Law Practice Tips

Indispensable People
By Jim Calloway, Director
OBA Management Assistance Program

She's gone.

The unexpected death of Debi Garner has left a huge hole in many of our lives. The OBA has lost an essential member of our staff and great morale booster. Surely everyone who ever attended an OBA Solo and Small Firm Conference knew Debi. I've lost a trusted loyal and capable assistant. I've also lost one of my best friends.

Debi first started to work for me in 1987. She didn't work for me continuously since that time, but for most of it. Twice she left to pursue other opportunities. Twice, at pivotal times in my life, I decided to hire her back. One time I was with a group of lawyers who split up and I was left as the most veteran lawyer in my group with a very inexperienced staff. I called on her to come back and manage the office. The second time was when the late Marvin Emerson, former Executive Director of the OBA, offered me a position here. As soon as I hung up the phone with Marvin, I called Debi to invite her to come to work for me.

The lawyers reading this who have not yet had the opportunity to establish a long term relationship with a truly top notch professional legal assistant may not appreciate how truly great it is. They become an indispensable person in your life. Those who have had this experience know what I mean. The years of familiarity yield an ease of communication that seems like telepathy sometimes. The lawyer is better able to focus on the legal tasks at hand, confident that things are being handled correctly at the office.

We all have indispensable people in our lives. At least we all should have. People we can truly depend upon are very important to all of us. In our personal lives, these people are our friends and family. In our professional lives, these people may be co-workers, other professional contacts or maybe even clients. Many of you have an indispensable assistant or office manager.

We lawyers would like to think of ourselves as indispensable, too. We are probably considered indispensable by members of our family, our friends and, hopefully, by our clients. One of the stresses of the practice of law comes from the weight of shouldering so many burdens of others.

But we are reminded by Debi's untimely death that none of us are, in fact, indispensable. We will all pass on from this world at some time. Staff members may also move on for a variety of reasons: health problems, better employment opportunities, family relocations and other reasons.

There are lots of things one can do to guard against the impact of the sudden loss of indispensable people. We can exercise and take better care of ourselves. We can purchase insurance. We can always wear our seat belts. We can treat our employees fairly. In short, we can make wise decisions in many areas.

The estate planning lawyers would remind us that we can arrange our affairs so that impact on our family can be minimized in the event of our deaths.

But my role is not to discuss insurance or estate planning or even seat belts. Law office management is the focus here. The way to minimize the loss of an indispensable person, staff member or lawyer, can be summed up in three words - good office systems.

Debi Garner and I not too long ago had an opportunity to discuss the death of law firm members and law firm succession.

We received a communication from Donna Dirickson, President of the Custer County Bar Association. There had been some deaths of solo practitioners in their area, generating several difficulties and creating much work for the lawyers who volunteered to help close their practices. She wanted me to come and talk to their bar association about these issues and how such problems could be minimized in the future. I agreed with a slight bit of trepidation. Law firm succession planning is an important component of law office management and, yet, truthfully most of us do not want to spend hours thinking about death and disability.

Most larger law firms have procedures and systems that provide procedures for dealing with the loss of a lawyer or indispensable staff member. I was in law school when I first learned about things like "key man insurance." (I'm sure there is a more gender neutral term used now.) Law firms with several lawyers at least have the available talent to step in and "cover" when a lawyer is out of action temporarily or permanently. They also usually have a system based on prior experience, if nothing else.

Many solo and small firm lawyers do not have these systems. The death of a solo practitioner can generate many problems if no advance thought is given and no provisions have been made. It is even possible that a malpractice claim could be generated after the lawyer's death. In any event, these problems would have to be handled by a lawyer's friends, family or fellow lawyers.

In doing the research for that project, we found some interesting resources. A lot of good material came from the Oregon State Bar Professional Liability Fund. Several people also made comments to me about this topic that were interesting. Shawnee attorney Mary Black mentioned that she was soon going on vacation and had to do her "semi" work first. When that term prompted a question from me, she smiled and said she wanted her desk to be fairly neat before she left in case she was hit by a semi on vacation and someone else had to come in and take over.

The OBA Management Assistance Program has several methods of communicating with our OBA members. Debi and I were more than happy to respond to the Custer County request, but we were not sure how to best make further use of the material. We had a concern that most county bars associations would not have the interest in hearing this type of presentation for a luncheon speech. We jokingly concluded the result could range from spoiled appetites to a much smaller than usual turn-out at the meeting. We decided for the time being not to use this material for a Bar Journal article for similar reasons. We decided instead to create a pamphlet to distribute at the OBA Annual Meeting, and more importantly, to have available for immediate distribution should we get an inquiry.

Those who listened to the program in Custer County this summer seemed to appreciate it. But it was not my usual brand of humor and entertainment mixed with teaching. It was a serious program. I also passed out the pamphlets later at a Canadian County Bar Meeting and we discussed the issues briefly. District Judge Edward C. Cunningham joined in the discussion actively, indicating that he had faced these types of problems very recently in his courtroom as the result of the deaths of local lawyers. He pointed out that some of my hypothetical examples really happened and created much tension and trouble.

So, we ask our readers to review what arrangements they have made to allow others to carry on in their absence or to protect them if they lose an indispensable person in their lives. You have by now learned that I have reconsidered my decision not to publish this material in the Bar Journal. Instead we will publish the pamphlet exactly as Debi and I completed it. We hope that you will make use of it to protect either yourself or your heirs from some of the problems that result from the loss of indispensable people in your professional life.

Planning Ahead: Protecting Your Client's Interests in the Event of Your Disability or Death
Prepared by the Management Assistance Program of the Oklahoma Bar Association

It is hard to think about events that could render you unable to continue practicing law. Unfortunately, freak accidents, unexpected illness and untimely death do occur and, if they happen to you, your client's interests may be unprotected.
Although there are no specific requirements in the Oklahoma Rules of Professional Conduct, lawyers should make arrangements for their client files to be maintained in the event of their own death, disability, impairment or incapacity (See Rule of Professional Conduct, Rule 1.1 and 1.3. See also, ABA Formal Op 92-369.) The information in this pamphlet was designed to assist you in fulfilling these ethical responsibilities.
Have a Plan
Step 1: Find someone, preferably an attorney, to close your practice in the event of your death, disability, impairment or incapacity.

Step 2: Draft written instructions to your family, the attorney and your office staff containing:
Information and guidance to help minimize uncertainty, confusion and possible oversights;
Instructions pointing the way to specific detailed information stored elsewhere. These letters of instruction should be updated and reviewed periodically to be certain they are complete and current.

Step 3: Discuss these items with the appropriate person to avoid confusion or delay of actions in the event of your death or disability.

Step 4: The arrangement you enter into with the attorney should include a variety of features:
A signed consent form authorizing the attorney to contact your clients for instructions on transferring their files;
Authorization to obtain extensions of time in litigation matters where needed;
Authorization to provide all relevant people with notice of closure of your law office;

The agreement should also include instructions as to:
the disposition of closed files;
the disposition of your office furnishings and equipment;
drawing checks on the office and trust accounts;
payments of current liabilities of the office;
billing for and collecting fees on open files;
collecting accounts receivable;
access (password) to your computer;

The agreement could also include provisions that give the attorney authority to:
wind down your financial affairs;
provide your clients with a final accounting and statement;
collect fees on your behalf;
liquidate or sell your practice.

Also, any arrangements for payment by you or your estate to the attorney for services rendered can be include in this agreement.

Conflicts of Interest and Confidentiality

Although the designation of another lawyer to assume responsibility for a deceased lawyer's client files would seem to raise issues of client confidentiality, it is reasonable to read Rule 1.6 as authorizing such disclosure under the circumstances. Rule of Professional Conduct 1.6(a) ("A lawyer shall not reveal information relating to representation of a client... except for disclosures that are impliedly authorized in order to carry out the representation.") Remember that if the attorney discovers evidence of malpractice or ethical violations, he or she may have an ethical obligation to inform your clients of your errors.

The attorney must also be aware of conflict of interest issues and must do a conflicts check if he or she is either providing legal services to your client or reviewing confidential file information to assist with referral of clients' files.

The Trust Account

If you do not make arrangements to allow someone access to the trust account, your clients' money will remain in the trust account until a court orders access. This is likely to cause delay and put a client in a difficult position. On the other hand, if you allow one access to your trust account and then the person misappropriates money, your clients will suffer and you or your estate may be held responsible. There is no simple answer to this and many important decisions to make.

If you want to allow access to your trust account, there are many alternatives varying from general access to access contingent upon the occurrence of an event (disability, incapacity or some other reason you are unable to conduct your business affairs.) This second approach also, involves selecting someone (such as a spouse or other family member) to hold the power of attorney until they make the determination that the specific event has occurred. If you are going to have the authorization for access to your trust account contingent upon an event or for a limited duration, the terms should be specified in a written agreement, and you should consult with your bank manager for confirmation that the bank will honor the agreement.

Include Family and Staff

As mentioned earlier, this plan should also include written letters of instruction to your family and office staff. These letters should ease the settlement of your estate by telling your survivors what you have, where it is, how to get it, and what to do with it. Your family, the designated attorney and your office staff need to share information and coordinate their activities in the event of your death or disability.

Generally, these instructions should cover:
all pertinent personal and family information and financial information;
identification and location of all estate planning documents;
location of personal insurance records, among other things.

Guidance to your staff should include directions as to:
notifying your professional liability carrier;
notifying all courts, boards and administrative agencies where you practice;
closing your office;
reviewing all depositories, including trust accounts and safe contents;
coordinating with your accountant.

In a sense, you are creating a system for the settlement of your own estate and the orderly winding up of your law practice.

Other Steps

There are a number of other steps that you can take while you are still practicing to make the process of closing your office smooth and inexpensive. These steps include:

1. Making sure that your office procedures manual explains how to produce a list of client names and addresses for open files;
2. Keeping all deadlines and follow-up dates on your calendaring system;
3. Thoroughly documenting client files;
4. Keeping your time and billing records up-to-date;
5. Familiarizing the attorney with your office systems;
6. Renewing your written agreement with the attorney every year;
7. Periodically purging your old and closed files;
8. Making sure you do not keep clients' original documents, such as wills or other estate plans.

If your office is in good order, the attorney will be able to close your practice with a minimum of time and costs. Your law office will then be an asset to be sold and the proceeds remitted to you or your estate.

Special Considerations

If you simply authorize another attorney to administer your practice in the event of death, disability or incapacity, that authority generally terminates when you die. The personal representative of your estate has the legal authority to administer your practice. He or she should be told about the appointed attorney and your desire to have them carry out the duties of your agreement. The personal representative can then authorize the attorney to proceed.

It is imperative that you have an up-to-date will and/or trust nominating a personal representative so that probate proceedings can begin promptly and the personal representative can be appointed without delay, avoiding a dispute with family members and others.

For some sole practitioners, the legal practice may be the only asset subject to probate. Other property will likely pass outside probate directly to a surviving joint tenant. This means that unless you keep enough cash in your law practice bank account, there may not be adequate funds to retain the attorney or continue to pay staff and other expenses during the transition period. One solution to this problem may be to maintain a small insurance policy with your estate as the beneficiary, or your surviving spouse or other family member as beneficiary, with instructions to lend funds to the estate if needed. The issue of having sufficient funds occurs in the event of disability and incapacity as well. In order to prevent this problem, you may want to maintain disability insurance in an amount sufficient to allow for expenses incurred in closing your practice.

Generally, a personal representative has broad powers to continue a decedent's business to preserve its value, sell or wind down the business, and hire professionals to help administer the estate. However, for the personal representative's protection, you may want to include language in your will that expressly authorizes that person to arrange for closure of your law practice.

Start Now

We encourage you to select an attorney to assist you and follow these basic guidelines. This is something you can do now, at little or no expense, to plan for your future and protect your assets. Don't put it off - start the process today.

This pamphlet was prepared by the Oklahoma Bar Association, Management Assistance Program, which wishes to acknowledge their use of Planning Ahead, a Guide to Protecting Your Client's Interests in the Event of your Disability or Death by Barbara S. Fishleder, published by the Oregon State Bar Professional Liability Fund.

Management Assistant Program
(405) 416-7008
Jim Calloway, Director OBA-MAP
1901 N. Lincoln Boulevard
P.O. Box 53036
Oklahoma City, OK 73152
(405) 416-7008
www.okbar.org

Originally published in the Oklahoma Bar Journal October 5, 2002 - Vol. 73; No.29