Covid Closures and the Senior Tsunami

Succession Planning for Solo and Small Firms

BY AMY LYNN LONERGAN

Before COVID, there was already an impending “Senior Tsunami.” Rapid advancements in technology, such as the required (but hard to navigate) efiling system, along with a general deterioration in civility have caused many attorneys of a finer vintage to consider retirement earlier than they may have contemplated at one time in their salad years.

Then we got hit with COVID, including Zoom Court and emailing of orders in Microsoft Word. This, combined with the boom in legal software like Smokeball, Clio, and Family Law software suites, along with innovations like LawPay and programs like Outlook, Adobe, and QuickBooks switching to a subscription basis, means that older attorneys are facing steep learning curves, reduced profits, and less personal social fulfilment in their profession. Often these same attorneys are managing children or grandchildren with eLearning, and large numbers are still caring for elderly parents or disabled spouses on top of these dramatic changes to the workplace. Therefore, the senior tsunami is cresting, and the wave is about to break. Many small law firms have closed up shop, solo practitioners are finding partners, and other attorneys

are playing musical chairs in and out of different firms or governmental positions, all in hopes of staying afloat in these turbulent economic times. Together, you can see that the hot topic for 2021—and probably several years thereafter—will be figuring out how to deal with either closing up or selling a legal practice. There are always complications when you are Amy Lynn Lonergan is a partner at closing or selling any business, but a law practice adds an extra layer of ethical concerns that all lawyers Finn & Finn, need to think about sooner rather Ltd., where than later. she focuses on small business, estate planFirst and foremost, it is important to understand that no matter your age or health, as we’ve seen ning, and with COVID, anyone in a small or real prop- solo firm- i.e. 90% of Lake County erty law. For more information, she can be reached at 847-599-0202, or lonerganamy@waukegan.com attorneys - should be thinking about succession planning. The LCBA had a wonderful presentation by John Cesario of

the ARDC back in September 2019 on this very topic, including basic checklists, sample language to include in your retainer letters, some proposed Supreme Court Rule changes, and a brief explanation of the role of the ARDC in all of this. The ISBA has most of these materials and a ton of guidance available at https://www. isba.org/committees/successionandtransitionplanning. Further, John Cesario has been an incredible resource to me and if you crave a personal touch or have a specific question, he will enthusiastically assist however he can. He can be reached at jcesario@iardc. org or 312/937-0244.

In the meantime, to jump start your plans, particularly if you are a solo practitioner, it is really your fiduciary duty to your client to ensure that they are not prejudiced in their case by your sudden departure or as a result of retirement. However, the client always has the ultimate choice of who their attorney is, so you cannot guarantee the purchaser of your firm will have the same book of business, nor can you guarantee that after you join another firm your book of business will follow you. This creates a natural tension and adds a layer of complexity to your plans. With the crush of deadlines and needing to earn wherever and whenever you can, it is easy to put such difficult decisions and complex matters on the back burner. Don’t do that! Instead, make it your 2021 goal to have a succession plan in place by the end of the year. Begin by breaking that plan down into five simple steps.

First, compile all client information in one central location. We have all quickly written down a client number in our planner or emailed ourselves our client’s phone number with a reminder to call. Take the time to have a centralized location for all client contact information—whether in Outlook, in your phone’s address book, in Smokeball if you have that, or in an Excel spreadsheet- and develop a plan to gather all current client contact info in one place. Make sure all new clients are regularly added to that same place. The same rules should apply to billing records, calendar entries, to-do lists, outstanding retainer letters and client files. You should have a central location for all this information and documentation. Make sure this information is password protected and that at least one other responsible person not only knows the physical or virtual location, but also how to access the info and how to read any notes or codes. Second, look at your digital footprint and all the records for managing your firm. Create a central location and access point for those as well. Bank records, email accounts, web hosting accounts for your firm website, search engine optimization and other marketing accounts, Microsoft 365, practice management software,

There are always utility bills, phone records, leases or mortgages, copier complications when you lease info, efax login, Law Pay, bar association login info, and cloud-based backare closing or selling up services are just some of the numerous examples of any business, but a law physical and virtual items that you cannot run your practice adds an extra business without. Again, making sure that this inforlayer of ethical concerns mation is in one place and that someone else knows where to look and how to that all lawyers need access is critical. Third, review your to think about sooner financials. What is your EIN? How would someone rather than later. else figure that out? Often small firms create their own 1099s. Where do you have that data stored? What about payroll? Tax withholding? IRA and 401ks and other employee benefits? Business licenses, annual filings, operating agreements, even keys to your office and any P.O. Boxes: who has knowledge of and access to these items? Bank account info, malpractice insurance, building insurance, computer login info, a complete inventory of equipment (i.e. did an employee steal a laptop on the way out in hopes of using proprietary information at his or her next job?) all needs to be centralized and made clear to whomever will be dealing with these items in your absence. Fourth, after you have gathered all this information and documentation in one place, start thinking about who you want to be in charge of what, have conversations about expectations, inform staff after decisions have been made, solidify agreements in writing, and spend some time thinking about updating retainers or sending out notice to current clients. Consider the addition of another attorney as “of counsel” and making them an authorized user of certain accounts. Consider ethical and malpractice insurance implications. Fifth, create a system to preserve your intent moving forward. Reexamine the situation often to ensure that you do not just “set it and forget it,” but are constantly updating the information. A detailed printout of client balances at the end of each month might be a great idea

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for your office in general, and it certainly would also help with any succession plan.

All of this, though, is just the tip of the iceberg. There is so much more you need to deal with. It is said that the only two things that are certain in life are death and taxes. Taxes have loopholes. Death does not. It’s not an “if”, it’s a “when”. Don’t let your legacy be a widow or widower with no clue what is going on or where to find anything with respect to your law practice handling their legal affairs. Do not assume that a junior associate will just step in and take over the helm. Failing to plan is planning to fail. You have worked very hard for your little empire. Do not let it burn in one day.

Do you have a Tech question? Is there a Tech topic you’d like to learn about next month?

Email Pete Salerno at pete.salerno@ stratusconcept.com

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