Closing The Door
In our continuing series about law firm exit planning, we have explored some alternatives already - - lateral firm movement and internal succession. We now turn to the possibility of simply retiring from practice.
To some lawyers, the idea of closing their office door for one final time, never to return to the workday grind, is a tempting thought. I had a suitemate who was so anxious to retire that on his last day at the office, he left his suit jacket hanging on the back of his chair and his briefcase on his desk. When the office manager called him to ask him what to do with the suit jacket and briefcase, the suitemate told her to ‘just burn it.’
To make the retirement dream a reality, though, does take planning. Like all the other succession pathways that we have discussed, retirement, too, requires a lot of forethought and preparatory work.
The planning mandate stems, in part, from the New York Ethical Rules 1.3, that require a lawyer to diligently complete a client matter. In the case of a retiring lawyer, that means that for matters that will continue past their tenure, they will have to transition their active projects to new counsel. This will have to be done with the consent of the client, of course, and in coordination with a substitute attorney.
Additionally, retiring attorneys will need to deal with the disposition of their escrow accounts and client files. The fate of these items could prove nettlesome as it will require methodical communication with both current and former clients. If the clients are not reachable, arrangements will need to be made as to what to do with escrow monies and files.
Retiring attorneys also need to arrange for continued professional liability coverage. Most malpractice policies are ‘claims made’ policies, meaning that coverage is for claims made during the policy term. Of course, clients or former clients can bring claims after a lawyer stops practicing, for acts done previously. In order to be covered, retiring attorneys should consider getting tail coverage, i.e., continued coverage, for some period after their retirement.
If simply closing your practice is an option you might consider, you should check out various retirement planning guides including the one at nysba.org/app/uploads/2019/12/NYSBA-Planning-Ahead-Guide-Second-Edition2-1.pdf. The guides, like the one from the New York Bar Association, provide checklists and to do’s that a soon to be retiree can utilize to plan their next phase. As with other law firm exit plans, retirement requires forethought (but not suit jackets).
