Vol. 77, No. 8, August
Taking Down the Shingle
Sole Practitioners Need Written Contingency Plan
Everyone is counting on you. What if something happens? Find out how
sole practitioners can create a safety net for their practices. This
column is the second in a series, "Taking Down the Shingle," that
addresses liability issues related to interruptions in law practice.
by Ann Massie Nelson
Ann Massie Nelson is a
regular contributor to Wisconsin Lawyer and communications
director at Wisconsin Lawyers Mutual Insurance Co.
Lawyers routinely advise small business owners to write contingency
succession plans, but rarely do lawyers take their own advice to heart
in this regard. When asked on their professional liability insurance
application "Who would be responsible for your practice in the event of
your absence?" sole practitioners frequently respond, "My spouse."
Expecting your nonattorney spouse or adult children to maintain or
close your solo law practice creates an unreasonable burden for your
family and does a disservice to your clients and staff. Furthermore,
clients who are harmed by your failure to plan for your own absence may
file a legal malpractice claim up to six years from the date the
negligence (or perceived negligence) is discovered, regardless of when
the legal representation took place.
Entering into an agreement with another lawyer or law firm to
substitute for you and handle your practice in your absence can help you
reduce your professional liability risk and fulfill your
responsibilities to provide competent representation, act diligently,
communicate, and maintain client confidences.
A more immediate benefit is the peace of mind that comes with the
knowledge that you have a fallback plan. The burden of "everyone is
counting on me" is a little lighter.
Develop a Contingency Succession Plan
Following are some suggestions for developing your contingency
succession plan for your solo practice.
Identify another sole practitioner or law firm to handle your
law practice in your absence. You are the best person to decide
whom to appoint as "guardian" of your practice. To protect your
practice, you will want someone who:
- shares your values
- knows your area of practice well
- can uphold a long-term commitment
- can preserve the value of your firm's assets.
In short, you want someone you can trust to do the job right.
The challenge for sole practitioners who practice in rural areas or
who have narrowly focused practices is finding colleagues who are
knowledgeable about their practice area but not disqualified by
conflicts of interest. If that is your situation, you will need to look
outside your immediate location. Tap into your network of State Bar and
law school colleagues or consult the Lawyer-to-Lawyer Directory, which
appears in the annual Wisconsin Lawyer Directory.
Negotiate a written agreement with the designated
colleague. Your agreement will need to address:
- Circumstances under which the contingency plan will be executed. How
will your designated colleague be informed? Who will determine if you
are incapacitated? What criteria will be used?
- Clarification of the designated lawyer's role. Will the other lawyer
provide triage only, or will he or she serve as substitute counsel? Is
the designated colleague representing you or your clients? What are the
ethical obligations of the substituting lawyer in either situation?
- Access to your office procedures manual, calendar, docket, contact
information, and accounting records. Could another attorney walk into
your office tomorrow and know where to begin?
- Immediate notification to current clients. Include a sample letter
to notify clients of your absence, encourage current clients to seek
other counsel, and instruct them on how to pick up their files. Some
clients will need to file substitution of attorney documents.
- Notice to former clients, other attorneys, the courts, regulatory
agencies, banks, and suppliers. Again, a sample letter in your agreement
will help the substituting attorney more quickly get the word out to
those who need to know.
- File access and storage. Former clients should be contacted and
asked to pick up their files. Because the long tail of liability follows
you indefinitely, the designated colleague ideally would keep a copy of
closed files. Consider how and where your closed files will be
- Fee agreements between you and the substituting lawyer. How will the
substituting lawyer be compensated for his or her time spent closing
your practice? How will accounts receivable be handled?
- Trust account and bank account access. Do you need to authorize your
designated colleague as a cosigner? Under what circumstances can someone
else access your accounts or distribute funds?
- Valuation process for selling your practice. How will the tangible
assets and goodwill of your law practice be valued? How will the
proceeds be distributed?
- Instructions for continuing your professional liability insurance
coverage. An extended reporting period endorsement, commonly referred to
as a "tail," can be exercised by your personal representative, typically
within a year of your death or permanent disability. This endorsement is
not a new policy; it simply extends the time to report claims under your
Ask clients' permission up front - while you can.
Describe your contingency plan to clients in your engagement letter or
fee agreement. Ask for their permission to give the designated colleague
access to confidential information when necessary.
This shows conscientious foresight and clears the way for your
colleague to step in at a critical time without jeopardizing his or her
own ethical duties. In an article that appeared in the January/February
2000 issue of GPSolo, published by the ABA's General Practice,
Solo & Small Firm Section, Marcia L. Proctor suggested the following
"In the event that I become incapacitated or otherwise unavailable to
handle your representation matter to completion, please be advised that
I have made arrangements with [backup lawyer] of [name of firm] law
offices to complete the matter. If you have objections to [backup
lawyer's] participation, or if [backup lawyer] is unable to handle the
matter at this time, [backup lawyer] will arrange for other counsel to
handle the matter. [Backup lawyer] will not receive any information
about your representation until and unless (1) I become unable to
proceed, (2) you consent to [backup lawyer's] representation, and (3)
[backup lawyer] is able to handle the matter at such a time."
If the Worst Happens
If a Wisconsin sole practitioner dies, disappears, or becomes
disabled without a contingency arrangement, the Wisconsin Lawyers
Assistance Corporation, created by the State Bar of Wisconsin, can help.
The nonprofit corporation advises the court-appointed trustee attorney
and provides professional liability insurance for trustee attorneys
through Wisconsin Lawyers Mutual Insurance Co. (WILMIC). For information
about the Wisconsin Lawyers Assistance Corporation, call the State Bar
at (800) 728-7788.
Duties of trustee attorneys are addressed in Supreme Court Rule
12.02, "Sole Practitioners; medical incapacity," and SCR 12.03, "Sole
practitioners; death or disappearance."