It’s not too grandiose a statement to say that attorneys are some of the world’s leading experts on due diligence. It’s for this reason that it is particularly important to be prepared for the worst-case scenario at all times, be in regarding a case or the state of your practice itself. It’s not a fun topic to dwell on, but as an attorney, it is crucial that you perform due diligence by ensuring that your clients will be okay in the event of your death or disability. There are several steps that can be taken to ensure that the process of closing your law firm or handing it off is both inexpensive and intuitive.
Just to be clear, the ABA Rules of Professional Conduct address the issue of your death or disability in Comment  to Rule 1:3, which states:
To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer 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. Cf. Rule 28 of the American Bar Association Model Rules for Lawyer 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 lawyer to protect the interests of the clients of a deceased or disabled lawyer).
There are several steps that you should take right now to ensure that your clients aren’t left out in the cold. It’s also a good idea to make sure you leave your practice in good standing by making sure the bills are paid and the staff receives their salary.
8 Steps in Addressing The Issue of Your Death
Lawyer’s Mutual produced an excellent guide on the topic entitled “Plan Ahead for Closing a Law Practice.” It outlines eight steps that you should take to ensure that your clients and your business are protected.
Step one is to find competent agents who will take care of your business if you die or become disabled. You will need to make arrangements with an assisting attorney. This attorney will either handle closing your office or run it on a temporary capacity.
Next, you will need to find a person to serve as an authorized signer. This appointed individual is to temporarily take control of your law firm so that he or she can transfer the appropriate files; request extensions, as needed, in litigation matters; and provide notice of closure.
Whether you decide on appointing one or several individuals to manage your law firm, it should be known that you’ll also need to appoint someone to oversee your trust funds. This is to include the termination of your lease, utilities, and services; retaining the appropriate accounting records; and closing bank accounts.
This two-party system will provide checks and balances to the operation of your law firm.
Authorization forms, Plans, and Instructions
The second step is to prepare necessary authorizations and instructions. One of the most important documents that the assisting attorney must have in hand is a signed consent form from you that authorizes three things: the authority to contact your clients and obtain instructions on the disposition of their files, the ability to get time extensions on matters of litigation, and authorization to notify interested parties of the closure of your practice.
Step three is to let the relevant people know about your plans. This includes your agents, your personal representative, and your staff. If tragedy suddenly strikes, it’s important to minimize confusion at this time.
How will your incapacity be determined? Will it be a note from your doctor? Prearranged signals? Reasonable suspicion? Step four is to once again plan ahead and work out detailed criteria as to what constitutes your incapacity and notification of it to the relevant parties.
While running your practice, whom does your assisting attorney represent? Does she represent you or your clients? It’s important to consider this fifth step because it makes a difference as to whom she owes her fiduciary duty. If it’s to your clients, does she then have a duty to reveal your missteps? On the other hand, if it is to you, then your confidences should be kept. The assisting attorney must check for conflicts before proceeding. This brings us to step six: creating a projected compensation plan.
How will staff and your agents be compensated? If you do not feel that your practice’s income will suffice, consider taking out insurance.
Inform Your Clients
The seventh step is to inform your clients of your plans should you die or become disabled. This can simply be done via the engagement letter or retainer agreement. The client’s signature on the agreement provides authorization for your agents to act on their behalf.
Step eight is basically maintaining housekeeping duties, such as making sure you have a detailed “office procedures” manual, that your calendar and records are up-to-date, and that you have carefully documented files.
Hopefully, you won’t need your exit plan anytime soon, but it is critical for your clients, colleagues, and family that you are as prepared as possible if a tragedy should befall you. If you must leave, leave with grace.