Law Practice Management Asked and Answered Blog

Category: Dissolution

Jul 22, 2015

Law Firm Dissolution – New Firm Startup – Steps to Be Taken

Last week a firm advised that their law firm was splitting up via a dissolution and forming two new law firms. I outlined some of the steps that would need to be taken to dissolve the firm.

This week I will discuss some of the typical steps that will need to be taken to start the new law firms. Some of these steps include:

ESTABLISH NEW LEGAL ENTITY

File articles or other documents for entity formation. (LLC, LLP, PC, etc.)
Obtain FEIN Number
Open new bank accounts
Establish line of credit with bank
Draft operating agreement/partnership/shareholder agreement
Agree on approach to partner compensation
Draft a business and marketing plan for the firm.
Obtain any required business permits.
Obtain office space, if moving, and negotiate lease – or negotiate new lease with landlord of present space.

IT & SYSTEMS

Decide on equipment and software being retained
Decide on billing and accounting system data conversion strategy.
Decide on MS Exchange Server conversion strategy.
Decide of document management system conversion strategy.
Purchase new software that may be required as a result of licensing.
Install, configure, and populate billing and accounting software.
Obtain new internet domain name and e-mail addresses

NOTIFICATIONS

Notify courts
Notify bar associations
Notify all vendors
Notify post office
Notify insurance carriers
Obtain malpractice insurance with tail coverage
Notify Yellow Pages and other directories
Notify phone company.
Obtain new phone number if needed
Notify tax authorities
Notify Westlaw/Lexis, etc.

HUMAN RESOURCES

Employee meetings
Setup payroll system – in house or outsourced
Deal with medical insurance transfer
Deal with 401k and other benefit plan transfer
Update employee handbook
Update administrative policies and procedures manual

FACILITIES

Decide on whether the firm if staying in current space or moving. If staying, decide on how much space is excess
If staying, decide on what space the firm will occupy and what space will be sub-leased or turned back to the landlord if possible
Negotiate lease with the landlord
Office signage
Decide whether any space improvements are needed.
Decide on internal move date and who will be in what locations (if staying)

CLIENT RELATIONS AND DEVELOPMENT

Notify clients of dissolution – joint letter – both firms – in accordance with rules of professional responsibility
Meet with clients
Develop new sources of clients

PUBLIC RELATIONS AND MARKETING

Public relations campaign
Business identity plan (branding, logo development, etc.)
Create marketing collateral materials (letterhead, brochures, business cards, etc.)
Create and launch new website
Open house or some event

The tasks involved in launching a new firm are numerous, specific to each individual firm, and this is just a starting list. You can use this list as a starting point to develop your own project plan. Suggest that you create a central project plan to get everyone handling various tasks on the same page. The plan should include tasks, specific responsibilities and start and target completion dates.

Good luck with your new firm!

Click here for our blog on succession

Click here for out articles on various management topics

John W. Olmstead, MBA, Ph.D, CMC

Jul 14, 2015

Law Firm Dissolution – Steps To Be Taken

Question:

I am the managing partner in a 14 attorney firm in Seattle. Our partnership has voted to dissolve the firm effective the September 1,2015. Two new firms will be formed. Eight attorneys will be going to one firm and six to another firm. What steps do we need to think about in managing this project?

Response:

You actually have two projects to manage. The dissolution project and the new firm start-up project for the firm that you will be joining. The other firm will also have a new firm start-up project as well. I will address in this blog some of the dissolution steps and I will address some of the new firm start-up steps in next week's post.

Dissolution Steps

Create a master project plan.
Identify who will be in control of the wind down. Firm or representatives from both sides.
Contact the firm's accounting firm.
Identify a spokesperson to address associates and staff.
Identify a spokesperson to handle the press and other outside sources.
Notify associates and staff.
Create a checklist of ongoing obligations and responsibilities.
Create a list of memberships and special arrangements.
Notify insurance carriers.
Notify clients by letter of the dissolution.
Determine compensation for those that manage the wind down.
Follow-up on outstanding delinquent accounts receivable.
Develop a dissolution agreement and have signed by all partners.
Identify who will have control of the files – paper and electronic.
Determine last day of operations.
Determine how and when the final work in process will be billed and by who.
Address the office lease obligation.
Address the equipment and other lease obligations.
Determine the value of all firm assets as of the last day of firm operations.
Identify contingency fee matters and negotiate a separate agreement regarding how to pay all involved when the cases are settled.

These are just a few of the many steps that are involved. Next week I will post Part I – Steps to be Taken to start-up your new firm.