Michigan Bar Journal September 2009 52 Law Practice Solutions Planning for an Orderly Transition By Dawn M. Evans M ost lawyers identify the impor- While an increasing number of states formal statewide program. While this pro- tance of having a will and de- require lawyers to identify a lawyer who cedure exists, relying solely on its opera- veloping a personal financial will act as an “inventory attorney” in wind- tion guarantees delay for clients and courts. contingency plan when plan- ing down the practice of a disappeared, dis- This delay could be avoided if the lawyer ning for retirement. Unfortunately, many are abled, or deceased attorney, the only pro- selects a successor in advance and provides less diligent in developing and maintaining vision currently in effect in Michigan that sufficient documentation and information in a contingency plan for winding down a law deals with the death or disability of an attor- the form of a succession plan to empower practice in the event of disability or death. ney is Michigan Court Rule 9.119(G), which that successor to step in immediately if the In a multi-member law firm, other attor- states in pertinent part: operative circumstances occur. neys may immediately step in to ensure One critical element of a succession plan If an attorney...disappears or dies, and that client matters are handled in the event is an up-to-date policy and procedure man- there is no partner, executor or other re- of the death or disability of an attorney. Be- ual for the law firm containing the follow- sponsible person capable of conducting cause solo practitioners do not have that ing information: the attorney’s affairs, the [grievance] ad- built-in backup system, it is vitally impor- ministrator may ask the chief judge in • How to perform conflict checks; tant for all solo practitioners to have a plan the judicial circuit in which the attorney • How to use the calendaring system; in place to deal with the possibility of death maintained his or her practice to appoint • How to locate a list of active client files or disability. a person to inventory the attorney’s files and how open/active files are organized; In the absence of a plan, a lawyer who and to take any action necessary to protect is suddenly disabled or dies without hav- • Where client ledgers are kept; the interests of the attorney and the attor- ing previously identified someone to step • Policies regarding billing; ney’s clients. The person appointed may in and wind down the practice may leave • Where closed files are kept, how they not disclose any information contained in clients unaware of the need to retain new are organized, and how to access them; any inventoried file without the client’s counsel or retrieve records, courts unaware written consent. The person appointed is • Policy on keeping clients’ original docu- that the lawyer is unable to appear in court, analogous to a receiver operating under ments and where they are kept; clients and third parties unable to access the direction of the circuit court. • Record retention policy, records identi- escrowed funds,1 and surviving family mem- bers vulnerable to lawsuits from unhappy Pursuant to MCR 9.119(G), if an attorney fying destruction dates for specific files, now-former clients. dies or becomes otherwise incapacitated, and notifications to clients regarding de- the grievance administrator must ask the struction policy; chief judge in the judicial circuit where the • Location of the safe deposit box (if any) attorney maintains an office to appoint a and how to access it; Law Practice Solutions is a regular fea- receiver to step in. Some local bar associa- • Information regarding all bank accounts ture brought to you by the Practice Manage- tions have programs to manage the death and trust accounts, including bank name, ment Resource Center (PMRC) of the State or disability of an attorney, but there is no address, signatories, and account numbers; Bar of Michigan, featuring articles on prac- tice and risk management for lawyers and their staff. For more resources offered by the PMRC, visit our website at http://www. Unfortunately, many lawyers are not diligent in michbar.org/pmrc/content.cfm or call our Helpline at (800) 341-9715 to speak with a developing and maintaining a contingency practice management advisor. plan for winding down a law practice in the event of disability or death. —JoAnn Hathaway and Diane Ebersole, Practice Management Advisors September 2009 Michigan Bar Journal Law Practice Solutions 53 • Location of all bank account and trust Additionally, once an agreement is in Dawn M. Evans is direc account records; and place, clients should be informed at the tor of professional stan time they retain the lawyer’s services about • How to access computers, e-mail, voice dards with the State Bar the existence of the advance planning agree- of Michigan. She spent mail, answering machines, etc., including ment to resolve any potential issues regard- eighteen years in attorney necessary passwords and access codes. ing confidentiality and to shed light on any discipline with the State This information should be presented in potential conflicts of interest between the cli- Bar of Texas—the last a manner that is understandable to some- ent and the assisting attorney. With that no- five of those as chief dis one completely unfamiliar with the firm’s tification in place, clients can be assured ciplinary counsel. Before protocols, which may be the case for the that they will be promptly notified of the her public service, she was in private practice for person identified as a successor. death or disability of their attorney to allow six years in Huntsville, Texas. She is the immediate In determining whom to select as a suc- them to make appropriate decisions to pro- past president of the National Organization of Bar Counsel and was formerly a member of the Texas cessor (also called an assisting attorney) to tect their interests in the event the advance Young Lawyers Association Board of Directors. wind down a practice, a lawyer should be planning agreement becomes operational. mindful of the important role this person When an attorney’s practice is in the will play in allaying clients’ fears that the form of a professional service corporation FOOTNOTES handling of their matters will be jeopar- (PC) or professional limited liability com- 1. All attorneys in Michigan receiving funds in connection dized by the original lawyer’s departure. pany (PLLC), the attorney must ensure that with a representation in which a client or third person claims an interest are required to deposit such funds The assisting lawyer should be competent, proper corporate resolutions are in place to into an IOLTA or non-IOLTA account separate from the trustworthy, ethical, and capable of being give the assisting attorney appropriate au- lawyer’s own property. See Rule 1.15 of the Michigan as committed to the clients as the original thority to act. This can be accomplished by Rules of Professional Conduct. State Bar of Michigan Informal Ethics Opinion RI-107 opines that “signatories attorney. It is a choice that should be dis- having a resolution in place that sets forth on a law firm’s IOLTA trust account must be lawyer cussed with the prospective assisting at- the manner and the circumstances in which members or employees of the law firm.” Because solo torney ahead of time so that he or she is the assisting attorney can act. practitioners do not have other attorneys in their firms to aware of the responsibilities being asked of Also, the lawyer’s will should clarify act as signatories on IOLTA accounts, the death or disability of a solo practitioner can create enormous him or her. the personal representative’s role in wind- problems with regard to trust account access if the Once an agreement has been reached, ing down the practice, if any, to prevent solo practitioner is the only signatory on the account. a written agreement should be drafted set- a potential conflict between the role of The only remedy for this situation is for the chosen successor attorney, the personal representative of the ting forth the terms of the relationship, de- the personal representative of the lawyer’s estate, or the court-appointed receiver to obtain a court scribing the assisting attorney’s role, and estate and the assisting attorney. Specifi- order giving him or her access to the trust account. This stating under what circumstances the assist- cally, any funds in the lawyer’s trust ac- may cause unavoidable delay in accessing the account upon the lawyer’s death or disability and may conflict ing attorney will step in. It must be deter- count when he or she ceases to practice with the requirements of MRPC 1.15(b)(3), which requires mined and spelled out in both the ad- due to unforeseen circumstances should the lawyer to “promptly pay or deliver any funds... vance planning agreement and in retainer be handled in a manner consistent with that the client or third person is entitled to receive....” agreements whether the assisting attor- the provisions of the agreement to close Unfortunately, there is no alternative for solo practitioners at this time. Attorneys practicing in multi-member firms ney represents the attorney or the attor- the practice. should ensure that at least two attorneys are named as ney’s clients. Finally, Rule 1.17 of the Michigan Rules signatories on the firm trust account to facilitate seamless If the successor attorney represents the of Professional Conduct allows for the sale access to the account at all times. 2. In accordance with MRPC 1.17(c), “actual written disabled or deceased lawyer, he or she will of a law practice. This option should be ex- notice of a pending sale shall be given at least 91 have a fiduciary relationship with the law- plored when planning for winding down days prior to the date of the sale to each of the yer or the lawyer’s estate and, therefore, a practice and may provide an alternative seller’s clients....” The notice required by section (c) must include: may be prohibited from representing the to a process that essentially involves an or- (1) notice of the fact of the proposed sale; clients on certain matters, such as legal derly return of the files to the clients.2 (2) the identity of the purchaser; malpractice issues related to the former at- Planning for an orderly transition upon (3) the terms of any proposed change in the fee torney. On the other hand, if the assisting disability or death—which is particularly agreement permitted under paragraph (b) [of MRPC 1.17]; attorney represents the clients, he or she important for solo practitioners—is a way (4) notice of the client’s right to retain other counsel or may be required to disclose ethical viola- of assuring family, staff, and clients that to take possession of the file; and tions under certain circumstances or report their respective concerns and interests have (5) notice that the client’s consent to the transfer of the client’s file to the purchaser will be presumed if errors or negligence that resulted in mal- been addressed at a time when decisions the client does not retain other counsel or otherwise practice to the clients. Upon execution of about who will handle their matters dur- object within 90 days of receipt of the notice. an agreement, family members and employ- ing the transition can be made dispassion- 3. For more extensive information on this topic, see O’Connell, Sudden Death or Disability: Is Your ees should be informed to ensure a smooth ately. Having such a plan in place also Practice—And Your Family—Ready for the Worst, transition should the assisting attorney’s serv- eliminates a significant source of stress for available at <http://www.michbar.org/seniorlaw/ ices be required. the lawyer.3 n pdfs/death-disability.pdf> (accessed August 6, 2009).
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