Management Assistance Program on www.OKbar.org

Management Assistance Program

What’s Your Exit Strategy?

by D. Scott Pappas

No matter the area of law in which we practice, in our profession, we often help others transition from one place in their life to another. As litigators, we start preparing our closing during our first client interview. When drafting a new partnership agreement, a dissolution provision is never overlooked. I recently attended training focused, through the collaborative law process, on helping divorcing couples end their marriage with dignity by providing them with the knowledge and a plan to face life when single.

In each of our legal careers there will come a time, for a myriad of reasons including disability and death, when we too need to have a thoughtful plan in place on how to close our law practice. Yet, when we first set up our law office, few if any of us took the time to plan for the inevitable — its closing. While in Oklahoma there is not a specific professional responsibility rule that requires you to have such a plan, comment 5 to Rule 1.3 of our Professional Conduct Code on Diligence states: “to prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require each sole practitioner to prepare a plan, in conformity of applicable rules, that designates another competent attorney 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.”1

So what’s your exit strategy? Maybe this is the first time you ever thought about needing one. Or, like your personal estate planning, it may be something you have specifically avoided up until now. If you work in a small firm or as a solo practitioner, you don’t have the luxury of other associates among whom your case load can easily be absorbed with little disruption to the client or the new attorney. This article is written to help you develop just such a strategy.2 Remember that the thought and preparation you put into developing your exit strategy now will directly impact the difficulty you or another attorney on your behalf will experience in closing your law practice later.

Your first step is to select another attorney who is willing to close or take over your law practice in the event of you become physically, mentally or emotionally unable to continue it.3 Once selected, you enter into a formal, written agreement with this “successor attorney,”4 which should be renewed every year. This written agreement needs to include: 1) a signed consent form authorizing the new attorney to contact your clients for instructions on transferring their files, to obtain extension of time in litigation matters where needed and to provide all relevant people with notice of closure of your law practice; 2) provisions giving said attorney authority to wind down your financial affairs, to provide your clients with a final accounting and statement, to collect fees on your behalf and to liquidate or sell your practice; and 3) a mutual decision as to whether or not this new attorney will represent you as your attorney and therefore have a fiduciary duty to you,5 and/or have access to your trust account.6 

The successor attorney needs to be familiarized with your office systems and updated from time to time as those systems change.7 He or she also needs to be acquainted with your office staff.8 Take time to inform your office staff and spouse, closest relative or estate personal representative of the successor attorney, how to contact him or her and where you plan to keep the written succession agreement.9 At this point, write to your insurance carriers, your landlord, your accountant or any other professional your law firm employs, to set up in writing the arrangements necessary to facilitate a smooth transition to enable the successor attorney to work with each one of them in the future at the start of your exit plan.10

SUCCESSOR LAWYER CLAUSE

Your next step comes at the beginning of each new case by including a similar provision to the following in your attorney/client retainer/fee agreement:11

Client agrees that a successor lawyer may be appointed to temporarily assist with the case in the event of the lawyer’s illness, vacation or other similar absences. In the event of the lawyer’s death, disability, impairment or incapacity, the client agrees that a successor lawyer can review the client’s file for the limited purpose of protecting the client’s rights and can assist with the closure of the lawyer’s law practice. Client maintains the right to select a lawyer to represent him/her.

There are other steps that you need to take in the ordinary course of running your law firm that will impact the ability of you or the successor attorney later to successfully close your law practice, which include without limitation the following:12

  • Making sure all of your file deadlines, including follow-up deadlines, are on your calendaring system
  • Keeping your time and billing records up to date
  • Returning original documents to your clients in a timely manner
  • Documenting each open client file as you go so next attorney could pick right up on its status
  • Creating and/or updating your office procedures manual to include instructions on how to produce a list of client names, telephone numbers and addresses for current cases.

Your exit strategy also needs to include instructions on passwords. As Diane Ebersole, a practicing management advisor for the State Bar of Michigan, reminds us in her article, “Watch Out for That Beer Truck!”13 we forget how many passwords are used on a daily basis to operate our law offices. A partial list includes: every office computer, each server, the networked printer, your software applications, your firm’s website, online banking, legal research, credit card services, syncing services such as Dropbox, your various logins and your email accounts. She strongly suggests that we protect our passwords by making them stronger, sharing access with at least one trusted individual, and perhaps even using a password manager, which allows you to have many passwords protected in an encrypted environment that is accessed by a “master password.”14 

If you ever agree to be a successor attorney, you, too, need to be informed as to the breadth of your duties. The Missouri Bar maintains on its website a two-page checklist and some necessary forms, including a letter to clients advising that his/her lawyer is unable to continue to practice.15

There is never enough time in the day to accomplish everything that must be done. However, your loss should be the hardest thing that your loved ones and colleagues have to go through at that time — not the closing of your law practice. Consider getting your exit strategy in place before next year dawns.

1. See 5 O.S. §x. This comment also directs our attention to Rule 28 of the American Bar Association Model Rules for Disciplinary Enforcement providing for court appointment of a lawyer to inventory files and take other protective action in absence of a plan providing for another attorney to protect the interests of the clients of a deceased or disabled lawyer.
2. The Missouri State Bar has an invaluable handbook that leads you step-by-step through this process, which can be viewed at www.goo.gl/Flmrj. See Planning Ahead, A Guide to Protect Your Client’s and Your Survivor’s Interests in the Event of Your Disability or Death, publication approved for distribution by the Missouri Bar Board of Governors on Nov. 18, 2005.
3. See id. at p. 1.
4. A long and short version of a successor agreement form can be found in the attachments to the Missouri handbook. See id.
5. If the successor attorney represents you, then s/he can not inform your clients of your legal malpractice or ethical violations. See id. at p. 2.
6. See id. at pp. 1-2.
7. See id. at p. 9.
8. See id.
9. See id.
10. See id.
11. Language donated by Jim Calloway, see also, the Missouri guide at pp 3, 9 and forms in the attachments.
12. See checklist in the Missouri guide at p. 9.
13. Volume 38 Number 2 Law Practice Magazine, March/April 2012, ABA Law Practice Management Section.
14. See id.
15. See Missouri guide at pp. 10-11 and forms in attachments; see also Handbook for Court-Appointed Inventory Attorneys, Supreme Court of the State of New York, Appellate Division: Second Judicial Department, January 2008.

About The Author

D. Scott Pappas practices in Stillwater and focuses primarily in the areas of family law, juvenile law and building a collaborative law practice and awareness in Oklahoma. She is a member of the OBA Board of Governors and has served on numerous OBA committees and task forces. She graduated from Fordham University Law School in 1991 and practiced in New York before returning to her hometown.

Originally published in the Oklahoma Bar Journal, October 6, 2012 - Volume 83, No. 26