ARCTIC OBITER

10 | ARCTIC OBITER
SUCCESSION PLANNING
Taking Care of Business
by John Rafferty, QC, Burchell MacDougall
CAROL’S HUSBAND, BRIAN, WAS A SENIOR LAWYER OPERATING A SOLE PRACTICE WHEN
HE SUDDENLY AND UNEXPECTEDLY DIED OF A HEART ATTACK. CAROL AND BRIAN HAD
BEEN HAPPILY MARRIED FOR OVER 35 YEARS. NOT ONLY DID CAROL HAVE TO COPE WITH
THE GRIEF OF LOSING HER LIFE PARTNER, SHE ALSO HAD TO DEAL WITH HER HUSBAND’S LEGAL PRACTICE.
Unfortunately, like so many lawyers, Brian had made no
succession plans for his practice. That is, he had made no
arrangements for another lawyer to handle the closure of his
office, the transition of his files and the realization of the
value of the practice.
The task facing Carol was a daunting one. There were active
files, some of them urgent, that needed to be transferred to
new lawyers. There were thousands of closed files. A plan
had to be developed for staff during the transition. The office
landlord, equipment lessees and suppliers needed to be dealt
with. If things were not handled quickly, the value of the
practice would quickly erode as clients drifted away.
When news of Brian’s death spread, chaos quickly followed
at the office. Clients were calling for their files and staff were
looking to their own future employment prospects. Files
were unbilled. There were accounts receivable to collect and
trust funds to deal with.
In addition to the tremendous stress these practice issues
visited on Carol, clients are likewise stressed. Many of them
develop a personal relationship with their lawyer over the
years, are saddened by his death, but are also confused as to
their proper course of action.
Sometimes the lawyer’s spouse or other family members are
employed in the office. This can provide helpful continuity
for the lawyer taking over the practice, but undoubtedly
brings an additional level of stress to the family member.
In a larger law firm, transitioning is usually not a serious
problem. The firm has other lawyers who can take on the
work of the deceased partner. Sometimes, other lawyers have
already been working on the files. Even if not, they are
prepared to work longer hours for the good of the firm and of
the clients. Chaos is controlled, clients are serviced, file value
is maintained, and the deceased’s family is protected from
additional stress. With proper planning, sole practitioners
can achieve the same result.
It is not just death that creates the need for a succession plan.
Disability, suspension, incompetency or other factors may
also result in the need for one. If a proper succession plan is
not in place, the Society may appoint a custodian or receiver
to manage the practice and protect the public interest, may
assist with transitioning the practice to another lawyer, or
may work with the estate to ensure client interests are
protected. Immediately after appointment, the custodian will
secure the lawyer’s files and records and become the signing
authority on the trust and general accounts.
Whether the successor lawyer is appointed by the Bar Society
or the estate, the deceased lawyer’s calendar will be checked
for upcoming hearing dates and meetings. Files will be
reviewed to identify urgent matters and impending
limitation dates. Clients and opposing counsel will be
contacted on the urgent matters first and, eventually, on all
active files.
One of the most significant tasks facing a custodian or
successor is disposition of the lawyer’s trust funds. On active
files, this is usually relatively straightforward, with a
replacement lawyer obtaining authorization from the client
and committing to honour the undertakings of the former
lawyer.
However, many client trust balances are quite stale. There
may be sums retained to record releases that have never been
obtained. This may sometimes occur due to difficulty with
the mortgagee or as a result of a failure to vigorously follow
up requests for releases. When the release is eventually
obtained, the recording fee may have changed so that the
available funds are now inadequate.