Death of a Sole Practitioner: Planning for the Event and Administering the Aftermath
LACBA Update, November 2013
By Gayle Eskridge, principal, Eskridge Law, and member, LACBA Professional Responsibility and Ethics Committee. She can be reached at firstname.lastname@example.org. The opinions expressed below are her own. They are provided as suggestions by someone who has seen firsthand the consequences of attorneys and other professionals failing to plan for their death.
The subject of death of a sole practitioner raises two issues: 1) What action should the sole practitioner take in advance of death to protect the rights of clients and to protect family from the added burden of handling the winding down of the practice? 2) What happens to the practice after the death if the sole practitioner fails to plan?
Planning for One’s Own Death
As of December 2011, 47% of California attorneys who were in private practice were sole practitioners.1 The typical sole practitioner does not work closely with other attorneys, and often does not share office space with other attorneys. Some sole practitioners do not even have any support staff. Even if the sole practitioner has a back-up attorney on whom to rely, clients normally do not know who the back-up attorney is. Consequently, when an attorney dies, clients have no idea who they can contact to obtain their files. Considering the prevalence of this type of practice, there is surprisingly little guidance in California law regarding what action sole practitioners are required to take in planning for the possibility that they may die while still in practice.
The California Rules of Professional Conduct contain no guidance specific to this issue. Rule 3-110, however, provides:
(A) A member shall not intentionally, recklessly, or repeatedly fail to perform legal services with competence.
(B) For purposes of this rule, “competence” in any legal service shall mean to apply the 1) diligence, 2) learning and skill, and 3) mental, emotional, and physical ability reasonably necessary for the performance of such service.
Surely the requirement of diligence in performing legal services includes the requirement for sole practitioners to plan for their own demise.
The ABA model rules address this issue in Comment 5 to Rule 1.3. Comment 5 sets forth the following guidance for succession planning:
To prevent neglect of client matters in the event of a sole practitioner's death..., the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer's death..., and determine whether there is a need for immediate protective action....
Although California has not adopted this rule, it would seem to follow logically that in order for sole practitioners to comply with the “diligence” requirement of California Rule of Professional Conduct 3-110, they should prepare a plan that designates another competent lawyer to review client files, notify each client of their death, and determine whether there is a need for immediate action. When deciding on an attorney to designate, the sole practitioner should take into consideration not only the expertise and experience that is required of the designee but also the likelihood of conflicts of interest. Sole practitioners within small communities may even need to designate an attorney who is outside their locale to avoid likely conflicts of interest. The designated succession attorney should obviously consent to the designation, and it would be a good idea to meet with the designated attorney, discuss various details (including how the designated attorney will be compensated), and thoroughly document the arrangement.2 Estate planning documents would need to be altered to be consistent with the succession plan. Sole practitioners should make an effort to organize and maintain their practices (rather than keeping most of the information in their heads) to allow for as easy a transition as possible. If death is imminent (such as within six months), the attorney should inform clients regarding the succession attorney’s eventual role.
Once the death occurs, the conservator of the estate of the deceased sole practitioner, or other person interested in the estate, could then bring a petition before the probate court seeking the appointment of the designated succession attorney (which the Probate Code refers to as the “practice administrator”) to take control of the files and assets of the practice of the [deceased] member and carry out the specified tasks. [Prob. Code §2468(a).] The advantages of providing in advance for a practice administrator under the Probate Code compared to the consequences of failing to plan (discussed below) include the ability to specify the identity of the succession attorney/practice administrator, the ability of the attorney’s personal representative to have some control over disposition of the attorney’s practice, and the fact that there is no requirement to involve the State Bar in the process. The procedure for appointment of a “practice administrator” is provided for by Probate Code Sections 2468(a) and 9764(a), and 17200(b)(22) and (23), and is authorized by the State Bar Act at Business and Professions Code Section 6185.3
Consequences of Failing to Plan for Death
If no arrangements have been made for a succession attorney (or “practice administrator”) to be appointed through the probate procedure, the closing down of the practice will be one more burden for family and friends who are already going through a difficult time. Procedurally, any client, the State Bar, or any interested person or entity may apply to the superior court in the county of the attorney’s principal place of practice or residence for court assumption of jurisdiction over the attorney’s law practice. If the action is initiated by someone other than the State Bar, the State Bar is permitted to intervene and to assume primary responsibility for conducting the action. [Bus. & Prof. Code §6180.2.] This procedure is set forth in the State Bar Act (Bus. & Prof. Code §6180, et seq.). The process is initiated by the filing of a verification, which leads to an order to show cause and then to a hearing on the merits. [Bus. & Prof. Code §§6180.3 and 6180.4.] An order assuming jurisdiction over a law practice is nonappealable and may not be stayed by petition for extraordinary writ except as ordered by the superior court or appellate court. [Bus. & Prof. Code §6180.13.] No person shall incur liability for instituting or maintaining (or failing to institute or maintain) proceedings for court assumption of jurisdiction over a law practice under the statute. [Bus. & Prof. Code §6180.11.]
A court assuming jurisdiction over a law practice may make all orders that are necessary or appropriate to exercise its jurisdiction. [Bus. & Prof. Code §6180.5.] The court will normally appoint an attorney who is an active member of the State Bar to act on its behalf in undertaking various tasks that are itemized in Business and Professions Code Section 6180.5. The appointed attorney does not take over the practice permanently, however, and is limited to applying for extensions of time pending employment of substitute counsel by the clients, and filing notices, motions, and pleadings on clients’ behalf and with clients’ consent where jurisdictional time limits are involved and substitute counsel has not been retained. [Bus. & Prof. Code §6180.6.] Court-appointed attorneys are generally not compensated, although they may be paid reasonable compensation by the State Bar in cases where the State Bar has determined that the appointed attorney has devoted extraordinary time and services that were necessary to the performance of their appointment. [Bus. & Prof. Code §6180.12.]4
In death as in life, it is always better to plan than to leave things to chance. Hope is not a strategy.
1 Summary Results of Survey of Members of The State Bar of California, December 2011 (www.calbar.ca.gov).
2 There is a sample agreement to close an attorney’s law practice in the future that is available on the State Bar Web site. This and many other helpful materials are available at http://ethics.calbar.ca.gov/Ethics/SeniorLawyersResources/Articles.aspx.
3 See Vapnek, Tuft, Peck & Wiener, CAL. PRAC. GUIDE: PROFESSIONAL RESPONSIBILITY (The Rutter Group 2013), pp. 1-84 through 1-90, for a further discussion of these procedures.
4 See Vapnek, supra note 3, pp. 1-80 through 1-84, for a further discussion of these procedures.
LACBA's Professional Responsibility and Ethics Committee welcomes new inquiries from LACBA members regarding ethical issues or concerns about professional responsibilities. The identity of the inquirer is kept confidential within the committee. The committee, however, does not publish formal opinions that are the subject of any pending litigation involving the inquirer. If you have an ethical question that you would like the committee to consider, you can mail your written inquiry to Los Angeles County Bar Association, Professional Responsibility and Ethics Committee, P.O. Box 55020, Los Angeles, CA 90055-2020, or e-mail your inquiry marked “Confidential” to Member Services at email@example.com.