Law Firm Wind-Down Checklist: The Operations Playbook
When a firm decides to wind down, the legal judgment sits with partners and ethics counsel. The paperwork lands on an operations team that is getting smaller every week. Here is the checklist, workstream by workstream, and where AI agents can carry the volume.
A law firm wind-down is nine operations projects running at once, on deadlines the firm does not fully control, with fewer people every week to run them. Every client needs a notice and a decision. Every open matter needs a new home, a substitution filing and an intact docket. Every file needs to go to the right place with a record of how it got there. Final bills, trust balances, leases, software contracts and staff obligations all have their own clocks. And months or years later, partners, insurers and possibly a court or estate will ask what happened, in what order, and who approved it.
Public history makes the point. The dissolutions of Heller Ehrman (2008) and Dewey & LeBoeuf (2012) were news for weeks; the work behind them, collections, records and claims over unfinished business, ran for years. The decisions in a wind-down are made by people. The record of those decisions is built by whoever does the paperwork, and that is the part this guide is about.
This is an operations guide, not legal advice. Professional responsibility rules, file retention periods, trust accounting rules and employment obligations vary by jurisdiction; confirm each with ethics and employment counsel.
Before you start: capture how the work is done
The first risk in a wind-down is not a missed letter. It is losing the people who know how the firm actually runs: who reconciles trust on which day, which reports the billing team pulls, which court rules each docketing clerk watches. Those people will leave on their own timelines, often early.
Caddi Discover connects read only to the firm's systems and maps the recurring operations work, with the evidence behind each finding. In a wind-down that map doubles as a knowledge-capture record: a list of every recurring process, the systems it touches and how often it runs, made while the people who run it are still there. Then assign an owner and a backup to each of the nine workstreams below, and a single wind-down lead who sees all of them.
1. Client notification and consent
What has to happen. Every current client receives a clear, timely notice that the firm is winding down, what that means for each of their matters, and their right to choose counsel. The client, not the firm or the departing lawyer, decides where each matter goes. The firm records each election, follows up with clients who have not responded, and does not release a file or substitute counsel until the election is in writing.
Why it is hard. A large firm can have thousands of open matters, many clients with matters split across practice groups heading to different firms, and several departing partners making their own client calls in parallel. Letters have to be accurate per matter, consistent with whatever joint notice the firm and departing lawyers agree on, and sent fast. Responses arrive by email, signed PDF, phone call and portal, and somebody has to reconcile them against the matter list every day.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Open matters and responsible lawyers from the practice management system (such as Elite 3E or Aderant), client contacts from Salesforce or the CRM, and the approved letter templates. |
| What it does | Drafts one letter per client listing each of their matters, the responsible lawyer and the election options; sends approved letters through DocuSign or Outlook; reads replies and signed election forms and records each matter's chosen counsel; sends follow-ups on the cadence you set. |
| Outputs | A live election tracker by client and matter (elected, pending, no response, returning file to client), with every letter and reply linked. |
| Human review | A partner or the general counsel approves the templates and each batch before it sends. Ambiguous replies are routed to a person, never guessed. |
2. Matter transition and substitution of counsel
What has to happen. For every litigated matter with a new firm, a substitution of counsel or notice of appearance and withdrawal is filed, and some courts require leave to withdraw. For every matter, the receiving lawyer gets a transfer packet: status summary, upcoming deadlines, key contacts, opposing counsel, open tasks, billing arrangement and where the documents are.
Why it is hard. Filing requirements differ by court. Matters move in waves as elections arrive, so the list of what to file changes daily. The lawyer who knows the matter best may already be gone, and the packet is assembled from the docket, the DMS and the billing system by whoever is left.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Elections from workstream 1, matter and court data from the practice management and docketing systems, and the firm's filing templates. |
| What it does | Builds the filing list (matter, court, filing type, receiving counsel, status), drafts substitution forms from templates, and assembles a transfer packet per matter from the docket, the DMS and billing. |
| Outputs | A court-by-court filing list, draft forms ready for signature, and one transfer packet per matter. |
| Human review | The responsible lawyer reviews and signs every filing; a person confirms each packet before it goes to receiving counsel. |
3. Client file transfer and records
What has to happen. Each client's file is delivered to the client or to successor counsel the client has authorized. Under ABA Model Rule 1.16(d) and state equivalents, the firm must surrender papers and property the client is entitled to when representation ends; jurisdictions differ on what the file includes and what copies the firm may keep. Everything else is sorted into three piles: return, archive under a retention schedule, or destroy when its retention period ends, with a record of each decision.
Why it is hard. A single matter lives in the DMS, email, billing, shared drives and paper storage. Exporting it whole, to the right recipient, with nothing belonging to a different client mixed in, is meticulous work multiplied by every matter. Chain of custody matters: you need to show what was sent, to whom, when, and that it arrived.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Elections, the matter's workspaces in iManage or NetDocuments, related email and shared folders, and the firm's retention schedule. |
| What it does | Exports each matter's documents with a manifest (file names, versions, hashes or counts), delivers through an agreed channel such as a Box share, requests and records receipt, and tags everything not transferred with its retention category and destruction date. |
| Outputs | A transfer manifest and receipt per matter, a chain-of-custody log, and a retention register for archived material. |
| Human review | Records staff or the responsible lawyer approves each export before delivery; no destruction runs without a named approver. |
4. Conflicts and lateral data for departing lawyers
What has to happen. Each departing lawyer's new firm needs a list of their clients and matters, adverse parties and related parties, so it can run conflicts before the lawyer and the matters arrive. ABA Model Rule 1.6(b)(7) generally permits sharing limited information for this purpose, provided it does not prejudice the client or reveal privileged information; state versions differ.
Why it is hard. Dozens or hundreds of lawyers leave at once, each to a different firm with its own conflicts form. The data has to be accurate, limited to what is needed, consistent with client elections, and logged. Over-sharing is a confidentiality problem; under-sharing delays the client's transition.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Matter, party and timekeeper data from the conflicts and intake system (such as Intapp) and the practice management system, plus each receiving firm's requested format. |
| What it does | Builds a per-lawyer list scoped to the fields the firm has approved for disclosure, formats it for each receiving firm, and records exactly what was shared and when. |
| Outputs | A disclosure-ready conflicts list per departing lawyer and a disclosure log. |
| Human review | The general counsel or conflicts team approves the field list once and signs off on each release. |
More on the mechanics in how to automate law firm conflict checks.
5. WIP, billing and collections
What has to happen. All unbilled time and costs are captured, final bills go out on every matter, and accounts receivable are collected. Client trust (IOLTA) accounts are reconciled three ways (bank, trust ledger, client ledgers), and each client's balance is disbursed to the client, transferred to successor counsel on written instruction, or handled under the state's unclaimed property rules.
Why it is hard. Collections fund the wind-down, and they slow down the moment clients learn the firm is closing. Time that timekeepers never entered has to be chased before they leave. Trust balances must be exact to the cent, and the billing team is shrinking with everyone else.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Unbilled WIP, AR aging and trust ledgers from Elite 3E or Aderant, bank statements, and the elections from workstream 1. |
| What it does | Flags timekeepers with missing or late entries, prepares final pre-bills per matter, drafts collection follow-ups on the cadence you set, and runs a daily trust reconciliation that lists every variance with the line it came from. |
| Outputs | Pre-bills ready for review, a collections queue by aging bucket, and a reconciliation report with each client's disbursement status. |
| Human review | Billing partners approve every final bill. Every trust disbursement is approved and released by an authorized person; the agent never moves client money. |
See also law firm revenue leakage for where unbilled time usually hides.
6. Vendor, lease and license exits
What has to happen. Every contract the firm holds is inventoried: office leases, equipment, research subscriptions, e-discovery and hosting vendors, and every SaaS tool. For each, record the notice period, termination date, any early-termination cost, and how the firm's data is returned or deleted. Some systems must stay live until files and billing are done.
Why it is hard. Contracts sit in different places, renewal and notice clauses differ, and missing a notice window can auto-renew a contract for another year. SaaS exits are also records events: client data held by a vendor has to come back or be certified deleted.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Contracts from the DMS or a Box folder, AP vendor history, and the list of systems in use. |
| What it does | Reads each contract and extracts term, notice period, termination method and data-return terms, each field traceable to the clause it came from; builds a notice calendar; drafts termination notices and data-return requests. |
| Outputs | A contract register with notice deadlines, drafted notices, and a tracker of data-return confirmations. |
| Human review | Finance or the general counsel approves each notice before it sends and decides which systems stay live. |
7. Staff and HR
What has to happen. Employment obligations are met on time. In the US that can include advance notice under the federal WARN Act (generally 60 days for covered employers and events) and any state equivalents, final pay rules, benefits continuation notices such as COBRA where it applies, and retirement plan steps. Beyond the obligations, staff need references, records of their roles, and outplacement support.
Why it is hard. Every employee has their own dates, benefits and state rules, and HR is often among the last teams standing. The people who are leaving are the same people asked to hand over their work.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Employee records from the HR and payroll system, approved notice templates and the separation schedule. |
| What it does | Generates individual notices and benefits packets from templates, tracks delivery and acknowledgement, drafts reference letters from role and tenure data for a manager to edit, and keeps a per-employee checklist. |
| Outputs | A per-employee obligations tracker with what was sent, when, and what is still open. |
| Human review | HR and employment counsel approve every template and the timing; managers personalize references. |
8. Docketing and deadline control
What has to happen. No deadline falls through during the handoff. Every matter's court deadlines, statutes of limitation, discovery dates and contractual deadlines are confirmed with the receiving lawyer, and the firm keeps watching the docket until the substitution is entered.
Why it is hard. Between the election and the court's order on substitution, a matter can belong to two firms on paper and neither in practice. Docketing staff may leave before the last matters move. This is where malpractice exposure in a wind-down concentrates.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | The docketing system, court notices arriving by email, and the matter transition status from workstream 2. |
| What it does | Runs a daily sweep: every deadline in the next 60 days on a matter not yet fully transferred, who owns it today, and whether receiving counsel has confirmed it. Reads incoming court notices and checks each against the docket. |
| Outputs | A daily at-risk deadline report and a written confirmation record per matter. |
| Human review | A named lawyer owns every flagged deadline until receiving counsel confirms it in writing. |
9. Governance: an audit trail of every step
What has to happen. Every notice, election, filing, file transfer, disclosure, bill, disbursement and contract termination is recorded: who did it, when, on whose approval, and from what source data. Partners, the firm's malpractice insurer, lenders, and any wind-down estate or court may all ask for it.
Why it is hard. If the record lives in inboxes and spreadsheets, it leaves with the people who kept them. Reconstructing it later costs far more than keeping it as the work happens.
How Caddi helps
| Agent | Detail |
|---|---|
| Inputs | Every agent run across workstreams 1 to 8, plus the approvals people gave. |
| What it does | Caddi Govern logs each run, the records it read and wrote, the decisions it made, and the person who approved each step, by workstream, client and matter. |
| Outputs | A reviewable, exportable history of the wind-down that does not depend on any one employee's inbox. |
| Human review | The wind-down lead reviews exceptions weekly; partners and counsel can pull the trail for any matter at any time. |
The wind-down checklist
A one-page summary to print and assign.
| Workstream | Checklist | Owner |
|---|---|---|
| Setup | Map recurring operations work; name a wind-down lead; assign an owner and backup per workstream; confirm jurisdictional rules with ethics and employment counsel | Managing partner, COO |
| 1. Client notice | Approve joint notice and letter templates; send per-client letters; track elections by matter; follow up on non-responses; hold files until elections are in writing | General counsel, practice leads |
| 2. Matter transition | Build filing list by court; file substitutions or withdrawals; send a transfer packet per matter; confirm receipt | Responsible lawyers |
| 3. Files and records | Export each matter with a manifest; deliver to client or authorized counsel; log receipt; classify the rest as return, archive or destroy; keep a retention register | Records, IT |
| 4. Conflicts data | Approve disclosure fields; produce per-lawyer lists; log every release | General counsel, conflicts |
| 5. WIP and trust | Chase missing time; issue final bills; run collections cadence; reconcile trust three ways; disburse or transfer each balance; handle unclaimed funds | CFO, billing, accounting |
| 6. Vendors and leases | Inventory contracts; calendar notice dates; send terminations; get data returned or certified deleted; keep required systems live | Finance, IT, GC |
| 7. Staff | Confirm notice obligations; send notices and benefits packets; final pay; references; outplacement | HR, employment counsel |
| 8. Docketing | Daily at-risk deadline sweep; named owner per deadline; written confirmation from receiving counsel | Docketing, responsible lawyers |
| 9. Audit trail | Log every action with approver and source; weekly exception review; export for partners, insurers, estate | Wind-down lead |
How the agents get built
Nobody in a wind-down has time for an implementation project. With Caddi Automate, the person who does the work shows Caddi the task on a screenshare or describes it in chat, and Caddi builds the agent against the firm's existing systems: iManage or NetDocuments, Elite 3E or Aderant, Intapp, Salesforce, Box, DocuSign and Outlook, among 150+ tools. AI builds the agent; the agent runs as deterministic code that calls each system's API, with AI only on steps that need reading, such as a signed election form or a lease clause. When the letter template or the filing list changes, they change the agent in plain English. Every run is logged and reviewable.
The same agents are useful at the firms on the other side of a wind-down: receiving firms onboarding laterals and their matters at volume. More on the full set of workflows for Caddi for law firms.
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Frequently asked questions
What has to happen when a law firm winds down?
Operationally, nine workstreams run at once: notifying every client and recording which counsel each one chooses, substituting counsel and handing off matters, transferring client files and setting a records plan for the rest, giving departing lawyers the client and matter data receiving firms need for conflicts checks, billing and collecting work in progress and reconciling trust accounts, exiting vendor, lease and software contracts, meeting staff notice and benefits obligations, keeping every docket deadline covered through the handoff, and keeping an audit trail of all of it for partners, insurers and any estate or court that reviews the wind-down later.
Who owns a client's file when a law firm dissolves?
In most US jurisdictions the client is entitled to the file, and the firm has a duty to surrender papers and property the client is entitled to when representation ends (ABA Model Rule 1.16(d) and state equivalents). What counts as the file, what the firm may retain a copy of, and how long closed files must be kept vary by jurisdiction. Confirm the rules that apply to your firm with ethics counsel before you set the file transfer policy.
Can departing lawyers share client lists with their new firm for conflicts?
Generally yes, within limits. ABA Model Rule 1.6(b)(7) permits disclosing limited information, such as client identity and the general nature of a matter, to detect and resolve conflicts arising from a lawyer's change of firm, as long as the disclosure does not prejudice the client or reveal privileged information. Many states have adopted a version of this rule; some have not. Keep each disclosure to the minimum needed and log what was shared, with whom and when.
What happens to client trust (IOLTA) funds when a firm closes?
Every client's trust balance has to be reconciled to the client ledger and either disbursed to the client, transferred to successor counsel on the client's written instruction, or, if the client cannot be found after diligent effort, handled under the state's unclaimed property rules. The three-way reconciliation (bank, trust ledger, client ledgers) should balance before the account is closed, and the records retained for the period your jurisdiction requires.
How long does a law firm wind-down take?
Client transitions usually move in weeks, but the full wind-down runs much longer: collecting receivables, closing trust accounts, resolving leases and vendor contracts, retaining and eventually destroying closed files, and answering questions from partners, insurers and any estate. Plan for the records and the audit trail to outlive the firm by years.
Can AI agents help with a law firm wind-down?
Yes, with the paperwork, not the judgment. Agents can draft per-matter client letters from the matter system, track each client's election of new counsel, assemble transfer packets from the document management system, pull conflicts lists, prepare final bills and collection follow-ups, inventory contracts and notice deadlines, and log every step. Partners and the general counsel still decide who receives what, approve every outbound letter and disclosure, and sign anything filed with a court.