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Preparing for the inevitable

Bar panel to consider rule for succession planning

files_mainVirginia could put teeth into a rule that urges lawyers to make plans for their eventual inability to practice.

Lawyers in some states, including South Carolina and Florida, are required to designate a successor attorney to take charge of client files in case the lawyer is unable to continue practice. Virginia has no such rule, but a Virginia State Bar committee is looking at whether it might be a good idea.

One consideration is the amount of money Virginia lawyers already are paying to manage the accounts of deceased or impaired attorneys who failed to make a plan for their incapacity. The FY 2019 budget for receiverships was $225,000. For 2020 it is $200,000. There were five open receiverships as of July 1, the bar reported.

A receivership for one attorney who died in 2016 had incurred nearly $102,000 in expenses as of last month, with more expected. Such costs are incurred by the 30,000 active Virginia lawyers who pay annual dues.

The VSB called around to ask about mandatory succession rules in other states: “Some have them, some don’t, some say, ‘We sure could use one,’” one bar leader said.

Rules exploration

A comment to Rule 1.3 of the Rules of Professional Conduct currently says that a lawyer “should plan” for client protection in the event of the lawyer’s incapacity. The plan “should” be in writing and “should” designate a successor.

The bar views competent representation as including a plan to finish the representation in case of incapacity, according to a summary by VSB Executive Director Karen A. Gould in the August edition of Virginia Lawyer. But the rules include no mandate.

If Virginia does require mandatory succession planning, the rule change likely will originate from the rules committee of the Committee on Lawyer Discipline, which sets policy for the regulation of lawyers.

So far there is no momentum for any specific proposal.

“We haven’t really got our arms around the whole problem,” said Peter A. Dingman of Alexandria, chair of the COLD rules committee. “My goal at this point is, by the end of the year, we have at least come up with a recommendation for an approach.”

It’s an original project, he said. “Generally, COLD has a proposed rule before it. This time, we’re sort of starting from scratch,” Dingman said.

“There is a question how efficacious the bar can be in dictating to people how they should practice law,” he said.

Perils of failing to plan

For more than two decades, Patricia A. Woodward of Warrenton has worked as a receiver for the accounts of departed lawyers, most of whom died in the midst of practice. All of them made zero plans for their offices in case of their incapacity, she said.

One receivership now open in Charlottesville involves hundreds of client files, a bar official said.

“Not having something in place can be a very expensive proposition,” Woodward said of receiverships generally. Clients appear and claim they never received services they paid for. The receiver, and sometimes bar staff and volunteers, have to sort through those claims.

Malpractice insurance is often lacking. “That’s often the last thing that gets paid with attorneys who have problems financially,” Woodward said.

Accounting for the details of defunct practices requires lawyers willing to serve as receivers for fees capped at $120 an hour. Woodward said she’s not taking any new receiverships because of that cap.

“It’s hard to pay overhead at that rate,” she said.

Lawyers urged to consider the end of practice

Rule or no rule, lawyers should make at least some plan for the prospect of their unavailability, experts say. Lawyers, like Woodward, who deal with the fallout from a suddenly terminated law practice say it’s something every lawyer should think about, even lawyers in their 30s and 40s.

“Thinking about one’s demise is important. We all are going to meet our end at some point,” Woodward said.

It’s a message that’s been preached for years at legal seminars by attorneys like Frank O. Brown Jr. of Richmond. Alexandria elder law attorney Barbara S. Anderson is another advocate.

“Things happen to people that we can’t expect,” Anderson said. “Having everyone look at succession planning is important,” she added.

“I feel very strongly that every lawyer should have a plan in place in case they are suddenly not available or if their office burns down,” Anderson said.

Step by step

The VSB has a step-by-step guide online for protecting client interests in the event of a lawyer’s disability or death: https://www.vsb.org/site/publications/planning-ahead. There are even forms available for download.

Step one is simply finding another lawyer willing to help close your practice. The question to ask is who do your trust your clients with when you’re not able to provide the services, Woodward said.

Step two is drafting written instructions to that attorney and to your family and your office staff. Update the instructions periodically.

Step three is discussing your thoughts with those people.

“Tell your staff – these are the attorneys I would recommend,” Woodward said.

Step four suggests details to be addressed in a written agreement with the successor attorney.

There’s still more to do, said Woodward. Get the client files in order, and get a sense of which are the active cases. Make sure your calendar is up to date.

“I am a solo practitioner. I know the pain of administrative tasks. They are very time consuming, but necessary,” Woodward said. In death, “you don’t want your name to be cursed,” she added wryly.

She offered some other unconventional advice: “Don’t keep in your office things you don’t want others to find.”

She said office inventories have turned up copies of Penthouse magazine, condoms in a lawyer’s desk, and even bloodstained clothing preserved as evidence from a 2-year-old criminal case.

“Try to do some spring cleaning,” she said.