Question

I am a solo practitioner, and I am thinking about retiring. What should I consider in planning to close my law practice?

Discussion and Answer

When contemplating closing a law practice, there are many issues that can arise. Most concerns under the disciplinary rules fall within these seven categories:

• current clients,

• tribunals,

• former clients,

• trust accounts,

• closed files,

• electronic equipment, and

• malpractice insurance.

While this article does not cover every issue that can arise in closing a practice, it does provide a brief overview of each of these seven areas.¹

Notify Current Clients

SCR 20:1.4(b) requires that lawyers notify current clients of their plans in a timely fashion. If a lawyer may not be able to complete a current client’s matter, the lawyer should notify those clients that the lawyer is unable to continue representing them and that they need to seek new counsel.

Pursuant to SCR 20:1.16(d), clients should be given “reasonable notice,” such that they have time to employ successor counsel. The communication should inform current clients about time limitations and dates that are important to their cases, and it should provide, if applicable, an accounting of fees, costs, and property held in trust.² The communication should also explain that clients can pick up copies of their files or have the files transferred to successor counsel and should give a time frame for doing this.

The rules do not mandate a particular method of communicating this information to current clients, but it is a good idea for lawyers to keep written records of each communication so they know what was communicated to the client. Obviously, the lawyer should maintain copies of such communications sent by email or letter. The lawyer should also notify opposing counsel and comply with the tribunals’ rules forwithdrawing.³

We suggest you keep these notes on each file:

• the file name;

• the file number;

• the date when the file was last reviewed;

• a list of the important dates, tasks, and limitation periods;

• the date when the letter was sent to the client;

• the date when termination was discussed with the client;

• any instructions that were received from the client;

• whether the file was copied;

• whether the file was given to the client or was delivered to successor counsel and a receipt obtained;

• whether opposing counsel was notified;

• whether a formal motion to withdraw was filed and granted; and

• whether any further action is required.

Tribunals: Withdraw from Pending Matters

If a matter is pending before a tribunal and there is a reasonable prospect that the lawyer will not be able to complete the matter before closing the practice and retiring, the lawyer should notify the tribunal and follow whatever procedure the rules of that tribunal require of the lawyer seeking to withdraw from the matter.

The disciplinary rules define “tribunal” quite broadly in SCR 20:1.0(p), so this includes administrative agencies as well as courts. The rules require that the lawyer follow local court rules when seeking to withdraw from a matter.⁴ Thus, the lawyer should notify courts and administrative agencies and follow the procedure the tribunal requires when seeking to withdraw from a matter that the lawyer cannot complete.

Under SCR 20:1.16(c), the lawyer must stay on and complete the matter if so ordered by the tribunal. If the lawyer regularly accepts appointments, such as guardian ad litem appointments, it is a good idea to notify the court of the lawyer’s future inability to accept those appointments.

Maintain Former Clients’ Files

Lawyers have no duty to notify former clients when closing a practice. As discussed below, however, lawyers do have an obligation to maintain closed files for at least six years, and former clients are entitled to their file upon request. To facilitate the return of files to former clients, the lawyer should consider keeping active methods of contact for former clients, such as an email, and keeping the lawyer’s contact information current with the State Bar of Wisconsin.

Disburse Trust Account Funds

The lawyer should reconcile the lawyer’s trust accounts, and all funds remaining in the trust accounts should be disbursed to whomever is legally entitled to the funds.⁵ If the lawyer is unable to locate or determine the owner of the funds being held in trust, the funds may have to escheat to the state, specifically Wisconsin’s unclaimed property office (part of the Wisconsin Department of Revenue).

For further discussion of the proper procedure when a lawyer cannot locate or determine the owner of the of funds held in a trust account, see “Dilemma: What to Do with Unclaimed Money in a Trust Account,” InsideTrack, Feb. 17, 2021.

The lawyer is required by SCR 20:1.15(g)(1) to retain the trust account records for at least six years after the date the accounts are closed. The Office of Lawyer Regulation has guidelines for trust account records.⁶

There is no affirmative obligation to notify either the State Bar of Wisconsin or the Office of Lawyer Regulation when closing any trust account.

Safeguard Closed Client Files

The lawyer must ensure the appropriate safeguarding and storage of closed files, whether in physical, electronic, or mixed format. The Rules of Professional Conduct do not require that closed files be maintained forever, but in general, closed files must be maintained for at least six years. Wisconsin Formal Ethics Opinion EF-17-01 provides a detailed discussion of a lawyer’s obligations with respect to storing and safeguarding closed client files.

In the ideal situation, the lawyer would have disclosed the file retention and destruction policy in each client’s engagement agreement and again in the client’s closing letter. If the lawyer has a file retention and destruction policy that has been communicated to the clients, closed files should be kept as required by that policy.

If the lawyer does not have such a policy and the client has not requested the file, the lawyer should retain the file for a minimum of six years from the date representation was terminated, although some types of files should be maintained for a longer time as discussed in EF-17-01.

With files older than the firm’s stated file retention policy, the lawyer can securely dispose of the closed files without notice to the former clients. While not required by the disciplinary rules, if the lawyer has not informed clients about a file retention and destruction policy in an engagement agreement or closing letter, the lawyer may wish to consider publishing an announcement in a newspaper of general circulation and then waiting several months before destroying thefiles, to give former clients sufficient time to reach out to the lawyer. It may also be advisable to have the notice published on the newspaper’s website.

Solo attorneys may wish to give their closed files to another firm to be stored and returned to former clients when requested. To do this, the lawyer must first obtain the informed consent of the current and former clients.⁷ In addition, in accepting files from another lawyer, law firms will have conflicts that arise from the possession of those files.⁸ In general, such conflicts can be resolved by obtaining the written and signed informed consent of the affected current or former clients, although this may be difficult for closed files.

The destruction of client files must be done in a manner consistent with the duty of confidentiality that every lawyer owes to every client and former client under SCR 20:1.9(c)(2) and SCR 20:1.6. There must be a complete destruction of the materials in the file, such as incineration or shredding. The lawyer should keep, for a reasonable period, a record or index of files that have been destroyed.⁹

Safely Dispose of Electronic Equipment

SCR 20:1.6(d) requires that any electronic equipment with a hard drive, such as a fax machine, copier, computer, tablet, or smartphone, that has information relating to the representation of the clients stored on it must be disposed of in a manner that prevents disclosure of confidential information.

If the equipment is to be sold, given away, or used for personal purposes, the lawyer must make sure the drives are clean and that all client information is removed.

If the lawyer is unsure how to dispose of electronic equipment in such a manner as to prevent disclosure of client information or how to wipe a device to ensure that no protected information remains, the lawyer should seek advice from an expert.

Optional: Maintain Malpractice Insurance

There is nothing in the disciplinary rules that requires retired lawyers to maintain malpractice insurance. Lawyers should be aware, however, that claims made against a lawyer after the lawyer has retired might not be covered by prior insurance. If the lawyer is concerned about this possibility, the lawyer should discuss a tail endorsement with a malpractice insurance carrier.

Conclusion

While not exhaustive, this list covers the most common concerns. To avoid issues that can arise under the disciplinary rules, a solo practitioner closing a practice should pay particular attention to this list of duties.

Lawyers closing their practice should keep in mind their duty to protect their clients’ rights, property, and confidential information.

Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel Timothy Pierce and Sarah Peterson, provide guidance only and are not legal authority. Each situation will depend on the facts and circumstancesinvolved.

Endnotes

1 This column is a revision and expansion of a previous column; see Aviva Meridian Kaiser, Five Things Solo and Small Firm Lawyers Should Do Before Taking Down Their Shingles, InsideTrack, July 2, 2014.

2 See, e.g., SCR 20:1.5(g), SCR 20:1.15(e).

3 See SCR 20:1.16(c).

4 See SCR 20:1.16(c).

5 See SCR 20:1.15(e).

6 OLR Guidelines for Trust Account Records, wicourts.gov/services/attorney/docs/guidetarecords.pdf (last visited Mar. 11, 2024).

7 See SCR 20:1.6.

8 See Restatement (Third) of the Law Governing Lawyers § 124. See also Timothy J. Pierce, Ethical Dilemma: What Conflicts Are Left Behind When a Lawyer Leaves a Firm? InsideTrack, Feb. 19, 2020. The conflicts that can arise when the confidential client information of more than one lawyer is held in a common space in an office-sharing arrangement are similar to those that might arise when a lawyer takes possession of the confidential client files of a lawyer who has left the practice of law. There are several ethics opinions discussing conflicts that arise in office sharing arrangements between unaffiliated lawyers. See D.C. Bar Op. 303; Colo. Bar Ass’n Ethics Comm. Op. 89; ABA Formal Op. 507.

9 See Wis. Formal Ethics Op. EF-17-01.