This article is the second in the series on Business Succession Planning. The first article covered Business Succession Planning: Mapping Your Road to Retirement. This article will discuss implementing a plan for the unexpected disability, disappearance, discipline, or death of an attorney in your firm.
While the Ohio Rules of Professional Conduct do not mandate that an attorney have a succession plan, Rule 1.1 – Competence and Rule 1.3 – Diligence suggest that a succession plan is necessary to protect clients from the adverse consequences of death or disability of an attorney. Comment  of Rule 1.3 further states that to prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require each sole practitioner to prepare a plan 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.
Rule 1.6 – Confidentiality, requiring a lawyer to maintain confidentiality of information related to the representation of a client, and Rule 1.15 – Safekeeping Funds and Property, requiring a lawyer to protect and account for client funds, also point to the need for a succession plan. Whether the firm is a solo attorney, mid-sized or large firm, preparing a plan will allow a successor attorney to address the requirements of a partnership agreement or corporate document and provide continuation of the practice and give clients stability and continuity of service.
The Ohio Board of Professional Conduct developed the Ohio Ethics Guide: Succession Planning to facilitate the process of appointing a successor attorney to ensure the orderly transfer of a client’s affairs and files to a new lawyer, enable the orderly return of moneys held in trust, and satisfy the lawyer’s ethical obligation to provide competent and diligent representation.
A written agreement between the affected lawyer (whose death, temporary disability, permanent disability, disappearance, or discipline will trigger the need for the services of the successor lawyer) and the successor lawyer should memorialize the arrangement and designate the duties and responsibilities of the successor lawyer. At a minimum, the agreement should authorize and direct successor lawyer to promptly inventory and review client files (within 24-48 hours after notice of death or disability) and determine those matters that need immediate protective action.
The Ethics Guide suggests that other key provisions in the written agreement may direct appointment of the successor lawyer with the legal authorization to undertake and accomplish all the actions contemplated by the agreement, to become effective only upon the affected lawyer’s death or disability. It may also outline the steps necessary for the successor lawyer to be notified by the affected lawyer’s family or personal representative in the event of the affected lawyer’s death or disability. The agreement may include authority for the successor to notify clients of the death or disability of the affected lawyer (a draft letter can be prepared in advance for the successor lawyer to utilize for this purpose).
Authority for the successor lawyer to access and serve as a signatory on the law practice’s operating account and IOLTA during disability or in the event of death and for the successor to assume possession of client files for purposes of inventorying and reviewing files can also be included. The affected lawyer should contact his or her bank in advance to determine what documentation it will accept for transfer of the IOLTA and operating account to the successor lawyer.
The written agreement should also address any compensation and reimbursement of costs to the successor lawyer by the affected lawyer’s estate or practice. Indemnification of the successor lawyer by the practice or the estate may also be addressed. The agreement should also specify a termination date.
The written agreement may also state whether the successor attorney will assist in winding down the business affairs of the law practice, including paying business expenses, collecting outstanding fees, terminating malpractice insurance, and purchasing a tail policy. The successor agreement may also include informing the Office of Disciplinary Counsel or local bar association where the affected lawyer’s closed files and or original documents will be stored and the name, address, and phone number of a person with authority to retrieve the files.
The written agreement should also address potential conflicts of interest between the affected lawyer and successor lawyer. It should delineate whether the successor lawyer will be representing the interests of the affected lawyer, some of the clients, or all of the clients, or neither the affected lawyer nor client(s).
The possibility of a conflict of interest exists depending upon how the “client” is identified in the written agreement with the affected lawyer. If the successor lawyer is designated in the written agreement as representing the affected lawyer, the successor lawyer may not inform a client about potential legal malpractice or ethical violations discovered during the representation, without the affected lawyer’s prior and informed written consent. See Ohio Rules of Professional Conduct, Rule 1.6. If the lawyer is permitted to represent the affected lawyer’s clients, he or she may have an ethical obligation to inform a client of errors or omissions discovered during the inventorying of the file.
Because the successor lawyer will have access to confidential client information during the file inventory process, the written agreement should direct the successor lawyer to check for conflicts of interest before beginning the file inventory. Conflicts of interest can be checked by comparing a list of the affected lawyer’s clients with those of the successor lawyer. If the successor lawyer determines that a conflict of interest exists, another lawyer, named by the affected lawyer in advance, should review the file. Additionally, the designated successor lawyer and affected lawyer should periodically review their respective active client matters to determine obvious conflicts that would require the designation of another lawyer to review certain client files.
If permitted by the written agreement, representation of the affected lawyer’s clients should commence only after the former client has approached the successor lawyer about representation. A successor lawyer should not actively or formally solicit the former clients of the affected lawyer. See Rule 7.3. However, the successor lawyer is free to respond to inquiries from clients regarding representation, absent any conflicts.
After the succession plan is place, at the outset of any client representation, the affected lawyer should inform the client in the initial fee or retainer agreement that the lawyer has arranged for a successor lawyer to transition the practice in the event of death or disability and undertake immediate protective action until new counsel is retained by the client.
Immediate protective action undertaken by the successor lawyer should be explained to the client so the client is aware of what type of action may be taken on his or her behalf. The affected lawyer should obtain the advance written consent from each client to the limited representation by the successor.
If it is necessary to implement the succession plan, after completing a review and inventory of the affected lawyer’s closed and active client files, the successor lawyer should promptly contact each active client of the affected lawyer to notify him or her of the incapacity of the lawyer. The written notification to clients from the successor lawyer should contain at a minimum: the status of the active client matter and any pending deadlines or time limitations; an accounting of any funds or property held in trust; the status of any outstanding fees owned by the client; a request for specific instructions from the client as to the disposition of the file with the options including directing that the file be sent to a new lawyer, advising the client how to retrieve the file and asking the successor lawyer for assistance in obtaining new counsel.
Pursuant to the written agreement, the successor lawyer should make every reasonable effort to attempt to identify clients who have funds in the trust account and contact those clients to return any funds to which they are entitled.
If funds remain in the IOLTA after distribution or a client cannot be located, the successor lawyer is required to transfer the remaining funds to the Ohio Department of Commerce, Division of Unclaimed Funds. Ohio Revised Code 169.01(B)(1), 169.03(A)(1) and Ohio Board of Professional Conduct Opinion 2008-3.
For a sample written agreement with a designated successor lawyer see:
- Columbus Bar Association Advance Succession Registry
- Cleveland Metropolitan Bar Association What If Preparedness Program
The steps outlined to appoint a successor attorney highlight the importance of providing for the orderly disposition of client matters and files. Designating the successor lawyer can also provide peace of mind for the affected lawyer, their office staff, professional colleagues, friends, and family. Lawyers at any stage of their careers, in any size firm are certainly encouraged to take these steps to appoint a successor.
As always, if there are questions about this or any loss prevention topic, please feel free to contact us at OBLIC. We’re here for you!
Gretchen Mote, Esq.
Director of Loss Prevention