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The Death of an Attorney and Other Law Firm Consequences

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Summary: Is your law firm prepared to carry on if you leave it?

The Death of an Attorney and Other Law Firm Consequences
 
  • At one point all law firms will have to face the inevitable death of their leader.
  • And it’s anyone’s guess as to what that death could do to a law firm.
  • The death of a legal leader could bolster a law firm and cause it to rally amongst itself.
  • Or it could leave the firm headless, and for that matter, aimless and stumbling around.

When Steve Jobs died on October 5, 2011, there wasn’t a single devotee of all things Apple that didn’t feel a void in their smartphone, tablet, lap or desktop computer. Even non-Apple users believed that with the death of Jobs, the tech world might spiral and stagnate due the loss of such a luminary.

To this day, with this much time having passed since Jobs’ death, some technology experts still believe a leader on par with Jobs’ persona, vision, drive and intelligence has yet to emerge from Silicon Valley or anywhere else in the world.

Admirable as this seems, it’s also shameful that a company, whether it be small, medium or large-sized, all the way up to a sector of business would let itself be stymied by the loss of a leader. After all, isn’t one of the main qualities to a successful business is its ability to withstand hardship? And to prove as much, look at Apple now; the company is currently worth over $1 trillion.

Sure, a void was left with Steve Jobs’ passing, but that doesn’t necessarily mean the company Jobs founded grinds to a halt. No, Apple instead accelerated into a higher gear.
 
The Death of a Lawyer Should Not Mean the Death of a Law Firm

In American business today it happens far too often that when a business loses its leader, so goes the business’ identity.

Well, to be frank, a lot of businesses simply need to get over it, and immediately establish their first character trait as survivors. After that these leaderless businesses then need to decide who they want to be whilst going forward:
 
  • Do they want to maintain their identity as it was when their leader was alive?
  • Or should they radically change their persona?

The fact is, the sooner a business addresses its identity once its leader has passed on, the better it will be for everyone including:
 
  • Managers
  • Employees
  • Investors
  • Customers

Now, this isn’t to say that law firms can or should exactly follow this post-mortem track while in lieu of losing their leader. Many law firms tend to specialize in one practice field or another, which can prevent them from a complete restructuring. As importantly, those same law firms may have a certain book of business that will refuse any significant changes in who the law firm is and how it handles itself and its clientele going forward.

For instance a leaderless law firm can’t suddenly change practice areas to mergers and acquisitions when under its founder the firm dedicated its last fifty years to litigation or real estate law.

And even if there is an influx of new, younger clients who might have different socio-economic ideals from those of the established lawyers, there is a strong likelihood the new younger clients are still going utilize that same law firm as their parents and older relatives did.

Of course, this is the best case scenario for a law firm that loses its leader: Things remain status quo. The clients stay in place and the practice area is never deviated from.

But what about those law firms that finds themselves besieged with change, misdirection, false starts, client loss and looming closure? Does the death of one lawyer mean the death of the entire law firm?
 
Have and Maintain an Attorney Succession Plan

One of the greatest services a senior attorney can do for their fellow attorneys, the legal firm, and as well as their clientele is to draw up a succession plan.

Succession plans are somewhat similar to last wills and testaments. Succession plans outline the transition of a senior attorney’s law practice to their next in charge in the event the senior lawyer is no longer capable of issuing orders, dies or goes missing.

As reported by the American Bar Association there are several elements involved in drafting a strong succession plan. Even so on a basic level a managing partner should:

1) Appoint a specific attorney or attorneys to take over the practice.
2) Then put the plan in writing.
 
A. Choosing the Right Succeeding Attorney

The ABA article explains that when appointing an attorney to take over a practice, they must select someone who is competent in the practice area similar to that of the law firm’s leader.

It is important, however, to understand that there is the strong possibility that managing lawyers who appoint subordinate lawyers to take over their practice may not be able to simultaneously satisfy the needs of two sets of clients – their own and the managing lawyer who makes the appointment.

To that end, a managing lawyer should make certain that they appoint multiple attorneys or at least reserve enough capital for their succeeding attorney to be able to hire outside counsel.

The ABA article determines that while a managing attorney should appoint someone who is competent in their (the managing attorney’s) practice area they should also choose someone who will not have multiple conflicts of interest.

For example, an attorney who practices plaintiff’s personal injury work should not hire a personal injury defense attorney as such an appointment could result in misrepresentation.

The chance the attorney who specializes in personal injury defense might represent parties against the managing attorney’s plaintiff’s personal injury can become a real threat in which conflicts of interest will undermine an entire succession plan.

As the article cites, there are other issues that need to be taken care of by an attorney who designs a plan for others to take over his or her law firm:
 
  • Clear communication of all existing cases: The managing attorney has to speak openly to their successor about each case they have in order to avoid confusion about the client, their legal circumstances or the general workload the succeeding attorney is due to take over. 
  • Clear communication will also ensure that cases for which there are very little bandwidth will not be sent off to other colleagues who may have little to no understanding about the managing attorney’s clients and/or legal circumstances. 
  • Be sure to include any details about the clients and their case, such as issues remaining to be resolved as well as financial ability for the client to pay for working on their case. If the case hasn’t much financial merit, it may be more trouble than it’s worth to a succeeding attorney, and will thus need to be farmed out to other attorneys.

These examples bring to light the different difficulties the succeeding attorney may face in assuming the responsibility of a managing attorney’s practice. The managing attorney needs to consider the implications of doubling an underling attorney's practice, putting them in a predicament where they will need to decipher cases they are unfamiliar with, as well as taking over accounting, management of the managing attorney’s current staff, and so on.

The more details a managing attorney can include in their succession plan, the more it will assist the succeeding attorney, whoever that person will be.
 
B. In case of conflict, who does the succeeding attorney represent – the client or the firm?

The ABA article suggests that managing attorneys should be very forthright as to who the succeeding attorney will eventually represent: the interests of the attorney or the interests of the attorney's clients?

While those interests should often align, in some cases they may conflict, which can leave a succeeding attorney in a legal bind. In this case, the succeeding attorney will need guidance as to which side they should take.

For example, if the succeeding attorney discovers malpractice or a misappropriation of client funds while transitioning active cases, whose interest is the succeeding attorney supposed to protect? This may sound shady, but it is still a fact of life in the legal world, and one that is often raised due to the personalities of the clients as well as the attorney.

In short, the article suggests managing attorneys define in advance if their attorney-client relationships dictate whether the succeeding attorney has a duty to report the error to the client in lieu of their own ethical duties.
 
C. Put everything else in writing

A managing attorney has to – by all means necessary – put their succession plan in writing. The ABA article suggests the following as a general list of the elements any attorney succession plan should include:

Contents of the practice: A plan should list the contents of a practice, including bank accounts, real estate, motor vehicles, office supplies, files, and anything else the managing attorney’s practice may own or contain.

Persons to receive the contents of the practice: The succeeding attorney will require a list of who gets what. If a managing attorney is holding property for clients, they can direct the succeeding attorney to the clients’ information that lists which property belongs to them.

Other items for a managing attorney to consider when writing a succession plan consist of:
 
  • Client files: Where to find them, and if there’s a filing system that reveals those files’ importance.
  • Office furniture: How should it be disposed of? Should the furniture be donated or sold? 
  • A list of other succeeding attorneys: A managing attorney needs to provide a list of succeeding attorneys in case their number one pick is unable to take over. 
  • Compensation of the succeeding attorney: The succeeding attorney should undoubtedly be compensated for their time. Managing attorneys need to make it clear to the succeeding attorneys whether or not they should bill their new-found clients similarly to the way the managing attorney billed them. 
  • A detailed description of their liabilities as the succeeding attorney: A managing attorney needs to concisely define their succeeding attorney's role and specify that they are acting on behalf of the managing attorney’s clients. At the same time, a managing attorney should try to limit the succeeding attorney’s liability toward their newly inherited clients to doing acts of good faith.

Lastly, the ABA article suggests inclusion of the following:
 
  1. A copy of the financial institution's form(s) for IOLTA access by the succeeding attorney
  2. A power of attorney authorizing the succeeding attorney to run the business as needed, including as IOLTA signatory
  3. A list of passwords for computer systems, and bank and other accounts
  4. Any outstanding debits of credits that the law firm needs to address
  5. An up-to-date chart of all files for transitioning and closure
  6. Instructions for loved ones and a designated representative to help with the succeeding attorney responsibilities
  7. Contact information for the designated succeeding attorney
  8. An updated list of law practice contacts (employees, clients, vendors, suppliers, memberships)
  9. A draft of a letter for the succeeding attorney to provide notification to clients of the law firm’s transition in leadership
  10. A draft of a letter from the succeeding attorney to clients authorizing release of their files to a new attorney
  11. The retention rules of the managing attorney’s state bar or their personal client file
  12. Instructions to the personal representative corresponding to the duties that concern the possible closing and/or selling of the law practice

Conclusion

As can be seen, it’s never easy for those who are left behind to take the place of their leader. At least with law firms, it can be as straightforward as it can be difficult. Only you as a law firm leader and/or manager have the power to make this transition as difficult as possible (which will invariably gain you the ire of your underling attorneys) or as seamless as possible.

Whatever you do, be honest, upfront, and candid, and trust those around you. If you want your business to continue, those subordinate to you are all you have and can depend on. Keep that in mind while you are still in a state where you are able to transfer power from yourself to others.

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