I am the owner of a six lawyer business transnational law firm in South Florida. I have been practicing law for twelve years and I started my present practice nine years ago. I am 42 years old. The five attorneys that work for me are all associates of which two are very experienced seasoned lawyers and three have less than five years experience. Since I am still a young attorney I am not concerned about retirement or long-term succession planning, maybe I should be, but I am concerned about the short-term. What would the firm do if I got hit by a bus?
Your concern is the concern of many solo practitioners and sole owners of firms that have several associates but no equity partners. In fact many state bar associations are beginning to require attorneys in private practice to have written succession plans or in the very least a designated representative authorized to act on a limited and short term basis to protect the rights and interests of lawyers and lawyers’ clients in the event of an attorney’s death, disability, disappearance, practice abandonment, or any other similar event.
At the personal level a concern would be your personal income. If you are a major producer of revenue in the firm, which I assume you are, there would be a major impact on revenue and your personal income as well. Covering firm overhead would be an issue as well. Part of this can and should be covered with insurance. You might want to consider:
The second level of concern will be at the firm level, particularly if you were to become disabled either for an extended period or permanently or die. In this situation a key question would be whether or how the firm would sustain itself or even continue. Will the work continue to come in and who would do the work? If you have a firm administrator he or she would be there to manage the business-administrative side of the house but who (lawyer) would manage the client/project side (client service side) of the firm? This would generally fall to the other partners, but until such time as you have partners another attorney in the firm needs to be identified and groomed for such a role. If you decide that a non-equity partner tier is appropriate for your firm this role might fall to a non-equity partner until such time in the future that you have, if you have, other equity partners.
You would want a succession plan or what I call a practice continuation arrangement. A practice continuation arrangement is an arrangement – typically in the form of an agreement or contract -made between you and an attorney or attorneys in the firm or outside lawyer or law firm. The arrangement would describe a course of action to manage and cover and possibly transfer your practice and sets payment for its value. In the event of temporary or permanent disability, or death, a practice continuation arrangement protects the practice, the your business interests or your clients and your and your family’s financial interests.
Your plan should include records pertaining to client identity and financial records as well a list of passwords and other security protocols necessary to access the attorney’s electronic business files, calendar, and other law office related records in a location known and accessible by the attorney’s designated representative or office personnel.
John W. Olmstead, MBA, Ph.D, CMC