When launching a new law practice, take time to plan ahead for when your law practice will end. You may have every intention of running your firm until you are in your 70s or 80s. But what happens to your law firm if you are suddenly gravely ill and in the hospital? What happens if you don’t survive your hospital stay or worse yet, don’t survive to make it to the hospital? These are sad facts that many lawyers know happened to Someone Else. Today, I want you to consider that Someone Else could one day be you.
First things first: find someone, perferably another attorney you trust, to close your practice in the unfortunate event of your incapacity or impairment, disability or death. The business of law is like no other. Another attorney is most apt to understand the various issues of the attorney-client relationship and ethical duties involved.
1. Have a signed written agreement. This agreement should include the following provisions to authorize your Assisting Attorney to:
a.) contact your clients to get instructions on transferring their files to other attorneys;
b.) contact the court and opposing counsel for extentions of time on litigation matters;
c.) contact all relevant people with notice that your law practice is being closed;
d.) arrange for someone to become an Authorized Signer on your lawyer trust account, preferably someone other than your Assisting Attorney to provide checks and balances and check with your bank that your special power of attorney form will be acceptable;
e.) wind down your office financial affairs, collect fees earned and pay expenses owed;
f.) provide your client with a final accounting and statement of money held in your lawyer’s trust account, payments made, and amount to be refunded or transferred to their new attorney’s lawyer trust account; and
g.) liquidate or sell your practice in accordance with your wishes.
To help you with creating an agreement and other forms and letters, the Professional Liability Fund provides a helpful publication, “Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death” one free to any Oregon lawyer who requests it. Out-of-state lawyers may purchase a copy at $15 per handbook. (503) 639-6911. The useful handbook contains sample forms including this agreement to assist in closing a law practice, a power of attorney that will give specific authority for the limited purpose of handling the lawyer trust account and bank accounts, a form for a specimen signature of attorney-in-fact, and letter of understanding to give a different person the direction to hold the power of attorney until conditions of the lawyer’s impairment require delivering it to person named as the attorney-in-fact. The forms in this publication can be downloaded from the PLF website www.osbplf.org under Loss Prevention, Practice Aids & Forms in the Closing Your Law Office category.
I want to underscore the obvious: you are careful to put money belonging to your client into your lawyer trust account, fulfilling your ethical and fiduciary duty to your client. Therein lies the rub if you are a sole practitioner and the only signer on the lawyer trust account.
How will your client be refunded money held in your trust account in order to go to another lawyer to finish the work? If you become incapacitated, likely there will need to be a court protective proceeding (conservatorship) to appoint someone to have authority to sign a check to refund the client’s money. If the lawyer is dead, likely there will need to be a court probate proceeding to appoint a personal representative to have authority to sign a check to refund the client’s money.
Stop for a moment and imagine what is the client’s reaction to this news. Clients usually go to lawyers in great distress with big problems. Finding out that the retainer that was so hard to come up with is now frozen in a deceased lawyer’s trust account makes a client very distressed and faced with a new big problem. Compound this problem of no access to the lawyer trust account with poorly kept trust account records or excellent trust account records and no means to access them on a password protected computer, and you will see that there is a critical need to plan ahead.
A lawyer’s duty of competent representation includes making advanced arrangements to safeguard the clients’ interests in the unfortunate event of the lawyer’s disability, impairment, incapacity or death. See the ABA Formal Opinion 92-369. In Oregon, the Oregon State Bar Formal Ethic’s Opinion 2005-129 points to the need to plan ahead to protect one’s clients.
Please plan ahead today.