By Mary F. Andreoni, ARDC Ethics Education Senior Counsel

Whether it’s called the Big Quit, the Great Retirement or even the Career Rethink, the pandemic has certainly caused more of us to consider (reconsider) changes in our personal and professional lives. Closing a law practice to retire from the private practice of law, making a career change like joining the bench,[1] or leaving one law firm to join another, requires preparation, organization and time. More importantly, it requires meeting our ethical obligations to clients to ensure that their interests are not adversely affected by our decisions.

To provide some guidance, the ARDC has two publications on its website that may be helpful in your planning: The Basic Steps to Ethically Closing a Law Practice and A Guide to the Ethical Obligations in Law Firm Departure. Both publications cover the key ethical duties, give practice tips and suggestions, and provide sample forms and resources. Lawyers with questions are encouraged to call the ARDC Ethics Inquiry phoneline at either the ARDC Chicago office at 312-565-2600 or Springfield office at 217-546-3523.

A summary of some of the basic ethical steps for these transitions follows.

Winding Down and Closing a Law Practice. The tasks necessary in closing a law practice has two aspects: terminating the representation of clients and terminating the relationships and financial arrangements that constitute the business of a law practice. While the decision to close your practice is never easy, your intent to close your practice should never prejudice clients’ interests. See In re Luther, M.R. 030819, 2021PR00025 (Ill. Sept. 23, 2021) (lawyer reprimanded and placed on 2 years’ probation under Arizona and Illinois licenses for failure to communicate with clients and refund unearned fees in closing her law practice).

ILRPC Rule 1.16 requires that in terminating a representation a lawyer must give reasonable notice to clients (ILRPC 1.4), allow time for the employment of other counsel (ILRPC 1.3), surrender all papers and property to which the client is entitled (ILRPC 1.15), and refund any advance payment of fees or expenses that have not been earned or incurred (ILRPC 1.5 and 1.15).

^{[1] The Administrative Office of the Illinois Courts (AOIC) has a segment on transitioning from bar to bench as part of its New Judge Orientation that all new judges are required to attend, focusing on the general ethical considerations under the Code of Judicial Conduct in closing down a law practice.}

Basic ethical steps in closing a practice:

• Set a proposed target date for the closure and target dates for completing the many tasks in closing the practice (realistically six months to one year in advance).

• Stop accepting new cases.

• Prepare an inventory of all active client matters and determine which can be completed to close or transfer to a new attorney.

• Inform staff of plans.

• Finalize as many active files as possible.

• Notify all clients[2] with active files of your plans to retire and the time frame for obtaining their file. For client matters that cannot be concluded, confer with the client about transfer of the file to a new lawyer. Determine whether inactive clients are to be notified.

• Transfer files to new lawyer(s) pursuant to the client’s direction.
• Address any outstanding trust account funds and other client property, as well as firm expenses, accounts receivable, business checking and related accounts.
• Refund to clients any advance payment of fees or expenses that have not been earned or incurred.
• Provide for the return or disposition of papers and property that belong to clients.

• Address unclaimed client funds and return safe deposit box contents.

• File the appropriate motions and obtain the consent of the tribunal to withdraw. Where the client has chosen a new attorney, be certain that a substitution of counsel is filed

• Implement file retention and storage policy.

• Update your professional contact information including letterhead, websites, legal directories and your registration with the ARDC.

• Contact your professional liability insurance carrier about necessary continued malpractice coverage. Consider purchasing an Extended Reporting Endorsement (ERE), commonly referred to as a “tail policy.”

Resources: ARDC publication, The Basic Steps to Ethically Closing a Law Practice

^{[2] If the practice is closing due to a sale, ILRPC 1.17(c) requires additional notices to clients. }

Succession Planning & Practice Transitions resources on the ARDC website

Illinois Judges Association Advisory Opinion 1994-12 Judge's responsibility regarding his former client's files and unearned fees (May 16, 1994)

Record Retention (2020), ARDC on-line webcast which covers the key elements of an effective file retention and destruction plan; setting retention periods; organizing and maintaining files in storage; and proper file destruction procedures

ABA Formal Opinion 468 Facilitating the Sale of a Law Practice (Oct. 2014)

ISBA Ethics Opinions on Client Files: Op. 94-13 and 94-14 (Returning clients papers upon termination); Op. 12-06 (Retention and destruction of law firm files; and Ops. 10-1 and 16-6 (Cloud-based storage).

Leaving One Firm to Join Another. Both the departing lawyer and the firm have ethical obligations to protect clients' interests and to honor clients' fundamental right to choose their counsel. At the same time, before a lawyer resigns from and leaves a law firm, the departing lawyer also owes contractual, fiduciary and/or agency duties to the law firm. See In re Park, M.R. 25897, 2012PR00027 (Ill. March 15, 2013) (lawyer suspended one year for downloading over 75,000 electronic documents from his former law firm, including a client directory, client files, forms and templates while simultaneously making plans to establish his competing firm).

The basic ethical obligations of both the departing lawyer and law firm are: that clients, on whose matters the departing lawyer had substantial responsibility, are fully informed of the lawyer’s impending departure (ILRPC 1.4), that any change in representation will not adversely affect the client’s interests (ILRPC 1.1, 1.3 and 1.16), that the duties of loyalty and confidentiality owed to current and former clients will not be compromised by lawyers moving between firms (ILRPC 1.7, 1.9 and 1.10), that the law firm will not restrict or interfere with a client’s choice of counsel (ILRPC 5.6), and that both departing lawyer and law firm will refrain from conduct involving dishonesty, fraud, deceit or misrepresentation toward clients and between members of a law firm in connection with a planned withdrawal from the firm (ILRPC 8.4(a)(4)).

Basic ethical steps in preparing to leave one law firm for another:

• Review the firm’s partnership, shareholder or employment agreement concerning provisions made in advance for departing lawyers.

• Read and review the Dowd & Dowd case as guidance for what pre-departure actions you may take in anticipation of setting up or going to a competing law firm.

• Give reasonable notice to the firm of your intent to withdraw from the firm promptly after reaching a commitment to join another firm or making the decision to leave the firm before notifying clients.

• Compile a list of client matters for which you were the originating and/or responsible attorney.

• Discuss with the firm the best procedure to notify clients regarding your departure.

• Notify clients, either jointly with the law firm or individually, of your departure and when, how your departure will affect their representation and, if necessary, obtain the client’s informed direction as to how the client wishes its work to be handled going forward.  

• Prepare and file any necessary motions seeking permission to withdraw or for substitution of counsel in any proceedings pending before a tribunal as well as advising all other counsel of any change in the representation.

• Agree on how the firm staff will handle calls from clients or potential clients after you have left the firm.

• Notify the ARDC of your change of address or change your address on the ARDC’s website. Arrange for your name to be removed from the old firm’s website and other professional listings.

Resources: ARDC publication, A Guide to the Ethical Obligations in Law Firm Departure

Dowd & Dowd. Ltd. v. Gleason, 181 Ill.2d 460, 693 N.E.2d 358, 230 Ill.Dec. 229 (Ill. 1998), affirmed in part, reversed in part, and the later 2004 Appellate Court opinion following remand, 352 Ill.App.3d 365, 816 N.E.2d 754 (1st Dist. 2004)

ABA Formal Opinion 489 Obligations Related to Notice When Lawyers Change Firms (Dec. 2019)

ABA Formal Opinion 09-455 Disclosure of Conflicts Information When Lawyers Move Between Law Firms (Oct. 2009)

ABA Formal Opinion 99-414 Ethical Obligations When a Lawyer Changes Firms (Sept. 1999)