The following procedures are required by a law practice which is closing or amalgamating with, or transferring to, another law practice.
Rule 17 of the Rules of Practice is a good start when giving notice to clients about files and trust money. This rule states:
17. Transfer of a solicitor’s practice
(1) When a solicitor intends to transfer to another solicitor the whole or part of the solicitor’s practice, including clients’ work in progress, and to put the other solicitor in possession of documents held by the solicitor on behalf of clients, before the solicitor delivers possession of the practice to the solicitor who is acquiring it the solicitor must give to each client at least 14 days’ (or such other period as may be reasonable in the circumstances) notice in writing of –
(a) the intended transfer of documents to the solicitor who is acquiring the practice, unless a contrary direction is received from the client; and
(b) the client’s right to give to the solicitor a contrary direction in relation to the conduct of the client’s affairs and the delivery of the client’s documents.
(2) Any notice sent to a client on whose behalf the solicitor holds money in trust or under the solicitor’s control must advise the client of –
(a) the balance of money held on the client’s behalf; and
(b) the solicitor’s intention to transfer the relevant account to the solicitor who is acquiring the practice, unless advised by the client to the contrary; and
(c) the client’s right to give to the solicitor a contrary direction as to the manner in which the solicitor should deal with the account on the client’s behalf.
(3) Subrules (1) and (2) do not apply where a new partner is admitted to a partnership which continues to conduct the practice.
1. Written notification is to be made to the Society within 14 days of intention to cease to exist as a law practice (reg 61 of Regulations). Trust Form 7A has been devised to assist you in this. Written advice is to be received by to the Society of the proposed actions with regard to the following matters.
2. Notification to clients. See 17(2) above.
3. An incorporated legal practice must within 14 days after it ceases to engage in legal practice in this jurisdiction, notify the Society of its intention using the Termination of Provision of Legal Services under s.117. Incorporated Legal Practice application.
4. Notification to all other law firms. This can be achieved by a notice in the Society’s weekly Update.
5. Advise the Society of your intentions with respect to closed files, trust records storage and safe custody documents.
Trust Account Matters
1. Where possible, matters must be finalised and the client trust ledger account cleared.
2. Funds held in statutory deposit account are to be drawn back to the trust account – after allowing for any unpresented cheques, balance of funds transferred to new practice.
3. Trust bank account and cash book balance are to be reduced to “Nil” confirming that no funds, including monies for investment are held by the former practice.
4. Complete Trust Form 7B and Form 1 (Schedule 1 of Regulations) (reg 59 of Regulations) and forward to the Society within 60 days of ceasing to hold trust money, confirming that the law practice has ceased to hold trust money.
5. Closure of the trust account examination (s269 of Act) is to be carried out by an approved external examiner, in respect of the period since the previous external examination was conducted. The report is to be lodged with the Society within 60 days of the end of the period of examination.
6. Please note that quarterly returns and any regular annual external examinations are to be carried out until all matters are concluded and a Closing Report has been lodged with the Society.