December 2001 

Classifieds
Letters
Display Ads
Archives
Article Index
Dec '01 Issue
Latest Issue
MSBA Home Page

Every lawyer dies. Some lawyers become incapacitated either permanently or temporarily. A few lawyers disappear or are disbarred or suspended from practice. If any of these events occur while the lawyer has an active practice representing clients, the lawyer's failure to plan for the end or temporary interruption of the practice may cause harm to his clients. The problems presented are particularly difficult if the lawyer is a sole practitioner without partners who may step in to see to the immediate needs of the clients.

In recent years several groups and commentators have considered the problems associated with such a termination or interruption of practice.1 In its Formal Opinion 92-369, the American Bar Association Committee on Ethics and Professional Responsibility relied on Model Rules of Professional Conduct 1.1 (Competence) and 1.3 (Diligence) as establishing an obligation on a sole practitioner to make plans to ensure that client matters will not be neglected in the event of the practitioner's death. It determined that:

. . . [L]awyers should make arrangements for their client files to be maintained in the event of their death. Such a plan should at a minimum include the designation of another lawyer who would have the authority to look over the sole practitioner's files and make determinations as to which files needed immediate attention, and provide for notification to the sole practitioner's clients of their lawyer's death.2

Although the ABA ethics opinions are advisory only, the Senior Lawyers Division of the ABA has urged all state and local jurisdictions to adopt through court rule or other appropriate means effective procedures for the protection of clients' interests in the event of termination or interruption of a lawyer's practice.3 A recent survey of all 50 states sponsored by the Senior Lawyers Division determined that many states had no formal plan in place. And the plans that were in place dealt only with the situation in which a lawyer had ceased practice with no adequate plan to wind up his or her affairs.4 In practice such terminations and interruptions appear to be handled on a very informal basis with another lawyer or perhaps a family member reviewing files and notifying clients. Only when the informal arrangements did not work do the state plans contemplate more formal intervention.

In Minnesota several rules of professional conduct provide for client protection in the event of the unexpected termination or interruption of practice. Under Rule 26 5 a lawyer who is disbarred or suspended or who resigns his or her license is required to notify each client of that fact within ten days of the Supreme Court's order. The rule requires that the notice urge the client to seek advice from other counsel of the client's own choice. In the case of pending litigation or administrative proceedings, the lawyer must also give notice to opposing counsel and the appropriate tribunal. The rule also applies to a lawyer who is transferred to disability inactive status under Rule 28. 6

Upon a showing that a lawyer is unable to properly discharge responsibilities to clients due to disability, death or disappearance, Rule 27 authorizes the Supreme Court to appoint another lawyer to serve as trustee to inventory client files and "take whatever action seems indicated to protect the interests of the clients and other affected persons.7

These rules do not offer full protection of clients' interests. The disbarred, disappeared or resigned lawyer will probably not give the notice required by Rule 26. The only sanction for noncompliance seems to be that failure to comply will bar reinstatement to practice; the disbarred, disappeared or resigned lawyer very often will not be thinking of that eventuality at the time of the order or disappearance. In the case of a lawyer's disability, the rule requires notice only in the event of the lawyer's transfer to disability status, a technical status requiring an action by the Supreme Court under Rule 28. 8 Such action is not usually taken in the case of a lawyer who is temporarily away from practice for chemical dependency treatment. Rule 27 also requires action by the Court to put the trustee in place. Until the Court acts, the clients' interests are not protected by the rules.

The biggest shortcoming of these formal protective rules, however, is that they do not advise or require lawyers to make plans for client protection before the death, disability, disbarment or disappearance occurs. When the termination or interruption of practice occurs, the clients may be left with no one to protect their interests. The disabled or disciplined lawyer may not give them notice. The surviving spouse or other relatives of the dead lawyer will not usually be lawyers and are likely not to have the interests of the lawyer's clients foremost in their minds.

Betty Shaw, assistant director of the Minnesota Lawyers Professional Responsibility Board, says that formal appointment of the trustee under Rule 27 is used only as a last resort in two or three cases each year. More commonly, even in those cases that come to the attention of the board, a lawyer or family member volunteers to informally wind up the practice of the dead or disabled lawyer. And since many more practicing lawyers die or otherwise terminate practice than come to the attention of the board, one must assume that the informal winding up of practices is the norm in their cases as well.

The very informality that characterizes most winding up or maintenance of practices makes it difficult to determine how often it occurs and how many lawyers have planned for the termination or interruption of practice. The ABA survey suggests that most have not. The normal tendency to avoid consideration of one's own death or disability probably leads many to put off that planning until it is too late.

As noted the ABA has found in the existing rules an obligation for lawyers to plan for the termination or interruption of practice. At least one state has issued an opinion that says that the duty of competent representation requires "at least making sure that someone will be available to step in to avoid client prejudice" in those cases.9 In Minnesota, no court rule clearly establishes an obligation on each lawyer to provide such planning. Nor does any rule of the Supreme Court set out guidelines for an attorney who wants to do such planning.

The problem is a serious one and a system for advance planning seems desirable. While this might take the form of a mandatory rule that requires each lawyer to certify that she has a plan in place for the maintenance and disposition of files in the case of termination or interruption of practice, such a formal mandate seems unwarranted. The lack of reported litigation dealing with the winding up of practices indicates that the informal system works in almost all cases.

Rather than adopting a mandatory rule, the Board of Professional Responsibility could facilitate advance planning by adopting guidelines to be used by the lawyer in setting up a plan for winding up. All of the formal rules and informal arrangements use a second lawyer to review files and notify clients of the death or disability of their lawyer, and an advisory opinion would likely do so as well. This second lawyer, who may be called a trustee 10 or an assisting lawyer,11 is given the task of making an initial review of the dead or disabled lawyer's files and notifying each client of the termination or interruption of the practice. The guidelines for a plan for termination or interruption must clearly define the role of this assisting attorney and address several issues that will arise in carrying out this function.

At the very least the assisting lawyer will have a duty to inspect the files in enough detail to determine which need immediate attention. He must notify all clients of the death or disability of the lawyer and ask how they wish the files to be handled. He must then transfer the files to the client or to a successor lawyer designated by the client and make appropriate disposition of closed or inactive files.12

Curtis L. Stine is professor of law at William Mitchell College of Law. He currently serves on an MSBA subcommittee examining issues surrounding attorneys' unexpected death or disability.

This role appears to be largely ministerial, but any rule that requires or advises appointment of an assisting lawyer must address several difficult problems. These include confidentiality, malpractice liability and coverage, compensation of the assisting lawyer, conflicts of interest, and disposition of the terminating lawyer's business and trust accounts.

Confidentiality
First, the rule should clearly state the assisting lawyer's obligation to maintain client confidentiality. Certainly any client should be able to rely on confidentiality by any lawyer authorized to review the client's file. The current confidentiality rule, however, requires only that a lawyer maintain confidences of her clients, and the assisting lawyer is not the lawyer for the clients of the planning lawyer until the clients have agreed to the representation. Although Wisconsin has ruled that the assisting lawyer in a formal winding up is bound by confidentiality rules,13 that result is not clear under the Minnesota rules. The opinion therefore should include a provision that imposes on any assisting lawyer, whether appointed in advance or not, an obligation to maintain client confidentiality in the review and disposition of files.14

Malpractice Liability
The opinion should consider the extent to which the assisting lawyer is liable for malpractice. Although she is not the lawyer for the client, the assisting lawyer does undertake to protect the client's interest, and a client may be injured by the assisting lawyer's failure to note the urgency of some matter in the file. Clients will be fully protected only if the assisting lawyer is bound by a duty of care in carrying out her function.

On the other hand, the potential for liability may make lawyers reluctant to take on the role of assisting lawyer. In the informal setting at least, lawyers often perform this function voluntarily for altruistic reasons. An opinion that clearly focuses attention on the potential for liability may lead to fewer lawyers being willing to assist in the winding up.

Some states with formal procedures for winding up a practice have addressed this problem by providing immunity for a lawyer acting as trustee.15 Immunity protects the assisting lawyer and may encourage persons to take on the role, but leaves the client unprotected in the event of the death, disability or discipline of his lawyer.

The opinion would better protect clients if the assisting lawyer is not immune from malpractice liability. Instead the rule should assure that the lawyer will have the same incentives and protection in the assisting lawyer role as the lawyer has in her ordinary practice. It should make clear that the lawyer is entitled to compensation for the work done as assisting lawyer. It should also define the scope of the assisting lawyer's role to assure that the lawyer's risk of liability for the work can be covered by insurance.

A reasonable lawyer agreeing to act as assisting lawyer for another will want assurance that any liability incurred in the role will be covered by insurance. He will want to know whether his standard coverage applies to the work done or whether he may obtain special coverage for it. Whether his standard coverage applies depends on the language of the contract, of course, but the contract has probably not been drafted with the role of assisting lawyer in mind and is unlikely to clearly address coverage for that role. The assisting lawyer is not the lawyer for any of the clients while he is merely reviewing files and notifying them. He may be viewed as the lawyer for the planning lawyer or her estate, but until this role is clearly defined, issues of coverage under existing policies are likely to arise.

Wisconsin has adopted a formal plan for winding up practices that assures malpractice coverage for the trustee attorney by making that attorney an employee of a nonprofit corporation created by the State Bar which maintains malpractice insurance.16 But the status arises only if the lawyer has been formally appointed trustee in a court proceeding. Where the winding up is done informally, that protection is not available. Since it appears that informal arrangements are used in the great majority of cases, a clarification of the issues of liability and coverage seems warranted.

Compensation
The rule should make clear that the assisting lawyer is entitled to compensation for the work she does. The review of the files will require the exercise of professional judgment. In many cases the termination or interruption of the practice may be sudden and unexpected. The review of files will be time-consuming and urgent and may interfere with the assisting lawyer's own practice. Compensation is necessary to encourage anyone to take on these responsibilities, particularly if the lawyer is liable for malpractice.

Some states have made the estate of the dead or disabled lawyer liable for the assisting lawyer's compensation, at least in formal arrangements.17 But the estate of a deceased lawyer may be insolvent. And in the case of the termination or interruption of practice caused by disability, disappearance or disbarment, one can easily imagine that the original lawyer would very often not have assets sufficient to satisfy the obligation to the assisting lawyer. The very neglect that led to the termination of the practice may leave the lawyer insolvent. Where funds are not available to compensate the assisting lawyer, the system may have to rely on the willingness of assisting lawyers to do the work for altruistic reasons; no other source of funding seems available.18

Conflicts of Interest
The opinion will also have to consider the potential for conflicts of interest for the assisting lawyer. A sole practitioner is likely to choose for assisting attorney someone whose competence he has determined from prior professional dealings. The two may have similar practices and draw similar clients. In smaller communities only two or three other lawyers may be available to be assisting attorneys. These circumstances make it likely that the original lawyer may have some files in which clients of the assisting attorney have a conflicting interest. When that is the case, the assisting lawyer should not give the file even a brief review.

Unfortunately, the assisting lawyer may look at the file without knowing of the conflict. If there is a pending dispute between the original lawyer's client and a client of the assisting lawyer, the assisting lawyer will probably know of the conflict from the client's name on the file and look no further. But if there is no pending action, the assisting attorney might look at a file only to discover information of benefit to his own clients. If that happens, the assisting lawyer would probably be required to recuse himself from the case entirely. But that answer may well leave lawyers in smaller communities in an unenviable situation. One may agree to act as assisting lawyer for the good of the profession, but jeopardize his continuing representation of his own clients if he looks innocently at the wrong file.

Even before an actual conflict of the type just mentioned occurs, the very adoption of the plan appointing an assisting lawyer may raise a potential conflict. If a lawyer in practice appoints an assisting attorney to wind up her practice, the assisting attorney may someday have access to the planning lawyer's files. Will it be necessary for the planning lawyer to disclose to her appointed assisting lawyer every existing and new client and ask that the assisting lawyer do a check for conflicts? If so, the adoption of the plan may place too much of a burden on both lawyers to be practical. One solution may be inclusion of a provision in the board's opinion making the mere existence of an appointment immune from ordinary conflict rules. Only when an actual conflict arose would the usual rules apply.

Business and Trust Accounts
The rule must also address the assisting lawyer's responsibility with respect to the dead or disabled lawyer's business assets and trust accounts. The business assets including business bank accounts are the property of the lawyer and should be handled as part of his estate by his personal representative or his conservator.19 The trust accounts are not the property of the lawyer, and therefore do not pass to the personal representative of his estate.20 Surprisingly, the current rules governing lawyer trust accounts do not clearly address the responsibility of the lawyer to make arrangements for someone to have charge of the disposition of the accounts at death or disability. The opinion should consider the lawyer's trust accounts and require that the lawyer provide for their disposition either by the assisting lawyer or some other responsible person who would have a fiduciary duty to the clients to disburse their funds as directed.

More lawyers than ever before are reaching the age when death or disability is more likely to occur. The system of informal winding up of practices that terminate or are interrupted unexpectedly has worked reasonably well and is likely to continue to be used. The Lawyers Professional Responsibility Board can help assure that the informal system will continue to work as it is used more often by adopting an opinion that guides lawyer as they plan for death or disability.

A lawyer will best protect the interests of her clients if she plans in advance for the unexpected termination or interruption of her practice because of death or disability. Although the problems are most acute in the case of a sole practitioner, all lawyers can benefit from thinking about the problems associated with the winding up of a practice and putting in place a plan for addressing them. The planning lawyer might use the following checklist in planning.

Assisting Lawyer. The planning lawyer should engage another lawyer to act as assisting lawyer in winding up the practice. The duties of the assisting lawyer should be set out in writing and include notifying clients of the planning lawyer's death or disability, checking files to see if any require immediate attention for court dates or running of any limitations period, transferring active files to the client or a lawyer designated by the client, disposing of closed files, notifying the planning lawyer's malpractice carrier of her death or disability, and properly disposing of trust account funds.

Compensation. The agreement between the planning lawyer and the assisting lawyer should provide for the compensation of the assisting lawyer and designate how that compensation will be paid.

Malpractice Insurance. Both the planning and assisting lawyers should notify their malpractice insurers of the agreement to determine whether current policies will cover the actions of the assisting lawyer. If not, the parties should make arrangements for necessary coverage.

Systems Check. The planning lawyer should review all of his systems for monitoring and managing his practice to see that they will sufficiently inform the assisting lawyer of the state of the practice at any time when the assisting lawyer may have to act. If the planning lawyer has one or more staff persons, they may know enough about the practice to help the assisting lawyer. Today, however, it is not uncommon for sole practitioners to rely on computer assistance and to have no staff. In those cases, the practitioner must make arrangements to notify the assisting lawyer of any computer passwords that will allow her to gain access to the files, the planning lawyer's calendar, and other file monitoring lists. If the passwords are to be kept in a safe deposit box or other secure location, the planning lawyer will have to make sure that his personal representative or other person with access is notified of the assisting lawyer arrangement.

Trust Accounts. The planning lawyer should make arrangements for disposition of any client funds held in trust accounts. He should make sure that his accounting for trust funds is sufficiently clear to designate those entitled to them. If he is appointing an assisting lawyer, designation of that lawyer as the one to wind up the trust fund distributions makes sense because the assisting lawyer will presumably continue to be governed by professional requirements in dealing with the fund.

Define the Role of the Assisting Lawyer. The winding up of a law practice entails many considerations that require the exercise of professional judgment by an assisting lawyer. It also entails considerations similar to those encountered in winding up any business. In developing the agreement with the assisting lawyer, the planning lawyer should identify those tasks for which the assisting lawyer will be responsible and those that are left to the planning lawyer's personal representative. Some that seem best suited to the assisting lawyer are:

1.Checking the calendar and client files to determine court dates and deadlines and making necessary arrangements to cover them.
2. Checking for any statutes of limitations and making arrangements to take action before they run.
3. Notifying the planning lawyer's malpractice carrier of the death or disability and determining assisting lawyer's coverage.
4. Sending notice of the death or disability to clients, courts, administrative bodies and opposing and associated counsel.
5. Transferring client files in accordance with clients' instructions.
6. Disposing of closed and inactive files.
7. Distributing client trust accounts to those entitled.

Other tasks in winding up involve the lawyer's own property and may be best left to the personal representative of the estate. For example:

1. Collecting fees and costs for unbilled work of the dead or disabled lawyer.
2. Closing the office and disposing of business furniture and other property.
3. Continuing to pay office staff during the period of winding up.
4. Paying any obligations of the lawyer arising from the practice.
5. Gathering information necessary to file required tax returns of the dead or disabled lawyer.

1 Peter Geraghty, "Handling Files of a Dead Lawyer," in The Lawyer's Guide to Retirement, 505 (3d ed., David A. Bridewell and Charles Naut eds., 1997); William D. Haught, "A Solo Pracititioner's Letters of Instructions," in The Lawyer's Guide to Retirement, 498 (3d ed., David A. Bridewell and Charles Naut eds., 1997).
2 Disposition of Deceased Sole Practitioner's Client Files and Property, A.B.A. Stand. Comm. on Ethics and Professional Responsibility, Formal Op. 92-369 (1992).
3 A.B.A. Senior Lawyers Division, Recommendation, May 21, 1997.
4 Stephen Maskaleris and Vivienne Cooperman, "What Happens When A Lawyer Dies: A Survey of the Problem and the Response of the Organized Bar" (1997) (unpublished, on file with A.B.A. Senior Lawyers Division).
5 MN Rules on Lawyers Professional Responsibility Rule 26.
6 MN Rules on Lawyers Professional Responsibility Rule 28.
7 MN Rules on Lawyers Professional Responsibility Rule 27.
8 MN Rules on Lawyers Professional Responsibility Rule 28; Under this rule the Supreme Court may immediately transfer a lawyer to disability inactive status upon proof that the lawyer has been found in a judicial proceeding to be a mentally ill, mentally deficient, incapacitated, or inebriate person. Otherwise, the Court may transfer a lawyer to that status in a proceeding initiated by the Director of the Office of Professional Responsibility.
9 Oregon State Bar Ethics Opinion 1991-129 (1991).
10 MN Rules on Lawyers Professional Responsibility Rule 27.
11 Or. Rev. Stat. ¤ 9.725 (2001)
12 A.B.A. Stand. Comm. on Ethics and Professional Responsibility, supra note 2.
13 Wis. Sup. Ct. R. 22.27(14) and 22.271(6)
14 See MN Op. of Lawyers Professional Responsibility Bd., Op. No. 1.
15 See Rules Governing the Courts of the State of New Jersey, Rule 1:20-19(d); Idaho Bar Commission Rules, Rule 519(g).
16 Wis. Sup. Ct. R. 22.27(15) and 22.271(7).
17 See id. 22.27(11) and 22.271(1)(d).
18 Minnesota has established a Client Security Fund but claims must allege that the client's loss arose out of the wrongdoing of a lawyer in the "lawyer-client relationship." See Rules of The Minnesota Client Security Board, Rule 3.02.
19 But see Alaska Rules of Court, Rule 31(b) that grants the trustee counsel in a formal winding-up proceeding the powers of the personal representative as to the deceased lawyer's practice.
20 Under Minn. Stat. Chapter 524 the personal representative of the decedent's estate has authority only over property of the decedent. Kenneth L. Jorgensen, First Assistant Director of the Lawyer's Professional Responsibility Board, notes that in practice the personal representative or some other person interested in the decedent lawyer's estate makes disbursement of the trust funds informally.