Should States Require Private Attorneys to Maintain Succession Plans?

Image by LEANDRO AGUILAR from Pixabay 

Emily Schmidt, Associate Member, University of Cincinnati Law Review

I. Introduction

Around seventy-five percent of attorneys work in private practice.[1]  From sole practitioners to lawyers at large firms, attorneys must prepare for the days they are no longer able to practice law. Succession planning proactively protects clients and colleagues in the event of an attorney’s death or incapacitation.[2] Only four states require private practice attorneys to plan for an end-of-career transition by designating another attorney to assist clients and conclude business.[3] Meanwhile, thirty-eight states merely recommend succession planning.[4]

This article will examine how jurisdictions mandate or recommend succession planning for attorneys. Section II will provide background on the sources of these rules and look to the four states that mandate succession planning: Arizona, Florida, Iowa, and Maine. Next, Section III will discuss the importance of succession planning and the benefits of making succession planning a mandatory requirement for attorneys. Finally, Section IV will conclude by recommending that more jurisdictions mandate succession planning for attorneys.

II. Background

The American Bar Association’s (“ABA”) Committee on Ethics and Professional Responsibility issued a Formal Opinion on succession planning in 1992.[5] The opinion stated that the ABA Model Rules of Professional Conduct (“Rules”) infer “that [sole practitioners] should make arrangements for their client files to be maintained in the event of their own death. . . . at a minimum [to] include the designation of another lawyer” who would have the authority to look over files and notify clients of their attorney’s death.[6]

The Rules guide most jurisdictions in creating legal ethics rules. Rules 1.1 and 1.3 relate to competency and diligence.[7] Both rules support the conclusion that attorneys are ethically obligated to succession plan.[8] Rule 1.1 states that a lawyer shall provide competent representation to a client, which “requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”[9] Rule 1.3 adds that a lawyer “shall act with reasonable diligence and promptness” when representing clients.[10] The ABA opinion on succession planning stated that in order for attorneys to diligently prepare to represent clients, the preparation process must include planning for an attorney’s death or incapacitation.[11] Because death and incapacitation can occur unpredictably, attorneys must be diligent in protecting their clients by creating and maintaining succession plans.

The ABA Formal Opinion on succession planning is not authoritative in any jurisdiction, although ABA interpretations often influence courts and state bar associations.[12] In 2002, the opinion likely inspired a new Comment to Rule 1.3 on diligence, which reads:

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.[13]

However, not every jurisdiction has adopted Comment 5. Further, the Comment merely recommends succession planning by using the phrase “diligence may require”[14]—as opposed to a mandate that “diligence shall require.”

Four states currently mandate succession planning for attorneys,[15] while thirty-eight states recommend the practice.[16] Eight states have no rules regarding succession planning for lawyers.[17] Succession planning requirements—whether mandated or recommended—look slightly different in every jurisdiction. Additionally, jurisdictions use a variety of terms to refer to the concept of succession planning, such as designating an “inventory attorney”[18] or “designated representative,”[19] and “proxy planning.”[20]

A. Jurisdictions Requiring Succession Planning

i. Arizona

In Arizona, Supreme Court Rule 41(i) became effective on January 1, 2016, mandating sole practitioners in the state to create succession plans.[21] Interestingly, the State Bar of Arizona never adopted Comment 5 in the state’s Rules of Professional Conduct.[22] Nevertheless, the Arizona Supreme Court made it clear that lawyers have the duty and obligation “to protect the interests of current and former clients by planning for the lawyer’s termination of or inability to continue a law practice, either temporarily or permanently.”[23]

A succession plan for attorneys in Arizona must (1) designate another lawyer to review client files and determine whether any files need immediate attention, and (2) designate someone to notify the lawyer’s clients of the lawyer’s death or incapacitation.[24] To aid attorneys in creating succession plans, the State Bar of Arizona provides extensive online resources, including a succession planning manual and sample forms.[25]

ii. Florida

The Rules regulating the Florida Bar created a new provision to Rule 1-3.8, effective January 2006, requiring every member of the Florida Bar who practices in the state to designate another member as an “inventory attorney.”[26] In the event that a Florida attorney is “suspended, disbarred, becomes a delinquent member, abandons a practice, disappears, dies, or suffers an involuntary leave of absence due to military service, catastrophic illness, or injury,” the court may appoint the designated inventory attorney to take action to protect the interests of the prior attorney’s clients.[27]

The Florida Bar amended this provision in 2009 to exclude attorneys working for governmental entities, clarifying that only attorneys in private practice are required to designate an inventory attorney.[28] While the Florida Rule does not use the term “succession plan,” an inventory attorney essentially performs the same tasks as those required by a succession plan to protect clients’ interests.

iii. Iowa

Iowa Court Rule 39.18, adopted in 2017, outlines the requirements “for death or disability designation and authorization.”[29] Like Florida, the Iowa Rule does not use the term “succession plan.” Instead, the Rule requires Iowa attorneys in private practice to annually identify another attorney to serve as a “designated representative” in the event of death or disability.[30] The designated representative is authorized to review client files, notify clients of the attorney’s death or disability, and determine whether any immediate action is required to protect client interests.[31]

Additionally, private practice attorneys in Iowa are required to maintain a current list of active clients for their designated representative.[32] The private practice attorney must also ensure that the designated representative, when authorized, can access the client list, along with office files, records, and passwords.[33] This Rule requires Iowa attorneys to provide the basic information needed to protect clients, while permitting attorneys to supplement the plan with a separate written document. The “supplemental plan” may detail instructions for tasks such as collecting fees, paying firm expenses and client costs, compensation for staff, terminating leases, liquidation or selling the practice, and other administrative tasks[34]—all important matters to consider after an attorney has died or become incapacitated. The Iowa State Bar Association encourages attorneys to create supplemental succession plans and provides ample resources on their website to assist in the process.[35]

iv. Maine

Just two years after the ABA issued its Formal Opinion on succession planning, the Professional Ethics Commission of Maine issued a similar opinion to guide the state bar in 1994.[36] The opinion stated a clear need for sole practitioners to develop proactive plans to protect clients and keep files secure in the event of death or disability.[37] However, the opinion noted that it would be “impossible” to “promulgate what must be in every [succession] plan” due to the breadth and complexity of solo practices.[38]

Instead of mandating specific requirements for succession plans, Maine requires lawyers “engaged in the private practice of law in Maine” to provide the name of an attorney to serve as a proxy on behalf of the lawyer in the event of death or incapacitation.[39] The state defines a “proxy” as “an attorney who will act to protect the interests of clients to manage or conclude the law practice of an attorney who is incapacitated, suspended, disbarred, disappears, or dies.”[40]

Once a Maine lawyer obligatorily selects their proxy, the Board of Overseers of the Bar recommends creating a succession plan. The Board provides a “proxy planning checklist” that includes important topics to discuss like financial information, vendor information, office procedures, and file management.[41]

B. Jurisdictions Recommending Succession Planning

Most jurisdictions merely recommend that attorneys create succession plans. The recommendations stem from various sources. Of the thirty-eight jurisdictions, more than half adopted Comment 5 to Rule 1.3 of the Professional Rules of Conduct.[42] As previously discussed, Comment 5 states that the “duty of diligence may require” sole practitioners to create succession plans to appoint another attorney to review files and to notify clients.[43] Several jurisdictions recommend succession planning by supplying online resources on state bar association websites.[44] Others give attorneys an option on annual registrations forms to designate another attorney to take over upon death or incapacitation.[45] Additionally, a few jurisdictions recommend succession planning more formally through court rules or ethics opinions.[46]

III. Discussion

Succession planning is a hugely valuable tool for attorneys to utilize. While having to plan for one’s death or incapacitation can be uncomfortable—and even a bit frightening—proactive preparation benefits both clients and attorneys.

From a client’s perspective, succession planning allows for better continuity in legal services. If an attorney dies unexpectedly, with no immediate plan in place, their clients may be temporarily left without the resources they need to navigate the legal system. While most states would appoint an attorney to serve as a caretaker for the deceased attorney’s caseload,[47] this process is neither instantaneous nor seamless. It may take the appointed attorney time to sort the logistics of caring for the practice, such as finding passwords and locating client lists. Even brief lapses in legal service coverage can negatively affect clients.

For attorneys, succession planning encourages diligence and organization. By planning ahead, lawyers can assure that their clients will remain cared for. Succession planning also gives attorney a say in who may provide the future care in winding up a practice, rather than allowing the court to appoint an attorney. In contrast to court-appointed caretakers, attorneys designated by succession plans voluntarily consent to serve the role. Succession planning also requires lawyers to consistently maintain thorough records, because death or incapacitation may occur without notice.

Jurisdictions with mandatory succession planning requirements eliminate some unnecessary risks, stressors, and costs. Adequate planning allows for the attorney and their designated representative to communicate before the attorney dies or becomes incapacitated. The designee can then ask questions and clarify any lingering confusion. The attorney can plan exactly how to dissolve their practice in a cost-efficient way and attempt to retain as much value in the practice as possible. The preparation involved in creating a succession plan undoubtably decreases stress during the transition after the attorney’s death or incapacitation.

Further, the four jurisdictions that mandate succession planning have created viable models for other states to utilize. All jurisdictions could easily implement the requirement by creating an online portal for attorneys to upload information regarding their succession plan, or by requesting the information within an attorney’s annual registration paperwork. Even if a jurisdiction does not require a written succession plan, at the least, jurisdictions should require attorneys to designate another lawyer with authority to wind up the practice and protect client interests. This may eliminate the need for courts to appoint caretakers or receivers to handle deceased attorneys’ caseloads—a task for which not every lawyer may be keen to volunteer for.

Succession planning may also become increasingly relevant as the legal profession ages. Over the last decade, the number of practicing lawyers above age sixty-five has increased more than fifty percent.[48] Today, about fourteen percent of lawyers are older than sixty-five.[49] In deciding whether to mandate succession plans, jurisdictions must consider the implications of shifting demographics within the legal profession. As attorneys near the end of their time practicing, succession plans ensure a smoother transition and continuous care for clients.

IV. Conclusion

Currently, only Arizona, Florida, Iowa, and Maine mandate private practice attorneys to designate another lawyer to handle client needs and wind down a practice in the event of the attorney’s death or incapacitation. Succession planning allows attorneys to be proactive and plan for the future. While most states recommend succession planning, more jurisdictions should move to adopt formal requirements to make succession planning mandatory. Succession planning requirements are flexible and adaptable. Bar associations across the country provide a plethora of resources and templates to educate attorneys on how to create succession plans. The four existing jurisdictions with mandates for planning each function slightly differently, but the underlying purpose to protect clients remains. While it may require more work initially to collect and track data, mandating succession plans benefits legal clients, attorneys, and their colleagues.

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[1] Carla N. Carson, American Bar Foundation, The Lawyer Statistical Report: The U.S. Legal Profession in 2005 9 (2012).

[2] Succession Planning, Am. Bar Ass’n, https://www.americanbar.org/groups/professional_responsibility/resources/lawyersintransition/successionplanning/ (last visited Oct. 18, 2021).

[3] State Mandatory Succession Rule Chart, Am. Bar Ass’n (2019), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/lawyer-succession-planning-rule-chart.pdf.

[4] Id.

[5] ABA Comm. on Ethics & Pro. Resp., Formal Op. 92-369 (1992).

[6] Id. at 3.

[7] See Model Rules of Pro. Conduct r. 1.1 (Am. Bar Ass’n 2020); Model Rules of Pro. Conduct r. 1.3 (Am. Bar Ass’n 2020).

[8] See id.

[9] Model Rules of Pro. Conduct r. 1.1 (Am. Bar Ass’n 2020).

[10] Model Rules of Pro. Conduct r. 1.3 (Am. Bar Ass’n 2020).

[11] See ABA Comm. on Ethics & Pro. Resp., Formal Op. 92-369 at 2-3 (1992).

[12] Center for Professional Responsibility Publications, Am. Bar Ass’n, https://www.americanbar.org/groups/professional_responsibility/publications/ (last visited Oct. 18, 2021).

[13] Model Rules of Pro. Conduct r. 1.3 cmt. 5 (Am. Bar Ass’n 2002).

[14] Id.

[15] The four states that mandate succession planning are Arizona, Florida, Iowa, Maine. State Mandatory Succession Rule Chart, Am. Bar Ass’n (2019), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/lawyer-succession-planning-rule-chart.pdf. The Illinois State Bar Association approved a new draft rule mandating succession planning in 2018, but the rule is still awaiting final approval from the Illinois Supreme Court. See Succession and Transition Planning, Ill. State Bar Ass’n, https://perma.cc/7P3N-L367 (last visited Oct. 19, 2021).

[16] The thirty-eight states that recommend succession planning are Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. State Mandatory Succession Rule Chart, Am. Bar Ass’n (2019), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/lawyer-succession-planning-rule-chart.pdf.

[17] The eight states that do not have rules regarding succession planning are Alabama, Hawaii, Kansas, Mississippi, Montana, Nevada, New Jersey, South Dakota. Id.

[18] See Fla. Bar Reg. R. 1-3.8(e).

[19] See Iowa Ct. R. 39.18(1)(a).

[20] See Proxy Planning Checklist, State of Me. Bd. of Overseers of the Bar, https://perma.cc/PE9J-L6VW (last visited Oct. 19, 2021).

[21] David D. Dodge, Lawyer Succession Planning Now Mandatory, Arizona Attorney 10 (May 2016), https://perma.cc/NUN8-A9X7.

[22] See ER 1.3. Diligence, State Bar of Ariz., https://perma.cc/T2TX-SKAL (last visited Oct. 18, 2021).

[23] Ariz. Sup. Ct. R. 41(i).

[24] Dodge, supra note 21.

[25] Succession Planning, State Bar of Ariz., https://perma.cc/3FR3-VJ3Y (last visited Oct. 18, 2021).

[26] Fla. Bar Reg. R. 1-3.8(e). See also In re Amendments to the Rules Regulating the Fla. Bar, 916 So. 2d 655, 657 (Fla. 2005).

[27] Fla. Bar. Reg. R. 1-3.8(a).

[28] See In re Amendments to the Rules Regulating the Fla. Bar, 24 So. 3d 63, 68 (Fla. 2009).

[29] Iowa Ct. R. 39.18.

[30] Iowa Ct. R. 39.18(1)(a).

[31] Iowa Ct. R. 39.18(1)(b).

[32] Iowa Ct. R. 39.18(2).

[33] Id.

[34] Iowa Ct. R. 39.18(3).

[35] Succession Planning and Court Rule 39.18, Iowa State Bar Ass’n, https://perma.cc/PJ6F-YNCQ (last visited Oct. 18, 2021).

[36] Me. Pro. Ethics Comm., Op. 143 (1994), https://perma.cc/T3X9-JUY7.

[37] Id.

[38] Id.

[39] Me. Bar R. 1(g)(12). See also Reporters Notes, State of Me. Bd. of Overseers of the Bar (June 2015), https://perma.cc/AG4K-SS8K.

[40] Proxy Designation, State of Me. Bd. of Overseers of the Bar, https://perma.cc/6NEA-LDUE (last visited Oct. 19, 2021).

[41] Proxy Planning Checklist, State of Me. Bd. of Overseers of the Bar, https://perma.cc/5YXP-ECS8 (last visited Oct. 19, 2021).

[42] State Mandatory Succession Rule Chart, Am. Bar Ass’n (2019), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/lawyer-succession-planning-rule-chart.pdf. The following 24 jurisdictions adopted Comment 5 to Rule 1.3: Alaska, Arkansas, Colorado, Connecticut, Idaho, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, West Virginia, and Wisconsin. Id.

[43] Model Rules of Pro. Conduct r. 1.3 cmt. 5 (Am. Bar Ass’n 2002) (emphasis added).

[44] See, e.g., Attorney Surrogacy, State Bar of Cal., https://perma.cc/PY8J-Y82K (last visited Oct. 19, 2021); Closed and Abandoned Practices, Ky. Bar Ass’n, https://www.kybar.org/page/closedpractice (last visited Oct. 19, 2021); Lawyer Succession and Transition Committee, State Bar of N.M., https://perma.cc/3GK6-GTX3 (last visited Oct. 19, 2021); Succession Planning, State Bar of Tex., https://perma.cc/HAH2-KXXR (last visited Oct. 19, 2021); Manage Your Practice, Wash. State Bar Ass’n, https://perma.cc/BB5Y-8SV7 (last updated Oct. 8, 2021); Planning Ahead: Succession Planning Guide, Wyo. State Bar, https://perma.cc/F4AJ-T2D5 (last visited Oct. 19, 2021).

[45] These jurisdictions include Delaware, Georgia, and Indiana. See State Mandatory Succession Rule Chart, Am. Bar Ass’n (2019), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/lawyer-succession-planning-rule-chart.pdf.

[46] These states include Michigan, Oregon, South Carolina, and Tennessee. Id.

[47] See State by State Caretaker Rules When Lawyer Disappears, Dies, or Is Declared Incompetent, Am. Bar Ass’n (July 2021), https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/chart-state-by-state-caretaker-rules.pdf. 

[48] Debra Cassens Weiss, As the Legal Profession Ages, Dementia Becomes an Increasing Concern, ABA Journal (May 12, 2021), https://perma.cc/39Y2-CSTK.  

[49] Id.