Oklahoma Bar Journal
Considering Closing Your Practice? Protect Yourself From Malpractice Claims When You Wind Up
By Phil Fraim and John E. Barbush
Baby boomers who may be considering closing their practice are doing so at a time when legal malpractice claims are on the rise and are expected to continue to do so. Thankfully, in Oklahoma, the total number of malpractice claims received by Oklahoma Attorneys Mutual Insurance Co. has not varied greatly, but the percentage of claims against attorneys in the baby boomer demographic has increased. Accordingly, it is imperative that thoughtful consideration be given to both when to retire and how to do so in a manner that decreases the chance of a malpractice claim.
MAKING THE DECISION ON CLOSING YOUR PRACTICE
When should an attorney wind up their practice? All great questions have something in common: There is no surefire formula for arriving at an answer. Deciding when to retire and how to exit your practice is undoubtedly tough. There is no magical age (i.e., 65) when an attorney needs to retire. The Oklahoma Rules of Professional Conduct make clear that an attorney may continue to practice law as long as the “lawyer [can] provide competent representation to a client.” The Rules Governing Disciplinary Proceedings defines the term “personally incapable of practicing law.” Therefore, attorneys are required to “self-evaluate” their competence to continue practicing law, regardless of how difficult or painful that self-evaluation might be.
At the center of that evaluation should be your clients; secondary to that is one’s legacy as a lawyer. There is nothing sadder than seeing bar complaints or legal malpractice claims against once well-regarded attorneys who have fallen into a trap that they would not have a few years earlier. Although legal malpractice and bar complaints are not the same, attorneys in the demographic of practicing 26 or more years have received the highest percentage of formal grievances from the Oklahoma Bar Association for at least the past decade.
Consideration of one’s health, mental capacity and the effectiveness of the representation one is providing to their clients in the types of cases that are being undertaken is a task that anyone considering whether it is time to retire should undertake. One should also discuss the topic with their spouse and/or trusted colleagues to obtain more objective views. Even if you determine you are still able to provide competent representation, you might determine to change the focus of your practice. As Daniel Owens, retired district court judge for Oklahoma County, once pronounced from the bench during a motion docket, “Trial attorneys are like gunfighters, you don’t see very many old ones walking around.”
PLANNING THE CLOSING OF YOUR PRACTICE
Once you decide to close your practice, your first step should be to read “Closing an Oklahoma Law Practice,” which provides “A Basic Checklist for Closing a Practice” as well as references to other resources to come up with your closing plan. Failing to properly plan is planning to fail.
ADDITIONAL THOUGHTS TO PROTECT YOURSELF FROM MALPRACTICE CLAIMS
After you begin the process of closing your practice, stop taking on new matters. This may appear obvious, but it will be difficult to implement, especially for longtime clients, friends and, of course, family. It is not uncommon for an insured who receives a legal malpractice claim to explain that the underlying legal matter was one that came in after they had “basically retired” but had not closed their practice.
The importance of the attorney, with the assistance of any support staff, making sure that every client/legal matter is accounted for and that each file is properly organized and documented with upcoming deadlines and tasks, cannot be overemphasized. Countless attorneys have reported “relying on an assistant” to docket a statute of limitation or undertake other important tasks that simply fell through the cracks, resulting in a legal malpractice claim.
Whether giving files back to clients or new counsel taking over the representation or even placing them in storage, after you have reviewed and organized the file (to include any substantive emails), make sure that you scan an exact copy of it (insert pages with the names of any subfolders) to keep electronically for your records before doing so. Likewise, the attorney should document when and to whom any files were provided, and that list should be preserved by the attorney. It is difficult to defend a claim of legal malpractice without having the complete underlying file. You don’t want to be the attorney digging through an attic, garage or storage unit looking for a file.
PROTECT YOUR TAIL ON THE WAY OUT THE DOOR
If you have maintained legal malpractice insurance, contact your insurance company and discuss the options for extended reporting endorsement (ERE),5 often known as tail-end coverage. Professional liability coverage is written on a claims-made policy form, and once coverage terminates, so does the ability to report a new claim. Accordingly, purchasing tail-end coverage to protect against acts or omissions on matters you handled prior to retiring should be considered, especially if an attorney wants to retire without worrying about the effect a potential claim will have on their retirement. Those debating whether tail-end coverage is a necessary business expense should keep in mind that the average cost of defense for any legal malpractice claim is between $50,000 and $75,000, regardless of whether it was meritorious or not. This amount does not include any amount paid to settle or to pay a judgment on a malpractice claim. There is no guaranteed way to avoid a legal malpractice claim, but purchasing tail-end coverage will certainly protect you from one when you are supposed to be enjoying retirement after what was hopefully a successful and fulfilling legal career.
ABOUT THE AUTHORS
Phil Fraim has been at Oklahoma Attorneys Mutual Insurance Co. since 1989 and has served as president and CEO since 1993. He is the past president of the National Association of Bar Related Insurance Companies (NABRICO) and currently serves as secretary of the organization. He also serves as secretary of The Bar Plan Surety and Fidelity Co., is a board member of the National Association of Mutual Insurance Companies (NAMIC) and is also a member of the Professional Liability Underwriting Society (PLUS).
John E. Barbush is a solo, civil trial attorney who practices in the areas of torts, business litigation, securities and family law. He is also an approved provider for OAMIC, representing attorneys in legal malpractice cases. He is a trained mediator and has served as an arbitrator. Mr. Barbush was part of the 2017-2018 OBA Leadership Academy class and has served as a delegate and an executive committee member of the Oklahoma County Bar Association Family Law Section. He currently serves on the OBA Board of Governors.
 Today’s General Counsel, “Expected Increase in Legal Malpractice Claims,” Dec. 7, 2022; ALM/Law.com, “Legal Malpractice Experts Brace for Influx of Claims Amid Economic Strain,” Nov. 14, 2022; Law360, “Risk Mitigation In Face Of Rising Legal Malpractice Claims,” Oct. 11, 2022.
 Oklahoma Rules of Professional Conduct, Rule 1.1.
 Rules Governing Disciplinary Proceedings, §10.1: “The term ‘personally incapable of practicing law’ shall include: (a) Suffering from mental or physical illness of such character as to render the person afflicted incapable of managing himself, his affairs or the affairs of others with the integrity and competence requisite for the proper practice of law; (b) Active misfeasance or repeated neglect of duty in respect to the affairs of a client, whether in matters pending before a tribunal or in other matters constituting the practice of law; or (c) Habitual use of alcoholic beverages or liquids of any alcoholic content, hallucinogens, sedatives, drugs, or other mentally or physically disabling substances of any character whatsoever to any extent which impairs or tends to impair ability to conduct efficiently and properly the affairs undertaken for a client in the practice of law.”
 Annual Report of the Professional Responsibility Commission for years 2012-2021, available on the OBA website.
 “Closing an Oklahoma Law Practice,” Callaway, Jim, OBJ, May 2021 (Vol. 92, No. 5).
 ERE should also be considered by attorneys who are leaving private practice but not retiring (i.e., taking the bench, going in-house, changing profession).
Originally published in the Oklahoma Bar Journal – OBJ 94 Vol 4 (April 2023)
Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.