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MCLE Self-Assessment Test

Sample contract appointing
a successor attorney is approved

Clients and heirs of California attorneys who die or become disabled can be left with the same sorts of issues faced by families of an individual who does not leave a will or living trust behind: what happens to client files and any funds that may be on deposit in a trust account? With the approval of a surrogacy agreement last month, the State Bar Board of Governors made it both easy and free to avoid such problems. The first to take advantage of the new “Agreement to Close Law Practice in the Future” was bar President Bill Hebert, who designated his law partner, James Quadra, to administer his practice in the event Hebert could not continue to work.

The sample agreement, available to all lawyers, spells out the responsibilities of the primary attorney and his or her successor.

“This is an easy way for every California lawyer to put in place a contingency plan that protects both the lawyer and his or her clients,” Hebert said. “Although none of us likes to consider the possibility of an interruption in our practices, the prudent lawyer should consider succession planning and spell out how our practice should be maintained, with public protection of paramount importance.”

Added Quadra, “This agreement protects everyone. It’s online, costs nothing and should be a part of every lawyer’s business.”

Currently, if a lawyer dies or becomes incapacitated without having made any arrangements about the future of his or her practice, the State Bar seeks a superior court order to take over the practice. It collects the attorney’s files and attempts to return those files to the client, although it does not try to find a new attorney to take over cases.

However, if a lawyer designates a successor using the new sample contract, the designated surrogate goes to court for appointment as the practice administrator who can take control and dispose of the practice. A lengthy list of duties is part of the contract and includes the ability to open mail, become a signatory on bank accounts, notify clients and transfer files, pay bills and handle funds, and accept the original attorney’s clients and cases. The practice administrator also will have the power to sell the practice.

The agreement includes a requirement that clients must be notified in engagement letters that a successor attorney has been designated.

Although New York and Indiana have successor attorney programs in place and the authors of the California contract used some of their language, Encino probate attorney Marshal Oldman conformed the contract to California law. As drafted, the agreement is aimed primarily at the solo practitioner with no back-up. “It really is more focused on the attorney in active practice for whom, at some point, either because of an accident or a sudden heart attack, everything comes to screeching halt,” Oldman said. With the surrogacy contract in place, a practice administrator “can come in and do the job.” In the meantime, Oldman, who said he suspects most attorneys have not made contingency succession plans, urges attorneys to adopt good business practices, including keeping their books and files in order.

Murray Greenberg, who for 15 years has handled State Bar takeovers of attorneys’ practices, whether for death, disability or discipline, said the numbers vary from year to year. He’s seen an uptick recently, probably due to the graying of the profession in general, he said. He shares Oldman’s belief that many attorneys aren’t well-prepared for the unforeseen: “No one expects to become disabled.”

“We view this both as a client protection feature and also as protection for attorneys and their estates,” said Greenberg, who called the surrogacy contract “an insurance policy that costs nothing. We are trying to assist the practitioner in understanding that something could potentially happen to them and this is an effort to protect their clients and their law practice.”