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					Lawyer Death and Disability Planning
October 2004

A Recurring Scenario
• Sole practitioner dies; decedent’s estate planning will allow surviving spouse to avoid formal probate of the lawyer’s estate • No specific arrangements have been made for disposition of the practice • Lawyer retained by surviving spouse contacts Client Security to ascertain who has authority to close out or transfer active case files; close out the trust account; dispose of old case files and perhaps sell the practice

A Second Scenario
• Sole practitioner unexpectedly becomes disabled and unable to maintain the practice • No prior arrangements exist for assumption of responsibility by another lawyer • Other local attorneys and judges become aware of the disability • A district judge contacts the Chief Judge to ascertain what can be done to protect the interests of existing clients

A Pending Challenge in Iowa?
• Over 4,100 lawyers in full-time private practice in Iowa • One-third of the full-time practitioners have practiced 26 or more years • Median age of the private practitioners was 49 in 2000, up from 44 in 1995 • More than 25% of these 4,100 lawyers appear to be sole practitioners

Applicable Iowa Rules - I
• No Iowa rule specifically requires planning for lawyer death or disability • EC 4-2 Client Must Consent to Association of Outside Lawyer • EC 4-6 Obligation to Preserve Client Confidences • EC 6-4 Proper Care to Safeguard the Client’s Interests • DR 2-107 Client Must Consent to Fee Division with Outside Lawyer • DR 2-110 Withdrawal Required When Lawyer’s Condition Renders Effectiveness Unreasonably Difficult • DR 2-111 Sale or Purchase of Law Practice (also see the Comment)

Applicable Rules II
• Rule 35.16 Disability Suspension • Rule 35.17 Death or Suspension of Practicing Attorney • Rule 35.21 Notifications of Clients and Counsel • Iowa Ethics Op. 78-30 Disposition of Files of Deceased Lawyer • Iowa Ethics Op. 79-72 Deceased Partner’s Files – Disposition or Retention

A Signal in the New Rules
Comment 5, Rule 1.3: Diligence
– To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action . . . .

What Happens Upon Death If No Plan Exists?
• Personal representative of the decedent (if any) has general authority to administer the practice incident to administration of the estate • Personal representative may be assisted by lawyer for the estate, or other lawyer specially appointed to administer the practice • Otherwise, application for trustee appointment may be made by county bar president or Board of Professional Ethics and Conduct, based on death of lawyer and a showing of reasonable necessity • Chief Judge in district where lawyer practiced appoints trustee, subject to Supreme Court confirmation • Trustee may not serve as lawyer for the clients of the deceased lawyer while acting as trustee; trustee may not examine files or other information concerning potential conflicts with the trustee’s clients • Trustee applies for order terminating the trust once all pending client matters are completed and the purposes of the trust are completed • Fees and expenses of the trustee are subject to court approval, for payment by the lawyer’s estate or otherwise by claim against the Client Security Trust Fund

What Happens Upon Disability When No Plan Exists?
• Supreme Court may order disability suspension after commitment for treatment, adjudication as incapacitated, or upon application of county bar president or Board of Professional Ethics and Conduct • Upon notification of suspension, Chief Judge in district where lawyer practices will appoint trustee, subject to Supreme Court confirmation • Trustee applies for order terminating the trust once lawyer is reinstated, or all client matters are concluded and trust purposes are accomplished • Trustee may not serve as lawyer for the clients of the disabled lawyer while acting as trustee; trustee may not examine files or other information concerning potential conflicts with the trustee’s clients • Fees and expenses of the trustee are subject to court approval, for payment by the disabled lawyer, or otherwise by claim against the Client Security Trust Fund

Stated Duties of the Appointed Trustee
• Trustee duties are to inventory files, sequester funds, take other actions as appropriate • Overarching responsibilities are
– Protect the interests of clients – Protect the interests of other affected persons

Common or Implied Duties of the Trustee
• Secure the office, files and other property including trust and business accounts • Protect the confidences of clients just as the disabled or decedent lawyer would have protected them • Provide notice of the death or disability to clients, opposing counsel and the court in all pending matters; notify clients of the right (and need) to engage other counsel • Be alert for conflicts of interest with the trustee’s own practice • Identify imminent deadlines if possible, and provide specific notice to clients • Locate all trust account monies and records, and make arrangements to return all monies and records to the rightful owners • Refer potential claimants to the Client Security and Attorney Disciplinary Commission for claims process, when appropriate • Inventory and return files to clients to the extent possible; provide proper notice before destruction of any files; make storage and ultimate destruction arrangements for files not subject to destruction • Maintain a record of all actions taken, and file interim reports and final report with the appointing authority regarding the actions taken

Why Plan for Death or Disability?
• Duty of competent representation includes safeguarding client interests in event of death of disability • Ethical obligation to plan for protection of client confidences and secrets • Help preserve your practice for eventual disposition • Your professional liability insurance carrier may require it • Ease the burden on your dependents • Minimize claims against the Client Security Trust Fund • Show clients one last measure of your professionalism

Planning Guidelines for the Member of a Firm
• Include provisions for death, disability of member lawyers in the firm organizational document • Address lawyer duties during routine practice • Address law firm authority and duties after lawyer death or disability • Consider backup attorney designations within the firm

Disability Planning for the Sole Practitioner
• Select another attorney to serve as your backup • Agree in writing with your backup on the scope of the duties to be performed • Familiarize your backup with your office procedures and systems • Empower your backup using a durable power of attorney • Advise your clients of the backup arrangements • Advise your family of the backup arrangements

Possible Provisions of Backup Agreement and Power of Attorney
• • • • • • • • • • • • • • • • • • Description of triggering events and identity of decision-maker Specify whether the backup will act as agent or your attorney Authority to enter the office, take charge of equipment, supplies, files Authority to receive and process mail Authority to contact current clients regarding their files Authority to obtain continuances or extensions as necessary Authority to collect fees Payment of firm expenses and client costs Authority to prepare final accountings and statements for clients Authority to make trust account disbursements and deposits Authority to arrange “tail” professional liability coverage Compensation of the backup attorney Compensation of staff Authority to properly dispose of inactive files Authority to arrange for storage of files and trust account records as required Authority to terminate leases Authority to liquidate or sell practice Durability of the power

Your Lawyer or Your Agent?
• Backup agreement should specifically state whether your backup is engaged as your agent or as your lawyer • As your lawyer, the backup would not be able to inform your clients of your errors; might not be able to provide successor representation to your clients even if requested; would need to maintain his or her own professional liability coverage • As agent, your backup can be empowered to inform clients of possible errors; more easily can provide successor representation if requested; consider indemnity agreement if backup serves only as agent

Death Planning for the Sole Practitioner
• Authority of your backup attorney under the durable power of attorney will terminate at your death • Personal representative of the decedent (if any) has general authority to administer the practice incident to administration of the estate • Personal representative may be assisted by lawyer for the estate, or other lawyer specially appointed to administer the practice • Include specific authority in your will for closure or sale of your practice; consider instructing your personal representative to engage your backup attorney for that purpose, with the appointment order or engagement incorporating provisions of the backup agreement

Preparation of Your Practice
• Inform clients of your backup agreement • Familiarize your backup attorney with your practice management system • Consult with your bank to ensure the backup agreement will be honored • Ensure your staff or software can produce an accurate list of current clients, addresses and telephone numbers • Ensure your staff or software can produce an accurate list of deadlines in pending matters • Keep your billing and trust account records up to date • Avoid keeping original client documents (e.g., wills, abstracts) in client files; consolidate and index your holdings of these documents or return them to clients • Periodically purge old files after notice to the clients • Consider life insurance or business continuity insurance to fund short-term continuation of the practice

Trustee or Backup Handling of Client Files
• Cannot summarily destroy any client files • Wills, abstracts and any other specific client property must be removed from files and returned to rightful owners • Custodian must attempt to contact and return all files to the client involved • Custodian must get client consent before disposing of the client’s file • Where client cannot be found, district court typically orders retention of file for five years after notice by publication

Client Files – Minimizing the Burden
• Determine what normal retention period(s) you will apply
– 6 years per DR 9-103? – Extended period per professional liability carrier? – Extended period based on limitation periods of other kinds?

• Segregate, safeguard and index abstracts, wills • Consider including an agreement and consent regarding file destruction in your initial engagement agreements with each client, or in the arrangements you make upon termination of each representation • Based on client consent, periodically purge files of client property and then destroy files in manner that preserves confidentiality

Contact Information
• Paul H. Wieck II, Client Security & Attorney Disciplinary Commission Judicial Branch Building, 1111 East Court Avenue, Des Moines, Iowa 50319 • (515) 725-8029; (515) 725-8032 Fax • paul.wieckii@jb.state.ia.us • //www.judicial.state.ia.us/regs/csc.asp


				
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