What would happen to your law practice if you disappeared tomorrow? It’s a question you may prefer not to think about. Yet whether you are a small firm or solo practitioner, it is important to have a succession plan in case you should suddenly become unable to fulfill your duties to clients and creditors due to a sudden disability or untimely death.
The lack of a succession plan has a significant impact on the likelihood of a professional liability claim, as well as the survival of the firm itself. Despite the importance of having a succession plan, in many cases, lawyers have not adequately prepared for a sudden departure from practice.
Prepare your succession plan with these tips:
Consider the Ethical Requirements
While the ABA Model Rules of Professional Conduct do not expressly require lawyers to plan for succession, Model Rules 1.1 and 1.3 have formed the basis of a “duty to plan” set forth in some ethics opinions and guides.1 Moreover, some states2 have adopted rules requiring advanced planning, and others may consider similar measures. If you haven’t already planned for succession, now is the time to do it.
Designate an Assisting Attorney
The assisting attorney you designate will be at the heart of your succession plan, so select someone trustworthy and competent. This individual will need to help manage or close the planning attorney’s practice in the case of his or her absence. In small firms, your assisting attorney will almost always be another lawyer in the firm, but in solo practices, you will need to look further afield. Ideally, you should designate both an assisting attorney and an alternate, in the event the primary designee is unable to meet his or her obligations.
Create an Office Manual
Before you seek out an assisting attorney, create a written office manual that your designee can reference and rely upon in case something unexpected occurs. Ideally, this living document should include:
- A complete list of all current and former clients and their contact information.
- Instructions to access the firm’s calendaring system of active matters that will require immediate attention.
- A description of your firm’s file organization and storage specifics, including your data retention policy and procedures for inactive files.
- Up-to-date password and login information for the planning attorney’s equipment and software.
- Business information including contracts, leases, deeds and a current snapshot of billable hours.
- Banking information, including account numbers and the names of account signatories.
The document should be kept up to date and stored securely.
Document the Succession Agreement
Once the manual has been compiled and the assisting attorney designated, put the agreement in writing and have both parties sign it. The agreement should outline the designee’s duties and scope of authority, which should address:
- The attendance to client matters
- The nature of relationship
- The triggering event
- The access to bank accounts
- The compensation agreement
Explore Insurance Considerations
A typical professional liability policy will provide an unlimited extended reporting period, free of charge, to an insured who dies or becomes totally or permanently disabled during the policy period. However, the assisting attorney must inform the insurer within the policy’s time period for a death or permanent disability. For a temporary disability or incapacitation, he or she must ensure that premiums are paid on time to maintain coverage for claims during the planning attorney’s absence. Consult your insurance broker about other coverage and benefits available for lawyers pursuant to a succession agreement.
A proper succession plan can mean the difference between a careful and efficient transfer of cases and a barrage of claims and complaints from creditors and clients. You can ensure your practice does not become a burden to colleagues, clients and family due to a sudden disability or untimely death. Now is the best time to take stock, plan ahead, and avoid becoming the lawyer who failed to expect the unexpected.
The information is intended to present a general overview for illustrative purposes only. It is intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA” service mark in connection with insurance underwriting and claims activities. Copyright © 2019 CNA. All rights reserved.
1. ABA Model Rules of Professional Conduct 1.1 and 1.3 set for obligations of competence and diligence, respectively.
2. Florida Rule 1-3.8 requires all attorneys in private practice to designate an inventory attorney capable of managing their practice if needed. Iowa Rule 39.18 requires solo attorneys to adopt a succession plan subject to minimum specifications.