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  Practice Management Advisors

When You Go to Heaven, Will Your Practice Go to Hell?

January 2009
No one anticipates their sudden death or disability. Although these are difficult issues to think about, planning for the ultimate crisis is not only critical to your family members, your clients and your colleagues, it is also an essential business practice.

Cliff was 66 years old when he suddenly died last week. It was supposed to be a fairly routine operation for a man his age, but he died of complications in the middle of his 35 th year of private practice as a lawyer. No one saw it coming, despite the usual pre-surgical warnings. Not Cliff, not his wife, not his doctor, and not Cliff’s clients. Now Cliff’s wife is calling the bar because several of Cliff’s clients are calling her. She doesn’t know what to do or how to help her late husband’s clients.

Lawyers are always encouraged to plan for their untimely death or disability, so that their clients are not left unrepresented and open to potential harm, and so their families are not faced with the problem of what to do with the practice while still mourning their loss. Articles abound from state bar associations, the ABA Law Practice Management Section, and more. In spite of this, many, many solo lawyers never make a plan.

What happened to Cliff is true, although it is not his real name. And variations of this story happen all the time.

It’s typical to not want to think about, much less plan for, your own sudden death or disability, but it happens. And it happens everyday. How do we know? Because we get the calls and e-mails from the people the lawyer left behind, wondering what on earth they are supposed to do. We’ve talked to young associates fresh out of law school, unsure of what to do, with everyone looking to them for answers. We’ve talked to spouses and employees in shock and unsure of what their next steps should be – always wanting to honor the memory of the deceased by doing what they can to wind down the practice. And we have talked to lawyers whose only contact with the decedent was to say hello as they passed in the hallway of their office building each day. All of these people were thrust suddenly into positions of responsibility for the departed lawyer.

Lawyers who have law partners at least have a small measure of comfort in knowing that their partner can step into their shoes in an emergency. But true solos, solo lawyers with a new associate, and solos sharing space with other lawyers, may not realize the serious predicament they leave behind.

Over the years, we have noticed several distinct situations that arise.

Scenario One: True Solo Dies

The worst scenario is for the true solo without an assistant or family. Often, no one will do anything for days or weeks, because no one is certain what has occurred. In the meantime, the client files are left to age, possibly missing critical deadlines. Eventually, a frustrated client or lawyer will call the bar, but often it is too late for some clients. Not a great legacy to leave behind to tarnish an otherwise outstanding reputation.

Scenario Two: Employee or Family Member Tries to Close Firm

The most common situation we see is the non-lawyer spouse or other family member of the deceased lawyer who tries to close down the office alone. They have no idea who to call or how to handle any of the myriad situations that arise when closing a firm. The solo who dies with no succession plan leaves behind a state of chaos and confusion. Clients are demanding assistance, parties need to be notified, bills are due and funeral arrangements need to be made. As clients are notified and take their case files, the cash flow starts to dwindle. When employees realize they are no longer being paid, only the most loyal, or financially able, continue to work.

Scenario Three: Someone Tries to Keep the Firm Running

Sometimes an employee or the non-lawyer spouse of the decedent will try to continue running the firm with the assistance of an associate lawyer, in order to continue the flow of income to the family. There are many problems with this scenario, chiefly that the non-lawyer is engaging in the unauthorized practice of law by running the law office in this manner and the associate is violating ethics rules, such as Rule 5.4 Professional Independence of a Lawyer which includes prohibitions against sharing fees with a nonlawyer.

A second issue arises if the associate is inexperienced in all facets of the practice. The associate risks disciplinary complaints or malpractice claims if they cannot competently handle the clients’ legal matters and other aspects of running a law firm such as maintaining the client trust account. In these instances, the associate lawyer should seek assistance from another competent lawyer. However, in our experience, there is usually not enough income to pay for the additional lawyer (contract or otherwise), and pay the associate and keep income flowing to the deceased lawyer’s family, so the spouse or family resists bringing in the more competent lawyer. As unfortunate as it may seem, the associate’s best recourse may be to contact the bar to seek appointment of the outside lawyer (discussed below), thereby circumventing the directives of the spouse. Clearly, no one wins in this scenario either.

True or False: “If I died suddenly, the Bar (or Court) would automatically find out and appoint someone to take care of my practice and wind it down or sell it for the benefit of my estate, if my family chooses.”

False. In most jurisdictions, there is not an automatic procedure for appointing a trustee in the case of a lawyer who dies. The relevant authority (jurisdictions differ as to whether the Bar or the Courts handle these matters) must be notified and a request must be made for a trustee to be appointed. Until then, the future of your clients and the remaining value of your practice is in complete limbo.

In most cases, the Bar doesn’t find out someone has died until they read about it in the paper or are notified by a family member. The usual procedure is to change the member database. That’s all. If a family member does ask for a trustee to be appointed to protect the clients’ interests, the focus is on protecting the clients and moving them to other lawyers as quickly as possible.

The trustee is appointed to review the active case files, determine pending deadlines so the clients are not harmed, then notify the clients to find new lawyers and come pick-up their files. Inactive and closed case files are next to be reviewed and distributed. In most instances, the trustee is not there to collect accounts receivable, pay bills, sell the assets or defend against claims for unearned fee advances. The trustee has a duty to your clients, not to the well-being of your family or your estate.

In some jurisdictions, the bar or court has difficulty finding lawyers to act as trustees, often because the hourly rate to close out the case files is set way, way below market rates. It is not uncommon, then, to find family members closing firms, or friends who are also lawyers having to step in to close the practice.

In short, if you die without a succession plan, you are leaving no possibility of a satisfactory outcome for anyone you leave behind.

If you are a solo practitioner, now is the time to read the ethics rules in your jurisdiction to find out what your responsibilities are. Some states have adopted a version of Comment 5 to Rule 1.3 – Diligence -- which encourages lawyers to prepare contingency plans.

[5] 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. Cf. Rule 28 of the American Bar Association Model Rules for Lawyer Disciplinary Enforcement (providing for court appointment of a lawyer to inventory files and take other protective action in absence of a plan providing for another lawyer to protect the interests of the clients of a deceased or disabled lawyer).

If you don’t like what you just read in this article, we hope you will take action now. As a first step, we suggest contacting your Bar association, which may have practice management advisors, such as ourselves, to assist you with this complex issue. A practice management advisor can point out resources that are available for you, answer your confidential questions, and more.

There is no “best way” to set up your contingency plan. Many good ideas abound through legal journals and across the Internet. However, one approach we like is to write a letter detailing what to do if you suddenly couldn’t get to the office anymore. Computer passwords, location of checkbooks, the name of your back-up attorney, etc. Put a copy of the letter in a sealed envelope and give to your spouse and/or adult child, and back-up attorney. Revise it once a year.

The top priority for lawyers (even after death) is to look out for their clients’ interests. So, if you suddenly die, make sure you’ve made plans so that your practice goes to heaven too.

Solo Practice and Disability, Ross A. Sussman, Chapter 56, page 581 of Flying Solo Fourth Edition, ABA Law Practice Management Section (2005)

When I Die, Ross A. Sussman, Chapter 57, page 585 of Flying Solo, Fourth Edition, ABA Law Practice Management Section (2005)

Being Prepared: A Lawyer’s Guide for Dealing with Disability or Unexpected Events, Cohen and Cohen, ABA GP Solo (2008)

Indispensable People by Jim Calloway, Oklahoma Bar Association Management Assistance Program

Planning Ahead: Establish an Advance Exit Plan to Protect Your Clients’ Interests in the Event of Your Disability, Retirement or Death (published by the New York State bar Association)

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About the Authors

Courtney Kennaday is the director of the Practice Management Assistance Program of the South Carolina Bar. She advises bar members on practice management and law office technology.

Reid F. Trautz  is director of the American Immigration Lawyers Association Practice & Professionalism Center, and is a nationally-known author and presenter on management issues of importance to solo and small firm lawyers.

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