Sole practitioners, should take the time to develop a succession plan for your practice. While succession planning is often only thought of when considering retirement, a succession plan is also something that you should have in place for any unexpected absences from work due to illness, disability or death. In addition to the ethical and professional obligations you owe to your clients, you may also have family obligations. Not only does not having a proper plan in place put you at risk of an insurance claim, it may also be detrimental to your loved ones.
You should be aware that, if you suddenly become unable to practice as a result of illness, disability or death, and have no succession plan in place, the Law Society will be required to have a Custodian appointed to take possession of clients’ property and ensure the protection of your clients’ interests. In such circumstances, the Law Society’s focus will be on the protection of the public and not on maximizing value for your estate.
Consideration of the following proactive initiatives is important when developing a succession plan:
- Who will succeed you when you can no longer do the work?;
- How do you provide a seamless transition for clients and everyone else who deals with your practice?; and
- How do you minimize disruption to you and your family?
You may also find helpful information by searching ‘succession plan’ on these websites: www.cba.org, www.lawsociety.bc.ca, www.lawsociety.ab.ca, and www.lsuc.on.ca.
A well-planned winding up and succession plan is in your best interests as well as those of your clients and is preferable to having the Law Society seek custodianship of your practice.
Following is a list of the specific obligations you will have when you are closing your firm (with no succession plan in place):
- Schedule a Closing Audit
You should be aware that your trust account balance should be at zero before this can occur. This means that all outstanding undertakings should be completed and any leftover funds returned to clients, where appropriate.
To schedule a Closing Audit, please contact Pamela Marks, Law Society’s Professional Responsibility Administrator. Ms. Marks will give you instructions on the scheduling process. Please allow for a reasonable amount of time to schedule and complete the audit. Ms. Marks can be reached by telephone at 758-0816.
- Return or Transfer of Trust Funds
As indicated in the previous bullet, when closing a law practice, lawyers must be mindful of the fact that all trust funds must be accounted for and either used for the intended purpose (such as completion of undertakings), transferred to another lawyer or returned to clients, if requested and appropriate. Following notice to clients that you are closing your practice, if a client wishes to have his or her file and remaining trust monies transferred to a lawyer selected either by him or her or by you, you are required to follow the client’s instructions. If a client wishes to have his or her file and remaining trust monies returned, you are also required to follow the client’s instructions, pending any unresolved disputes related to the monies. In some cases, trust monies may have to be paid into Court pending resolution of any dispute. Please note that any final statement of account rendered to the client can be subject to taxation.
- Fulfill Your Responsibilities to Clients
You must send letters notifying all clients of the specifics of the closure in a timely manner.
- Transfer Open Files
After obtaining written permission from the client, all open files must be transferred to another lawyer or personally collected by the client so that the client can retain another lawyer.
- Return or Store Closed Files
All closed files must be sent to or collected by clients. Arrangements must be made for safe storage or a contact name must be given to the Law Society of Newfoundland and Labrador naming the lawyer in charge of any closed files that remain at the date of closure. This will allow the client to have easy access when he or she is prepared to collect.
- Submit Appropriate Forms
Once the above matters have been considered, you are required under the Law Society Rules to file Form 2.20A, Notice of Change in Association of Practice, or Form 2.19A, Application for Non-Practicing Status or to Resign Membership with the Law Society of Newfoundland and Labrador. These forms can be found on the Law Society’s website or by contacting Renee Whalen at 722-4740.
Please feel free to contact, Brenda Grimes, QC directly at 722-4795 should you have any questions or concerns about succession planning.