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Exit, Stage Left! A Succession Planning Checklist for Lawyers

By James S. Bolan

To prepare the practice for a purposeful transition, study up with this abbreviated list of action items and other points for consideration.

“The party’s over. It’s time to call it a day…” (Song by Betty Comden, Adolph Green and Jule Styne, 1954)

Leaving practice, for any reason, compels us to undertake a surfeit of actions for a purposeful and smooth transition. To guide you in approaching succession planning from a pragmatic perspective, what follows is a list that I use in counseling other lawyers and law firms in the event of death, disability, disappearance or loss of license.

In General

1. Have an agreement:
   1. Firm lawyer: Prepare and execute a partnership (or entity) agreement.
   2. Solo lawyer: Prepare and execute a succession agreement. Bring in a successor; sell to another lawyer or firm; execute a durable Power of Attorney (for which client consent to contact should be obtained). Some commentators suggest that space sharers can take over a solo’s practice, but that cannot happen without client consent or court order. Prepare a memorandum of directions to be followed by your legal representative. Include provisions in your will for a Special Fiduciary to be appointed by the court.

Client Matters/Files

1. Maintain updated lists and files for clients (open and closed), financial records and accounts, leases, 401K and profit-sharing plans, lines of credit, guarantees and other contracts and financial obligations, as well as current and reconciled bank statements.
2. Identify all client matters so open matters can be concluded if possible or shifted to acceptable new counsel. Take whatever steps are necessary to protect clients’ interests until successor counsel takes over.
3. If the matter is in suit or pending before a tribunal, seek leave to withdraw. See Massachusetts Rule 1.16(c) or the corresponding rule in your state.
4. Scan in or copy files. Arrange for pickup or delivery by the client or successor counsel.
5. Funds handling:
   1. Prepare an accounting of all funds received and disbursed in each matter and funds still held. Close or change each IOLTA, client, trust and/or fiduciary account. In Massachusetts, records of all transactions must be maintained for six years after the final distribution and termination of the representation. Rule 1.15(a). After seven years from final distribution/conclusion, the file can be destroyed (and fee agreements should so state). See the corresponding rule in your state.
   2. Account for unearned retainers/cost advances and funds to which clients are entitled and must be paid to them or as they direct.
   3. Funds in trust/IOLTA/conveyancing/separate accounts must be delivered to the client or third persons.
   4. Funds held in escrow or held back at a closing need to be accounted for and a successor escrow agent needs to be agreed upon and the escrow accepted. Escrow participants should be notified.
   5. If clients cannot be located, it may be necessary to pay money into court on their behalf or paid under escheat laws.
6. Confidentiality must be maintained and clients should bless communications to a third person, including a space sharer or special fiduciary. Files may not be delivered to anyone but the client without the client’s consent. Thus, without the client’s consent to disclose information to prospective new counsel, the departing lawyer cannot provide another lawyer or law firm selected by the departing lawyer with information about the matter or permit access to the file.
7. For contingent cases: A revised fee agreement needs to be agreed upon or the departing lawyer and successor counsel need to agree on a division of fees.
8. Resign from any fiduciary position held, including as administrator, executor, trustee, guardian, conservator or attorney-in-fact.

Notices

1. Provide written notice to all clients of intention to withdraw from representation or departure from practice. Notice should clearly communicate that the client is entitled to select new counsel and that the client’s file will be delivered to the client or successor counsel as the client directs.
2. Create notices to the following: clients, post office, vendors, malpractice insurance agent/carrier, Board of Bar Overseers, lawyers’ newspaper, advertisements [seminars, magazines, Web, TV, radio, brochures, e-mails, books, newspapers, Yellow pages], friends and family, colleagues, bar associations, list servers, Martindale-Hubbell, “social media” sites, diaries, CLE providers, real estate boards, courts, title insurance companies and opposing counsel.
3. Notify the Board of Bar Overseers of new address and request inactive or other status if the lawyer is leaving the practice of law. (See, e.g., Massachusetts Supreme Judicial Court Rule 4:02.)

Office Management; Employment Issues; Insurance

1. Address, among other things, handling client files, confidentiality, short/long-term disability, and compensation of the successor or interim fiduciary.
2. Calendar due dates and current to-do lists.
3. Change name and information on building signs, directories, letterhead, envelopes, business cards, e-mails, Web sites and advertisements, social media sites, telephone, cell phone numbers and voice mail, as well as the answering service, phone system and receptionist area.
4. Create written instructions to staff on tasks to be handled. Set forth office procedures for new, other and successor attorneys and staff as to how to handle the changes. Manage “control” issues within the firm; address integration into how management decisions are made, both day-to-day and longer term, authority to act, authority on taking in new matters, hiring and firing issues, and work allocation.
5. Attend to mail handling, alarm systems and codes, keys, employment/wage and hour law issues, termination and staff placement; collect and remove fax cover sheets, letterhead, envelopes and the like; preserve and download computer system and computer files, integrate transferring data into new computer system and computer files transfer, confirm backups of computer and e-mails; review Timeslips; attend to files and file cabinets, fireproof file cabinets, safekeeping (including having an inventory of contents), stored files; and library, Internet access, notary stamp disposition, material and office supplies. Make plans for voice-mail messages and e-mails to be responded to.
6. Return or deliver client files, papers in safekeeping.
7. Deal with office space, utilities, vendors, billing and contracts, and personal property including furniture, phone systems, computers and cell phones.
8. Contact title insurance carrier as to pending or future matters.
9. Contact malpractice insurer and address tails, if needed. Make a list of actual or potential malpractice claims, disciplinary complaints, administrative proceedings and past malpractice claims and insurance experience.
10. Review employment benefits to be added, adjusted or changed.
11. Review health, disability and life insurance policies.
12. Review profit-sharing and other plans’ details, transferability and rollover of plans, including 401K.
13. Cancel or change Lexis, Westlaw, other subscriptions, Internet, e-mail and IT services.
14. Attend to billing, accounts receivable and accounts payable.
15. Address real estate or office management chores.
16. File all tax returns and organize information to prepare current year’s returns.
17. Secure access to computers, e-mail and files, but make sure access, including passwords, is available if needed.

 Money Issues

1. Collect and inventory all bank records and funds and determine whether there are any funds of any client or third person being held, which will need to be returned. Same for escrow funds or holdbacks. Review for authorized signatures, name changes, and transfer all trust, IOLTA, escrow, conveyancing and individual client accounts. Reconcile and close after all checks clear and account to clients for all funds.
2. Review retainers, invoices and accounts receivable. Check on collection on old bills. Review accounts payable and contact vendors to arrange for payment of bills. Are fee agreements in client files? Check for quantum meruit or contract claims.
3. Check for fee sharing and referral fees owed.
4. Address handling of income and payments to or for your benefit in the future after the change.
5. Attend to payroll services and payment.

Licensure

1. Check on status of other license (e.g., real estate or insurance brokerage).
2. If you are withdrawing from the practice of law, but remaining within the space occupied by your former law firm, treat the change of circumstance as though you were moving to an entirely new office with no connection to the prior firm or the practice of law, and all indicia of practice and licensure must be changed so as to be able to objectively demonstrate that you are not engaged in the practice of law and no inference can be drawn to the contrary.

I hope that this initial and abbreviated checklist is of assistance in managing the practical issues in lawyers’ succession plans.

About the Author

James S. Bolan is an attorney with Brecher, Wyner, Simons, Fox & Bolan, LLP, in Newton, Massachusetts.