015
Managing an orderly and compliant law firm closure When a law practice decides to close their doors, there are many things that must be considered to ensure the firm closes in an orderly manner, avoiding any compliance issues and ensuring clients are well looked after when the firm ceases to practise. Michelle Garlick from Weightmans Solicitors has provided some guidance below on closing a law firm or exiting a legal market, ensuring all compliance issues are avoided. CARET-RIGHT Plan well in advance – Think carefully about what you want to achieve? Do you just want to close your business or are you looking for a buyer? It is important that you identify and engage expert advisors as early as possible. CARET-RIGHT Prepare your firm for buyers – Don’t lose out by giving buyers an opportunity to reduce the value of your firm because of skeletons, urgency or distress etc. Organising your firm before a sale is very important. CARET-RIGHT Engage with the SRA – It is important to inform the SRA of your plans to close your law
firm. Guidance on closing a law firm can be found on the SRA website. CARET-RIGHT Successor Practice issues – There has been much discussion in recent years over the difficulties of finding a successor practice prepared to take on the potential risks of future claims against the closing firm. Insurers of a potential buyer will often prefer the firm being acquired to purchase run off cover, but this comes at a significant cost to the closing firm, with post six year run-off cover being a further risk for individual partners of closed firms if the SIF is to close. CARET-RIGHT Consent and data protection/confidentiality requirements – Understandably, a buyer will want to understand the nature of the client base, work types, financial and staff information etc; yet the closing firm has very clear obligations to maintain client confidentiality under the rules contained in the SRA Standards and Regulations and the Data Protection Act. Both parties need to carefully manage this process, including carrying out a Data Protection Impact Assessment,
redacting personal data and ensuring that client engagement terms and privacy notices sufficiently cover such situations. CARET-RIGHT Inform your clients – You should provide all current clients with as much notice as possible when planning the closure of your firm so that they can understand their rights and make informed decisions The R&R Solutions model can be used to assist closing law firms in the orderly run off of files, ensuring all compliance issues are avoided and client files are well looked after. It can also help to avoid any successor practice issues and post six year run-off cover issues that may arise.
If you would like to find out more about R&R Solution’s process, feel free to get in touch on a confidential basis direct via email david.johnstone@r-rsolutions.co.uk, telephone 07887796989, or contact Sally Dunscombe at sally.dunscombe@r-rsolutions.co.uk or 07774 205 870
spg.uk.com
