ALPS In Brief Podcast - Episode 78: Succession Planning & Selecting a Backup Attorney

In this episode of ALPS In Brief, our Risk Manager Mark Bassingthwaighte talks about the importance of creating a succession plan and naming a succession/backup attorney.

 

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Transcript: 

Hello, I am Mark Bassingthwaighte, the risk manager here at ALPS. And welcome to another episode of ALPS In Brief, the podcast that comes to you from the historic Florence building in beautiful downtown Missoula, Montana. Of course, that's where our home office is, and if you ever get out to Missoula, you should stop by. It is a beautiful, beautiful area. 

It's a time of year where you get to thinking about all kinds of things. We have a year coming to an end, and boy, what a crazy year this has been, huh? And a new year starting. And these are the times where at least I do, and I don't think I'm alone or unique in this, just start to do some processing, start to think about what was good about the year, what things need to be done. And also, I've been with ALPS now coming up in 26 years, and I've been thinking more and more about what's next for me. Again, I've got a lot of years left, God willing and knock on wood here that ALPS will want to continue to have me. 

But I want to say a lot of years, I don't know, five, six, maybe eight more years of work here, but I also think about retiring and what's next. And there are interesting things you start to think about just looking at all kinds of stuff. And I won't get into my sort of what's personally going on with me, but it does bring up an important topic, and that's the topic of succession planning. And I want to talk a little bit more about this in some interesting ways. It's something I've been talking about writing on for years. 

I can simply say it doesn't happen overnight. I'm in a community where I see lots of people. We're in a 55 plus community now down here in Florida actually. It's been just a wonderful, wonderful decision for us. But I see a lot of people in retirement. I see some that have been very successful and I have seen and visited with some where it's not working. There's different drivers behind why retirement happened for some. Some had happened earlier than they thought, think health issues as an example. Others are still very, very active in second or third careers. Just because they retired doesn't mean... They retired from their profession perhaps, but they're still doing all kinds of other things. 

So I want to talk about this. The first thing I want to say is regardless of your age and where you are in terms of your practice and your career in law, it's never too early to start. We've been dealing with the transition issues and decisions and financially restructuring for, oh gosh, now it's been a good six to eight years easy. And of course, we're blessed that we have the ability to retire at some point here. Again, I can say I've worked with lots and lots of lawyers, and I mean that literally who are not financially in a situation where retirement ever seems likely, and it doesn't need to be that way. So I just encourage you to start early, particularly on this, just the savings side, if nothing else, but okay, back to succession planning. And we're going to also explore backup attorneys in this context, which is the central issue I want to focus on here. 

But before we get there, being a lawyer is hard. I understand that. And it can be quite a challenge. It's an ever-changing landscape, if you will, in terms of the introduction of AI and how that's impacting things, but also different types of clients and different types of matters and all sorts of things can go on. And as some of you may know, if you've followed me over the years, whether on the blog or podcast, I've been at this a long time and I've done a lot of consulting and I have worked with lawyers that have dealt with cancer as an example. And one lawyer in particular was so involved out of necessity, don't get me wrong here, but so involved in his cancer treatment, having to travel and be gone extensively for chemotherapy. And the practice was being neglected in very, very significant ways. And there was some fallout unfortunately to that. 

I have been involved with numerous lawyers that have had, let's just say, challenges with competency. When there's dementia, which is, again, it's just a very serious problem with our profession. It's not unique to lawyers, but there's a lot of issues I've seen over the years that have led to claims and all kinds of things, unexpected things happen in life, in other words, but it's just wild in terms of all the crazy things I've seen. 

So I want to, again, to underscore, we need to think about succession planning. This is not something we do, again, in the twilight of one's career. I really see it as a strategic and forward thinking approach. That's what we need to be thinking about. It's going to benefit you regards to, it's obviously more important if you're in a solo space, but it's important even if you're in a small firm or even larger firms. Now, sometimes the problems, the issues that come into play as you get into larger firms are a bit different than what you're dealing with in small firms, but we do need to prepare for the unexpected. It is about, at the end of the day, taking care of our clients. 

So let's move forward here and talk about some other reasons why I see this as mitigating risk, preserving client relationships, again, thinking more importantly in the solo space, but again, absolutely not limited to this, but if we are unexpectedly taken out by a car crash, I've got a story about that. Won't bore with it today, bore you with it today, but someone ended up in a coma for quite an extended time, and a number of matters were neglected. So I see this as a competency issue thinking about rule 1.1. A diligence issue, 1.3, and there's some language in the rules, particularly in commentary and at least some of the states and in the ABA model rules that talk about the diligence mandates and attorney moving forward with some type of succession planning. It's just not optional. 

So I see it as an ethical obligation. I see it as taking care of one's career, reputational kinds of things. Particularly if something goes wrong, something unexpected happens, I see it as taking care of clients, building relationships, because we can talk about it. So it's about ensuring coverage in the event of some short-term health issues, but it's also about taking care of things in the unexpected deaths or long-term disability scenario too. Again, we could talk for quite some time about stories of how this has just been a problem. 

So I hope that kind of helps. I know it's a little bit of a ramble here and I've got all kinds of things going on in my head, but I really hope that you begin to get a sense of the importance of succession planning from a business perspective, from an ethical perspective and from a malpractice perspective. 

Let's move more now toward really what I want to focus on and center on. And it's really looking at a basic decision of backup attorneys. Now, before we dig into this, one of the things that I have found over the years is some attorneys are reluctant when asked to be a backup attorney. They're reluctant to agree to do so for a variety of reasons. But two of the more common concerns at times, I think, also used as excuses are I've got my own full-time practice, and how in the world can I handle two practices at once? Well, a successor attorney/backup attorney isn't necessarily charged with running a full second practice. In the backup situation, you're just covering for somebody for emergencies. Well, they're on a two-week vacation or whatever it might be, or whether they're in the hospital for a week or so for some immersion kind of thing. If it's an unexpected death, you're really being brought in to wind up the practice and oversee that. You're not running a full practice, you're not charged with taking on all of these clients and immediately doubling the size if your practice. 

And something else to think about whether you're agreeing to do this, being asked to do this and thinking about agreeing or doing the asking. The backup attorney/successor attorney situation doesn't have to be limited to just one individual. I have seen some situations that have been very, very successful in terms of there was an untimely death. And what happened was, for instance, a group of three, four, I've even seen five attorneys will agree to be there for each other and we have this group. And so if I'm the person in this group that passes unexpectedly, the other four can share the load. One might be responsible for putting out fires, one might be responsible for contacting clients, getting that letter that goes out, et cetera, taking care of those kinds of things. So you just split, you split the workload. Can make it very, very easy. 

The other excuse that I hear at times is the, well, is my malpractice going to cover me? Is there some... And again, I don't want to be sued for all this stuff. Well, first off, understand, again, in the winding up of the practice, you're really not doing anything legally. You're administering the duties of transition of client notification, et cetera. Now, I guess, at times, if you pick up a matter and once you make it your own, of course, your policy is going to be in play. But I could see there could be some situations. We try to figure things out, put out fires. Maybe something goes a little wrong here or in the backup situation. I can't say 100% for sure because policies differ between carriers, et cetera, et cetera, and the circumstances are going to dictate. But here's how I look at it. 

A carrier wants to make sure that when something goes wrong, again, an emergency illness, we like people taking vacations to stay fresh because burnout leads to depression and addictions and all this. We want to see lawyers take care of themselves. So getting some vacation time is a good thing. But if a backup attorney or successor attorney isn't trying to help, good Lord, it would make no sense for a carrier to say, I'm not going to defend this, or we're not going to get involved. It's just not a decision I would think any carrier is going to be feeling good about making. That's not in their best interest. Maybe that's another way to look at it. So I just don't think the coverage issue is as significant as some want to make it. 

There is language, I should say, in a number of policies that will describe or are in terms of under the definition of insured, will include a description of attorneys who are stepping in to help administer the winding down of a practice. There for backup. As long as they are doing so under the authority of an agreement of some sort, that kind of thing. 

Okay, so let's put that outta way or put that out of the way. So the next thing, and I've been asked at times, what do I do? How do I go about selecting a backup attorney? And this really gets to the heart of the issue. If you're working within a firm setting, hopefully there's someone else within the firm that has the skills and et cetera that can step in. If you are one that's, and again, typically it's going to be in a small firm setting that has some unique skills, well, you're going to have to find somebody outside of the firm and name because if no one else in the firm has the ability, that doesn't really solve the problem. So you might need to look external, but let's talk about that in the context of the solo attorney. 

And really what you need to do is just try to identify someone who is going to be competent. That is your obligation. So they have to have the skillset necessary to step in and understand what's going on in your practice, both as a backup attorney if ever needed, and then again, as a successor, should that ever come into play as well. They need to have good communication skills. They need to be experienced in the practice. And we need to think about, I guess, conflict concerns too. They should be somebody that isn't going to bring to the table or have all kinds of conflicts in light of their practice and yours. It can't be somebody that you're constantly on the other side of, is constantly opposing counsel to many of your clients. That's going to be problematic. So we just need to think about, again, is this person competent, diligent, a good communicator, as conflict free as possible, et cetera? And that can really be a good thing. Okay? 

And I guess the other thing, needs to be somebody that's going to have the time or the ability to make the time to step into this role. If someone is constantly on the road just by virtue of their practice and being available on not necessarily a minute's notice, but being available at times, if that's going to be problematic, that might not be the right fit. So again, we just need to look, does this work for the individual that you are asking? 

When we finally identify the individual that we think is going to be a good fit and this individual agrees or group of individuals, please don't overlook the importance of letting key staff know that this step has been taken care of, who this individual or group of individuals are, when and how they are to be reached so that the staff in the event of emergency know what to do. Again, I could tell stories where staff had no idea that there was a backup attorney, had no idea what they were supposed to do in a situation like this. The was a new receptionist and that was the only position she was charged with and she had no clue, was not really experienced in the legal profession or working in the legal profession and just sat there taking calls day after day. And a number of claims rose out of that because it was person injury plaintiff attorney who was in a coma for a while and some statutes ran during this time and she just sat there, had no clue. So again, we need to let people know. 

Some other things to think about. You might want to have a formal written agreement with the backup attorney successor. One and the same in most instances or group, and that's document or at least outline if you will the terms of the engagement, the scope, the responsibilities. There may or may not be compensation here. And you have to figure out if there is going to be some compensation, and particularly in the succession plan, successor attorney coming in and winding up a very busy practice, that can take some work and some time. And you can deal with covering those expenses in a variety of ways, not the least of which might be some type of key person life insurance, but there are ways to deal with this. But I like the idea of having some type of agreement so that we're all on the same page and really understand what the expectations are. 

And a number of times too, this can be a two-way street, if I ask you to be my backup attorney and you agree, and it might be, well, I agree to do the same for you. And so we can have these discussions and really talk about what are the roles going to be. 

So it's also worth letting your malpractice carrier know. There are some carriers out there, particularly in the solo space that will request knowledge of, or you need to report who is this, other carriers mandate or require it. They may not agree to insure you perhaps in a formal designation because they want to know who to contact if something happens here again. 

Some things to think about in terms of preparation. I would periodically review the plan and the agreement just because things change over time. And as you think about that, here's this other side not coming in. We've talked about, here are the roles, responsibilities, what we're anticipating, what we think we should be doing for each other, et cetera. But we should also perhaps have some type of writing. Could be a letter kept in a drawer somewhere, staff knows about, and this is primarily for the succession plan situation, but you need to think about setting forth the things that the successor attorney needs to know to run your practice, to be able to wind down your practice. 

So where's the calendar? What are the passwords to key programs or applications or laptops? That kind of thing. What about signature authority on the trust account? I don't want to see money locked up. And there are different ways to deal with that. Could even be just a contingent signature authority agreement of some sort. So there are a number of things you can do here, but I have seen situations where an attorney passed and none of this was done, and a lot of time and money was needlessly spent on trying to literally hack into computers because that's where all the information was and no one had any idea how to get in. So there has to be some ways to do that. 

And here's an interesting thought on this one. You can set up emergency access to password safes. More and more of us, if you're not using a password safe for cybersecurity reasons, boy, now's the time. That's a conversation kept for a whole nother day. But there's one way to do some of this. You can have emergency access and set that up. It varies in terms of what you can do and how you do it with these different password managers, but it's just another thing to think about and nothing to look at. There's all kinds of spins on this, but I'm hoping you have found something of value here and some encouragement to move forward. 

The one final thought I have is at the beginning I was talking about, well, there's this piece of client communication, and I want to take that just a little bit further. I also mentioned reputation can be an issue here and the failure unit to have a backup attorney leading to mistakes because you never get out and take a vacation or take care of yourself and prioritize wellness, et cetera, et cetera, et cetera. You can get run down, burned out, depressed. Reputation can suffer in that way. Reputation can suffer because there is no plan. And you're in the hospital for four, six weeks in a coma, going back to that one story that I've been alluding to, and your reputation is dead there. 

But there's another angle to this reputation piece, and I see it as communicating the decision. I have some language and you're welcome to email me or look it up. I have some of this on our website, but if you have trouble finding it, you can let me know. But consider putting some language in your engagement agreement. And it might say something, I'm just going to read a short little paragraph as an example. But think about the message that you're giving. So I'm a new, our potential prospective client coming in, looking and all that, we're talking and I see this language, or you might even highlight it for me in the agreement, and it'll say something like this: 

While I strive to deliver excellent legal services to each and every client, I also have an ethical obligation to protect your interests during any extended absences such as a vacation and illness or any event of my unexpected death or disability. To accomplish this, I have named, of course, you insert the name for your backup attorney as my backup attorney who will be available during any extended absences or will step in to assist in the closing of my practice, should that ever prove necessary. I will personally provide you advanced notice of any planned absences, and my office staff or backup attorney will contact you with information on how to proceed should any unexpected event ever occur. 

I guess I'm a risk guy, okay, I get that. But I got to tell you, if I saw something like that, I would say this attorney is really thinking through the issues and doing everything he or she can to see that his or her clients are taken care of. And he's really thought this through. I want to work with someone like that. Wouldn't you? That's demonstrating commitment, loyalty, diligence, competency. And that just speaks volumes to me. So there's this other reputational angle to it that's saying, he's thinking about this, she's thinking about this. I like this. I'm going to work with them. Then you deliver. Man, I'm even more excited and I'm going to go out and just tell people. How do you think referrals... Referrals come on reputation and good work. Good reputation, you provide great service and all of that, referrals are going to come. So I think there's an angle to that as well. 

So I've been rambling on here for I don't know how long, but I hope you found something of value. I really believe that it's hard to do this at times. It's hard to get started. But I really do believe in the value of this. And once you have this taken care of, I think you're going to sleep better. I think it's going to be one less thing to worry about, and you can concentrate and focus more clearly on some other things in terms of just taking care of your clients. So name that backup attorney if you haven't. Name that successor attorney if you haven't. 

And once you do, please, please take the time. Take advantage of what you've just done and make sure you're getting that extended vacation from time to time to stay fresh, to nurture the significant, important, I'm sorry, the important and significant support systems in your life. Go on a cruise with your spouse. Go visit the grandkids and children for a week, whatever it might be, because wellness is so, so important in our profession too. It just helps you stay sharp. 

That's it for me. I hope you found something of value, and please don't hesitate to reach out if there's anything I can ever do for any of you. You do not need to be an ALPS insured to visit with me. There's no costs or fee to visit with me. If there's something I can do, hey, I'm here. My email address is mbass@alpsinsurance, ALPS Insurance, one word .com. 

Have a good one, all. 

Bye-bye.