The Final Farewell: Business Responsibilities, Part I

Published August 23, 2016

When you close up shop, in addition to your professional responsibilities as a lawyer, you also have business responsibilities as the owner of a professional services firm. This article covers some of the monetary-related steps that you will need to take.

Inventory Assets and Liabilities
Inventory all of the assets and liabilities of your firm, including such things as work-in-progress (WIP) and possible contingent liabilities. Create an inventory list of all of the items, and be sure to add associated tasks to your timeline.

Collect Accounts Receivable
Send out your final billings as soon as possible. It may even be easier to send out each billing as the client account is “cleared” or transferred to another attorney. Sending your billings quickly is important because you want to collect your fees before you finish closing your office. You don’t want to be trying to collect these accounts into your retirement.

You may also make arrangements with the new attorney to receive payment from the first funds that he or she receives. One thing is clear, however: the files cannot be held hostage for payment.

You may choose to hire an agency to collect old, overdue accounts. It could be worth the extra money to get the largest portion or percentage possible of the fees owed to you.

Assess Bank Obligations
Once you have a plan and a timeline for winding down your law practice, contact your banks about any outstanding obligations. Honor the obligations, or get an extension until you have worked out exactly how and when the practice will be closed.

Negotiate Debt with Creditors
Either pay or negotiate an extension or settlement of all outstanding debts with creditors. This becomes important because in closing your practice, you are ending the traditional cycle of incurring debt in order to cover your operating costs and other expenses involved in the practice.

Categorized in: Client Relations, Financial and Cash Flow Management, Selling or Buying a Law Practice

Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners