Frequently Asked Questions

• If I am not selling my practice what do I need to consider when closing a practice?

  If I am not selling my practice what do I need to consider when closing a practice?

  There can be a number of reasons for closure of a practice:  retirement, incapacitation or death of a sole practitioner, cessation of practice, merger with another firm, dissolution of a partnership or an incorporated legal practice, or the declared insolvency of a practice. When there is time to prepare for the closure of a practice the following should be done:

  • You should have thoroughly understood and reviewed the practice and had it audited. There should be an audit of finances, stock, deeds held, contracts, closed files.
  • Note that parts of the Running Your Practice Checklist may be of assistance.
  • You should have determined that sale or merger is not a viable option.
  • You should have considered your obligations to employees and sought advice regarding the requirements under employment law.
  • You should have resolved third parties obligations including to donors of powers of attorney, to trusts and to estates.
  • You should have resolved the issue of storage of deeds and closed files.
• What are some of the issues to think of when considering selling a small practice?
  • Ensure that your practice is as ‘sale ready’ as possible. The longer the time allowed for being ‘sale ready’, the better.
  • If you think you may sell some time in the future, don’t await a crisis such as a health issue thus forcing a ‘fire sale’ or closure.  It is also good to have a ‘disaster management plan’ in place. See LPLC: When a sole practitioner dies May 2015 89 (5) LIJ, p. 70.
  • Those practitioners who have sold successfully have had software packages that enable prospective buyers to see a ‘snap shot’ of the finances of the firm. See How to succeed at succession September 2012 86 (09), LIJ p.13.
  • Consider providing an ‘executive summary’ of your practice to give prospective buyers. This could include the areas of practice, number of deeds and ‘live’ wills held, the type of clients, the staff, the premises and the technology in use. See Practice Management: Preparing to sell Jan/Feb 2015 89 (1/2) LIJ, p. 79. Consider also: Top Tips when acting in a sale or purchase of a business
  • Andy Shaw May 2017  and “Is it time to sell or merge” by Rohan Harris June 2017 LIJ, p 70.
  • Note that valuation of a practice maybe difficult to determine and need professional input
  • Methods of sale:
    • Advertising( including in the classifieds section of the LIJ)
    • Networking with other practitioners in the practice or geographical area. A suburban or regional law association may be useful for discrete inquires.
    • Using a  broker. However note that unless a practice is worth over a $100,000 the use of a broker will not be justifiable. See Practice Management: Preparing to sell Jan/Feb 2015 89 (1/2) LIJ, p 79.
• What are human resources?

  Human resources (HR) is about the management of people – every law firm's most important asset.  

  It involves getting the right people in the right roles, and for those people to be motivated, appropriately rewarded, developed and supported. Activities associated with HR include:

  • recruitment – getting the right people into the right roles
  • staff development – retaining your existing staff through training, mentoring and professional development
  • performance management
  • employee relations
  • administration of awards, wages, terms and conditions, including leave allowances and benefits
  • training, mentoring and professional development
  • HR policy management (eg occupational health and safety, work-life balance).

  The LIV has developed a checklist to help you manage your HR function and requirements. The LIV also provides an HR Information service to members on 03 9607 9548.

• What steps do I need to take when closing a practice?

  Note that this is a non-exhaustive list.

  1. Contact the VLSB+C

  Regarding your practising certificate: Notification of change of information - Local legal practitioner.

  Note that this must be done through LSB Online.     

  For legal practices (non-ILP) see: Legal practice other than incorporated legal practice.

  For ILP’s: Termination of provision of legal services: incorporated legal practice.

  If the practice is an ILP you will also need to meet ASIC requirements regarding closure.

  2. Notify the LPLC that you will not be renewing your practising certificate and insurance.

  Note the LPLC’s run-off insurance policy.

  3. Retain or transfer files and deeds. Note your obligations regarding files under the Uniform Law.

  Note the LIV’s Ethics: File ownership retention and destruction guidelines

  The following articles may be useful as a guide but note that these reflect the position under the Legal Profession Act 2005:

  Practice management: Filing facts

  November 2014 88(11) LIJ, p.78

  LPLC: The Seven Year Ditch

  May 2011 85(5) LIJ, p.74

  4. Notify clients of the intention to transfer or store deeds and files to give them an opportunity to collect these. Your obligation is to give clients at least 14 days’ notice when transferring files and deeds (See Rule 6 Legal Profession Uniform Legal Practice (Solicitors) Rules 2015). The obligation to seek client approval extends to closed files including closed files in electronic form. Note that it may be the legal personal representative who has rights over the deceased client’s deeds and files.

  5. Close the trust account. Information and forms can be found on the VLSB+C’s Website:

   Fact Sheet: Closing the trust account

  6. While in no way compulsory it is advisable to permit the closure of practice details to be noted on the Legal Archives Register so that former clients and other practitioners can trace deeds and files etc. This can be done by contacting the LIV as the Library holds these records.

• Where can I find awards and salaries information?

  Information about awards and salaries can be found here.