Law Practice Management

Sudden Cessation of Practice and Custodianships

Written by Law Practice Management Committee | Nov 20, 2024 7:16:16 PM
  1. The Mechanics of the Texas Rules of Disciplinary Procedure, Part XIII
    Cessation of practice procedure rests primarily on Texas Rules of Disciplinary Procedure (TRDP), part XIII.
    1. Rule 13.01 states that the lawyer, or a qualified stand-in, must give written notice that the attorney ceased practice. However, if “the client has consented to the assumption of responsibility for the matter by another attorney licensed to practice law in Texas, then the above notification requirements are not necessary and no further action is required.”
    2. Rule 13.02 provides that in extraordinary circumstances—with active matters pending and no lawyer handling them with client consent—any interested person may request that a court assume jurisdiction over the lawyer’s practice. The petition may be filed in district court or, if the attorney has died, in statutory probate court or other court with probate jurisdiction. Venue rests in the county of the attorney’s residence.
      The petition must be verified, stating that:
      1. An attorney licensed to practice in Texas (i) has died, disappeared, resigned; become inactive; been disbarred or suspended; or become physically, mentally, or emotionally disabled and (ii) cannot provide legal services necessary to protect the interests of clients.
      2. Cause exists to believe court supervision is necessary because the attorney left client matters for which no other attorney licensed in Texas has, with consent of the client, agreed to assume responsibility.
      3. Cause exists to believe that the interests of one or more clients of the attorney or one or more interested persons or entities will be prejudiced if the proceeding is not maintained.
      The court will review the petition and determine whether to issue a show cause order. A show cause order directs the lawyer at issue, the lawyer’s personal representative, or those with access to client files to appear and show cause why the court should not assume jurisdiction.
      At the hearing, the court determines whether one or more of the events stated in Rule 13.02 has occurred. If court supervision is necessary, the court assumes jurisdiction and appoints one or more Texas-licensed attorneys to serve as custodians of the practice. The appointment order states powers and responsibilities of the custodians under Rule 13.03.
    3. Pursuant to Rule 13.03, the court’s order will authorize the custodian to perform certain acts in the custodianship toward disposition of client files and closing the practice. A custodian does not assume the role of a successor attorney for the client; rather, the custodian performs the assigned tasks to enable a client to find new counsel. Still, in the performance of these duties, “[t]he custodian shall observe the attorney-client relationship and privilege as if the custodian were the attorney of the client and may make only such disclosures as are necessary to carry out the purposes of [TRDP, part XIII].” The rule also provides liability protection: “Except for intentional misconduct or gross negligence, no person acting under this part may incur any liability by reason of the institution or maintenance of a proceeding under this Part XIII.”
    4. Rule 13.04 allows for voluntary appointment of custodian attorneys, with similar liability protection. A 13.04 custodian does not become the new lawyer for the clients. Indeed, if the custodian steps into representation of a client, “the lawyer’s role as custodian terminates, and the lawyer’s actions are subject to the Texas Disciplinary Rules of Professional Conduct regarding the client-lawyer relationship.”
    5. A new rule effective October 1, 2024, Rule 13.05, states that a custodianship conducted by a custodian who was voluntarily appointed by an attorney ceasing practice or planning for the cessation of practice under Rule 13.04 ends when one or more of the following events happens:
      1. The transfer of all active files and other client property in the possession of the custodian in accordance with the Texas Disciplinary Rules of Professional Conduct, in one or more of the following means:
        (1) To attorneys assuming the responsibility for ongoing matters; or
        (2) To the client or client’s authorized representative, to the extent that the client is lawfully entitled to such materials.”
      2. Entry of an order terminating the custodianship from a court with jurisdiction over the practice under Rules 13.02 and 13.03.
      3. The return of the appointing attorney to his or her practice prior to completion of the custodianship and resumption of representation of active client matters with the competence to conduct such representation. In the event there is disagreement about whether the appointing attorney is competent to resume representation of a client matter upon return to the practice, either the appointed custodian or the appointing attorney may petition for a determination and order of a court under Rules 13.02 and 13.03 concerning the resumption of the practice by the appointing attorney and termination of the custodianship. An appointed custodian may also petition the court for an order concerning the proper disposition of dormant or closed client files, distribution of active files for which a client is nonresponsive or cannot be located, and for proper distribution of any client property or other property being held pursuant to a representation by the appointing attorney, including client funds held in an IOLTA account.
  2. General Guidance for Custodians
    Each cessation of practice is unique. If you serve as a court-appointed custodian, keep in mind the language of the appointment order. If conditions change, seek guidance from the court. Likewise, TRDP 13.04 custodians may encounter situations in which court supervision is needed. Do not hesitate to seek guidance in court.
    1. Verify Attorney Unable to Practice
      Confirm that the attorney is deceased, missing, disabled, or otherwise unable to practice law.
    2. Contact State Bar of Texas Regarding Custodian Designation
      Contact the State Bar of Texas at (512) 427-1300 or lpm@texasbar.com to see if the attorney designated a custodian attorney through the State Bar’s online portal.
    3. Determine If a Court Supervision is Required Under TRDP 13.01–13.03
      If court supervision is needed, file the necessary pleadings to invoke jurisdiction and seek appointment as custodian. See section A.2., “Rule 13.02,” above and the pleadings in section G., “Forms and Resources for Sudden Cessation of Practice and Custodianships,” below.
      Keep a record from the start. A report to the court will be needed to end the custodianship. Track hours and expenses and keep receipts, which will be useful in preparing your report.
    4. Issues Requiring Special or Urgent Attention
      1. Conflicts of Interest: Be careful to avoid matters that may pose a conflict of interest for you or your clients. If a conflict exists, defer to another custodian attorney, or seek guidance from the court.
      2. Check Calendar for Upcoming Hearings and Deadlines: Check the attorney’s calendar for any upcoming hearing, trial, mediation dates, or discovery deadlines. Notify the court and the parties’ counsel of the cessation and the need for continuance as appropriate.
      3. Check Voicemail and Email: Log voicemail, if possible. If passwords are not available, disconnect all voicemails and consider using a simple answering machine instead. Check emails to screen for urgent issues. At some point, it may be possible to reject or answer all emails with a notice instructing the sender whom to contact.
      4. Uncompleted Tasks: Check uncompleted tasks that need immediate attention.
      5. Access to Accounts: Identify any need to access firm bank and trust accounts and methods to attain access.
      6. Client Property: Identify any client property or valuables to be secured or returned to the client.
    5. Find People with Knowledge of the Law Practice
      Locate keys, access codes, log-in credentials and passwords. Find file cabinets, electronic storage, and digital files. There may be boxes in storage. Keep looking until you are satisfied that you have located all the files. If you are unable to locate the credentials to access computers and digital files, see section C., “Accessing and Disposition of Client Files,” below.
    6. Insurance Policies
      The lawyer may have insurance coverage relating to interruption or cessation of practice. Contact the lawyer’s insurance agent, if any. Search for professional liability policies, business liability policies, and any other policies that may apply.
    7. Organizational Documents of Business Entities
      The documents that created the business entity (professional corporation, professional limited liability company, etc.) through which the lawyer practices or practiced may touch on interruption or cessation of practice.
    8. Authorized Agents for the Attorney
      Contact the lawyer’s spouse, children, or relatives to see if the lawyer had any authorized agents to act on the attorney’s behalf, such as a power of attorney with the authority to designate a custodian and/or access firm bank accounts (including an ILOTA account), access to records (including digital records), or other estate planning documents indicating that the lawyer named a custodian to handle matters.
    9. Preserve Confidentiality
      Maintain confidentiality and protect the attorney-client privilege per Texas Disciplinary Rule of Professional Conduct (TDRPC) 1.05.
    10. Who to Notify That the Attorney Ceased Practice
      Send written notice to clients, cocounsel, opposing counsel, courts, insurance carriers, landlords, and any other person or entity having reason to be informed of the cessation of practice. Confirm oral communications in a follow-up writing. It is also a good idea to notify office neighbors and provide them with contact information in case a client stops by, finds the office closed, and wanders into their office.
      In the notification to clients, instruct them to retain new counsel and pick up their files or request that they be sent to new counsel. If a client picks up their file, have them sign for it. If the client wishes to send the file to new counsel, have the client sign a transfer authorization. Provide written notice to each client with a closed file that they may collect it or authorize its destruction. Obtain the client’s signature to confirm release of the file and written authorization if the client wants the file destroyed.
      See section G., “Forms and Resources for Sudden Cessation of Practice and Custodianships,” below for the following forms:
      1. Custodian’s Letter to Active Clients
      2. Custodian’s Letter to Closed Clients
      3. Client Acknowledgment of Receipt of Client File
      4. Client’s Authorization to Transfer File
      5. Client’s Authorization to Destroy File
    11. Client Access and Referrals for Legal Services
      Alert clients to the custodianship. Provide contact information so clients can actively communicate with you. Urge clients to obtain new counsel.
      If cessation is sudden and unexpected, local colleagues may be willing to step in as new counsel at reduced rates. Keep in mind antisolicitation rules under TDRPC 7.03, which is especially important to adhere to if the client inquires if you, as custodian, can take over representation.
      You may refer clients to certified lawyer referral services, including the State Bar of Texas Lawyer Referral and Information Service. You may also refer low-income clients to legal service programs, such as those summarized at Affordable Legal Services. Many self-help resources are available at TexasCourtHelp.gov and TexasLawHelp.org.
    12. Straying into the Role of New Counsel
      Do address scheduling, extensions of time, and continuances. Consider with caution whether court filings may be required to prevent prejudice to the client’s rights. Review the custodian agreement or court order creating the custodianship, and always keep in mind that the role of custodian does not encompass the function of new counsel. Observe closely the antisolicitation rules. If you do step in (or stumble into) the role of new counsel, liability protection under TRDP 13.03 and 13.04 may be forfeited.
    13. Retain Copies of Substitution Orders
      Retain copies of substitution orders, including appointment orders that reassign court-appointed cases to new counsel.
    14. Inventory and Review Client Files
      The general rule in Texas is that the file belongs to the client, but there is no encompassing rule for how long a lawyer must keep the file. See Ethics Opinion 627 and section C., “Accessing and Disposition of Client Files,” below.
      Locate and inventory all files, including all physical and electronic files. Note that closed files may be stored in more than one location. Physical files may be stored in public warehouses, at 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 jump drives or disks. Ask staff, relatives, and close friends about off-site locations, passwords, and keys.
      Update files with any new mail. Document status, actions you have taken, and action contemplated. Subject to privilege for confidential information, include a summary in the custodian’s report.
    15. Secure Content with Intrinsic Value or That May Give Rise to Significant Property Rights
      Files may contain original wills, signed contracts, stock certificates, promissory notes, property deeds, trust instruments, or other original documents like birth and marriage certificates and passports. Such items must be safeguarded, returned to the client, or disposed of, if at all, by court order. Special attention should be paid to open files and closed files in which it appears the client’s or the attorney’s interest may be ongoing, including files that contain corporate books and records, intellectual property files, documents pertaining to minors (such as custody and support judgments and adoption records), or other matters of ongoing interest.
    16. Be Alert to Lawful Restrictions on the Client’s Access to Contents in the File
      Specific content in the file may be reviewable by the custodian but restricted from disclosure to the client. Be watchful for protective orders and markings that limit disclosure to “Attorney’s Eyes Only.” Other restrictions may apply by statute, rule, or standing orders. Examples of restricted access include:
      1. Criminal case discovery obtained from the prosecution may be restricted from the client. Tex. Code Crim. Proc. art. 39.14(f), (g) and Ethics Opinion 657
      2. Trade secret and proprietary information discovery may be restricted from the client. Misc. Order 62, ¶22 and Ex. A (N.D. Tex. Nov. 17, 2009) (standing protective order applicable to patent cases in the Northern District of Texas); Local Rules for the United States Court for the Eastern District of Texas, app. B, P. R. 2-2 (local rule applicable to patent cases in the Eastern District of Texas).
      3. National security information discovery may be restricted from the client. Classified Information Procedures Act (“CIPA”), 18 U.S.C. app. 3; see U.S. v. Bin Laden, 2001 WL 66393 *2 (S.D. New York 2001) (“defense counsel have been cleared to review a category of classified documents that they may not share with their clients”).
        Note: The custodian may be restricted from disclosing information concerning the whereabouts or identifying information of children, crime victims, confidential informants, undercover officers, jurors, and others. This is not an exhaustive list. Other restrictions may apply.
  3. Accessing and Disposition of Client Files
    1. Guidelines for Custodians Attempting to Access Client Files
      1. If you are unable to locate the credentials to access the attorney’s computers and digital client files, ask staff, family members, friends, and relatives if they know the user IDs and passwords for the attorney’s computers, digital files, case management software, etc.
      2. See if the attorney had a power of attorney who has the information or if the issue was addressed in the attorney’s will or estate planning documents. If the agent under power of attorney or executor has authority to access the attorney’s digital files under the provisions of the power of attorney or will (as applicable), those persons may be able to contact a computer service company or other digital provider to obtain access.
      3. If you are still unable to locate the credentials to access the attorney’s files, you will need to obtain a court order to do so.
        1. Court-Ordered Custodianship
          If you have been appointed as a custodian under a court-ordered custodianship, file a motion to gain access to the attorney’s digital files. The court order should specify that you have been authorized to access the computer and digital files. Take the signed order to a computer service company that can reset the computer log-in information so you can gain access to the files. You may need to contact any case management or billing software companies to determine log-in information as well.
        2. Designated Custodians
          If you were designated as the lawyer’s custodian by agreement or through the State Bar of Texas designation portal and were not provided specific authority to access the attorney’s digital files, check to see if the attorney appointed an agent under power of attorney or executor in a will that has those powers whom you could request to use that authority to help you gain access through the computer service company or digital service provider. If no such authority has been granted, you may need to file an application for custodianship in district court or a probate court (as applicable) in the attorney’s county of residence and a motion to gain access to the attorney’s digital files as indicated above.
    2. Guidelines for Disposition of Client Files
  4. IOLTA, Escrow, and Other Trust Accounts
  5. A Word on Temporary Cessation of Practice
  6. Wrapping Up
  7. Forms and Resources for Sudden Cessation of Practice and Custodianships

Conclusion

Transition planning is something more than a transaction. By pausing now to consider your wishes for the arc of your practice, it sets the stage for attaining the graduation you hoped to achieve. The best graduation is a sign of accomplishment, a time to reflect, and a time to celebrate. It’s a journey, and it’s okay to have a good time.

A. The Mechanics of the Texas Rules of Disciplinary Procedure, Part XIII 

Cessation of practice procedure rests primarily on Texas Rules of Disciplinary Procedure (TRDP), part XIII. 

1. Rule 13.01 states that the lawyer, or a qualified stand-in, must give written notice that the attorney ceased practice. However, if “the client has consented to the assumption of responsibility for the matter by another attorney licensed to practice law in Texas, then the above notification requirements are not necessary and no further action is required.” 

2. Rule 13.02 provides that in extraordinary circumstances—with active matters pending and no lawyer handling them with client consent—any interested person may request that a court assume jurisdiction over the lawyer’s practice. The petition may be filed in district court or, if the attorney has died, in statutory probate court or other court with probate jurisdiction. Venue rests in the county of the attorney’s residence. 

The petition must be verified, stating that: 

  1. a. An attorney licensed to practice in Texas (i) has died, disappeared, resigned; become inactive; been disbarred or suspended; or become physically, mentally, or emotionally disabled and (ii) cannot provide legal services necessary to protect the interests of clients.
  2. b. Cause exists to believe court supervision is necessary because the attorney left client matters for which no other attorney licensed in Texas has, with consent of the client, agreed to assume responsibility.
  3. c. Cause exists to believe that the interests of one or more clients of the attorney or one or more interested persons or entities will be prejudiced if the proceeding is not maintained.

The court will review the petition and determine whether to issue a show cause order. A show cause order directs the lawyer at issue, the lawyer’s personal representative, or those with access to client files to appear and show cause why the court should not assume jurisdiction. 

At the hearing, the court determines whether one or more of the events stated in Rule 13.02 has occurred. If court supervision is necessary, the court assumes jurisdiction and appoints one or more Texas-licensed attorneys to serve as custodians of the practice. The appointment order states powers and responsibilities of the custodians under Rule 13.03. 

3. Pursuant to Rule 13.03, the court’s order will authorize the custodian to perform certain acts in the custodianship toward disposition of client files and closing the practice. A custodian does not assume the role of a successor attorney for the client; rather, the custodian performs the assigned tasks to enable a client to find new counsel. Still, in the performance of these duties, “[t]he custodian shall observe the attorney-client relationship and privilege as if the custodian were the attorney of the client and may make only such disclosures as are necessary to carry out the purposes of [TRDP, part XIII].” The rule also provides liability protection: “Except for intentional misconduct or gross negligence, no person acting under this part may incur any liability by reason of the institution or maintenance of a proceeding under this Part XIII.” 

4. Rule 13.04 allows for voluntary appointment of custodian attorneys, with similar liability protection. A 13.04 custodian does not become the new lawyer for the clients. Indeed, if the custodian steps into representation of a client, “the lawyer’s role as custodian terminates, and the lawyer’s actions are subject to the Texas Disciplinary Rules of Professional Conduct regarding the client-lawyer relationship.” 

5. A new rule effective October 1, 2024, Rule 13.05, states that a custodianship conducted by a custodian who was voluntarily appointed by an attorney ceasing practice or planning for the cessation of practice under Rule 13.04 ends when one or more of the following events happens: 

  1. The transfer of all active files and other client property in the possession of the custodian in accordance with the Texas Disciplinary Rules of Professional Conduct, in one or more of the following means:

(1) To attorneys assuming the responsibility for ongoing matters; or 

(2) To the client or client’s authorized representative, to the extent that the client is lawfully entitled to such materials.” 

  1. Entry of an order terminating the custodianship from a court with jurisdiction over the practice under Rules 13.02 and 13.03.
  2. The return of the appointing attorney to his or her practice prior to completion of the custodianship and resumption of representation of active client matters with the competence to conduct such representation. In the event there is disagreement about whether the appointing attorney is competent to resume representation of a client matter upon return to the practice, either the appointed custodian or the appointing attorney may petition for a determination and order of a court under Rules 13.02 and 13.03 concerning the resumption of the practice by the appointing attorney and termination of the custodianship. An appointed custodian may also petition the court for an order concerning the proper disposition of dormant or closed client files, distribution of active files for which a client is nonresponsive or cannot be located, and for proper distribution of any client property or other property being held pursuant to a representation by the appointing attorney, including client funds held in an IOLTA account.

B. General Guidance for Custodians 

Each cessation of practice is unique. If you serve as a court-appointed custodian, keep in mind the language of the appointment order. If conditions change, seek guidance from the court. Likewise, TRDP 13.04 custodians may encounter situations in which court supervision is needed. Do not hesitate to seek guidance in court. 

1. Verify Attorney Unable to Practice 

Confirm that the attorney is deceased, missing, disabled, or otherwise unable to practice law. 

2. Contact State Bar of Texas Regarding Custodian Designation 

Contact the State Bar of Texas at (512) 427-1300 or lpm@texasbar.com to see if the attorney designated a custodian attorney through the State Bar’s online portal. 

3. Determine If a Court Supervision is Required Under TRDP 13.01–13.03 

If court supervision is needed, file the necessary pleadings to invoke jurisdiction and seek appointment as custodian. See section A.2., “Rule 13.02,” above and the pleadings in section G., “Forms and Resources for Sudden Cessation of Practice and Custodianships,” below. 

Keep a record from the start. A report to the court will be needed to end the custodianship. Track hours and expenses and keep receipts, which will be useful in preparing your report. 

4. Issues Requiring Special or Urgent Attention 

  1. Conflicts of Interest: Be careful to avoid matters that may pose a conflict of interest for you or your clients. If a conflict exists, defer to another custodian attorney, or seek guidance from the court.
  2. Check Calendar for Upcoming Hearings and Deadlines: Check the attorney’s calendar for any upcoming hearing, trial, mediation dates, or discovery deadlines. Notify the court and the parties’ counsel of the cessation and the need for continuance as appropriate.
  3. Check Voicemail and Email: Log voicemail, if possible. If passwords are not available, disconnect all voicemails and consider using a simple answering machine instead. Check emails to screen for urgent issues. At some point, it may be possible to reject or answer all emails with a notice instructing the sender whom to contact.
  4. Uncompleted Tasks: Check uncompleted tasks that need immediate attention.
  5. Access to Accounts: Identify any need to access firm bank and trust accounts and methods to attain access.
  6. Client Property: Identify any client property or valuables to be secured or returned to the client.

5. Find People with Knowledge of the Law Practice 

Staff often have the most knowledge of the law practice. If the lawyer had no staff, search for officemates, close colleagues, and relatives for a person with knowledge of the law practice. 

6. Obtain Access to Files 

Locate keys, access codes, log-in credentials and passwords. Find file cabinets, electronic storage, and digital files. There may be boxes in storage. Keep looking until you are satisfied that you have located all the files. If you are unable to locate the credentials to access computers and digital files, see section C., “Accessing and Disposition of Client Files,” below. 

7. Insurance Policies 

The lawyer may have insurance coverage relating to interruption or cessation of practice. Contact the lawyer’s insurance agent, if any. Search for professional liability policies, business liability policies, and any other policies that may apply. 

8. Organizational Documents of Business Entities 

The documents that created the business entity (professional corporation, professional limited liability company, etc.) through which the lawyer practices or practiced may touch on interruption or cessation of practice. 

9. Authorized Agents for the Attorney 

Contact the lawyer’s spouse, children, or relatives to see if the lawyer had any authorized agents to act on the attorney’s behalf, such as a power of attorney with the authority to designate a custodian and/or access firm bank accounts (including an ILOTA account), access to records (including digital records), or other estate planning documents indicating that the lawyer named a custodian to handle matters. 

10. Preserve Confidentiality 

Maintain confidentiality and protect the attorney-client privilege per Texas Disciplinary Rule of Professional Conduct (TDRPC) 1.05. 

11. Who to Notify That the Attorney Ceased Practice 

Send written notice to clients, cocounsel, opposing counsel, courts, insurance carriers, landlords, and any other person or entity having reason to be informed of the cessation of practice. Confirm oral communications in a follow-up writing. It is also a good idea to notify office neighbors and provide them with contact information in case a client stops by, finds the office closed, and wanders into their office. 

In the notification to clients, instruct them to retain new counsel and pick up their files or request that they be sent to new counsel. If a client picks up their file, have them sign for it. If the client wishes to send the file to new counsel, have the client sign a transfer authorization. Provide written notice to each client with a closed file that they may collect it or authorize its destruction. Obtain the client’s signature to confirm release of the file and written authorization if the client wants the file destroyed. 

See section G., “Forms and Resources for Sudden Cessation of Practice and Custodianships,” below for the following forms: 

  1. Custodian’s Letter to Active Clients
  2. Custodian’s Letter to Closed Clients
  3. Client Acknowledgment of Receipt of Client File
  4. Client’s Authorization to Transfer File
  5. Client’s Authorization to Destroy File

12. Client Access and Referrals for Legal Services 

Alert clients to the custodianship. Provide contact information so clients can actively communicate with you. Urge clients to obtain new counsel. 

If cessation is sudden and unexpected, local colleagues may be willing to step in as new counsel at reduced rates. Keep in mind antisolicitation rules under TDRPC 7.03, which is especially important to adhere to if the client inquires if you, as custodian, can take over representation. 

You may refer clients to certified lawyer referral services, including the State Bar of Texas Lawyer Referral and Information Service. You may also refer low-income clients to legal service programs, such as those summarized at Affordable Legal Services. Many self-help resources are available at TexasCourtHelp.gov and TexasLawHelp.org. 

13. Straying into the Role of New Counsel 

Do address scheduling, extensions of time, and continuances. Consider with caution whether court filings may be required to prevent prejudice to the client’s rights. Review the custodian agreement or court order creating the custodianship, and always keep in mind that the role of custodian does not encompass the function of new counsel. Observe closely the antisolicitation rules. If you do step in (or stumble into) the role of new counsel, liability protection under TRDP 13.03 and 13.04 may be forfeited. 

14. Retain Copies of Substitution Orders 

Retain copies of substitution orders, including appointment orders that reassign court-appointed cases to new counsel. 

15. Inventory and Review Client Files 

The general rule in Texas is that the file belongs to the client, but there is no encompassing rule for how long a lawyer must keep the file. See Ethics Opinion 627 and section C., “Accessing and Disposition of Client Files,” below. 

Locate and inventory all files, including all physical and electronic files. Note that closed files may be stored in more than one location. Physical files may be stored in public warehouses, at 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 jump drives or disks. Ask staff, relatives, and close friends about off-site locations, passwords, and keys. 

Update files with any new mail. Document status, actions you have taken, and action contemplated. Subject to privilege for confidential information, include a summary in the custodian’s report. 

16. Secure Content with Intrinsic Value or That May Give Rise to Significant Property Rights 

Files may contain original wills, signed contracts, stock certificates, promissory notes, property deeds, trust instruments, or other original documents like birth and marriage certificates and passports. Such items must be safeguarded, returned to the client, or disposed of, if at all, by court order. Special attention should be paid to open files and closed files in which it appears the client’s or the attorney’s interest may be ongoing, including files that contain corporate books and records, intellectual property files, documents pertaining to minors (such as custody and support judgments and adoption records), or other matters of ongoing interest. 

17. Be Alert to Lawful Restrictions on the Client’s Access to Contents in the File 

Specific content in the file may be reviewable by the custodian but restricted from disclosure to the client. Be watchful for protective orders and markings that limit disclosure to “Attorney’s Eyes Only.” Other restrictions may apply by statute, rule, or standing orders. Examples of restricted access include: 

  1. Criminal case discovery obtained from the prosecution may be restricted from the client. Tex. Code Crim. Proc. art. 39.14(f), (g) and Ethics Opinion 657.
  2. Trade secret and proprietary information discovery may be restricted from the client. Misc. Order 62, ¶22 and Ex. A (N.D. Tex. Nov. 17, 2009) (standing protective order applicable to patent cases in the Northern District of Texas); Local Rules for the United States Court for the Eastern District of Texas, app. B, P. R. 2-2 (local rule applicable to patent cases in the Eastern District of Texas).
  3. National security information discovery may be restricted from the client. Classified Information Procedures Act (“CIPA”), 18 U.S.C. app. 3; see U.S. v. Bin Laden, 2001 WL 66393 *2 (S.D. New York 2001) (“defense counsel have been cleared to review a category of classified documents that they may not share with their clients”).

Note: The custodian may be restricted from disclosing information concerning the whereabouts or identifying information of children, crime victims, confidential informants, undercover officers, jurors, and others. This is not an exhaustive list. Other restrictions may apply. 

C. Accessing and Disposition of Client Files 

1. Guidelines for Custodians Attempting to Access Client Files 

  1. If you are unable to locate the credentials to access the attorney’s computers and digital client files, ask staff, family members, friends, and relatives if they know the user IDs and passwords for the attorney’s computers, digital files, case management software, etc.
  2. See if the attorney had a power of attorney who has the information or if the issue was addressed in the attorney’s will or estate planning documents. If the agent under power of attorney or executor has authority to access the attorney’s digital files under the provisions of the power of attorney or will (as applicable), those persons may be able to contact a computer service company or other digital provider to obtain access.
  3. If you are still unable to locate the credentials to access the attorney’s files, you will need to obtain a court order to do so.
  4. i. Court-Ordered Custodianship

If you have been appointed as a custodian under a court-ordered custodianship, file a motion to gain access to the attorney’s digital files. The court order should specify that you have been authorized to access the computer and digital files. Take the signed order to a computer service company that can reset the computer log-in information so you can gain access to the files. You may need to contact any case management or billing software companies to determine log-in information as well. 

  1. Designated Custodians

If you were designated as the lawyer’s custodian by agreement or through the State Bar of Texas designation portal and were not provided specific authority to access the attorney’s digital files, check to see if the attorney appointed an agent under power of attorney or executor in a will that has those powers whom you could request to use that authority to help you gain access through the computer service company or digital service provider. If no such authority has been granted, you may need to file an application for custodianship in district court or a probate court (as applicable) in the attorney’s county of residence and a motion to gain access to the attorney’s digital files as indicated above. 

2. Guidelines for Disposition of Client Files 

  1. Promptly Return Client Files Upon Request

Screen files for content that may be restricted from disclosure to the client. Subject to screening, return the file promptly, even if the client has an outstanding balance. It is advisable to designate a single pickup location for all client files. Coordinate with the client on time and location. Ask for identification, and absent written consent from the client, limit release of the file to the client. Have the client sign an acknowledgement of receipt. Alternatively, with written consent from the client, the file may be returned by certified mail; be sure to get proof of delivery. 

  1. Transfer Files to Third Parties Promptly Upon Client Request

Be sure to obtain a transfer authorization signed by the client. Obtain a written acknowledgement of receipt from the third-party recipient. See section G., “Forms and Resources for Sudden Cessation of Practice and Custodianships,” below for sample forms. 

  1. Properly Store Client Files

Some clients will not be able to be reached to retrieve their files, and other client files may not yet be able to be destroyed. Maintain a record of the location of stored files and whom to contact to arrange retrieval. Consider publishing a non–client-specific notice in a local newspaper. Do notify the State Bar’s Law Practice Management Department at lpm@texasbar.com of where closed files will be stored until destroyed and the name(s), address(es), and phone number(s) of the contact person(s) who will be able to retrieve each file, as clients who could not be reached often contact the LPM Department for assistance with retrieving their files. Then, when the time is right, the custodian should arrange to destroy closed files. If any client property cannot be returned because a client cannot be reached, consider depositing the property with the Texas comptroller. 

  1. Destroy Client Files Only If Authorized

Methods of authorization to destroy client files include (i) the client’s written authorization; (ii) court order obtained through a motion for authorization to destroy files; or (iii) if applicable, authority set forth in a file-retention provision of the client’s engagement agreement. Once authorization is obtained and a requisite time has passed, destroy the file. It is best to shred the file or have it shredded by a company that provides professional shredding services. Prepare a list of client files destroyed with dates of destruction. Subject to confidentiality precautions, a list may be included in the custodian’s report. 

Note: The two-year statute of limitations for malpractice or four-year statute for contract or breach of fiduciary duty claims may determine a minimum period for holding a client file to avoid harm to the client due to earlier destruction. 

D. IOLTA, Escrow, and Other Trust Accounts 

In court-appointed custodianship, the court may or may not empower the custodian to close out the lawyer’s trust and escrow accounts. These accounts may be subject to handling by an entity, if any, out of which the lawyer practiced. Additionally, final reconciliation of the IOLTA may be a task for the lawyer’s estate or a Texas lawyer appointed by the estate. See Texas Estates Code Chapter 456. 

If the custodian is tasked to close the IOLTA, bear in mind that there may be more claims on the IOLTA than there are funds in the IOLTA. It is advisable to seek guidance from the court on how to report and distribute funds anytime it is not clear to whom the funds belong or there is a shortage of funds for all claims. 

Additionally, TDRPC 1.14, “Safekeeping Property,” paragraph (a) 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.” 

Remember to notify the Texas Access to Justice Foundation within thirty days of any IOLTA account closure. The Texas Access to Justice Foundation’s website has an IOLTA Bank Account Closure Form that you can print and return to them. 

E. A Word on Temporary Cessation of Practice 

As indicated in section A.5., “TRDP 13.05,” above, some cessations of practice may prove temporary. The lawyer may be in a coma, then wake up. A missing attorney might reappear. It can become tricky if the lawyer wishes to return to practice and you are concerned that they may not be fully capable of doing so. 

If the practice is in a court-ordered custodianship, keep in mind that the court appointed you. If you are unclear on how to handle the potential return of the attorney or have concerns about the attorney’s return, review the court order, and do not hesitate to seek guidance from the court if further guidance is needed. The court may decide to revisit the order for custodianship. 

If the custodianship is by agreement under TRDP 13.04, review the custodian agreement. Ideally, the agreement will have terms for what to do if the lawyer reappears. If the agreement is unclear or if the circumstances of the lawyer’s return or capacity warrant concern, consider seeking guidance from a court. 

F. Wrapping Up 

1. Closing Documents 

To close a court-appointed custodianship, submit the custodian’s report and move to dissolve the custodianship. Address disposition of client files, expenses incurred, and other details, while still preserving confidentiality. Submit a proposed order to dissolve the custodianship. 

Custodian agreements under TRDP 13.04 should include a process for terminating the custodianship. Review the agreement, comply with the terms, and if unclear or no procedure is provided, consider seeking guidance from the court. Under Rule 13.05, a custodianship can be terminated by court order, by return of the attorney who is competent and willing to resume representation, and by completing distribution of all active files to the client, a designated representative, or the new attorney assuming representation. Documentation should be made and kept of the conditions under which the custodianship is terminated and evidencing those factors are satisfied. 

2. Compensation for the Custodian 

TRDP, part XIII, does not address compensation for custodial services. No rule requires or precludes payment. If custodianship is by agreement under 13.04, be sure that the written agreement addresses compensation. In all other instances, consider how you might address it in court. 

The expense of custodianship is sometimes borne by agreement with the lawyer’s family or the lawyer’s estate. If the lawyer practiced out of an entity, the entity may be a resource. If the entity is in receivership, the receivership court may be a forum to request costs. 

If the cessation is sudden and unexpected, the local bar may be needed to recruit a team of volunteers who share the burden and are willing to serve without compensation. 

G. Forms and Resources for Sudden Cessation of Practice and Custodianships 

1. Forms 

  1. Sample Pleadings for Court-Appointed Custodianship
  2. i. Application for Court to Assume Jurisdiction
  3. Attorney’s Waiver and Consent for Court to Assume Jurisdiction
  4. Show Cause Order
  5. Proposed Order on Application
  6. Custodian Report and Motion to Dissolve
  7. Order Dissolving Custodianship
  8. Custodian’s Letter to Active Clients
  9. Custodian’s Letter to Closed Clients
  10. Client Acknowledgment of Receipt of Client File
  11. Client’s Authorization to Transfer File
  12. Client’s Authorization to Destroy File
  13. Motion to Access Digital Files
  14. Motion to Access IOLTA Account

2. Resources 

  1. Closing a Practice on the State Bar of Texas Law Practice Management website
  2. Succession Planning on the State Bar of Texas Law Practice Management website

Conclusion 

Transition planning is something more than a transaction. By pausing now to consider your wishes for the arc of your practice, it sets the stage for attaining the graduation you hoped to achieve. The best graduation is a sign of accomplishment, a time to reflect, and a time to celebrate. It’s a journey, and it’s okay to have a good time. 
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