What’s Your Succession Plan?

Whether you’ve been a solo or small firm practitioner for a year or for decades, there is a thought in everyone’s mind about what happens when you don’t want to do this anymore, or worse yet, when you can’t do it anymore. That’s when preparation pays off. And to be fair, this sort of preparation can serve you well in your day-to-day practice in the short term.

The best first step is always documenting things. This is true in your personal life as well as a practice like the law. You need lists. Lists of clients, lists of cases, lists of files (both open and closed) and where to find them. I know for many people this may already be in place; just be more intentional about it. What would someone do if they had to handle your firm in your absence? Could they figure out the status of your files? I know it can be easy to let certain things slide over time, but it can be a good project to just touch the open files and find out where they are in process. They may actually be closed but need that last little push to take them out of rotation. Beyond your files, what about your passwords? You shouldn’t have them written down where anyone can find them, but a good rule is to have them in a password-protected database. But who knows that password? Could someone access it if they had to? And remember, this also bleeds over to your personal life. There’s an entire digital landscape that needs to be taken care of after you’re gone. Many people don’t give thought to what their digital estate looks like.

Beyond the passwords and clients, think more broadly. Who are your vendors and service providers? What contracts do you have in place, and what are their renewal terms? Can you find the paperwork for any of them? The terms may not be what you think they are, or were. Renewal might be 60 days out. It might be month-to-month, but only if you say so. As an attorney, you probably did read the terms once, but if it’s been a while, take a look to see if they’ve changed. It’s become much easier for vendors to change terms electronically, so you might not know where you stand. As someone who is going through a renewal cycle personally for several vendor contracts, I’ve been surprised more than once.

Next, consider documenting standard operating procedures for your firm. This could be a big value-add. It can also be handy to have an SOP as a reference for yourself, as you may forget certain steps on projects and duties that are not done every day. I know that a simple reminder of that one step you cannot remember comes in handy at the most opportune times. Creating standard operating procedures are worth it because they can help alleviate frustration. Another word for this is workflow, and there are several ways it can be done. It can be as simple as a legal pad and pen, but you can go digitally, too. There are software packages that will record your work patterns to provide you with videos and documentation. If dictation is your way to think out loud, record yourself talking through the work. My rule is that if another person could pick up the documentation and be able to do the work without asking you questions, you’ve done it right. Yes, it can be daunting to take on a project like that, but it could be helpful if someone needs to take over for you in the short or long term. Beyond the usefulness for your own firm, it can help ease the transition if you were to sell or merge with another firm in the future.

The consequences of not planning for the future can be dire. Without advance planning on what happens to your firm upon disability or death, you may leave someone with a true mess that will take much time and effort to fix. If you are the attorney who is assuming cases because of a lack of succession, you need to be aware of issues that might come up. What’s the situation regarding data? Have the files been secured regularly on the cloud? Are the files only in hard copy? How is email being handled? What about your website? And even more basic, what about the escrow account? Think about it: If you don’t make arrangements to allow another attorney to access the trust account, the money must remain in trust until a court authorizes access. Only today I saw an attorney asking on a forum how to handle this problem because a client is waiting on funds of a sale that got hung up in escrow due to an attorney incapacity. Lack of foresight if something goes wrong goes beyond you and your firm and affects the clients directly. It always makes me wonder when I see the ubiquitous ad in the county bar association newsletter seeking the files of a prior attorney. Certainly, not every situation can be prevented, but some advance planning goes a long way in easing the tensions for the successive attorneys handling your work as well as those clients who also must face those consequences.

These are the sort of tips we outline in the soon-to-be published updated version of the NYSBA’s “Planning Ahead Guide.” We put it together with the thought of what to do in emergencies as well as preparing for succession in a firm. Closing down a firm comes with a multitude of issues, and some of them can be handled with proper forethought and planning. Knowing where things like files and passwords are is half the battle, and strong direction can assist immeasurably in your absence.

Planning for Succession

If you’re in the position of planning your next move and are looking to give up the practice and retire, think about successors. Depending on your firm type, you may already have built-in successors available to you, but if you are a true solo, you’ll have to go further afield. Where you practice is going to play a large role in this. Some more rural locations may have difficulty in identifying younger attorneys who are willing to take on a more general practice in an established firm. Be sure to identify a successor who is qualified to take over your practice. For many it may be someone you train up and introduce to your client base. If you can’t identify a successor, you may instead choose to sell your practice outright. If you’re in this position, your thoughts may be about what collections look like for longer-term clients. If you leave abruptly, there may be cases that have not yet paid; who collects those fees? What should your malpractice insurance coverage look like as you transition away from the firm?

Either way, this will take time, so try not to rush the process if you can help it. Your thoughts on the process may not be in line with those working with you, so you need to keep an open mind to how the succession is handled. We all think our work is valuable, but a valuation of the firm may state otherwise. There are firms that can assist in such financials. Keep in mind your own personal planning in this, making sure your estate planning documents reflect the state of your business. And be flexible. As well all know far too well, things can change, and quickly. It is important to be flexible with your succession plan. Be prepared to make changes as needed.

These can be scary things to think about. For many, the retirement plan may be to work until you can’t anymore, and that’s fine. However, your clients may not necessarily agree to this approach. By planning ahead, even a small amount, you can help to ensure that your solo law practice is prepared for the future.

Sarah Gold, founder of Gold Law Firm in Albany, works with businesses and nonprofits. She is a professor at Rensselaer Polytechnic Institute, where she teaches business law and ethics. Gold is a member of NYSBA’s Executive Committee, chair of the Law Practice Management Committee, and previously chaired the General Practice, Business Law, and Young Lawyers sections. She has been named a fellow of the New York and American Bar foundations.