After a very busy week, a young sole practitioner was driving home and looking forward to the weekend. While mentally planning the family activities for three young children and the time needed to prepare for the following week’s court appearances, the lawyer’s car drifted into oncoming traffic and struck another car head on.
The young lawyer was severely injured and unable to communicate. Over the weekend, family members and friends offered their support, but nothing could emotionally prepare the spouse for Monday morning. At 9:30 a.m., the home phone rang and continued to ring, until the spouse finally answered. The first callers were two clients who had court appearances that morning and were angry that the lawyer had failed to appear. The spouse quietly explained what had happened and promised to get someone to help. While sympathetic, both callers demanded an immediate return of their advanced fees so that they could retain new counsel.
Upon arriving at the lawyer’s office, the spouse quickly discovered that none of the necessary information was accessible. The lawyer kept all files electronically, and the spouse could not locate the login information for the computer and the practice management software. After locating a bank statement, the spouse called the bank, which refused to provide any information without the lawyer’s authorization.
The spouse contacted the State Bar of Wisconsin and was told that in the absence of a succession plan, SCR chapter 12 provided a procedure by which a court may appoint an attorney to serve as a chapter 12 trustee. The State Bar explained that a chapter 12 trustee attorney would have the authority to hire a data recovery service to gain access to the computer and the electronic files; to notify and deliver the files and property to the clients; and collect fees, reconcile the trust account, and disburse funds. The State Bar also explained that it can be difficult to find an attorney who is willing to serve as a chapter 12 trustee attorney. The State Bar recommended that the spouse contact the lawyer’s malpractice insurance carrier. The spouse, shocked and overwhelmed by the news, asked, “How can I possibly deal with this along with everything else?”
History of the Succession Planning Registry
As this hypothetical illustrates, the failure of a sole practitioner to have a succession plan in place can, if the lawyer dies or becomes incapacitated, harm clients, jeopardize the law practice (especially if the incapacitated lawyer recovers and wants to resume practice), significantly burden the lawyer’s family, and subject the lawyer to potential liability and violation of the professional rules of conduct.
Aviva Meridian Kaiser, Univ. of Buffalo 1979, is ethics counsel with the State Bar of Wisconsin. Ethics Question? Call the Ethics Hotline at (608) 229-2017 or (800) 254-9154.
Christopher C. Shattuck, Univ. of La Verne College of Law 2009, M.B.A. U.W.-Oshkosh 2015, is manager of Practice411™, the State Bar’s law practice assistance program. If you have questions about the business aspects of your practice, call (800) 957-4670 or visit practicehelp@wisbar.org.
While succession planning is crucial for sole practitioners, it may also be helpful for small firms. For example, lawyers in some small firms operate somewhat independently of each other, such as keeping their own calendars or trust accounts. A firm-wide succession plan that goes into effect in the event of the death or incapacity of one of the lawyers can relieve some of the uncertainties and burdens. However, in small firms, lawyers should ensure that their named successor attorney is a member of the firm.
Richard S. Brown, formerly chief judge of the Wisconsin Court of Appeals, and members of the Senior Lawyers Division identified the lack of succession for smaller firms as a growing concern for the public. Then State Bar President Ralph Cagle formed a working group to address the problems that arise when lawyers do not name successor counsel.
The working group, led by Judge Brown, proposed creating a registry on WisBar.org that would allow lawyers to voluntarily designate primary and secondary successor counsel in the event of their disability, incapacity, or death. Judges, clients, family members, and others could submit an online form to the State Bar requesting the successor attorney’s name. The registry is now active and available through myStateBar at www.wisbar.org (click on the myProfile tab and go to Advanced Profile).
The Registry’s Effect on Practice Management
The registry is a critical tool for sole practitioners. Usually, the first person called when a sole practitioner fails to have a succession plan in place is the spouse or another member of the immediate family. Often, that person is not a lawyer and is not familiar with the most significant rules governing the legal profession, such as confidentiality of client files and trust account management, or the deadlines associated with cases. It is unfair to the spouse or family member who is faced with the almost impossible task of closing or maintaining a practice, due to the lawyer’s failure to name a successor. Fortunately, there are tools that sole practitioners can use to ensure a smooth transition in the case of death or disability.
Naming a Successor Attorney and Using the Registry. A good first step for a sole practitioner is to talk with another lawyer about becoming a successor attorney. The lawyer and the successor attorney also should review After All, You Are Only Human: The Solo Practitioner’s Handbook for Disability and Death, the handbook created by the State Bar’s Solo/Small Firm & General Practice Section. This resource explains the benefits of naming a successor, assists with succession planning in the event of incapacity or death, and includes sample forms and provisions. The handbook also explains the role and responsibilities of the successor attorney.
Once the successor is selected and agrees to take that role, the sole practitioner should record that information with the State Bar’s voluntary registry. In the case of a lawyer’s death, disappearance, disability, or incapacitation, judges, clients, and other people may submit an online form on WisBar.org to request the name of a lawyer’s successor attorney that has been recorded with the registry. (Please see the “Resources for Succession Planning” sidebar.)
In the case of a lawyer's death, disappearance, disability, or incapacitation, judges, clients, and other people may submit an online form on WisBar.org to request the name of a lawyer's successor attorney that has been recorded with the registry.
Practice Accessibility. After a successor attorney is selected, the lawyer should ensure that the practice is accessible to that individual in case of a qualifying event. For example, the lawyer must ensure access to necessary information, such as records (electronic or paper), calendars, passwords, trust accounts, business accounts, the case management system, and information technology.1 A written succession plan should be stored with other documents, such as a power of attorney, to easily facilitate future court proceedings.2
State Bar Resources. Incapacitated lawyers or their successor attorneys can obtain free advice from the Ethics Hotline, (800) 254-9154; the Wisconsin Lawyers Assistance Program’s 24-Hour Helpline, (800) 543-2625; and the Practice Management (Practice411™) Helpdesk, (800) 957-4670. These services may also assist family members who need help when there is no succession plan.
Resources for Succession Planning
The following resources are mentioned in this article.
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After All, You Are Only Human: The Solo Practitioner’s Handbook for Disability and Death, State Bar of Wisconsin Solo/Small Firm & General Practice Section, www.wisbar.org/onlyhuman.
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Succession Planning Registry. To register, log in to WisBar.org and select the myStateBar tab. Click the myProfile tab, scroll down to the Advanced Profile area, and enter the name(s) of your successors. Check the box to indicate you have reviewed the necessary information and had the appropriate discussions with your successor(s). Finally, click the Submit Advanced Profile button to transmit the update to the State Bar of Wisconsin.
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Form to Request Name of Successor. Judges, clients, and other people may submit an online form to request the name of a lawyer’s successor attorney. Visit WisBar.org and select the forPublic tab. Click on I Need Information and scroll down to the Succession Information Request Form (pdf). Complete the fillable form and email it to successorinfo@wisbar.org or mail to the State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53718-2101.
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Ethics Hotline, State Bar of Wisconsin, (800) 254-9154.
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Practice411™, State Bar of Wisconsin Practice Management Helpdesk, (800) 957-4670.
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Law Practice Toolkit, Chapter 7, Wisconsin Lawyers Mutual Insurance Co. (WILMIC), http://wilmic.com/managing-risk/wilmic-law-practice-toolkit/.
Ethical and Fiduciary Considerations of Succession Planning
The death or incapacity of a sole practitioner can have serious consequences for clients. Important client matters, such as court dates, statutes of limitation, and document filings, might be neglected until the clients discover that their lawyer is incapacitated or has died. To safeguard clients’ interests, a written plan ensures to the extent reasonably practicable that client matters will not be neglected in the event of the practitioner’s death or incapacity.3 Both the Rules of Professional Conduct and a lawyer’s fiduciary duty to clients play a significant role in that planning.
The ethical obligation to protect a client’s interests after a lawyer’s death or incapacitation arises generally from SCR 20:1.1 and SCR 20:1.3. A lawyer is required by SCR 20: 1.3 to “act with reasonable diligence and promptness in representing a client.” The ABA comment to this rule provides guidance, especially for sole practitioners. Paragraph [5] of this comment states:
“[5] To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, 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….”
Paragraph [3] of the comment recognizes ways in which a client’s interests can be adversely affected by delay caused by a lawyer’s incapacity or death.
“[3] … A client’s interests often can be adversely affected by the passage of time or the change of conditions; in extreme instances, as when a lawyer overlooks a statute of limitations, the client’s legal position may be destroyed. Even when the client’s interests are not affected in substance, however, unreasonable delay can cause a client needless anxiety and undermine confidence in the lawyer’s trustworthiness.…”
In addition, SCR 20:1.1 requires that a lawyer provide competent representation. Competent representation includes the “preparation necessary for the representation.” Read together, SCR 20:1.1 and SCR 20:1.3 indicate that a lawyer should diligently prepare for a client’s representation. Included in that preparation should be a plan to reasonably protect the clients’ interest in the event of that lawyer’s death or incapacitation.
Although there is no specific requirement in the rules, “it is fairly to be inferred from the pertinent rules that lawyers should make arrangements”4 in the event of their own death or incapacitation. “Such a plan should at a minimum include the designation of another lawyer who would have the authority to look over the sole practitioner’s files and make determinations as to which files need immediate attention, and provide for notification to the sole practitioner’s clients.”5
A lawyer’s duty, however, “is not satisfied simply by complying with the Rules of Professional Conduct.” Lawyers must also be sensitive to the various aspects of their fiduciary duty.6
It is well recognized that lawyers have a fiduciary duty to their clients. That duty requires the lawyer to act in the client’s best interests and not the lawyer’s own interests. Protecting the client’s interests in the event of the lawyer’s death or incapacity is part and parcel of the lawyer’s duties to advance the client’s lawful objectives, to act with reasonable competence and diligence, to comply with obligations concerning the client’s property and confidences, and to fulfill the contractual obligations to the client.
The Restatement (Third) of the Law Governing Lawyers, section 16, provides guidance regarding the fiduciary duty that a lawyer owes to a client.
“§ 16. A Lawyer’s Duties to a Client – In General
To the extent consistent with the lawyer’s other legal duties and subject to the other provisions of this Restatement, a lawyer must, in matters within the scope of the representation:
1. proceed in a manner reasonably calculated to advance a client’s lawful objectives, as defined by the client after consultation;
2. act with reasonable competence and diligence;
3. comply with obligations concerning the client’s confidences and property, avoid impermissible conflicting interests, deal honestly with the client, and not employ advantages arising from the client-lawyer relationship in a manner adverse to the client; and
4. fulfill valid contractual obligations to the client.”
The fiduciary duty owed to the client is also recognized by section 49 of the Restatement (Third) of the Law Governing Lawyers.
Ҥ 49. Breach of Fiduciary Duty РGenerally
In addition to the other possible bases of civil liability described in §§ 48, 55, and 56, a lawyer is civilly liable to a client if the lawyer breaches a fiduciary duty to the client set forth in § 16(3) and if that failure is a legal cause of injury within the meaning of § 53, unless the lawyer has a defense within the meaning of § 54.”
When lawyers fail to have a plan in place to reasonably ensure that client matters will not be neglected in the event of the lawyers’ incapacity or death, these lawyers may fail to fulfill their fiduciary and ethical obligations. Often, the only available alternative when there is no succession plan in place is the SCR chapter 12 trustee attorney. Unfortunately, it is often difficult to find a lawyer who is willing to undertake the responsibilities of a chapter 12 trustee attorney.
Death and Disability Happen: Free Handbook Helps You Protect Your Law Firm
After All, You Are Only Human: The Solo Practitioner’s Handbook for Disability and Death, created by the State Bar’s Solo/Small Firm & General Practice Section, explains the benefits of naming a successor, assists with succession planning in the event of incapacity or death, and includes sample forms and provisions.
Sample contents include, among other things, information on:
- Selecting an outside helper
- Executing the documents
- The will provision
- The general durable power of attorney
- The non-durable, limited, and springing power of attorney
- The fee agreement – Tips for dealing with brief illness or incapacity
- The one left behind – Tips for managing or selling another attorney’s practice (including checklists)
- Information the outsider will need
- Ethical rules regarding informed consent
- Malpractice insurance issues
- Sample forms, checklists, file tracking charts
- Appointment as trustee attorney under SCR 12 (with sample forms)
Get your free copy of After All, You Are Only Human: The Solo Practitioner’s Handbook for Disability and Death, www.wisbar.org/onlyhuman.
Appointment of a Chapter 12 Trustee Attorney
SCR chapter 12 provides a procedure by which the court may appoint an attorney to act as a trustee for the practice when a practitioner who has no succession plan in place becomes medically incapacitated,7 abandons the practice,8 or dies.9
In the case of a sole practitioner who has become medically incapacitated, a Wisconsin lawyer or any interested person, such as a client or family member, may file a petition in the circuit court for the county in which the practitioner resides or maintains a law office alleging that the practitioner has a medical incapacity. The petition and notice of hearing must be personally served on the practitioner or, if personal service cannot be accomplished, through publication.
If “no other satisfactory arrangements have been made to assist the sole practitioner” and if there is “a showing by clear, satisfactory and convincing evidence at a hearing that the attorney has a medical incapacity,” then the court must appoint a trustee attorney. The sole practitioner is personally liable for any compensation and expenses of the trustee attorney as ordered by the court.10
Although there is no specific requirement in the rules, 'it is fairly to be inferred from the pertinent rules that lawyers should make arrangements' in the event of their own death or incapacitation.
When a sole practitioner has died, a Wisconsin lawyer or any interested person, such as a client or family member, may file a petition in the circuit court for the county in which the practitioner resided or maintained an office alleging that the practitioner is deceased and that no satisfactory arrangements have been made for winding up the practice. The petition and a notice of hearing must be served on the personal representative for the estate of the deceased attorney, or if there is no personal representative appointed, an adult heir or a court-appointed special administrator. Upon a showing at the hearing that no satisfactory arrangements have been made to wind up the practice of the deceased practitioner, the court must appoint a trustee attorney. The estate of the deceased attorney is liable for the compensation and expenses of the trustee attorney.11
Similarly, when a sole practitioner has disappeared or abandoned the law practice for at least 21 days, a Wisconsin lawyer or any interested person, such as a client or family member, may file a petition in the circuit court for the county in which the sole practitioner resides or maintains a law office alleging that the abandonment or disappearance has occurred and that no satisfactory arrangements have been made to continue the practice. The petition and notice of hearing must be personally served on the sole practitioner or, if personal service cannot be accomplished, through publication.
If no other satisfactory arrangements have been made to continue the practice, and if there is a finding that the sole practitioner has disappeared or abandoned the practice, then the court must appoint a trustee attorney. The absent sole practitioner is personally liable for the compensation and expenses of the trustee attorney as ordered by the court.12
While the duties of a trustee attorney vary slightly depending on whether the sole practitioner has become incapacitated, disappeared, or died, the primary duties are the same. The trustee attorney is required to do the following:
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Protect the clients’ rights, files, and property.
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Notify all clients being represented in pending matters of the appointment of the attorney as promptly as possible.
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Deliver client files and property to the clients on their request.
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Collect outstanding attorney fees, costs, and expenses and make arrangements for the prompt resolution of any disputes concerning outstanding attorney fees, costs, and expenses.
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Assist with the sale, termination, wind up, or suspension of the law practice.
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Comply with the applicable Rules of Professional Conduct.13
Unfortunately, the interests of a sole practitioner’s clients can be harmed because of the difficulty finding a lawyer who has the time and is willing to undertake the responsibilities of a chapter 12 trustee attorney. Moreover, while the sole practitioner personally or the estate of the sole practitioner is liable for the compensation and expenses of the trustee attorney, often there are inadequate funds available. Although chapter 12 provides a procedure to help clients when the sole practitioner has no succession plan in place, chapter 12 itself is not a succession plan.
Plan Ahead: Cases Are Not Put on Hold When a Lawyer is Ill or Dies
By Thomas J. Watson
Developing a good succession plan is a crucial aspect of the business and ethics of operating a law practice. In the event of a business interruption, a lawyer’s professional responsibilities continue, including having ongoing communication with clients, representing them diligently, and maintaining confidentiality of information and communication. Cases are not put on hold when a lawyer becomes ill or dies. The professional responsibilities that existed before the practice was interrupted and before a successor attorney for the practice was needed continue.
According to Brian Anderson, Wisconsin Lawyers Mutual Insurance Co. (WILMIC) senior claims attorney, the biggest problem seen at WILMIC, from a legal malpractice perspective, is when an attorney faces an unexpected emergency and has failed to put any safeguards in place to protect sensitive client matters. Anderson says if a lawyer becomes incapacitated, his or her family is left to pick up the pieces.
“An example of this is where a solo attorney expects that his or her nonlawyer spouse or staff member will take over their practice. Time is often of the essence in the legal arena and to leave your spouse, staff, and clients floundering, for any length of time, can be detrimental to the handling of and overall outcome in the underlying client matter.”
Anderson says the best thing that a lawyer can do to proactively address succession planning is to carefully consider who will be responsible for the practice in the event of an unexpected absence. “This is an especially important question for a solo practitioner to answer and needs to involve discussions with other attorneys with a similar practice skill set, your staff, if applicable, and ultimately your clients. Having a backup plan in place requires proactive planning and a ready, willing, and able lawyer to pick up your client matters, when the lawyer is no longer able to do so. This takes some foresight and advanced planning, which is often impossible after an unexpected event has occurred.”
Because lawyers have continuing responsibilities to provide competent representation to their clients, succession planning should be a part of the overall professional service that a lawyer provides. When Anderson or any of WILMIC’s claims attorneys gets a call from someone about an incapacitated or deceased lawyer, the first thing the claims attorney looks for to protect both the lawyer’s clients and the lawyer’s practice is a backup plan.
According to Anderson, “Having another lawyer in place to step in can make a huge difference. When a client matter is mishandled, in part because a lawyer failed to engage in proactive succession planning, this situation in and of itself can give rise to an Office of Lawyer Regulation grievance or legal malpractice claim.”
“Expect the unexpected and develop a plan in advance to protect your clients and your practice,” he says.
Thomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.
Endnotes
1 Tison Rhine, So, You Want To… Plan for Succession, Wis. Law., Feb. 2016.
2 Id.
3 ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 92-369 (Dec. 7, 1992). While this opinion addresses the disposition of a deceased sole practitioner’s client files and property, the ethical and fiduciary duties apply equally to sole practitioners who become incapacitated.
4 Id.
5 Id.
6 Dean R. Dietrich, Lawyers Owe Fiduciary Duty to Client, Wis. Law., Nov. 2009.
7 SCR 12.02.
8 SCR 12.03(2).
9 SCR 12.03(1).
10 SCR 12.02.
11 SCR 12.03(1).
12 SCR 12.03(2).
13 SCR 12.02; SCR 12.03.
