Oregon State Bar Bulletin — AUGUST 2012
Managing Your Practice
Planning Ahead:
It's Never Too Early to Plan, but Frequently Too Late
By Sheila M. Blackford

Retirement is looming on the horizon for many members of the baby boomer generation, and their numbers continue to rise in Oregon as elsewhere. For others, the retirement date is an indistinct speck on the horizon, and starting to plan seems premature. But it’s not. Lawyers have a professional and ethical obligation to have an exit strategy in place just in case “life happens.”

This is not new. Lawyers have been nudged and advised to plan ahead, especially if they are sole practitioners, for years.

In 1992, the ABA issued its Formal Ethics Opinion 92-369, Disposition of Deceased Sole Practitioners’ Client Files and Property:

To fulfill the obligation to protect client files and property, a lawyer should prepare a future plan providing for the maintenance and protection of those client interests in the event of the lawyer’s death. Such a plan should, at a minimum, include the designation of another lawyer who would have the authority to review client files and make determinations as to which files need immediate attention, and who would notify the clients of their lawyer’s death.

In 1999, the PLF first published its popular handbook, “Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death.” Now in its 2011 version, one copy of this handbook is available free to any Oregon lawyer who requests it. It can be downloaded as a PDF publication from the PLF website (www.osbplf.org). Out-of-state lawyers can purchase a copy for $15. As the handbook explains,

Although it is hard to think about events that could render you unable to continue practicing law, freak accidents, unexpected illness, and untimely death do occur. Following the suggestions in this handbook will help to protect your clients’ interests and will help to make your practice a valuable asset that can be sold to benefit you or your estate. In addition, it will simplify the closure of your office — a step your family and colleagues will very much appreciate.

In 2005, the Oregon State Bar issued Formal Ethics Opinion 2005-129, Competent Representation, Information Related to the Representation of a Client: Responsibilities on Death of a Sole Practitioner, which stresses that planning ahead is part of the obligation of competent representation. ORS 9.705–9.755 helpfully sets forth procedures for placing a nonperforming lawyer’s practice under the court’s jurisdiction to protect the lawyer’s clients. However, there are immediate problems with potentially serious consequences for the solo attorney without employees:

For a lawyer who has no partners, associates, or employees, however, there could well be a significant lapse of time after the lawyer’s death or disability during which the lawyer’s telephone would go unanswered, mail would be unopened, deadlines would not be met, and the like.

The duty of competent representation includes, at a minimum, making sure that someone will step in to avoid client prejudice in such circumstances. The person may, but need not, be a lawyer. Depending on the circumstances, it may be sufficient to instruct the person that if the lawyer dies or becomes disabled, the person should contact the presiding judge of the county circuit court so that the procedure set forth in ORS 9.705–9.755 can be commenced.

First Things First
Your first step in planning ahead is to find someone to close your practice in the event of your death, disability, impairment or other incapacity. It is not required in Oregon for this to be an attorney, but choosing a lawyer is preferable for obvious reasons. Frequently, another solo attorney will be willing to enter into an arrangement if it can be reciprocal. It is most helpful if you both execute written agreements to clarify what you will do under your arrangement. You will want to have a signed consent form that authorizes the assisting attorney to contact your clients for instructions on transferring their files, obtaining court extensions and providing notice to all relevant people of the closure of your law practice.

Scope of Duty
Clarify the scope of the assisting attorney’s duty to you and your clients. If the assisting attorney represents you as your attorney, then the assisting attorney may be unable to represent some or all of your clients because he or she owes a fiduciary duty to you. Unless you consented, the assisting attorney would be forbidden to inform your clients of your legal malpractice or ethical violations and instruct them to obtain independent legal advice. However, if the assisting attorney is not your attorney, then the assisting attorney may have an ethical obligation to inform your clients of your errors or potential errors because he or she owes a fiduciary duty to your clients.

Trust Account
Your lawyer trust account must be addressed properly in any plans. For purposes of checks and balances, it is a good idea to have someone who is not your assisting attorney as the authorized signer on your lawyer trust account.

Another reason for these two roles to be held by different people is to prevent conflicting fiduciary duties. This can arise when the assisting attorney is your attorney, and, in performing the dual role of authorized signer, finds misappropriations in your trust account. In this situation, he or she has conflicting fiduciary duties regarding informing your clients and instructing them to obtain independent legal advice or to contact the OSB Client Security Fund.

The idea of authorizing trust account access to someone else may make you blanch, as visions of the account being cleaned out fill your head. Consider an additional safeguard: Designate a third person to hold a power of attorney that is limited to handling the trust account. This third person would be instructed to release this authority to the named agent or attorney-in-fact only upon your written instructions or upon determining that you are unable to handle the trust account due to your disability, impairment or death. Essentially, you are creating a springing power of attorney that has a condition precedent to become effective.

Be sure to check with your own banking institution to complete any paperwork required for its records to authorize someone to sign on your lawyer trust account. Your bank will not accept the agreement unless it complies with the bank’s own rules. Some banks will balk at honoring even a validly signed power of attorney as access to a lawyer trust account, unless there is a valid signature card with this additional signer on file.

Why this is critical: if there is no valid authority, then there will need to be a court proceeding just to sign a refund check to a client to take to his or her new attorney. If you become incapacitated, there will need to be a conservatorship; if you die (i.e., the lawyer is deceased), there will need to be a probate. Think of the delay waiting for the court to order access!

Law Firm General Bank Account
Your plans must also properly address your law firm’s general bank account. Again, for checks and balances, it is a good idea to have someone who is not your assisting attorney as the authorized signer on your law firm general bank account. You may want this authorized signer to be the same person who is responsible for your trust account. In other words, you’d have one assisting attorney closing the practice and another authorized signer to handle the financial accounts including the trust account.

If your law firm general account is at a different financial institution than your lawyer trust account, don’t forget to check with this banking institution to complete any paperwork required for its records to authorize someone to sign on your law firm general account. Again, the bank will not accept the agreement unless is complies with its own rules. Again, it may require execution of its own forms, for instance.

This is critical, because without valid authority, there will need to be a court proceeding just to sign a check to pay the rent or pay the staff. If you become incapacitated, there would need to be a conservatorship; if you die, there would need to be a probate. The delay could become an unnecessary burden for all involved.

Client Notification
It is a good idea to let your clients know that you have planned ahead. The easiest way to do this is to include this information in your retainer agreements and engagement letters. Not only is this reassuring to clients who wonder what will happen to them if something happens to you, but also it provides your clients with details of your arrangement and gives them an opportunity to object. Your client’s signature on the retainer or fee agreement then provides written authorization for the assisting attorney to proceed on the client’s behalf, for everything from obtaining any necessary extensions from the court to transferring the client file to a successor attorney of the client’s choosing. Most importantly, this written consent allows the disclosure of confidential information; after all, even the name of your client is confidential information. Realize that your assisting attorney will need access to even limited confidential client information: the name and contact information of the client, the nature of the matter and the parties involved.

Later, when you plan is implemented, your clients will need to be notified by the assisting attorney about the imminent need to close your office because of your disability, impairment or death. The client doesn’t need to know personal details about you (the lawyer), just that due to ill health or death you are unable to continue representation and that the client needs a new attorney.

Planning Ahead Forms Available From PLF
All of the forms contained in the PLF publication “Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death” are available on the PLF website at www. osbplf.org and can be downloaded in Word or WordPerfect for easy customization. See Practice Aids and Forms under Loss Prevention and then select Planning Ahead to Protect Your Clients for the following:

Short and long form agreement. Agreement forms for clarifying your arrangement with assisting attorney for closing your office and authorized signers on your lawyer trust account and law firm general account.

Limited power of attorney. A power of attorney form limited to authorizing your agent or attorney-in-fact to handle your lawyer trust account, law firm general bank accounts and law firm safe deposit box or boxes.

Specimen signature of attorney-in-fact (notarized). It is always a good idea to attach a notarized specimen signature of the attorney-in-fact to a power of attorney document, as it helps with authentication.

Letter of understanding. This provides written instructions to another person to hold the limited power of attorney until notified of your impairment and to then release it to your authorized signer. This can put an extra safeguarding step into turning over the authority to sign trust account checks.

Sample will provisions. There are sample will provisions that would be necessary in the event of your death, so that the named personal representative is directed to carry out your agreement with your assisting attorney, or in the alternative, for your personal representative to have sole authority to wind down your law practice, notify clients or attempt to sell your law practice in compliance with ethics rules.

Letters of notification. There are sample letters to advise that the lawyer is unable to continue in practice, is closing the law office or from a firm offering to continue representation.

Authorization for transferring client file. The client needs to consent to the transfer of his or her client file. This sample allows the client to direct where to send it.

Request for client file. This is a sample request to have a copy of client file documents be sent directly to the client.

Office closure file tracking chart. This chart can help keep track of which clients have been contacted, what instructions have been received and when files have been sent.

Law office list of contacts. This is a great document for gathering all the important information for your assisting attorney, including computer, email and voice mail passwords!

By planning ahead, you gain the peace of mind of knowing that should some unexpected emergency require the closure of your office — short- or long-term or even permanently — your clients will be protected. This peace of mind is then shared with your clients, your family and your colleagues.

The uncertainties of life can make life exciting, but a lawyer’s duty of competent representation includes planning ahead to ensure that our clients and law practices are well cared for. Look to the PLF for resources to help you develop your plan. In addition to the handbook and forms, there is free and confidential practice management advice on an individual basis through our practice management advisor program. Call the PLF at (503) 639-6911 or (800) 452-1639 to speak with a practice management adviser. It’s never too early to plan, but frequently too late!


Sheila M. Blackford is a practice management adviser with the OSB Professional Liablility Fund. She can be reached at sheilab@osbplf.org.

© 2012 Sheila M. Blackford

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