Agreement lays out plan for the end of a practice

By Amy Yarbrough
Staff Writer

It was enough to make even a seasoned investigator squirm.

Left to sort out the corrupt criminal practice of an attorney who had been determined to be mentally unfit, the State Bar found itself in possession of hundreds of his clients’ files. Housed for several months in an 8-by-10 shipping container in the bar’s Los Angeles parking lot, the files were so infested with bugs and rat droppings they had to be decontaminated by a hazardous materials crew before they could even be returned to clients.

Few situations rise to such an extreme level. But even eight years later, the story serves as a vivid example of a persistent problem: attorneys failing to have a plan in place for their practice in the event of their incapacity or death.

To help resolve the problem, the bar’s governing body, then known as the Board of Governors, approved a sample surrogacy agreement in 2010 that allows attorneys to appoint a successor to wind down their practice should something happen to them.

Current Board of Trustees President Patrick Kelly said there are plenty of good reasons why attorneys, particularly sole practitioners, should have a plan in place. Still, he worries that many aren’t aware of the agreements or don’t feel they need one.

“Look at the alternative if they don’t. The files could end up as part of a delayed court proceeding,” he said. “At least with our program there’s an orderly process.”

 While it’s not a legal obligation, “certainly there is a moral obligation,” Kelly added.

When a lawyer dies or becomes disabled without having made plans for the future of his or her practice, the bar sometimes seeks a state Superior Court order to take over their practice to collect case files and return them to clients.

In typical situations, an attorney will have a bookkeeper. But some attorneys “keep it in their heads and now they’re gone,” said Deputy Chief Trial Counsel Joseph Carlucci. In those cases, the bar must bring in a forensic auditor to sort out the paper trail.

“Everyone should have a plan in place, just like everyone should have a will,” Carlucci said. “We have had situations where it is a mess. “

While it’s difficult to say how many attorneys have made use of the sample surrogacy agreement, recent rough figures give a snapshot of those who haven’t.

In 2012, the State Bar’s San Francisco and Los Angeles offices received at least 73 calls about attorneys who had passed away without an apparent plan for their practice in place and 19 about incapacitated attorneys. The State Bar had to assume control of three of those law practices.

The numbers were similar for 2011: 73 calls about deceased attorneys, 11 about incapacitated attorneys and six assumptions of practices.

With the sample agreement, an attorney can designate a successor who can go to court to be appointed the practice administrator. Per the agreement, that person would then be allowed  to open mail, become a signatory on bank accounts, pay bills and handle funds and accept the attorney’s client cases, among other duties. That person would also have the power to sell the practice.

For more information on surrogacy agreements or to download a sample contract, go to the State Bar’s website’s Attorney Surrogacy page.