In general, a business succession plan dictates who will manage
the business at those times when the owner is absent, it
provides a mechanism to transfer the ownership of the business
during the owner’s life or after his death, and it provides
the cash to pay for the sale of shares or the costs of winding
up. There are several factors that make law firm succession
planning unique, complex, and absolutely necessary.
When an attorney becomes disabled or dies, his colleagues
and office staff may attempt to manage the attorneys’ affairs.
This assistance is generous and is likely well-intentioned, but
ethical rules may prevent it. The Illinois Rules of Professional
Conduct must be consulted before anyone, whether attorney
or non-attorney, attempts to step in and manage another
attorney’s practice for any amount of time. Other sources also
impose ethical duties on the part of the practicing attorney,
and the assisting attorney and staff.
Rule 1.3 of the Illinois Rules of Professional Conduct provides:“A lawyer shall act with reasonable diligence and promptness
in representing a client.”1
The Comments state, in relevant part:
Comment : Unless the relationship is terminated as
provided in Rule 1.16, a lawyer should carry through to
conclusion all matters undertaken for a client. … If a
lawyer has served a client over a substantial period in a
variety of matters, the client sometimes may assume that the
lawyer will continue to serve on a continuing basis unless
the lawyer gives notice of withdrawal. Doubt about whether
a client-lawyer relationship still exists should be clarified by
the lawyer, preferably in writing, so that the client will not
mistakenly suppose the lawyer is looking after the client’s
affairs when the lawyer has ceased to do so. …2
Comment : To prevent neglect of client matters in the event
of a sole practitioner’s death or disability, 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 or disability, and determine whether there is a need for immediate protective action. See Illinois Supreme Court Rule 776, Appointment of Receiver in Certain Cases.3
These Comments are largely self-explanatory. In the case of
a disabled or recently deceased attorney, potential violations
of the Rule are easy to imagine. Under the ethical duty of
diligence, we solo practitioners are required to have a plan
in place so that our clients are protected in the event of our
disability or death. Also, the American Bar Association Standing Committee on Ethics and Professional Responsibility
affirmatively stated that a lawyer should designate another
attorney to fulfill the obligation to protect client files and
property in the event of a lawyer’s death:
To fulfill the obligation to protect client files and property,
a lawyer should prepare a future plan providing for the
maintenance and protection of those client interests in
the event of the lawyer’s death. Such a plan should, at a
minimum, include the designation of another lawyer who
would have the authority to review client files and make
determinations as to which files need immediate attention,
and who would notify the clients of their lawyer’s death.4
Accordingly, a solo practitioner practicing without a succession
plan may be endangering his hard-earned reputation, placing
his clients in jeopardy, and subjecting himself or his estate to a
malpractice claim in the future.
Pursuant to Rule 1.6 of the Illinois Rules of Professional
Conduct, a lawyer shall not reveal information relating to
the representation of a client unless the client gives informed
consent, the disclosure is impliedly authorized in order to carry
out the representation, or the disclosure is permitted by certain
In most instances, a review of client files, even by the Personal
Representative of a deceased attorney or the agent under a
Power of Attorney for an incapacitated attorney, would clearly
violate this rule! This is especially true where the agent or
personal representative is not an attorney. However, even a
designated attorney may not be authorized to examine client
information without the client’s consent in the absence of a
court order. Therefore, it is recommend that each solo practitioner
designate an attorney who will review his client files in
the event of disaster, inform his clients that such designation
has been made, and obtain the consent of each client to such
disclosure in all client engagement letters. For former clients, a
letter may be sent informing them of the new designation and
asking them to contact you if there is any objection.
Conflict of Interest.
Pursuant to Rule 1.7 of the Illinois Rules of Professional
Conduct, a lawyer shall not represent a client if the representation
involves a conflict of interest, unless such representation falls
within one of the exceptions set forth in the Rule.6
There are two ways in which a conflict of interest may arise
during a solo practice transition. First, if the solo practitioner’s
succession plan provides that another attorney shall contact
her clients and provide options to them regarding continued
representation, the designated attorney must ascertain whether
representation of any of the solo practitioner’s clients would
create a conflict of interest with any of the designated
attorney’s clients. The designated attorney must be vigilant to
identify such conflicts and obtain informed waivers or refer the
clients to other attorneys.
Second, if the solo practitioner’s succession plan designates
one attorney to both represent the estate, and to continue to
represent clients, then a conflict of interest may arise if the
successor attorney identifies mistakes made by the solo
practitioner in the representation of his clients. The attorney
may have to make a claim against the estate he is also
representing. Therefore, it would be prudent for a solo
practitioner to designate one attorney to represent his estate,
and another attorney to offer services to clients. Attorney Trust Accounts.
Funds in attorney trust accounts are, by definition, not
the property of the attorney. Some solo practitioners
designate another attorney as a signatory on attorney trust
accounts. If so, clients should be advised of this arrangement.
In all other cases, a personal representative or an agent under
a Power of Attorney would lack authority to access or make
distributions from these trust accounts absent a court order.
If a solo practitioner fails to designate another signatory, or
chooses not to do so due to risks involved in naming another
signer on the IOLTA account, then Illinois Supreme Court
Rule 776 “Appointment of Receiver in Certain Cases” allows
the presiding judge in the judicial circuit court to appoint an
attorney from the same judicial circuit to serve as a receiver
to perform certain duties, including the distribution of funds
from an IOLTA account.7 The conservator is entitled to
payment from the attorney’s assets or estate for reasonable
hourly fees and reimbursement for expenditures. The sole
practitioner’s succession plan must include the bank and
accounting records for the IOLTA account.
Any attorney who comes into possession of a deceased or
incapacitated attorney’s files will ultimately need to address
the issue of document retention. The rules governing a lawyer’s
obligation to retain certain records and protect client
confidentiality, along with the statute governing data disposal,
can create considerable challenges for Illinois attorneys.
Lawyers must exercise care in determining what records may
be disposed of and ensuring that the proper procedures for
disposal are implemented. The consequences of noncompliance
can be substantial, and a full discussion is beyond the scope of
The Sale of a Law Practice.
Upon the death or disability of a practicing attorney, it may
benefit the attorney’s family to sell the attorney’s practice.
Illinois Supreme Court Rule 1.17 specifically authorizes the
sale of a law practice,9 but the value of any practice is reduced
if no succession plan is in place. Who would purchase a
disorganized collection of file cabinets during a free-for-all
as staff and friends try to handle client and administrative
matters after the departure of the solo attorney? A solo
practitioner who fails to establish a succession plan is
diminishing a potentially valuable asset of his estate.
When a practice is to be sold, Rule 5.4 specifically allows an
attorney who either purchases a deceased or incapacitated
attorney’s practice, or takes over her active client files, to pay
the purchase price or a portion of the total compensation to the
heirs of the deceased attorney without violating the prohibition
against an attorney sharing legal fees with a non-attorney.10
Rule 1.17(c) of the Illinois Rules of Professional Conduct
provides that the estate of a deceased lawyer may sell his or
her law practice, including goodwill, if it gives written notice
to each of the firm’s clients regarding the proposed sale, the
client’s right to retain other counsel or to take possession of
their file, and the fact that the client’s consent to the proposed
transfer will be presumed if the client does not object within
90 days of receiving the notice.11 However, the estate needs to
be mindful of the restrictions and limitations imposed by the
comments to the Rule.12
Implementation of a Succession Plan: Power of Attorney,
Emergency Manual, and Up-to-Date Office Procedures
The process of preparing and implementing a succession plan
for a law practice may seem daunting, especially if your office
is not well-organized and information is not well-documented.
As is true with business succession planning for non-legal
businesses, taking any of the steps in the process is valuable,
even if you do not complete the entire To-Do List.
One important step is to prepare formal authorization documents
including powers of attorney for designated attorney(s)
to step in when necessary. Although the POAs would expire
on the solo attorney’s death, the personal representative of the
estate would take on the function of winding down the
business and could employ or delegate tasks to a previously
chosen assisting attorney. The POA can attach very specific
instructions and authorizations to cover specialized actions
that need to be taken.
Many estate plans seek to avoid probate, but when an
attorney passes on, probate will likely be necessary
to vest the personal representative with adequate
powers and protections to sell or wind down the law practice.
Make helpful directives in your will, such as instructing your
spouse/executor to hire your designated attorney to attend to
the transition of the practice and referring to the authorizations
and duties attached to the POA.
The solo practitioner should also prepare an Emergency Manual
that will be used upon disability or death. The Emergency
Manual will contain extremely confidential information about
your practice, therefore its storage must be carefully considered.
A safe deposit box with your successor as joint tenant might be
a secure location, but it will be more difficult to make regular
updates to a manual stored in this way. You may choose to
maintain these documents in a binder and/or encrypted
electronic folder as PDF or word-processing files in a secure
location and confidentially protected manner. With any
storage system, monthly or quarterly updates are recommended.
You may be thinking that your valued administrative assistant
or paralegal knows all of this information and can be counted
on to spring into action when the time arises, so there is no
need to write it down. This employee’s knowledge and experience
admittedly are valuable – but a written manual will ensure
that the assistant affords the proper priority to the most critical
matters and engages the assistance of your designated attorney
at the appropriate times.
The Emergency Manual should contain: (i) contact information
for the designated assisting attorney and a copy of the Power
of Attorney; (ii) keys, codes, or passwords to enable the
designated attorney to access the law office, computer
databases, client files and contact information, conflict of
interest systems, calendaring systems, voicemail, e-mail, tax
and accounting records, billing software, safe and/or safe
deposit box, and business and trust bank account records.
verify that giving another person your password and access to
instructions to enable the designated attorney to quickly identify
active client files, time-sensitive matters, and client property
in the attorney’s possession; (iv) descriptions of how the
office classifies, organizes, and stores files and information,
and handles billing and scheduling; (v) information regarding
the existence of maintenance or service contracts, professional
liability and other insurance and ongoing office expenses; (vi)
a copy of the financial institution’s form(s) for IOLTA access
by the assisting attorney, if this is desired by the sole practitioner;
(vii) a Power of Attorney specifically authorizing the assisting attorney to run the business as needed; (viii) access
to an updated list of law practice contacts (employees, clients,
vendors, suppliers, memberships); (ix) a draft of a letter for the
assisting attorney to provide notification to clients about the
deceased or disabled lawyer, and authorizing release of client
files to a new attorney; and, (x) instructions for loved ones and
the personal representative of the estate about the designated
assisting attorney responsibilities.
Even if your personal representative or agent knows your
user names and passwords, there is potential liability for their
accessing your accounts. Federal and state laws criminalize
certain types of unauthorized access. If a digital asset provider’s
terms of service do not authorize a fiduciary to access a
deceased or disabled user’s account then access by the fiduciary
may be a violation of these criminal laws.13 Increasingly,
state legislatures are providing express statutory authority to
allow fiduciaries to access certain digital assets of a deceased
or disabled person. For example, Illinois Senate Bill 1376 seeks
to provide procedures and requirements for the access and
control by guardians, executors, agents, and other fiduciaries
to the digital assets of persons who are deceased, under a legal
disability, or subject to the terms of a trust.
In addition to significantly reducing malpractice liability
exposure, increasing client satisfaction, and enhancing the value
of the law practice, the process of preparing a succession
plan will improve the day-to-day operation of an attorney’s
business. File opening and closing procedures and your
engagement letters may receive valuable updates. While creating
your Emergency Manual, if you find that it is difficult to
describe your system for handling certain aspects of your law
practice, or that the instructions are particularly onerous or
inefficient, you may recognize the need to make some current
modifications to your practice. Succession planning for solos
and small firm attorneys may reveal some inconvenient
truths and unearth necessary changes, but it will ultimately
benefit the planning attorney in the long run. The truth hurts.
However, as Charles Dickens put it “…there is nothing so
strong or safe in an emergency of life as the simple truth.”
1. Ill. Sup. Ct. R. Art. VIII, R. 1.3 (2010).
2. Id. cmt. 4.
3. Id. cmt. 5.
4. ABA Formal Opinion 92-369, Disposition of Deceased Sole Practitioners’ Client Files and Property, (1992),
available at: http://www.americanbar.org/groups/professional_responsibility/services/ethicsearch/
5. Ill. Sup. Ct. R. Art. VIII, R. 1.6 (2010).
6. Ill. Sup. Ct. R. Art. VII, R. 1.7 (2010).
7. Ill. Sup. Ct. R. Art. VII, R. 776(a) (1989) (amended 1991).
8. For a complete discussion see Ill. Sup. Ct. R. Art. VII, R. 769 (1989) (amended 2003) and Personal
Information Protection Act, 815 ILCS 530/1 et seq.; See also The Docket: Publication of the Lake County Bar
Ass’n, Record Retention and Proper Document and Data Disposal for Illinois Lawyers, June 2014.
9. Ill. Sup. Ct. R. Art. VIII, R. 1.17 (2010).
10. Id. R. 5.4.
11. Id. R. 1.17(c).
12. See Ill. Sup. Ct. R. Art. VIII, R. 117, cmt. 7 and 11 (2010), stating that the estate cannot provide a potential
purchaser with access to any client-specific information relating to the representation, or access to the
file generally, without the client’s informed consent. Also, Comment 11 makes clear that any lawyers participating
in the sale of the practice are subject to ethical obligations, including the obligation to exercise
competence in identifying a qualified purchaser (pursuant to Rule 1.1), the obligation to avoid disqualifying
conflicts and to secure the client’s informed consent for conflicts that can be waived (pursuant to Rule 1.7),
and the obligation to protect information relating to the representation (pursuant to Rules 1.6 and 1.9).
13. See 720 ILCS 5/17-51 Computer Tampering; 18 USC § 1030 The Computer Fraud Abuse Act.
Patricia C. Kraft is an estate planning and general
practice lawyer from Woodstock, Illinois. Pat is a
regular speaker and writer on estate planning and
related topics for families and small businesses.
Her monthly column in the Woodstock Independent
is reprinted on her website PatriciaKraftLaw.
com covering topics such as How Do I Know if I
Need an Estate Plan? Pat is also a Master Gardener since 2006 and an avid knitter.