"Hot Tips for the General Practitioners; Winding Down the Practice; Planning for Disability, Death, Disablement or Retirement; Ethics Update"

Meeting

Tuesday, January 27, 2004
9:00 a.m. ­ 12:30 p.m.
Speakers:
Stephen P. Gallagher, Narberth, PA.
Jeffrey M. Fetter, Syracuse, NY.
Robert L. Ostertag, Poughkeepsie, NY.

Establish an Advanced Exit Plan – Why should I do this?

Step 1: Designate a successor attorney to close your practice in the event of your disability, impairment, incapacity, or death.

• limited power of attorney,
• a comprehensive agreement with detailed powers, or
• a short authorization and consent

Step 2: Prepare written instructions to your family, your designated successor attorney and your office staff containing:

• General information and guidance required to minimize uncertainty, confusion and possible oversight;
• Specific detailed information and authorizations needed to wind down your law practice;
• Steps to be taken to assure that your written instructions are updated and reviewed periodically for completeness and accuracy.[1]

Step 3: Discuss your Advance Exit Plan with the appropriate persons. Set specific short-term goals for completing clearly defined tasks.

Step 4. Your Advance Exit Plan should describe arrangements you enter into with your designated successor attorney, covering the following:

• A signed consent form authorizing your successor attorney to contact your clients for instructions on transferring their files;
• Authorization to obtain extensions of time in litigation matters, where needed;
• Authorization to provide all relevant people with notice of closure of your law practice.

Your Advance Exit Plan might also include sample letters notifying clients of your inability to continue in practice, and arranging for transfer or return of files. The plan should also include instructions as to:

• Disposition of your office furnishings and equipment;
• Authorization to draw checks on your office and trust accounts;
• Payment of current liability of the office;
• Billing for and collecting fees on open files;
• Collecting accounts receivable;
• Access to important information (e.g. passwords to your computer).

Your Advance Exit Plan might also include provisions that give your successor attorney or executor, as the case may be, authority to:

• Wind down your financial affairs;
• Provide your clients with a financial accounting and statement;
• Collect fees on your behalf;
• Liquidate or sell your practice.

Your Advance Exit Plan should include any arrangements for payment by you or your estate to your successor attorney for services rendered to your clients or on your behalf.

Trust Account Notice:

If you do not make arrangements to allow someone access to your office trust account(s), your clients’ money must remain in trust until a court permits access. This is likely to cause delay and put your client and you in a difficult position.[2]

How to Get Started in Establishing an Advance Exit Plan

1. Identify several potential successor attorneys – Begin talking to appropriate family members and colleagues about why you feel it is important to establish an Advance Exit Plan. In the next 30-days interview at least three practitioners to see how they are handling their own exit plan. Select one of these candidates to see if they would be willing to partner with you in going through this planning process. As a general rule, good friends will recognize the value of this exercise for their own practice, so be prepared to get involved as a successor attorney for your friend.
    
2. Set aside a specific period of time to complete the Advance Exit Plan – The development of an exit plan cannot be done in a single meeting. There are a number of elements that need to be researched and coordinated, so the Advance Exit Plan should be handled as any other client matter. Open a file for your Advance Exit Plan, and commit the time each month to accomplish this important task on budget and on time. In my experience, a three-month period of time is not unusual for a sole practitioner to establish an Advance Exit Plan. Working with a partner or coach in establishing this plan can be extremely helpful.
    
3. Allocate time each month to complete the planning process – Be prepared to spend approximately five-hours a month (non-billable) for a three-month period of time to complete the Advance Exit Plan. This time will be needed to meet with key family members and other resource people who will be involved in helping you develop this plan. Many practitioners already have a number of the elements (a will, life insurance, retirement investments) of an exit plan in place, however, time will be needed to update and coordinate these plans developed over many years of practice.
   Be prepared to call on your office support staff (if you have any) to help in developing your exit plan. Compiling accurate lists of client information with current financial information will be extremely important. Closing old files and tightening-up and documenting office procedures are also important parts of this planning process.
    
4. Allocate resources (Money) each month to complete the Advance Exit Plan – It is not unusual for individuals to need outside assistance in order to fully implement an Advance Exit Plan. A trusted advisor can help you with your commitment and accountability in preserving your strategic investment in self, family and loved ones.
   Budgeting for an experienced executive coach can be based on the hourly rate of the individual establishing the exit plan, the same monthly commitment for hours to be worked, and the same three-month period of time. Depending on the level of detail you request the cost will typically range around $1500, plus your own commitment of non-billable time.

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[1] See “Checklist for Lawyers Planning to Protect Clients’ Interests in the Event of the Lawyer’s Death, Disability, Impairment or Incapacity” and “Checklist for Closing Your Own Office”

[2] Since your personal representative would have responsibility for ensuring that matters relating to your firm’s finances are dealt with appropriately, it is important that direction be given in your will and other relevant documents for the coordination of these activities (presumably, the attorney responsible for dealing with the trust account would present an accounting of his or her activities to your personal representative). You may wish to provide for compensation for the time expended in this role.