How to close a law practice: 8 essential steps

how to close a law practice

Law firm closure is a significant process that requires careful planning and execution. Whether you decide to close your law firm due to retirement, a change in career direction, or financial distress, this process involves numerous legal and regulatory considerations that must be addressed before the firm ceases to practise.

In England and Wales, there are specific rules and regulations that must be followed before a firm has closed, and failure to comply with them can result in severe consequences for both the firm and their clients.

It is essential to understand how to close a law practice and the legal requirements that must be met to ensure a compliant and orderly closure. Recovery First outline the essential considerations involved in closing a law practice and provide guidance on how to navigate this process effectively and avoid disciplinary action.

The importance of an orderly and compliant law firm closure

Making the decision to close a practice is never easy; but careful planning to ensure you make an orderly and compliant exit is key to minimising stress throughout the process.

An orderly and compliant closure is critical for law firms as it ensures that clients’ rights and interests are protected. It will also ensure that the reputation of the firm is preserved. When a law firm closes, clients may be left in a vulnerable position if their legal matters are not properly addressed.

It is the responsibility of the law firm to ensure that their clients’ files are handled appropriately, and their obligations to clients are fulfilled. Failure to do so can result in legal and ethical consequences, damage to the firm’s reputation, and potential harm to clients.

Additionally, a compliant closure ensures that the law firm meets its legal and regulatory obligations. Law firms are subject to specific regulatory requirements when closing or selling a practice. These include notifying clients, transferring files to another solicitor or firm, and properly handling client funds. Failure to comply with these requirements can result in disciplinary action by the Solicitors Regulation Authority (SRA).

Finally, an orderly and compliant closure can help to preserve the firm’s reputation and goodwill. Clients and other stakeholders will view a law firm’s closure in a more positive light if it is done in a professional and transparent manner. This can lead to increased trust and respect from the legal community and potential clients in the future.

How to close a law practice compliantly

Closing a law practice can be a complex process that involves several steps. Below are some essential steps that can help guide you through the process of closing your law firm:

  • Plan well in advance – Think carefully about what you want to achieve. Do you just want to close your business or are you open to the possibility of selling your firm? It is important that you identify and engage expert advisors as early as possible. Key elements such as marketing, due diligence, legal, financials and regulatory consents all take time and can be stressful if you haven’t planned.
  • Notify clients: Notify your clients of the closure of your law firm and provide them with information about their legal matters. You should inform them about how their files will be handled and if their legal matters will be transferred to another solicitor or firm. You should ensure clients are made aware of their options and ideally obtain explicit consent or alternatively informed consent before transferring files to another firm.
  • Transfer files: Transfer all client files to another solicitor or firm or successor practice. The Recovery First model can be used to assist closing law firms in the orderly run off of files, ensuring all compliance issues are addressed and client files are well looked after. 
  • Client accounts: You should handle client accounts in accordance with the Solicitors Accounts Rules. This includes ensuring that all outstanding bills are paid, and any funds held in trust are properly distributed.
  • Identify any successor practice issues: There has been much discussion in recent years over the difficulties of finding a successor practice prepared to take on the potential risks of future claims against the closing firm. Insurers of a potential buyer will often prefer the firm being acquired to purchase run off cover but this comes at a significant cost to the closing firm with post six year run-off cover being a further risk for individual partners of closed firms if the SIF is to close.
  • Notify the SRA: You must notify the Solicitors Regulation Authority (SRA) of the closure of your law practice and provide them with information about how you will handle any outstanding matters. You should also ensure that you comply with any regulatory requirements relating to the closure of your law practice.
  • Inform employees: If you have employees, you should inform them of the closure of your law practice and provide them with appropriate notice periods and redundancy pay.
  • Close business accounts: Close all business accounts and cancel any business contracts, leases, or agreements.

In summary, closing a legal services business can be a complicated process that requires careful planning and execution. Speaking to Recovery First can ensure that you comply with all legal and regulatory requirements and protect your clients’ interests.


How can Recovery First assist?

Recovery First know how to close a law practice in an orderly and compliant manner. Our process involves discreetly selling a firm’s cases to multiple purchasers on our panel of solicitors. This mitigates the risks to the buying firms and results in a higher value for the work in progress (WIP) being recovered, whilst ensuring SRA compliance.

Our team manage the transfer of files from start to finish, placing case files with the best firms suited to deal with their unique client matter.

Our model can also help to avoid any successor practice issues and post six year run-off cover issues that may arise.

We also provide a complementary service for professional advisors that assist in the closure of law firms, such as advisory only accountants and indeed solicitors specialising in regulatory matters advising their peers.

We guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today via email at, or 07887796989, or contact Sally Dunscombe at or 07774205870.

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