Hopper: What options do you have in law practice succession planning?

Helping attorneys develop law practice succession plans is very specific to the desires and circumstances of each attorney. The options vary depending on whether a senior attorney is a solo practitioner or practicing in a law firm. In my experience, here are the primary options:

1. Law firm — transition greater responsibilities to younger partner(s) or associate(s);

2. Transition to “of counsel” role in a law firm;

3. Mentor junior attorney and transition law practice for value over a period of years;

4. Sell their law practice (or part of it) outright to an experienced attorney or law firm;

5. Merge law practice with another attorney or law firm;

6. Contract with a junior attorney or attorneys who can provide legal services for their clients, or;

7. Wind down and close law practice.

If you are in a law practice involving more than one attorney, the most common succession plan is for a younger partner or associate attorney to assume management responsibilities for the firm. Usually, how an attorney becomes an equity partner and how a partner retires, including how that retiring partner’s ownership interest in the law firm is paid out, is spelled out in the partnership or operating agreement.

If a partner or associate attorney in a law firm wants to step back from the full-time practice in a law firm, the partner or associate may move to an “of counsel” role in their firm or a different firm. Moving to an “of counsel” role usually removes that attorney from management responsibilities. If the attorney has been an equity partner in that firm, this arrangement would also include terms of payment of that partner’s equity. I recently talked with one senior attorney in a smaller community who is in the process of retiring and who was able to become “of counsel” in a small law firm in a larger, adjoining county with whom he had a working relationship over the years. This allowed this attorney to transfer his clients’ files and “will vault” to the other law firm. In my view, he was looking out for his clients’ best interests.

Over the years, a common approach to law practice succession planning has been for a senior attorney to bring in a junior attorney to mentor over a few years. This type of arrangement allows for the development of that junior attorney’s skills, abilities and relationships with the practice’s clients. It also allows both the senior attorney and junior attorney to see how that attorney fits in that law firm and community. Such a mentoring relationship also allows both to determine whether the junior attorney has the gifts and abilities to lead and manage that practice in the future. This is, by far, my preferred option. Historically, before accredited law schools and bar examinations, apprenticeships were the way we trained prospective lawyers. While I’m not advocating that we go back to that model, mentoring is still essential to developing good attorneys. I will be forever thankful to Conrad Harvey for his mentorship of this young attorney who had a lot to learn about being a good attorney.

If the senior attorney is not a mentor, this option will not succeed. I think that most senior attorneys can be good mentors, and some are very passionate about mentoring younger attorneys. But I have found that there are some attorneys who don’t have the capacity or desire to be a mentor. If so, that senior attorney would need to consider a different option.

Another option for a senior attorney would be to sell his or her law practice (or part of a practice) to a junior attorney. This junior attorney could be an attorney already practicing in that same practice or in that community. There should be a process of determining whether the junior attorney’s background, skills and personality are a good fit for the senior attorney’s law practice.

The value of the law practice would have to be determined, as well as the creditworthiness of the junior attorney. In an outright sale, Rule 1.17 of the Rules of Professional Conduct would have to be followed to protect the clients’ confidences.

A similar option would be for a senior attorney to sell his or her law practice (or part of a practice) to an existing law firm. The acquiring law firm could be in the same community as the senior attorney, from a nearby larger community or from elsewhere in the state. A common approach to expanding their legal services “footprint” is for a law firm in a nearby community to buy another attorney’s law practice or law firm in another city. Some law firms have a strategy to identify key communities where they want to expand their legal services. There should be a process of ascertaining whether the acquiring law firm’s values and areas of practice are a good fit with the senior attorney’s practice. Again, Rule 1.17 of the Rules of Professional Conduct would have to be followed.

Another common option for a law practice succession plan is for a senior attorney or law firm to merge that law practice with another attorney’s or law firm’s practice. As in the last option, there should be a process of ascertaining whether the acquiring attorney’s or law firm’s values and areas of practice are a good fit with the senior attorney’s or law firm’s practice. In a merger, Rule 1.17 of the Rules of Professional Conduct does not come into play.

A newer option in law practice succession planning for when a senior attorney wants to slow down in his or her law practice is to contract with a junior attorney(s) who can provide legal services to his or her clients in areas of the law where the senior attorney no longer wants to practice, e.g. family law, litigation, bankruptcy, guardianship, tax, etc.

A final option for law practice succession planning is for a senior attorney to wind down and close his or her law practice. This option should be thought through very carefully to protect clients’ interests. Notice should be given to all existing and some prior clients (e.g., if the attorney has a will vault) so they can make informed decisions on what should be done with their legal matters.

Regardless of the option you choose, you should involve your professional liability carrier as you implement your plan. There are important issues they can help you sort through in order to protect your clients and yourself.•

■ Don Hopper is founder of Hopper Legal Consulting Services and a partner at Harrison & Moberly LLP. His focus is serving solo and small law firms in developing law practice succession plans that will continue their legal legacies in their Indiana communities. Opinions expressed are those of the author.