Voluntary Closure of a Law Firm

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Why would I choose the voluntary closure of my legal practice?

There are a number of reasons why it may be necessary voluntarily to close a practice. These include

• The death of a sole principal;
• Ill health of a sole principal;
• To avoid an intervention by the SRA;
• The retirement of a sole principal of the practice;
• Financial difficulties;
• Insolvency of a principal;
• A partnership dispute which cannot be resolved;
• Difficulties in obtaining Professional Indemnity Insurance (or it being prohibitively expensive);
• Inability to comply with registration requirements.

Can’t I just sell my legal practice or walk away?

It is not easy just simply to sell or give away your practice because of stringent rules about successor practice and your obligations to clients.

Even if you have no intention of continuing to practise as a solicitor, it is not possible just to close the doors and walk away. A failure properly to wind down your practice could lead to disciplinary action by the SRA. It is also likely that the SRA will consider an intervention to protect your current and former clients. You will be liable for the costs of an intervention and they are usually extremely high.

How can I ensure an orderly closure of my practice?

It will be helpful to sit down and prepare a plan for your closure. You will at least need to think carefully about the following:

• Who will need to be told about the closure;
• What will happen to archived files;
• Professional indemnity insurance;
• Closure of your files or arrangements for them to be transferred to new solicitors;
• Closure of your client account;
• A final Accountants Report/cease to hold report;
• Ensuring all undertakings are discharged;
• What is going to happen to your staff;

Remember, the costs of an intervention are significant and are the personal liability of the principals even where the practice is a Limited company or LLP. An orderly closure is preferable to an intervention.