UPDATE: SUCCESSION PLANNING PROPOSAL MOVES TO THE COURT
Every year a significant number of Michigan attorneys in small or solo firms become incapacitated, die, disappear, or are disciplined without a plan in place to protect existing client’s interests or to wind down the practice. When this happens, there is little guidance for clients, the attorney’s family members, or others who are left to handle the aftermath. Various Bar based groups including the SBM’s Receivership Work Group, Professional Standards, and the Master Lawyers Section have, over the last number of years, been studying and developing a proposed program to address the serious problem of the 4 Ds – Death, Disability, Discipline, or Disappearance when that lawyer had a continuing client based practice.
Presently the Bar relies on its members to voluntarily create a succession plan. Members can use a planning document titled “Planning Ahead” which can be found at the Practice Management Resource Center pages of the SBM website: http://www.michbar.org/pmrc/planingahead. And additionally, the Bar’s Ethics Committee with the Master Lawyers Section’s input, adopted ethical guidelines to accompany the succession process and planning. That opinion is RI-374 and can be found at https://www.michbar.org/opinions/ethics/numbered_opinions/RI-374. The need for a succession plan is not debatable. Private practitioners make up a large percentage of lawyers in our state and the lawyer population is aging. Currently there are over 13,000 lawyers in firms with less than ten lawyers, of those, over 8,700 are over 50 years old. In fact, 55% of attorneys licensed in Michigan are over 50 and only 5% are under 30 (State Bar of Michigan 2018-2019 Statewide and County Demographics). Of course age is not the only reason to require a succession plan. Lawyers of all ages pass away unexpectedly, become temporarily disabled due to accidents, and face discipline. By way of illustration, presently there are 41 pending client claims against 13 deceased attorneys demanding $1,042,557.90 of our dues money. In the event of a sudden cessation of practice, to protect clients and the interests of the affected attorney, a number of things should happen, including: notifying clients, staying pending litigation, transferring pending cases to a new attorney, managing client files, returning unearned fees, winding down or continue the practice, paying the practice’s bills, and collecting outstanding fees. A “volunteer” approach simply does not address the myriad of the profession’s responsibilities owed to the client and the public, nor does it protect the lawyer and the lawyer’s family.
During the last year, the Receivership Workgroup has been working on a recommendation that SBM implement an Interim Administrator Program (SBM IAP). In January, Professional Standards Assistant Division Director, Alecia Ruswinckel, presented this concept to the Board of Commissioners. The memorandum may be located on page 47 here: https://www.michbar.org/file/generalinfo/pdfs/1-18-19_BoC_agenda.pdf. At the April 13 Representative Assembly meeting I, on behalf of the Receivership Workgroup, presented the Workgroup’s proposed solution to the Representative Assembly and the RA passed the proposal 87-26. The RA proposal is located here: https://www.michbar.org/file/generalinfo/pdfs/4-13-19consideration_interim.pdf. Under this proposal, attorneys in private practice would be required to designate an attorney or law firm to act as interim administrator (IA) or, for an annual fee, participate in a program where SBM would provide a SBM IA in the event of the affected attorney’s death, disability, discipline, or disappearance. The proposal will now be sent to the Supreme Court for its consideration. Stay tuned. Mike Dettmer
Note Workgroup members: AGC administrator Alan M. Gershel P29652, Rhonda Pozehl P38854, Erin Bednarski (AGC paralegal), Yuily Osipov P59486, David M. Findling P43256, Former SBM president Michael H. Dettmer P12709, Judge Tomas Byerley P28937 and SBM staff counsel Alecia Ruswinckel P62825.
About the author: Michael Dettmer has been litigating cases across the State of Michigan for more than 45 years specializing in civil litigation. Additionally; given the breath of his experience, he now has developed and maintains an active mediation and alternative dispute resolution practice. He has consistently been named one of Michigan’s Super Lawyers and has held Martindale-Hubbell’s highest peer rating of AV since 1987.