Best Practices

The Michigan Supreme Court enacted an order requiring private practice attorneys in Michigan to designate an Interim Administrator and name a Person With Knowledge to assist in the event the private practice attorney is unable to practice law. This guide is intended to assist private practicing lawyers in Michigan in implementing compliance with these rules while preparing their practice for a temporary or permanent inability to practice.

Additional planning above and beyond the disclosures required by the rules is not only practical for professional reasons but for personal reasons as well. The better a private practicing attorney plans today, and continues to update, the better prepared family, friends, and practice will be.  Below are some best practices. The full Guide to Succession Planning Best Practices, a publication of the State Bar of Michigan, is available here.

Prepare

Much of the confusion and expense involved after a lawyer’s inability to practice can be minimized by prior planning and disciplined conduct of the practice. Recommended tasks in organization and operation of the practice are included in the Law Office List of Contacts and Preparing Law Practice to Protect Your Clients’ Interests in the Event of Your Inability to Practice. Taking the time to plan now, will save a lawyer’s firm, staff, family, and designated interim administrator the time and cost of attempting to create knowledge that a lawyer had prior to their inability to practice.

Maintain Your Files

Lawyers who maintain legal files are ethically required to have a file retention policy. Creating a policy has many facets as there is no specific file retention period in the Michigan Rules of Professional Conduct (MRPC). Further, policies should be customized to address the specific needs of each law firm and its clients.

Lawyers who need to create a file retention plan should refer to the State Bar of Michigan’s Record Retention Kit. Attorneys are strongly encouraged to review Ethics Opinion R-5 to review minimum policies that an attorney’s or firm’s office should include within their record retention policy. Attorneys should also contact their malpractice insurance carrier for additional guidance on the attorney’s or firm’s policy and review case types to determine length of retention.

Make a Personal Estate Plan

A private practitioner will want to maintain a current estate plan that designated a fiduciary and alternates. The estate plan should also refer to the attorney’s optional interim administrator planning documents.

Michigan law gives broad powers to a personal representative and a trustee to sell or wind down a business, and to hire professionals to help administer the estate. However, for the fiduciary's protection,  a lawyer may want to include language in their estate plan that expressly authorizes the personal representative or trustee to enter into an agreement with an attorney to act as interim administrator if the previous choice designated as interim administrator is no longer able or willing to act.

Pay Your Interim Administrator

The private practice attorney should consider the likely cash flow situation of the practice upon the lawyer’s inability to practice. If the remainder of the property (other than the practice) is likely to pass to spouse or other family members, the practice might be placed in a cash-poor situation. Cash flow needs of the practice for routine expenses and compensation of staff likely will continue for some period after the inability to practice occurs. A lawyer may want to consider disability insurance and a specific policy of insurance on their life as sources for interim capital to wind up their practice in the event of disability or death.

Entering into an Interim Administrator Planning Agreement with the designated interim administrator may indirectly assist with the issue of compensation. If the designated interim administrator will have the opportunity to become successor counsel for those clients who consent after notice, he or she may be willing to serve with no or reduced compensation.