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Succession Planning Handbook for New Mexico Lawyers

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Succession Planning Handbook for New Mexico Lawyers Succession Planning Handbook For New Mexico Lawyers Protecting Your Clients’ Interests By Providing for a Smooth Transition After Your Retirement, Death or Disability July 2014 New Mexico Supreme Court Lawyer Succession and Transition Committee State Bar of New Mexico Lawyers and Judges Assistance Program, Client Protection Fund, Senior Lawyers Division New Mexico Supreme Court Lawyer Succession and Transition Committee Justice Edward L Chávez Charles D. Noland Briggs F. Cheney William D. Slease, Chair Joseph R. Conte Richard B. Spinello Sandra Morgan Little Jill Anne Yeagley Gaelle D. McConnell Caution Regarding Sample Forms This handbook is a guide to help New Mexico lawyers protect their clients when a law practice is interrupted. The forms provided are samples only and anyone using these forms must adapt them to fit his or her individual circumstances. Further, the sample forms and the recommendations made in this handbook are not intended to excuse users’ compliance with all laws, statutes and applicable court rules, including but not limited to the Rules of Professional Conduct. If any provisions of this handbook or any terms of the sample forms conflict with New Mexico statutes, court rules or case law, the applicable legal authority shall control. Users must confirm that any forms used comply with all applicable laws and rules. Acknowledgments The Lawyer Succession and Transition Committee was established as an official Supreme Court committee effective Jan. 1, 2013. Research soon showed that the succession planning guide published by the Oregon State Bar Professional Liability Fund in 1999 was the seminal resource for several other states. The New Mexico committee gratefully acknowledges Oregon’s pioneering work in this area and its generosity in sharing its guide. The committee also gratefully acknowledges the assistance of the American Bar Association and the New York State Bar Association in granting permission to use the excerpts from their resources that are reprinted or adapted in this handbook. This handbook was adapted from the Oregon State Bar Professional Liability Fund handbook Planning Ahead: A Guide to Protecting Your Clients' Interests in the Event of Your Disability or Death, Copyright 2013. All rights are reserved except that members of the State Bar of New Mexico and other attorneys licensed in New Mexico may use this material for assistance with their own law practice or to help another attorney close his or her office. This material may also be reproduced for classroom instruction or for use by a not-for-profit organization, provided that such use is for informational, non-commercial purposes only and any reproduction of the handbook or portion thereof acknowledges original publication of the handbook by the Oregon State Bar Professional Liability Fund and notes if the material was adapted with permission of the Oregon State Bar Professional Liability Fund. Copyright 2014 New Mexico Supreme Court Lawyer Succession and Transition Committee All Rights Reserved Co-Editors: Charles D. Noland, Gaelle D. McConnell, William D. Slease Supreme Court of New Mexico CHIEF JUSTICE P.O. BOX 848 CHIEF CLERK BARBARA J. VIGIL SANTA FE, NEW MEXICO JOEY D. MOYA, ESQ. JUSTICES 87504-0848 (505) 827-4860 FAX (505) 827-4837 PETRA JIMENEZ MAES RICHARD C. BOSSON EDWARD L. CHAVEZ CHARLES W. DANIELS Dear Colleague: When a client hires a lawyer—whether it is to represent the client in a domestic relations case, civil litigation, criminal litigation, or to draft legal documents—the client expects the lawyer to complete the assignment. Whether you are a sole practitioner, in a small law firm, or even in a large law firm, and whether you are new to our profession or have been a lawyer for decades, you need to ask yourself: "If I suffer an unexpected tragedy rendering me permanently or temporarily incapacitated, or if I need to be away for a prolonged period because of a personal or family emergency, or if I simply want to retire, do I have a plan in place to protect my clients and make sure that their legal problems will be taken care of with the least disruption possible?" Most attorney-client relationships last for months, if not years. And when clients hire you, they are relieved that a competent professional will diligently protect their interests, safeguard the property they entrust to you, and, in a very real sense, they trust you to map out a strategy to secure their futures. However, your clients don't realize that you might fall victim to an unexpected tragedy or that you may be unable to work for an undetermined amount of time. They don't have a Plan B in place if they suddenly need a new lawyer. It is your job to set up that Plan B for your clients. Although no one can predict the future, lawyers must strive to lessen the impact of unexpected interruptions in their relationships with their clients. Your duty to competently and diligently represent your clients requires this, but more importantly, it is the right thing to do. So how do you protect your clients from necessary interruptions in the attorney-client relationship? You develop a succession and transition plan! Creating an effective succession and transition plan will help protect your clients, your hard-earned reputation, and your family and loved ones. My colleagues and I on the Supreme Court recognize that developing an effective succession plan can be complicated and it takes time. To help you in this process, the Supreme Court Lawyer Succession and Transition Committee has prepared this Succession Planning Handbook to provide you with necessary information and sample forms to guide you in developing an effective plan. These resources are also available at www.nmbar.org/LSTC.html. Have a plan. Put it in writing. Talk to your clients about the plan. Let them know that you really are looking out for their interests, both now and in the future. Succession Planning Handbook for New Mexico Lawyers i Table of Contents Page Dear Colleague Letter, Justice Edward L. Chávez .................................................................................. i CHAPTER 1 – Your Client Doesn’t Have a Plan B Cautionary Tales from New Mexico ........................................................................................... 1 Unexpected Medical Calamities ............................................................................................. 1 A Divorce Practice in Crisis ...................................................................................................... 1 The Lawyer with Dementia ..................................................................................................... 2 A Word to the Wise: What To Expect When You’re Not Expecting To Close a Solo Practice ........................................................................................................... 3 CHAPTER 2 – The Duty To Plan Ahead Lawyers and Succession Planning: Why a Little Action Now Is Better Than a Lot of Panic Later ........................................................................................................ 11 American Bar Association Standing Committee on Ethics and Professional Responsibility, Formal Opinion 92-369, Disposition of Deceased Sole Practitioners’ Client Files and Property .................................................................................. 14 CHAPTER 3 – Anatomy of the Planning Process Facing the Possibilities .............................................................................................................. 21 Terminology and Forms ............................................................................................................ 21 Implementing the Plan .............................................................................................................. 22 Access to the Trust Account ...................................................................................................... 25 Client Notification ..................................................................................................................... 25 Other Steps That Pay Off ........................................................................................................... 25 Death of a Sole Practitioner—Special Considerations ............................................................. 26 CHAPTER 4 – What If? Answers to Frequently Asked Questions ..................................................... 29 CHAPTER 5 – Succession Scenarios Your Future Path(s) ................................................................................................................... 35 Succession Planning as a Business Strategy ............................................................................. 35 New Mexico Rules of Professional Conduct, Rule 16-117 NMRA, Sale of a Law Practice ..... 37 Committee Commentary ............................................................................................................. 38 Transfer of a Law Practice ........................................................................................................... 40 Temporary Substitutes During Extended Absence for Military or Personal Reasons ........... 47 Closing a Law Office: New Mexico Guide for a Third Party Closer ........................................49 CHAPTER 6 – Checklists and Sample Forms Table of Contents ........................................................................................................................ 61 CHECKLISTS Checklist for Lawyers Planning to Protect Clients’ Interests
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