Assumption of Practice: A Custodian’s Guide

Issued by the State Bar of Texas

Introduction

There are a variety of reasons why an assumption of a lawyer’s practice may be necessary. In an ideal world, every attorney would take appropriate steps to plan for the eventual closure of his or her practice. However, often times the assumption of a lawyer’s practice is required because the lawyer has been suspended or disbarred, is suffering from a disability, has passed away, or has simply abandoned the practice. In these situations, the State Bar relies on attorneys from around the state to volunteer to serve as “custodian” of these practices for the purpose of examining client matters, notifying clients, contacting courts, and returning client papers and files. This handbook is a tool for those volunteers. It offers insight and guidance regarding the process of assuming an attorney’s practice, forms that may be useful in facilitating the process, and contact information of those who can provide assistance.

Initiating the Process

A client, the Office of the Chief Disciplinary Counsel of the State Bar of Texas, or any other interested person may file a petition initiating custodianship proceedings (“assumption of jurisdiction”) designating the volunteer as custodian. The current possessor of the attorney files will be ordered to show cause as to why the Court should not assume jurisdiction of the attorney’s practice, which he or she may waive. The custodian will receive a copy of the assumption order and may proceed with custodial duties detailed below. The custodian will then prepare a report for the Court describing services rendered and the status of all client files, and seek an order dissolving the custodianship.

Guidelines to Managing Custodial Duties

This is intended as guidance only. Each situation will be unique, and the action required will vary accordingly.

The cessation of a law practice is governed by Texas Rules of Disciplinary Procedure Section 13 (also available here), which sets forth the requirements applicable to assuming jurisdiction of a lawyer’s a practice. This handbook aims to provide guidance supplemental to those requirements. Please note that these guidelines are not comprehensive and are intended only to provide a general roadmap for navigating the assumption of a practice. Every case will be different and the action required to successfully assume a practice will vary accordingly.

Successor Attorney? Determine if attorney had an arrangement with another attorney (sometimes called a successor or assuming attorney) who previously agreed to assume practice of deceased or disabled attorney. Check with staff, close friends, and relatives.

Ask local bar association(s) to send e-mail alerts to members and place a public notice in bar publications announcing death or disability of attorney. The notices should ask for information as to any successor attorney(s) with client matters with the deceased or disabled attorney.

Getting in. Obtain a set of keys, access codes, and/or passwords to the premises and to interior locked file cabinets, safes, and offices. Ask staff and the landlord for help. Change locks, codes, and passwords to protect the office files and assets.

Utilize attorney’s staff. To the extent possible, utilize attorney’s staff to assist in the closure of the practice. Inquire as to client and contact lists, office procedure manual, locating files, accessing information (e.g., keys, passwords), calendars, and other matters pertaining to the practice.

Track and document all action taken. From the moment you begin sorting through the attorney’s files, prepare and maintain an inventory of client files, the status of those files, and actions you have taken and that need to be taken on each file. This information will be included into the Custodian’s report to the Court.

Deadlines and other urgent matters. First, determine which files are active and identify any deadlines or other urgent matters that require immediate attention, such as cases with a statute of limitations running, scheduled court appearances, or cases with discovery or filing deadlines. Check with staff. Review all office calendars, both physical and electronic. Ask the local court administrator to run a search to determine if the lawyer is attorney of record on any open matters.

Contact the client regarding urgent matters and ask for permission to reset. Encourage the clients to hire new counsel as soon as possible. Confirm extensions and resets in writing. Ensure these scheduling arrangements do not pose a conflict of interest for you or your clients. If a conflict exists, contact another attorney about handling these matters.

Notify courts agencies, opposing counsel, and other appropriate entities of the assumption and, with client consent, seek extensions of time or continuances, and/or reset scheduled settings. File notices, motions, and pleadings on behalf of clients who cannot be contacted prior to immediately required action.

Contact clients. Notify clients of attorney’s death, disability, incapacity, or other inability to act. When possible, client communications should be in writing. If you are unable to reach a client, consider publishing notice of the assumption in a local publication.

Send clients who have active files a letter explaining that the law office is being closed and instructing them to retain a new attorney. Send clients who have closed files a letter informing them of the assumption and giving them the opportunity to collect their file or authorize destruction of their file.

If the client wants to pick up his or her file, obtain a written request and make appropriate arrangements. It is advisable to designate a single pick-up location for all client files. The file must be returned even if client has an outstanding balance. The file can be returned by certified mail with written consent from the client. Be sure to get proof of delivery.

If the client wishes for the file to be sent to new counsel, have the client sign transfer authorization for the original file to be released to the new attorney. If the case is pending in court, ensure that a Substitution of Attorney is filed.

If the client prefers that the file be destroyed, obtain written authorization.

Ensure that a phone number is available for the clients to either speak with someone about their file or so that the client can leave a message.

Client files. Consider the following guidelines in organizing and disposing of all client files in the attorney’s possession:

• Locate and inventory all files, including all physical and electronic materials corresponding to each. Note that closed files may be kept in more than one location. Physical files may be stores in places such as public warehouses, the attorney’s home, or even with a client. Electronic files may be stored on servers, hard drives, laptops, home computers, and/or removable media such as thumb drives or disks. Be sure to add copies of all digital files to the physical files. Ask staff, relatives, and close friends about off-site locations, passwords, and keys.

• Update all files with any new mail, stray documents, or any action pertaining to urgent matters.

• Return files to clients promptly upon client request. Coordinate a time and location in which client may pick up his or her file. Ask for identification. Absent written consent, file materials should not be released to anyone but client. Have client sign an acknowledgement of receipt. Again, if the client has provided written authorization of certified mail delivery, be sure to get proof of delivery.

• Transfer files to third party promptly upon client request. Ensure you have obtained a transfer authorization signed by the client. Obtain an acknowledgment of receipt from third-party recipient.

• Destroy client files only if authorized. Authorization may be obtained through written client authorization, court order obtained through a motion for authorization to destroy files, or as authorized under a file-retention provision in the fee agreement. The file should then be completely destroyed. The safest way to destroy closed files is to shred them or have them shredded by a company that provides professional shredding services. A list of client files destroyed with dates of destruction will be included in the Custodian’s report submitted at the conclusion of the proceeding.

• Properly store closed files of clients who cannot be reached and that may not be destroyed. Texas Disciplinary Rule of Professional Conduct 1.14(a) (available here) provides, in part, that “Other client property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.” Make information available regarding where these files will be stored and whom clients should contact in order to retrieve a closed file. Notify the Bar of where closed files will be stored and the name, address, and phone number of the contact person for retrieving the files.

• Original documents that a client might need to establish substantial personal or property rights—such as wills, signed contracts, stock certificates, promissory notes, property deeds, trust instruments—or other original documents like birth and marriage certificates and passports, must be returned to the client, safeguarded by the lawyer, or disposed of by court order.
  
  Special attention should be paid to closed files that contain documents pertaining to a minor (such as custody and support judgments and adoption records), corporate books or records, intellectual property files, or any other file in which it appears the client’s or attorney’s interest may be ongoing.

Financial affairs. Identify and contact a family member, business associate, or close friend of the attorney to encourage them to initiate a probate proceeding or obtain a guardianship to handle the attorney’s financial affairs.

Office matters.

• Review all unopened mail, especially certified mail, and place in corresponding client files. Look for information on pending client matters, bills that have to be paid, tax returns that have to be filed, income that may come in, etc.

• Contact the landlord or other leasing entity and, if necessary, arrange for the assignment of the lease to the custodian, the termination of the lease, or the subletting of the lease to another party.

• Notify post office of assumption, as well as building management and some nearby offices. Post office forwarding will prevent mail from being delivered and left at an empty office. Request building management and nearby office to collect mail, express deliveries and anything else that might be important.

• Tend to voicemail and email. If you can obtain passwords, clear all voicemails that may contain client or other important communications. If passwords are not available, disconnect all voicemails and consider using a simple answering machine instead. Arrange for automatic forwarding of all emails to a mailbox of the responsible person. It is also possible to reject or answer all emails with a notice instructing the sender whom to contact.

Track hours and expenses. Keep a record of all time spent in the performance of custodial duties and associated expenses, including receipts. This will be useful in preparing your Court report and may be applied toward pro bono credit.

Report to the Court. Prepare and submit a report to the Court describing all custodial services rendered in the assumption of the practice and requesting dissolution of the custodianship. Consider including exhibits that detail disposition of client files and expenses incurred in the course of performing all custodial duties. Submit a proposed order dissolving the custodianship.

Other Custodianship Issues

Representation. The custodian does not assume representation of the client upon appointment as custodian. The custodian must inform the client accordingly and advise the client to retain new counsel. The custodian may not transfer the file without written consent. If the attorney was a partner at a law firm, another lawyer(s) within the firm does not automatically assume the attorney’s practice. The client must be informed of the closure and retained independently. The custodian may represent the client, but representation must be established by a new, separate agreement between the custodian and the client. Check your client list for possible client conflicts before undergoing representation or reviewing confidential information of the client.

Confidentiality. The custodian is bound by Texas Disciplinary Rules of Professional Conduct 1.05 (also available here) in performing all duties pertaining to the assumption of practice. The custodian must maintain the confidences and secrets of a client and protect the attorney-client privilege as if the custodian represented the clients of the attorney.

Liability. The custodian will not be liable to attorney or attorney’s estate for any act or failure to act in the performance of his/her duties as custodian, except for intentional misconduct or gross negligence. The custodian will not process, pay, or in any other way be responsible for payment of attorney’s personal bills.

Questions? For questions or information pertaining to custodial proceedings or duties, please contact James Ehler at (210) 208-6600, or Timothy Baldwin at (713) 758-8200.

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