Mergers, acquisitions and sales of law firms (or files)

If you are considering selling or merging your law firm, or acquiring another firm, department, or files, you should take note of the SRA’s recent Warning Notice.

In particular, you must put client’s best interests before any commercial considerations. Remember that clients are not commodities that can be bought or sold: they must be notified of any change of ownership and given the opportunity to decide who they want to represent them.

When acquiring a law firm

• Keep clients informed and give them reasonable time to decide where they want their file, documents or money to go – don’t assume they want to transfer to your firm
• Obtain written client consent to the transfer of their matter
• Carry out thorough due diligence on the firm or files you are acquiring
• Review your firm’s capacity, competence and systems to ensure you can manage the incoming work
  Plan and budget for the secure storage and destruction of transferred archived files
• Review any acquired residual client account balances, ensuring they are dealt with in accordance with the SRA Accounts Rules

When selling a law firm

• Always reconcile the firm’s client account before effecting any transfer of files
• To protect your clients’ best interests, raise and investigate any concerns you have about the acquiring firm’s capacity, competence or systems
• If you are selling your firm’s will bank, you must make reasonable efforts to contact each testator and to obtain their consent. Never leave them not knowing where their will is stored
• Notify the SRA promptly of any financial difficulty and of the planned sale and acquisition
• If your firm is facing an administration or insolvency situation, appoint a solicitor manager to ensure client money, assets, confidential and privileged information is safeguarded and SRA regulatory arrangements are fully complied with.