucrative clients and leave the remaining ones unrepresented. The buyer must accept all of the currently active files except:
The buying lawyer may not increase attorney fees charged to the selling attorney’s clients for a period of at least one year from the date of the sale.
When negotiating the sale of a practice, an attorney should note that the amount and type of information the selling lawyer may give to a potential buyer is limited by the client confidentiality requirements of MPRC Rule 1.6. A prospective buyer may not see the client file unless the selling lawyer has obtained a waiver of confidentiality from the affected client. After the sale, the selling attorney must send written notification to all clients to be taken over by the purchaser. That notification must include (1) a statement that the practice, including the client’s file, has been sold; (2) a summary of the purchaser’s professional background; and (3) a statement that the client has the right to either continue with the new firm under the same fee arrangement, to have the complete file returned to the client, or forwarded to another attorney of the client’s choosing.
If the notification is sent by certified mail or personally served, the notification may state that if the client does not contact the buying attorney within 90 days, the client’s silence may be considered a waiver of confidentiality and consent to representation. The buying attorney should obtain a new representation agreement and file an appropriate substitution of counsel in this scenario. The selling lawyer should consider extending malpractice insurance for some reasonable period of time following the sale to ensure against losses arising from errors that might come to light after the sale.
An attorney winding down, closing up, or selling their practice has an obligation to return or properly refer all unsold active files and to dispose of all remaining inactive files appropriately. An attorney may not simply turn a client matter over to another attorney (without client consent). The Director’s Office may issue an admonition to an attorney who fails to properly close down their practice.
It is good practice to explain the firm’s file retention/destruction policy in an engagement letter, retainer agreement, or letter at the close of every representation. A lawyer should not destroy or dispose of a client file without screening it. Before archiving a file, the attorney should make sure that all client assets (such as stock certificates, abstracts, executed but unfiled documents, original wills, unrecorded deeds, etc.) have been returned or permanently safeguarded.
Clients and former clients have a reasonable expectation that useful information in the lawyers’ files will not be prematurely and carelessly destroyed. To that end, an attorney should obtain the client’s consent before destroying items that clearly or probably belong to the client. This includes retaining any information in the file that may have future utility to the client. The remainder of the closed files should be retained for a reasonable time. What is ‘reasonable’ will depend in part on the nature of the representation. Generally, an attorney should keep client files at least until the applicable statute of limitations on malpractice has run. Settlement documents and trust account books, and records must be kept for six years after completion of the representation. An attorney may dispose of the files at the end of the retention period by shredding (sensitive materials) or bagging (non-sensitive) files in heavy-duty opaque bags.
A Schmidt & Salita Workers’ Comp Lawyer will come to your home or the hospital for your initial visit. The Schmidt Salita Law Team strives to provide personal injury legal services with a personal touch to help the victims of personal injury through a very difficult time in their lives.
Contact us today for a free case consultation!
Dean Salita is a seasoned Personal Injury lawyer with over 30 years of experience, specializing in workplace injuries and occupational diseases like asbestos-related illnesses. He’s the chair of the Minnesota Association for Justice Workers’ Compensation section and has been recognized as a Super Lawyer with an AV rating by Martindale-Hubbell. Dean is dedicated to providing personal, compassionate legal support to his clients, guiding them through trials and the legal process.
This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Dean M. Salita, with more than 30 years of legal experience as a personal injury attorney.
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