RI-374

December 1, 2016

SYLLABUS

Michigan lawyers are strongly encouraged to prepare a comprehensive succession plan specific for their law practices to protect their clients and fulfill their ethical responsibilities under the MRPC should they become unavailable due to death, disability, discipline, disappearance, or any other circumstance.

References: MRPC 1.1, 1.2, 1.3, 1.4, 1.6, 1.15, 1.16; MCR 9.119

TEXT

Based upon an inquiry from the Master Lawyers Section of the State Bar of Michigan (MLS), the Professional Ethics Committee considered ethical concerns regarding succession planning for Michigan lawyers in the event they become unavailable due to death, disability, discipline, disappearance, or any other circumstance. A primary reason this issue has been raised is that attorneys are practicing longer and retiring later in life. Because of the significant ethics considerations inherent in the absence of adequate planning, including risks to clients' interests, the Committee offers this opinion to provide ethics guidance to members of the State Bar.

A lawyer's ethical responsibilities under the Michigan Rules of Professional Conduct (MRPC) continue even when the lawyer becomes unavailable, including the duty to competently (MRPC 1.0) and diligently (MRPC 1.3) handle the representation, keep the client reasonably informed about the status of the matter (MRPC 1.4), protect the client's confidences and secrets (MRPC 1.6), safeguard and maintain records of the client's property in the lawyer's possession (MRPC 1.15), and withdraw from representation resulting from either a violation of the MRPC, a physical or mental condition that materially impairs the lawyer's ability to represent the client or when the lawyer is discharged (MRPC 1.16). A lawyer's duty to meet these responsibilities can only be carried out with appropriate advance planning.

Lawyers who lack a succession plan would ultimately fail their clients and possibly be in violation of various ethical duties under MRPC. The consequences to clients should be taken very seriously, as clients are often entirely dependent on the lawyer to handle their legal matter. Deadlines, hearings, discovery matters, trust accounting, etc., require timely attention should a lawyer become unavailable.

The MLS previously proposed an amendment to State Bar Rule 2 to require members to disclose to the State Bar the name of an active member who agreed to serve as an inventory attorney in the event that the reporting member becomes disabled due to death, disability, or disappearance.1 The MLS's position paper noted that (1) 71% of Michigan lawyers are solo practitioners or practicing in small firms (2 to 10 lawyers), (2) there is a steady increase in the number of Michigan lawyers over the age of 50, and (3) more lawyers over the age of 50 are practicing beyond the traditional retirement age.2 Statewide demographics showed that 47.9% of active State Bar members during the 2014-2015 bar year were 54 years of age or older.3 In light of these demographics, attorneys are strongly encouraged to have a succession plan.

With an aging attorney population, the Grievance Administrator of the Michigan Attorney Grievance Commission (AGC) is increasingly asked to seek the appointment of a receiver pursuant to MCR 9.119(G). Under this court rule, the Grievance Administrator may petition the chief judge of the circuit court in which the attorney last practiced for the appointment of a receiver when an attorney becomes unavailable and there is no partner, executor, or other responsible person capable of conducting the attorney's affairs.

While the receiver is focused on handling the client files and records left behind, and the closing of lawyer trust accounts, if any, under the direction of the circuit court, the receiver may, if willing to do so, wind up the practice of the unavailable attorney. As there is no mechanism for payment of receivers under the court rule, those appointed to serve in such capacity must look to the unavailable lawyer or the estate of the lawyer, if the lawyer is deceased, for payment for services rendered. Depending upon the magnitude and complexity of matters that require attention, receivership costs can be significant. Thus, advance planning will not only protect the unavailable attorney's clients, but may significantly reduce the amount of time and the costs associated with winding up the unavailable attorney's practice. When an attorney who becomes unavailable has a succession plan in place, the stresses of not being able personally to handle client matters can be somewhat alleviated for the lawyer, if the lawyer is still alive, and for the lawyer's clients, staff, and family members.

In addition to seeking the appointment of a receiver under MCR 9.119(G), the Grievance Administrator is often appointed by the circuit judge to serve as the receiver for an unavailable attorney, as there is often no other receiver available to accept an appointment. In these circumstances, AGC staff attorneys are tasked with carrying out the duties articulated in the court rule in addition to maintaining their normal caseloads.

Guidelines for succession planning vary by jurisdiction. Several states have adopted a rule requiring lawyers to have a succession plan in place, but a majority of the states do not have such a requirement.4 Among the states that do not require succession planning, the ethics rules of those jurisdictions strongly encourage the attorney to do so.

1 See Establishment of an Inventory Attorney Rule.

2 Id. at 2.

3 State Bar of Michigan Statewide & County Membership Demographics, 2014-2015, p 3. A 2015 American Bar Association report providing national statistics for 2005 showed that 34% are over the age of 55. See Lawyer Demographics.

4 See ABA survey chart. Arizona recently adopted a rule mandating succession planning by lawyers licensed in their jurisdiction. See Succession Planning and Succession Planning for Ohio Lawyers.

Although the MRPC do not specifically require a lawyer to engage in succession planning, the prudent lawyer should have a plan in place in order to meet their responsibilities to their clients in the event they become unavailable and to ensure that the appropriate individuals (colleagues and key staff members) have knowledge of the plan. The following checklist is provided to assist in preparing (or updating) a succession plan.

• A fully implemented written record retention plan5
• Designation of an assisting attorney to be provided when appropriate access to the lawyer's trust accounts (both IOLTA and non-IOLTA accounts) is required, along with login and password information for online banking6
• Information detailing the wind up duties of the assisting attorney
• Information detailing how the assisting attorney will be compensated
• Identification regarding the assisting attorney in the lawyer's personal estate plan to ensure that notice is given to family members that efforts to wind up the law firm must be handled in accordance with the MRPC
• Written instructions concerning how and where client information is stored, including bank and other account details (e.g., operating and lawyer trust account information)
• Information regarding law office equipment leases or other contracts
• Information regarding payment of current liabilities and accounts receivable
• A routinely updated list of contact information and job descriptions of key staff members (lawyers and non-lawyers), if any
• A routinely updated list of key staffers who can provide an accurate client list, current contact information, and a list of impending deadlines in a timely fashion
• A routinely updated client list, including contact information
• Information regarding calendaring and docketing protocol for all client matters
• Account numbers and signatories for business and lawyer trust accounts, including location of all such accounts
• Access information for safety deposit boxes and storage facilities, including location where all such materials are being stored
• Location and number of file cabinets, office safes, including where keys are located
• Instructions regarding how to gain access to all equipment and devices, including access codes for all pass-code protected equipment and devices such as desktop computers, laptops, office and mobile phones, burglar alarms, etc.
• Location of important business documents and original client documents, if any

5 See Record Retention Kit that contains a compilation of ethics opinions and articles concerning a lawyer's safekeeping duties. See also R-19 (2000) (A client has a right to access to the lawyer's file, but should bear the cost for copies). Based upon the specific questions presented by the MLS, a lawyer serving as an assisting lawyer is not required to adhere to the unavailable lawyer's record retention plan when winding up the law practice. Under such circumstances, the assisting lawyer is analogous to a receiver who can make decisions necessary to efficiently and economically wind up the law practice, which includes final disposition of the lawyer's files. Similarly, the authority of an assisting lawyer to carry out the duties of winding up the law practice is authorized when so designated and does not require client consent. However, client consent is required if an assisting lawyer wishes to provide legal services to the client. MRPC 1.16(a).

6 See R-21 (2012) (Solo practitioners without another lawyer in-house to manage accounts should consider including the name of a successor attorney as an alternative signatory on trust accounts who can perform the safeguarding duties required by MRPC 1.15 in the event of sudden death or disability.)

While succession planning should be given heightened priority for solo and small firm practitioners because of the greater risk of harm to clients if those members suddenly become unavailable, it is important for all lawyers to have a comprehensive plan specific for their practice in place.

In summary, Michigan lawyers are strongly encouraged to prepare a comprehensive succession plan specific for their law practices to protect their clients and fulfill their ethical responsibilities under the MRPC should they become unavailable due to death, disability, discipline, disappearance, or any other circumstance.