Vol. 77, No. 6, June 2004

Plan for Absence from Practice

by Ann Massie Nelson

A lawyer dies of a heart attack in the stands at a Badger football game.

Dementia forces a sole practitioner to end his practice; two colleagues must close his office.

Smoke inhalation from a house fire lands a lawyer in bed for a month.

A senior partner announces he will retire but continue to serve "of counsel" to selected clients.

A disagreement about business practices prompts two lawyers to abruptly resign from a law firm and form a new partnership.

All of these events involved Wisconsin lawyers, who probably thought, like you may be thinking right now, "Nothing like that will ever happen to me."

In reality, lawyers do become disabled, die, retire, and change firms. Every lawyer's shingle will come down someday, whether by choice or by chance.

While lawyers may be mortal, liability for errors or omissions in their professional capacity endures in perpetuity. Malpractice claims have been made against lawyers' estates decades after the legal services were rendered.

To help lawyers manage professional liability risk incurred through expected and unexpected departures from practice, Wisconsin Lawyers Mutual Insurance Co. (WILMIC) will hold seminars and publish articles on the topic of "Taking Down the Shingle: Planning for Retirement, Disability, Death, or Changing Firms."

How well prepared are you should you walk out the door today and not return for a week, month, year, or maybe forever? How will you continue to protect your clients' interests in your absence? Would your partners, office staff, spouse, or other family members know what to do in your absence?

Ready or Not?

The following questions will help you assess how well prepared you are and introduce some of the key concepts to consider in developing a plan.

Client matters

• Who is the attorney you have designated to handle your client matters in your absence?
• Is this agreement noted in your engagement letter to clients? Have you discussed your contingency plan with clients and obtained their consent and signature?
• Do you have a signed agreement with the other attorney that is reviewed annually?
• Where will your files be kept? Who will have access? How long will your client files be retained? If your firm ceases to exist, what will happen to client files?
• Who can access your calendar? Address book? Email? Voice mail?
• Are your calendar and docketing system current? Are they accessible?
• Who will notify your clients, the courts, and other counsel?

Practice management

• Who will manage your firm's business affairs?
• How current are your billing records? Will someone collect your accounts receivable? What about contingent fee agreements and/or fee splitting agreements?
• What financial obligations do you have, for example, salaries, rent, equipment leases, utility bills, and insurance premiums?
• Who is authorized to access your client trust account? Under what circumstances?
• Where are your bank accounts located? Who are the account signers?
• Who will need access to your post office box, safety deposit box, safe, and locked file cabinets?
• Where are your insurance policies kept?
• Where is your will or estate plan located?
• How will your practice be valued for sale?
• Who is the personal representative for your estate? Is the personal representative apprised of your agreement with another lawyer to close your practice?
• Who has health care power of attorney for you? Under what circumstances will your practice be closed?

Professional liability

• What provisions does your professional liability insurance policy make for lateral transfers? Will the insurer provide prior acts coverage for lateral hires?
• If a lawyer retires or resigns from a firm, what obligations does the firm have to continue insurance coverage?
• Does your professional liability policy provide for an extended reporting period (often called "tail") endorsement for malpractice claims against you, your former firm, or your estate?
• How much time does your firm or your personal representative have to exercise the tail endorsement?
• If the attorney who closes your practice or assumes your files discovers an error or omission in your work, is he or she obligated to inform your clients and/or to notify your malpractice insurer?

Ethics questions

• What ethics rules apply to you in your absence due to disability, impairment, disappearance, retirement, or lateral transfer?
• What rules apply to the lawyers who assume your client matters?
• If the attorney who closes your practice discovers ethics violations, is he or she obligated to report violations to the client and/or to the Office of Lawyer Regulation?
• Does the succeeding attorney represent you or your former clients? Can he or she ethically represent both?

Future "Managing Risk" columns and the fall seminars (see accompanying sidebar) will help you, your firm, and your family explore answers to these difficult questions and develop a plan for your individual situation.

"Taking Down the Shingle: Planning for Retirement, Disability, Death, or Changing Firms" is a morning-long program sponsored by WILMIC that will address the labyrinth of liability questions surrounding lawyer career transitions. More information will be available about the seminars in the months ahead; for now, please mark your calendar, or phone WILMIC at (608) 288-1866.

Friday, Nov. 5 Hudson House Inn Hudson

Friday, Nov. 12 Robbins Restaurant Oshkosh

Friday, Nov. 19 Grand Geneva Lake Geneva

Friday, Dec. 3 Wintergreen Resort Wisconsin Dells

Wisconsin Lawyer