Private practice attorneys in Michigan must make an interim administrator plan as part of this year’s license renewal. The Michigan Supreme Court issued ADM 2020-15 adopting Rule 21: Mandatory Interim Administrator Planning in June 2022, the most significant rule change impacting Michigan attorneys in at least two decades. The new requirements take effect as part of annual license renewals in September 2023. However, there are steps that lawyers can — and should — take now.

THE REQUIREMENTS

Rule 21 applies only to “private practice attorneys.” For purposes of this rule, private practice attorneys are those who provide legal services that require a Michigan law license to one or more clients. This includes all lawyers in a law firm of any size as well as solo practitioners.

Requirement 1: Designate an interim administrator

An interim administrator is called into service if the private practice attorney becomes unable to practice law temporarily or permanently. An interim administrator’s duties include taking custody of client files and records; taking control of accounts; and notifying clients, courts, and opposing counsel that an interim administrator has been appointed. For a full list of duties, see ADM 2020-15.

Private practice attorneys have two options for designating an interim administrator:

• Designate an attorney or law firm to serve as an interim administrator. (The attorney named also must accept the designation in order to fulfill the requirements of Rule 21.)
• Enroll in the State Bar of Michigan’s Interim Administrator Program.

An interim administrator must be an attorney in good standing or a law firm with at least one Michigan attorney in good standing other than the attorney for whom they would serve as interim administrator.

For attorneys in a law firm with multiple attorneys, their designated interim administrator would typically be another attorney at their firm or their firm. The same attorney can (but is not required to) serve as designated interim administrator for everyone in their firm, except themselves.

Private practice attorneys can choose to designate their own interim administrator at no cost. However, the nominated attorney must accept the designation to fulfill the requirements of Rule 21, which requires verification. If the nominated attorney does not accept the designation, the private practice attorney is in violation of the rule. Alternatively, private practice attorneys can choose to simply enroll in the State Bar of Michigan’s Interim Administrator Program. The cost is $60 annually, which is payable during license renewal. Under this option, the State Bar of Michigan will place or act as interim administrator so the private practice attorney does not have to independently make any additional agreements or arrangements. In most instances, even a designated interim administrator would need to be officially appointed by the circuit court when a private practice attorney becomes unable to practice law. (There is an exception when the designated interim administrator is an attorney at the same firm as the affected attorney.) At the time of appointment as an acting interim administrator, the attorney would need to obtain and retain professional liability insurance which provides insurance coverage for the actions taken as interim administrator.

Requirement 2: Name a person with knowledge

Beyond designating an interim administrator, private practice attorneys also must name a “person with knowledge” as part of Rule 21’s new requirements. A person with knowledge is someone who knows where the actual and virtual keys to the office are located. This means they can help the interim administrator physically access the office and files (including any passwords needed to review electronic files).

The person with knowledge does not have to be an attorney. In fact, the person with knowledge in many cases might be a family member or office manager, or in some instances perhaps the designated interim administrator serves in both capacities.

The person with knowledge should be someone who is willing to assist an interim administrator by providing the necessary information if for any reason the private practice attorney becomes unable to practice law.

Private practice attorneys will have to provide the person with knowledge’s name, phone number, and email address. However, the person with knowledge does not have to confirm their acceptance of the role like interim administrators do.

STEPS TO TAKE NOW

Michigan attorneys are required to fulfill any requirements of Rule 21 as part of their license renewal for 2023-2024, which begins in September. However, private practice attorneys are encouraged to make their interim administrator plan prior to license renewal to ensure there are no issues that could affect their licensure.

Especially if an attorney plans to designate their own interim administrator, they should contact the attorney or firm they plan to nominate and work out the specifics of their agreement.

All attorneys also have the ability to fulfill the requirements of Rule 21 now by logging into the Member Area of the State Bar of Michigan’s website at michbar.org/MemberArea. This is the same area where attorneys who are nominated to be designated interim administrators will go to confirm or deny their willingness to serve.

Simply click on “Interim Administrator Planning” at michbar.org/ MemberArea and the online site will walk you through fulfilling of the requirements. By updating your State Bar of Michigan membership to include Rule 21 requirements now when license renewal comes around in September you will be able to simply confirm your previous selections remain accurate. (In future years, you also will have the option to simply confirm your previous selections.)

Attorneys who are not in private practice also can go to the site to update their records and confirm that Rule 21 is not applicable to them.

Those who plan to enroll in the State Bar of Michigan’s Interim Administrator Program, which officially launches Sept. 1, 2023, also can indicate that intention now. Doing so will update your status so that you no longer get reminder emails regarding the need to fulfill Rule 21 requirements.

BEYOND RULE 21

Lawyers are not invincible, and a good succession plan can protect clients, the law firm and its assets, and the integrity of the judicial system. Fulfilling the requirements of Rule 21 is a good start, but Michigan attorneys are encouraged to create a comprehensive succession plan.

The Michigan Supreme Court order allows for private practice attorneys and their designated interim administrator to set their own terms of engagement. Developing a written outline of interim administrator duties and compensation is recommended. You might also consider showing your designated interim administrator your office systems, introducing them to staff, and informing family members. Just like drafting a comprehensive trust to ensure protection of your assets, a comprehensive succession plan should be created to protect your interest in your firm. Moreover, ensuring good business practices will allow the interim administrator to more effectively assist in a time of need.

The State Bar of Michigan offers many resources to help you comply with Rule 21 as well as to create a comprehensive succession plan, including:

• Michbar.org/Rule21: A website with more information about Rule 21 including frequently asked questions
• Succession planning guidebook: Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death can help you develop your own comprehensive succession plan. It provides checklists and other tools for creating an interim administrator agreement and winding up a law firm.
• Contact us: If you have questions, please email iap@michbar.org or call (517) 346-6355.