If you're thinking about retiring from your practice, you may not know quite where to start. All the boxes you'll have to check from terminating building leases and utilities to making sure you've tied up loose ends with all of your clients can be daunting. The first step? Recognize that retiring from the practice of law involves more effort than simply retiring from other professions.

Depending on the state in which you practice, you may have three viable options:
 

• Close the practice
   
• Sell the practice
   
• Transition the practice to a successor.
   

Matthew Fitterer, CNA Risk Control Representative, Lawyers Professional Liability Program, describes these options in the recent edition of Professional Counsel, "Retiring from Practice: Understanding your Options."Here, I will help you decide the option that may be best for you.

Should You Close Your Practice?
Closure may be the only realistic option for attorneys who either cannot sell their practice due to professional rules or have not engaged in an effort to name a successor. Selling may require as much as two years, and a transition can take even longer.

When choosing to close your practice, the first step is to set a target date, ideally six to 12 months in advance. It's unrealistic to presume that all client matters will come to a conclusion before you retire, so it is advisable to create an inventory of all active matters, such as:
 

• The identity of each client and nature of the matter
   
• Each client's current status and any unresolved issues
   
• Any time limitations or deadlines
   
• Whether client property or funds are being held
   
• The amount of any outstanding fees
   

Based upon this information, you can decide whether a client's file can be closed before your practice closes, or transferred to another attorney. Remember, ABA Model Rule 1.16(d) requires the attorney to fully cooperate with successor counsel and ensure that the client's interests are protected post-termination.

Even when all cases have been finalized or transferred, consider tail coverage, also known as an extended reporting period, as, applicable under the terms and conditions of your Professional Liability policy. An extended reporting endorsement provides coverage for legal malpractice claims reported after the termination of a professional liability policy and during the tail coverage period, provided that the acts or omissions that form the basis of the claim occurred prior to the policy termination date.

Should You Sell Your Practice?
Selling allows an attorney to reap the benefits of years — or even decades — of hard work and enter retirement with a little extra cash in hand. The process, however, can be lengthy, and attorneys must understand the numerous ethical limitations that can delay a sale or prevent it entirely. In addition, a number of factors arise affecting the sale of a practice, such as sufficient revenue to justify a sale, the likelihood of clients remaining with the purchasing attorney, the practice area, and the reputation of the practice.

As noted above, the sales process may require as long as two years. While local bar association newsletters and online marketplaces are available, you also may want to utilize a broker, who can help locate a buyer, assist in valuing the firm, establish an asking price and negotiate the sale.

Prior to completion of the sale, identify and resolve any conflicts of interest. In some states, it may be necessary to obtain client consent to disclose certain information to the buyer. ABA model Rule 1.17(a) requires the seller to refrain from practicing law, either entirely or in the practice area sold, within the geographic location where the practice was conducted.

How Do You Develop a Succession Plan? 
Transitioning a practice is actually often overlooked, yet it offers several benefits to the existing owner, including consistency for the firm's clients, continued employment for staff, the ability to cut back hours rather than retire "cold turkey," and the increased likelihood of an orderly sale in the end. Again, this option is not for everyone, as significant time and effort are involved in the transitioning process.  Ideally, the predecessor attorney will be envisioning a retirement date at least three years in advance of retirement, but preferably five to seven years.

If you choose to transition your practice, you must have the patience to allow the new associate to grow into his or her role and eventually take the reins. Too little trust will preclude the possibility of engaging potential successors; too much trust may result in a failed business during or shortly after the transition. Here is a transition timeline to consider, as noted in "Retiring from Practice: Understanding your Options."
 

The transition represents a gradual sale with "transition activity" built into the transaction.  However, some authorities have concluded that the transaction is not a "sale" as contemplated by ABA Model Rule 1.17, and is exempt from the rule's requirements. The North Carolina State Bar, for example, explained in 98 Formal Ethics Opinion 6 that when a firm is purchased by a current employee, "there is no potential for harm to the interests of the clients of the firm due to the conflicts of interests, breaches of confidentiality, or abuse of fee agreements."

While you may be retiring from the profession, your duties as an attorney never truly retire. Keep careful records, preserve copies of client files and continue to adhere to a strict standard of confidentiality. By selecting a plan that works for you before you retire, you can ensure that your ethical obligations will be fulfilled, your legacy will remain intact and your retirement will be worry-free — as it should be.