I am a 55 year old sole practitioner in Chicago. I have two staff employees. I have recently been thinking about what I would do if I became sick or disabled? How would I take care of my clients and my employees? Would you share your thoughts in this regard?
While many lawyers and law firms are beginning to think about long range succession issues and the need for long range succession plans, many have not yet addressed the shorter range issues. At a recent presentation on succession/exit planning I was asked by a lawyer in the group the following question:
“What if something happens to me today or tomorrow – what is my backup plan?"
My presentation was focused on the longer term retirement issues but I also need to address issues such as short term illness, disability, death, and even vacations.
Many solo lawyers are in “reactionary mode” and have not adequately prepared backup plans in the event that, in the short term – prior to retirement – something would happen to them. For example:
Sound practice continuation arrangements can solve this dilemma and preserve practice value and can help prevent a lawyer’s spouse or immediate heirs from facing a hasty sale or disposition of the practice in an emergency. A practice continuation arrangement can also give lawyer practitioners, their staff, and their family’s peace of mind.
What Is a Practice Continuation Arrangement
A practice continuation arrangement is an arrangement – typically in the form of an agreement or contract – made between an individual lawyer or a small law firm and another lawyer or law firm. The arrangement describes a course of action to transfer a lawyer’s practice and sets payment for its value. In the event of vacation, temporary or permanent disability, or death a practice continuation arrangement protects the practice, the business interests of the lawyer or law firm’s clients and the financial interest of the lawyer and his or her family.
There are different kinds of practice continuation arrangements. Typically a lawyer enters into a one-on-one agreement with another sole proprietorship, partnership or professional corporation in the community. Agreements can range from simple “dual coverage for each other” for vacation or other temporary absences to sale of the practice in the event of long term disability or death.
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John W. Olmstead, MBA, Ph.D, CMC
Posted at 07:45 AM in Succession/Exit Strategies
Tags: Law Firm Succession; Law Firm Practice Continuation Arrangements