How Long Can I Keep Doing This?
~Thinking about retiring from the
practice of law~
Over the past few years, I have been receiving more and more calls from
practitioners who are “thinking” about retiring. They have been practicing for
many years, but are thinking that they may want to start considering the steps
to take if they want to stop practicing.
This month’s column will start to discuss “planning” steps to retire. Future
columns will discuss other retirement issues. I will use the word retirement for
the sake of word counts, though it can easily be applied to any voluntary
closing of a practice. Although the focus of the column will be for those
practitioners who are just in the “thinking” stage, much of the information
applies to anyone voluntarily considering closing a practice for other reasons.
Some of those reasons will include (but are not limited to): accepting a position
with a firm, private company or government agency; judicial appointment, moving
to another state or other voluntary reasons.
Needless to say, the earlier you can start thinking and planning for retirement,
the easier and more successful the transition. There are both broad and personal
issues and practical “how to” issues that need to be addressed. Both are
critical to consider, even if most solo and small firm practitioners focus more
on the “how to’s.”
Broad and Personal
When starting to consider retirement, you need to take a hard look at your
finances. According to Boston College’s Center for Retirement Research (www.bc.edu/centers/crr/),
you will need between 65 percent and 75 percent of your current income to maintain
your current standard of living. That is only an average and makes the assumption
that you have no mortgage, no major expenses and have decent health care coverage.
Your percentage may be different, but it will not be much less than 70 percent.
You must determine now if you will have this type of income for the next 10,
20 or even 30 years if you will not be practicing law.
This financial information may even help you decide whether you want to just
close up your practice or attempt to sell your practice. If you are in a small
firm, you need to review your agreement to determine what benefits, if any, you
receive from your firm. You should have a financial advisor, be it a CPA or a
tax attorney, to guide you in these areas.
This will also be a good time to take a look at how you are spending your money
to determine what, if any activities or habits can or should be changed. (Notice
I said changed and not eliminated.) In addition to reviewing your future income
and expenses, you need to think seriously about “what you want to do when you
grow up.” How do you plan to use the 60 -70 hours a week that you used to spend
on your practice? Will your future activities require more or less resources?
If more, this may be a good time to start considering a budget if this is something
you have not done. It may be a good time to start keeping track of exactly where
you are spending your money.
If you are considering selling your practice, you need to familiarize with
Maryland Rule 1.17 Sale of a Law Practice. Again, you need to have a CPA or
other professional who has worked with selling a law practice to help with this
process. A third party will be able to help you confidentially determine who
may be interested in purchasing your practice and determine its “value.” According
to an article by Jay Foonberg on selling a law practice on www.seniorlawyer.org, “The urgency or
lack of urgency in buying or selling may affect the price. Hopefully, the lawyer
will have begun the process of selling the practice to another lawyer or law
firm as part of a retirement plan while there is time for give and take
negotiation with a potential buyer.” (A PDF copy of the article can be found
www.msba.org/departments/loma/articles/index.htm under “Closing a Law
There are other ways to close your practice for retirement. You can simply
finish all your work and turn out the lights. You can also begin to transition a
younger associate or partner to take over your practice. Just as with selling
your practice, the more planning, the easier the process.
Regardless of which method you choose for closing your practice, there are
certain tasks which must be completed, such as disposing of client files,
contacting and informing clients and other administrative tasks.
Ideally, you had a policy for dealing with the disposition of client files.
Unfortunately, there is no simple answer to the question, How long do I need
to keep files? The answer: It depends. The MSBA’s Ethics Committee has a number of
opinions on the disposition of client files, including 94-28 -Retention of
Closed Files; 93-39-Disposition of Client Files; 92-2 - Notification to
Ex-Clients of Departure from Law Practice; Disposition of Remaining Escrow
Funds; 89-58 - Attorney/ Personal Representative’s Duty regarding files of
Attorney/Decedent; 85-77 - Disposition of Files.
A copy of each of these opinions is available online for MSBA members at
You may also receive a copy of articles on client retention policies by sending
an e-mail to Pat Yevics at firstname.lastname@example.org.
According to Mel Hirshman, Bar Counsel, Attorney Grievance Commission, at a 2005
Annual Meeting Program on Retirement For Practitioners:
- You must retain your records for five years after termination
of representation, whether you sell your practice or not.
- You must notify your clients and offer them the portions of the
file to which they are entitled.
- Files not retained must be properly destroyed. (A copy of the
entire PowerPoint presentation can be e-mailed to you by contacting Pat Yevics
Ideally, all work will be completed before your departure. However, if work
is not going to be completed before your departure, you will need a client’s
permission before turning any file over to another attorney. You must tell
clients that they have the right to not go with the attorney. You may decide
to give clients the names of a number of attorneys so that they can choose.
You should make copies of any items in the file which you may need in the event
of a malpractice claim. For a checklist of what other items need to be addressed,
visit the LOMA website at www.msba.org,
under “Closing a Practice”. Also, these additional MSBA Opinions discuss the
closing of a practice:
- 80-42 Retirement from Solo Practice Guidelines
- 89-26 Safekeeping Client’s Funds: Funds of Unidentified Client
- 96-8 In Transaction Whereby One Law Firm Proposes to Purchase
Another Law Firm With Cash Payments Over a Term of Years, May the Law Firm
Purchase Agreement Contain a Non-Competition Provision?
Also, the MSBA Senior Lawyer Section and the MSBA Solo and Small Firm Practice
Section will cosponsor a session, “The Secret to Your Future Success:
Preparation, Preparation, Preparation and a Good Retirement Strategy”, on June
14, 2007, at the MSBA Annual Meeting in Ocean City. This session will give you
practical tips on how to patch the roof while the sun is still shining, so you
can be certain that your second season of success was as comfortable as your
first. Topics will include options and opportunities before and after retirement
and long-term care insurance as a “Patching” Option.
This may not be the most exciting session being presented at this time, but
it is probably the most important.