Question:
My husband’s ( Robert) practice is located in Alexandria, Virginia. The practice is a general practice with a focus on estate planning, family law, and real estate. He is now sixty and suffering from Alzheimer’s. He has three legal assistants and two associate attorneys. The associates are newbies each out of law school less than three years, are risk adverse, have no client book of business, and have no desire to own a law firm. As my husband’s physical health has declined his mental acuity has declined as well. However, rather than examining possible succession alternatives he has continued to practice and the quality of his services to clients has declined. Clients have taken notice and many have taken their business to other law firms. Recently I, who serves as the firm’s office manager, approached several law firms regarding possible sale of the practice. All of the law firms that I approached have rejected my proposals advising me that since the firm is “uniquely my husband” and without a lengthy transition, they do not believe that there is sufficient value to warrant a practice acquisition. Four weeks ago, I approached both of the associates and both advised me that they did not wish to acquire this or any other law practice. Last week both associates gave their notice and advised that they were joining other law firms in the area. Based upon the medical advice of my husband’s doctor he has decide to close the practice and has asked me to handle the logistics of closing down the practice.
Response:
Unfortunately Robert’s failure to plan for his succession and transition has resulted in:
- Loss of compensation for the goodwill of his practice and the sweat equity that he invested because of the need for a hasty practice sale;
- A one generation law firm;
- Loss of peace of mind for Richard’s family and employees;
- Failure to provide continuity for clients and employees; and
- Failure to continue the legacy of the firm that Robert built.
Had Robert reconsidered his attitude of having partners, hired and groomed entrepreneurial associates with a desire to own a law firm, institutionalized the firm’s brand to be less uniquely Robert, and put in place both a short-term practice continuation plan and a long-term succession plan, the story may have ended differently.
You may not have much choice but to close the doors and windup the practice. You should check with your state bar association regarding your state court’s rules for the proper procedures for doing this. In many states a court may step in when a solo attorney:
- Dies
- Becomes incapacitated
- Is suspended or disbarred
- Unexpectedly abandons the practice
- Is otherwise unable to manage client matters
Because clients’ cases, funds, and confidential information must be protected, the court ensures there is a responsible lawyer to manage the transition. Typically the court-appointed attorney (sometimes called a practice administrator, trustee, or receiver) is authorized to:
- Secure and inventory client files
- Notify clients of the situation and their options
- Return client files and property
- Manage trust accounts and distribute funds properly
- Seek continuances or withdraw from cases appropriately
- Close the office, handle billing, and deal with vendors
- Ensure ethical obligations are honored
They do not usually take over the cases themselves unless the clients choose to hire them separately.
The goals are to:
- Protect clients from missed deadlines or case damage
- Safeguard client funds and trust accounts
- Preserve confidentiality
- Prevent chaos that could result from an abrupt closure
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John W. Olmstead, MBA, Ph.D, CMC
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