Put off a succession plan at your peril

Last week's column about sole practitioners' succession planning noted that those lawyers who fail to do such planning face significant ethical consequences. That concern needs to be reviewed in more detail.

The ethical implications of failing to plan for a practice's future when the lawyer retires or dies are so severe that state bar associations are taking action to "protect" the public.

For example, a proposal currently before the California Bar Board of Governors would require attorneys to have an "estate plan for the law practice" providing for succession in the event of a lawyer's death or disability.

That action was prompted by such horror stories as the tale of the widow of a California attorney who sought to work through the problem of closing her husband's practice after his death. The woman ended up hiring a practice management attorney who cost a great deal of money but provided unsatisfactory service; the state bar threatened intervention. Winding down the practice was difficult and stressful, and both the family and the clients of the deceased lawyer were at risk.

The consequences can be even more serious. Here in New England, a Maine lawyer died some years ago and was buried, his estate probated. Suddenly, the estate was sued for malpractice because the plaintiff/former client was injured. Her matter was lost because of the passage of a statutory time limit.

The court held the lawyer's estate liable because, it reasoned, he should have known that death was possible and taken steps to protect his clients. He failed to have an estate plan for his law practice, his client was injured as a result, and his estate was therefore liable for damages.

For bar associations that believe "protecting the public" (and not serving lawyers), is their top task, it is obvious that such protection can now reach the grave.

Even insurance carriers are now asking the question: Who will take care of your practice in your absence? Failure to provide an answer is reason for refusing to issue a malpractice insurance policy.

I have been called in on occasion to help either a widow(er) or spouse of a disabled attorney, and the management and financial entanglements can be horrendous. The challenges to protect the clients can be daunting when there is no one left in the office who knows what the status of each of the pending matters may be.

Of course, an estate plan is not a guaranteed guard against ethical problems. A potential issue in solo practice is that aging lawyers may leave their clients emotionally long before they close their doors. That can result in less effective representation well before the lawyer retires, with malpractice claims a potential risk.

Also, too many older lawyers are behind the technology curve, even not using e-mail. That exposes the attorney to charges of malpractice for not meeting the standard of care practiced by other law firms. It also diminishes the value of the practice if the lawyer wishes to sell it and retire because the purchasing lawyer has to invest in the technology to get the practice up to speed.

In a larger-firm context, such issues are likely not to occur. The older lawyer simply receives the designation of "special counsel" or "emeritus partner," and another attorney in the firm takes over the practice. Or, on a sudden absence from the firm, the disabled or deceased lawyer's caseload is quickly transferred to another member of the firm. There may be a glitch, but seldom a catastrophe rising to the level of malpractice.

For the solo lawyer, deciding how and by whom the practice is to be closed in the event of unexpected death or incapacity is harder to face. However, the attorney who has not taken the possibility of his untimely death or disability into account for planning a practice's future is creating a tremendous burden for loved ones left behind — one that may bring unwelcome intervention by powerful outside entities.