Checklist - Converting from sole practitioner to ILP

This list may apply to practitioners considering converting to an ILP from a sole practice or partnership, merging practices or purchasing a practice. This list is not exhaustive and some steps may not be applicable to your situation.

Preliminary matters

  1. Transferring your legal practice as a going concern from one entity to another may involve a written contract or agreement which may be a dutiable transaction. Take legal, accounting and financial advice as to whether a company is the right structure for your legal practice, the purpose of the re-structure, its likely impacts, and the documents required to effect the transaction. N.B. There may be a full or partial stamp duty exemption on the transfer of assets from a partnership or sole trader to an ILP if certain criteria are met. Refer Qld Revenue Office.
  2. Consider whether a valuation of your existing business and/or the business that you are purchasing or merging with is necessary.
  3. Consider shareholder and directorship roles (including Non-LPD). If currently operating as a partnership ensure you carefully review the partnership deed and any ancillary documents for terms concerning the winding up of the partnership and transfer of assets before proceeding.
  4. Understand the additional reporting and compliance requirements and costs in running a company.
  5. Take legal advice on the proposed structure and the terms of the constitution for the ILP. The ILP must have at least one legal practitioner director (holding a principal practising certificate). Director Identification Numbers are now compulsory. Consider whether you will install a Board of Governance.
  6. Consider Lexon’s successor practice rule and the impact it may have if your new structure is a merger of practices, includes the purchase or amalgamation of another practice, or the appointment of additional legal practitioners (other than those who were in the original partnership arrangement) as directors. An amalgamation or merger may also impact on your ability to access a full or partial stamp duty exemption on the transfer of assets from a partnership or sole trader to an ILP.
  7. Register for a new ABN and consider whether your entity needs to be registered for GST.


  1. An ILP is required to have a LPD within 7 days of a vacancy otherwise it must cease providing legal services. If you are proposing a sole LPD ILP, ensure you have a contingency /succession plan in place. If you are the sole Director, it is recommended you appoint an attorney under a general power of attorney.

Registered Name

  1. Consider the name for your incorporated entity. Some practitioners choose to trade under the name of their Pty Ltd (eg. QLS Solicitor Support Pty Ltd) and others prefer a registered trading name (eg. QLS Solicitor Support Pty Ltd trading as QLS Ethics and Practice Centre). The name of your Pty Ltd and its ACN or ABN must appear on public documents including your letterhead, website, invoices etc
  2. Register your company. The ASIC Company Extract will need to be submitted with your notification to QLS (see below 16).
  3. If you propose to use an existing registered trading name you will need to arrange for that name to be transferred to the ILP at the date of the transition.


  1. Ensure you arrange new business interruption insurance, business asset insurance and public liability. Consider whether you also require key person insurance, directors’ and officers’ liability insurance (management liability insurance).
  2. Consider the applicability of the acquisition endorsement.
  3. Practices insured by Lexon should also consider risk issues set out in the Taking over Safe Custody Packets – Checklist and Off-Risk Letter resource available on the Lexon Insurance website.

Start date

  1. Consider the date you propose to commence trading as the ILP. You may prefer the transition to occur simultaneously with a new financial year, new calendar year or another significant date that will be easy to remember. How busy is your practice at this time of year, do you have sufficient resources to attend to your client work and the additional duties that the transition will require?
  2. Will you transfer WIP and debtors to the new practice (potential tax issues) or run the old entity concurrently until reduced (additional administration).
  3. Consider the financial reports to be run for the changeover date.

Regulatory obligations

  1. Give at least 14 days’ notice to QLS by way of a Form 23 of the intention to provide legal services through an ILP AND of your intention to cease providing legal services by way of sole practitioner or partnership. QLS will notify Lexon Insurance. Lexon Insurance will contact you in relation to the transfer of your professional indemnity insurance policy to consider whether the new ILP will be a successor practice. You will need to provide details of the officeholders of the ILP and confirmation of the transfer or registration of the registered business/trading name (if any).

Limitation of liability scheme

  1. Consider whether your ILP should apply for QLS Membership in order to benefit from the Limitation of Liability Scheme. Consider whether all employed solicitors are full or honorary QLS Members and members of the Limitation of Liability Scheme. Does the limitation of liability disclaimer on your letters, invoices and marketing material need to be updated?

Transitional issues

  1. Set up a new office/general bank account and, for any direct debit arrangements, prepare a list of payments that need to be transferred from the old office/general account to the new account.
  2. Set up new general ledger accounts in accounting program.
  3. Review fixed assets to be transferred. Seek advice from your accountant.
  4. Update credit card merchant facilities, BPAY and any e-commerce facilities offered.
  5. Service agreements – legal practice software, computer technology, phone lines, mobiles, internet, office lease and any other external service supplier agreements will need to be transferred to the new entity.
  6. Employee accrued benefits – consider the impact the transition may have on employee benefits, employment contracts and employer responsibilities. Seek advice from an employment lawyer.
  7. Ensure you inform all employees of the proposed changes and keep them informed of the progress of the transition.
  8. Do you have a third-party payroll office?
  9. Does your ILP need to be registered for payroll tax?
  10. Consider whether your present office systems satisfy the obligation to implement and maintain “appropriate management systems” see s117(3) LPA.

Solicitors’ Trust Accounts

  1. Consider whether the ILP needs to open a new trust account or can operate without one. Appoint an External Examiner to the new trust account, notify the QLS Trust Accounts Team of both.
  2. Order new cheques, amend templates for bills, authorities, cost agreements, receipts and trust account statements.
  3. Consider whether you will require EFT, PEXA, Titles Queensland or Qld Revenue Office approval for the new trust account and apply to the QLS Trust Accounts Team for same.
  4. On and from the changeover date the ILP is a new law practice; no further funds can be received into the former practice’s trust account.
  5. If you have an existing trust account for the sole practice or partnership, liaise with the QLS Trust Accounts Team as to:
    1. the process and requirements for the transfer of funds from the existing trust account to the new trust account;
    2. the closure of the old trust account; and
    3. the requirements for External Examination and final lodgements.
  6. Consider the use of an e-signing platform to expedite the process of obtaining trust transfer authorities and client agreements.

External third party engagement

  1. Notify your e-settlement platform (PEXA or Simplii) to close your existing subscriber account and open a new transacting account.
  2. Cancel your existing QRO self-assessor and reapply on behalf of the new entity.
  3. Cancel your existing Qld Titles lodger registration and reapply on behalf of the new entity.


  1. For all existing client matters, to secure payment of fees, consider whether you will issue (a) new client agreements; (b) tripartite agreements between the new entity, existing practice and client.
  2. Consider any settlement agreements or Court Orders that might require payment of settlement amounts into your existing trust account. Do these agreements or Court Orders need to be varied to allow transfer of funds to the new practice’s trust account?
  3. For litigation matters, either file a notice of change of solicitors name (and address, if moving) or contact the Court Registry for a Notice of Change of Name (and address, if necessary) Practice Direction.
  4. Notify clients and referrers of the change. Consider Lexon’s Cyber policy in how you notify clients or other parties of the change to your banking details.

Legal Team Issues

  1. Consider appropriate designations of all officers and employees of the ILP.
  2. Provide an explanation that employees may use to explain to clients the changes occurring.
  3. Review all marketing material, precedents and templates to ensure references to sole practitioner, partner or partnership are updated to legal practitioner director, director or legal practitioner, as appropriate. Public documents, including letterhead and website should be in accordance with ASIC requirements.


  1. Close your old general account.
  2. Cancel the ABN for your sole trader/partnership (in consultation with your accountant).

Ongoing ILP requirements

  1. Ensure you have documented dates for the annual registration fee for your company, preparation of financial records and scheduled regular Directors meetings.