From solo practitioners to attorneys in large firms, all attorneys must prepare for the days they are no longer able to practice law. Succession planning proactively protects clients and colleagues in the event of an attorney’s death or incapacitation.
Only four states require private practice attorneys to plan for an end-of-career transition by designating another attorney to assist clients and conclude business. They are Arizona, Florida, Iowa and Maine.
Thirty-eight states recommend succession planning. They are Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Eight states that do not have rules regarding succession planning. They are Alabama, Hawaii, Kansas, Mississippi, Montana, Nevada, New Jersey and South Dakota.
Here are some succession planning basics to consider:
- Review partnership agreement.- how does it address death, disability, mandatory retirement, withdrawals of partners? Most likely it will need to be revised.
- Evaluate partner compensation structure – does your system pave the way for partners to retire with a smooth transition for the clients?
- If you are a solo attorney, have you designated an attorney to takeover your client work, should you die, become disabled or are approaching retirement age. If not, you will want to start a recruiting process to find the best fit for your clients. The solution may be a successor attorney, a merger or an acquisition of your practice.
- Do you know the value of your practice/firm? If not, you should have a valuation completed and financial modeling analyzed.
- Put your plan in writing. The plan should start 5-10 years before expected retirement age. If your firm doesn’t have a mandatory retirement age, it is important that you have a well-documented succession plan. The firm should revisit the plan on an annual basis.
See the State Mandatory Succession Rule Chart, American Bar Association,
Brenda Barnes is co-author of the book titled, RESPECT -An Insight to Attorney Compensation Plans and is a frequent speaker and consultant on succession planning and attorney compensation plans.