Preparing the practice coverage and succession plan

Succession planning: tools, documents and resources

To help you plan ahead, the Law Society has prepared sample documents and tools based on the following considerations and assumptions.

Estate planning documents

You are preparing new personal, as well as professional, estate planning documents.

Incorporation

You may or may not be incorporated.

Trusted people

You will need the following trusted people in place:

  • an executor of your will (and possibly an alternate)
  • a person to act as your attorney under your personal power of attorney (and possibly an alternate)
  • a lawyer to take over your practice (and possibly an alternate) as your practice attorney/trustee
  • someone to act as gatekeeper (and possibly an alternate)

The personal attorney, the executor and the gatekeeper may be the same person (i.e. your spouse).

Power of attorney

The use of your law practice power of attorney may be triggered by you. You may be planning an extended holiday or surgery. Otherwise, the gatekeeper will determine when either the law practice power of attorney or will is triggered.

Gatekeeper agreement

The purpose of the gatekeeper agreement is to remove triggering events from your law practice power of attorney and put that vital decision into the hands of a trusted third party.

In this document, the evidence needed for incapacity is kept deliberately broad, assuming that you will be in no position to disagree, and all family and relevant parties will be in agreement as to incapacity.

The gatekeeper may obtain a doctor’s opinion, but seeking a committeeship order could result in unacceptable delays for client matters. In those rare cases where you might be suffering from a mental illness or incapacity and are unable or unwilling to recognize it, the practice attorney/trustee will have to involve the Law Society to have you removed from practice.

Funding of expenses and debts

You should not expect that your practice attorney/trustee will fund the expenses and debts of your practice or not be paid. You cannot count on your accounts receivable and work in progress to cover these expenses. You should make the necessary arrangements such as securing a large line of credit and/or life and disability insurance. Your practice attorney/trustee should be the beneficiary of these policies, but would be bound by the terms of your mutual agreements on its use.

Review period

As this is a commercial transaction and the documents may not be triggered for months or years (or ever), the agreements allow for a review period so the practice attorney/trustee can assess the status of your practice and his or her own situation, and decide whether to continue the arrangement. In the meantime, the agreements contemplate that the practice attorney/trustee agrees to address any urgent matters to protect your interests and those of your clients.

Incorporated practice

If you have an incorporated practice, it is highly recommended that you have a shareholders’ resolution held by the gatekeeper, appointing the practice attorney/trustee as a director and signing officer of your law corporation.  This will assist you in dealing with financial institutions as some institutions may not accept a Power of Attorney granted by your law corporation.

Signing authority

It is suggested that you make arrangements with your bank for the practice attorney/trustee to have signing authority over your practice accounts, when needed.

Duty to report

Your practice attorney/trustee has a duty to report and account to you, if you are capable, or to your personal attorney/executor.

Purchase of your practice

The sample documents allow for your practice attorney/trustee to buy some or all of your practice, if acceptable terms can be arranged.

Succession planning: tools, documents and resources