Law Firm Succession Planning

Checklists For Closing Your Practice and Winding Up Your Business

Written by Mark Bassingthwaighte, Esq.

Lawyers may close their practices for many reasons including medical disability, retirement, relocation to another state, or a change in career. Although the specific steps required and the time frame involved can vary significantly depending on the reason for the closure and the nature of the practice, the following checklists address the core issues most lawyers will need to consider.

When circumstances permit, plan for the process to take six to twelve months, and in some cases longer. Obligations to protect client confidences and safeguard client interests often make closing a law practice more complex than closing other types of businesses. Finally, because jurisdictional rules differ, an early review of applicable local rules and ethics opinions and perhaps a call to local bar counsel is strongly recommended.

Closing Your Practice Checklist

Planning, Timing, and Case Assessment

• Develop a realistic timeline for closing your practice and assess the status of all active matters.
• Cease taking on any new matters.
• Complete and close as many active matters as you are able.

Staff Notification and Transition Support

• Let your most trusted staff know what your plan is as you will need their assistance in implementing it. Additionally, key staff deserve to know your intentions once you know the date you hope to have the transition completed. If possible, give them a date certain and advise them if you are willing to be a reference for them. After all, these folks need to be able to plan for their transition as well.

Client Notification Regarding Transition of Representation

• Notify all clients on matters you cannot complete. The notice should explain that you are unable to continue representation and that the client must retain new counsel. Advise clients of any relevant deadlines or time limitations affecting their matter. Explain how and where clients may obtain their files and set a reasonable deadline for doing so.

Client Files, Records, and Retention

• Make a copy of all active client files before turning over the original. Have clients who pick up their files sign a receipt and clients who request a transfer of their files to new counsel sign a written authorization.
  
• Arrange for the secure long-term storage of closed files, whether physical or digital, and then notify all clients of these arrangements, to include where files will be stored, how they can obtain their file in the future, and what your file retention policy is if this has not been previously communicated. If closed files are to be stored by another attorney or firm, obtain client consent prior to the transfer and provide that attorney’s or firm’s contact information.

Withdrawing and Court Notification

• Notify the court of your need to withdraw. For matters with pending hearings, depositions, or deadlines, consult with each client regarding next steps. Request continuances, extensions, or rescheduling as appropriate. Provide written confirmation of these actions to opposing counsel and your client. Obtain permission to file a motion and order to withdraw as attorney of record.
  
• Confirm that your withdrawal is complete. For matters before courts or administrative bodies, select a future date to verify that a substitution of counsel has been filed or that your motion to withdraw has been granted and follow through with that confirmation.
  
  

Trust Accounts, Client Property, and Compliance Obligations

• Close out your trust account after it has been fully audited and reconciled. If trust funds are being transferred to new counsel, issue checks payable to both the client and the new attorney. Notify the bar that the trust account has been closed and retain trust account records in compliance with your jurisdiction’s rules.
  
• Preserve your books and records. In many jurisdictions, RPC 1.15 requires retention of general and trust account records for at least five years following termination of the fiduciary relationship. These records may be maintained in digital format.
• Address client property still in your possession, including original wills, corporate records, unclaimed funds, or other entrusted items.

Insurance, Bar Notifications, and Professional Obligations

• Review your malpractice policy and contact your carrier in order to understand the options and costs associated with the purchase of an extended reporting endorsement, commonly referred to as a “tail.”
• Notify relevant bar associations and professional organizations.

Winding Up the Business Checklist

Office Space, Utilities, and Physical Assets

• Provide notice of termination for all office leases or rental agreements.
• Arrange for all utilities to be shut off in a timely manner.
• Determine the disposition of furniture, fixtures, equipment, library materials, artwork, and other physical assets.
• Dispose of unused office supplies. Consider donating usable items to schools or charitable organizations.

Communications, Mail, and Post-Closure Contact

• Cancel your telephone service and arrange to have calls to your office forwarded to your home or other number or consider placing an automated message on your office line that will remain active for at least several months post closure.
• Decide where physical mail and email should be directed after closure, notify the post office, and update all email account settings accordingly.
• Consider setting up an automated reply on email accounts that are to be closed and placing a static page on your website that announces the closure of your practice along with information about where closed files will be stored.

Technology, Data Security, and Online Presence

• Address confidentiality and file security issues related to computers and other technology. Before selling, donating, or disposing of any device, back up all data you intend to retain and permanently wipe all remaining data from the device.
• Cancel or update all advertisements and legal directory listings, including your website and social media profiles.
• Reduce fraud and identity theft risks by responsibly retiring your online presence, including your firm’s domain name, website, email accounts, online listings, and social media accounts. This link (https://www.themodernfirm.com/retirement-guide-law-firms-website-online-presence) will take you to a helpful resource outlining recommended steps and considerations.

Vendors, Subscriptions, and Memberships

• Notify all vendors and arrange for the closure of these accounts.
• Cancel all business memberships and subscriptions to include online accounts.

Financial Accounts, Credit, and Loans

• Meet with your accountant to discuss dissolution of the firm, obtain tax guidance, establish a timeline for final financial statements, and identify required state and federal notifications.
  
• Meet with any lenders to address repayment of outstanding loans.
  
• Cancel all firm credit cards and then shred them.
  
• Close the operating account once all outstanding receivables have been collected and all outstanding bills have been paid. And then shred any associated debit cards.
  
• Destroy all unused checks, deposit slips, and similar financial interments.

Business Records and Long-Term Planning

• Determine where and for how long business records must be maintained.
• Consult with your accountant or financial planner regarding retirement plans and rollover options.

Insurance and Risk Management

• Notify all insurance carriers, including premises liability and workers’ compensation insurers. Obtain guidance regarding conversion or continuation options for health, life, and disability insurance.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

Guidelines to Closing Your Law Practice – A Risk Manager’s Perspective

Written by Mark Bassingthwaighte, Esq.

A lawyer can decide to close her practice for a number of reasons. Disability, retirement, disbarment, a move out-of-state, a career change, or a need to care for someone else are the more common ones we hear. While the specific steps that need to be taken can vary significantly depending upon the reasons behind the closure, this post seeks to provide some general guidance on the principal issues that will arise.

At the outset, understand that in many instances the process of properly closing a law practice can easily take six to twelve months and sometimes longer because your obligation to protect client confidences as well as the interests of your clients make closing a law practice a bit more complicated than closing other types of businesses. In addition, because the Rules of Profession Conduct differ from state to state, a review of your local rules and ethics opinions perhaps coupled with a call to your local bar counsel would be well advised early in the process. The following are the key steps that one must take.

Determine What Work Can Be Completed Before Closing

The first step you should take after making the decision to close is to determine what matters can be completed prior to closing and then see that enough time is set aside to enable you to follow through. This does mean you will need to decide when to stop taking new matters on and when to notify staff because these people will be interacting with the public as well as current and past clients once the news breaks.

Notify Clients with Active Matters

The second step is to let all clients with active matters that cannot be completed before you close your practice know of the upcoming change. At a minimum, this notice should inform the client of any relevant time limitations or time frames, provide instructions as to how and where they may obtain their file, and advise them to find a new attorney as quickly as possible. An offer to assist these clients in finding a new attorney by providing a few names or the phone number to a local lawyer referral service would also be appropriate.

Don’t overlook the importance of setting forth your file retention policy and providing post‑closure contact information in the event a client needs their file at some later point in time. This is the reason that some jurisdictions also require that a similar notice be sent to past clients. Finally, and where called for, these initial notices are usually followed up with a full accounting of client funds that remain in the trust account and/or a statement of fees owed by the client.

Return Client Property and Document File Transfers

As clients respond to these notices, remember to retain a copy of the file and return to the client any original documents and/or client property such as original wills, deeds, stock certificates, signed contracts, promissory notes, etc. Think about it this way. Originals belong to the clients, and copies belong to you.

Remember to document and maintain a record of the disposition of these files in case questions come up post‑closure. Have clients sign an authorization to release their file to their new attorney or sign an acknowledgement that they picked up their file.

Manage Active Litigation and Court Obligations

On matters that have pending court dates, depositions, or hearings, have a conversation with the client to discuss how to proceed. A request to reset a hearing or a request for an extension or continuance may be called for and once received, confirmation of the granted request should be sent to opposing counsel and your client.

For cases before a court or administrative body, obtain client permission to submit a motion and order to withdraw as the attorney of record and at an appropriate time verify that all motions to withdraw have been granted. If the client has obtained a new attorney, make certain that a Substitution of Counsel is filed.

Review Old Files

If, over the course of your career, you failed to review and destroy old files that no longer needed to be retained, do it now because the costs to continue to maintain closed files can be significant. And while there is an ethical obligation for you to do so, you really don’t want to unduly burden a spouse with this should he or she outlive you.

When you originally closed the file, hopefully all original documents belonging to the client were returned at that time. If you did not, again, do it now. In fact, a review of every file prior to destruction is a good idea as sometimes original documents were overlooked when the file was initially closed.

Address File Ownership and Destruction Concerns

In a number of jurisdictions, the file belongs to the client. Because some clients will want their original file as opposed to having it destroyed, this means that you shouldn’t unilaterally decide to destroy client files absent client awareness and approval. If you did not obtain the client’s instructions when you closed any given file, seek those instructions now in accordance with any ethical guidelines set forth in your jurisdiction.

Many attorneys often try sending letters to their clients’ last known addresses, at least with files closed in recent years. Once you learn their wishes, carry them out. If the decision is to have the file destroyed, do so responsibly. The word “destruction” does not mean leaving a bunch of old files in an alley dumpster behind your office. You need to incinerate or shred these files and if they are digital files follow through with proper digital destruction best practices because you cannot compromise your client’s confidences, even during a file destruction process. As with file transfer protocols, document your actions. Track the client’s name, file matter, method of disposition (destroyed, returned), and date of disposition.

Contact Your Malpractice Carrier About Tail Coverage

To provide one specific business concern, contact your malpractice insurance carrier well in advance of closing. The purpose is to begin the process of learning about the options for obtaining an extended reporting endorsement (ERE — more commonly referred to as a “tail policy”).

This endorsement is not a new policy. It simply provides an attorney with the right to report claims to the insurer after a policy has expired or been cancelled. Again, it is important to note that under most ERE provisions the purchase of the endorsement is not one of additional coverage or of a separate and distinct policy. This means no coverage will be available for a wrongful act that takes place during the time the ERE is in effect.

So, if a claim arises several years of post‐retirement out of work done in retirement, for example - writing a will as a favor for a friend, there would be no coverage for that claim under the ERE. Trust me, this is something you never want to forget.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

How Long Should I Keep Closed Client Files?

Written by Mark Bassingthwaighte, Esq.

As a risk manager for a national legal malpractice insurance company, this is the one question I have been asked more than any other. Often the reason why is because an attorney or law firm is tired of paying the costs associated with storing all their closed files, and they’re hoping to hear it’s okay to get rid of most of them.

Unfortunately, the answer isn’t as straightforward as one might hope because the answer is it depends. Start with a baseline assumption of seven years and go from there. Of course, once any destruction date arrives, make sure you follow through with a proper file destruction process.

File Retention

General Retention Guidelines: Why Seven Years Is a Reasonable Baseline

Because guidelines and ethical opinions differ across jurisdictions, you should always check with the authorities where you practice. That said, most recommendations fall in the seven‑to‑ten‑year range. Speaking as a risk manager, I lean toward the shorter end of that window. My reason is this. The statute of limitations on malpractice under contract law is often five or six years, and I add one more year just to play it safe. Thus, seven years is generally sufficient for most matters. If seven years have not yet passed, the safest answer is simple: keep the file.

I can share that over the years I have encountered a few firms that take a far more aggressive approach. Some of these firms went so far as to destroy all files well within the first-year post closure. I strongly advise you against this. If a malpractice claim ever arises, you will have no file to defend yourself with, which is a position you never want to be in. Trust me on that one.

Why Some Files Must Be Kept Longer Than Your Standard Retention Period

Even after your seven‑year (or up to ten-year) retention period has passed, you may still be unable to destroy certain files. As with most rules, there are exceptions that require additional storage time. These include, but are not limited to:

• Files where the malpractice statute of limitations has not yet run (and remember the doctrine of continuous representation can toll these statutes). 
• Files involving a client who was, and still is, a minor.
• Estate planning files for clients who are still alive.
• Files containing agreements that have not yet been executed or fully paid off.
• Files establishing the tax basis of client assets.
• Adoption files.
• Support or custody files with continuing obligations.
• Files with renewable judgments.
• Corporate books and records for active client entities.
• Files for clients convicted of a capital crime.
• Files involving certain “problem clients.”

In a perfect world, every file would have been assigned a destruction date, or at least a review date, when it was first closed. If that didn’t happen, use these exceptions to guide your decisions now.

File Destruction

Always Conduct a Final Review Before Destroying Any File

Before destroying any given file, conduct one final review. This step prevents premature destruction and ensures that documents that should not be destroyed are preserved.

When the file was originally closed, you should have separated and returned all original documents belonging to the client. If that didn’t happen, now is the time to correct it.

During this final review, identify and preserve:

• Documents that clearly or probably belong to the client.
• All original documents.
• Any documents the client may need or reasonably expect you to preserve.
• The file’s closure letter.
  
  

That closure letter is more important than many lawyers realize because it can help clarify whether a conflict of interest exists later. If closure letters are destroyed, you lose the ability to provide documentation that an inactive client is actually a past client under Rule 1.9, the “Former Client” Rule.

Why You Shouldn’t Unilaterally Decide to Destroy Client Files

To varying degrees in many jurisdictions, the file is considered client property. This means clients should be made aware of and give their permission to have their property destroyed. If clients were never informed of your file retention and destruction policy when their file was closed, try to contact them now to see if they want their file. Some lawyers try sending letters to the last known address, but with older files this effort often yields little success. To avoid having to deal with this problem, many firms now include file‑retention language in their engagement letters and closure letters, at least on a going forward basis. If you wish to adopt a similar approach, consider including the following sample language in your closure letters.

I have enclosed your original documents as I no longer need to keep them, and I thought you would want them for your records. It is our firm’s practice to destroy files [number of] years after we close them. If you would like us to return your file to you [number of] years from now instead of destroying it, please send me a note to that effect within the next thirty days so that we can segregate your file from all our other files and accommodate your request. You will need to be responsible for keeping us informed as to how to reach you should your contact information ever change.

If you find yourself needing to send past clients a letter years after closing their files, you might consider designing a letter based upon this sample language.

Our policy is to destroy files [number of] years after they are closed. We have retained your file for that period of time and are now preparing to have it destroyed. If your desire is to have our firm continue to store it or see that it is returned to you, you must send me a letter telling us of your desire and this must be done no later than ten days after the date you receive this letter.

Protect Confidentiality to the Very End

Once you determine which files can be destroyed, make sure you follow through and see that they are properly destroyed. Never just toss boxes upon boxes of files in a dumpster behind the office or drop them off at the local landfill! Client files must be incinerated or shredded because your obligation to preserve and maintain client confidences doesn’t end even though your file retention period has.

Document the Final Disposition of Every File

And finally, create and maintain an inventory of the final disposition of all files. At a minimum, track:

• Client name
• File matter
• Method of disposition (destroyed or returned)
• Date of disposition
  
  

This record will prove useful should any questions arise years later.

Why You Don’t Get a Pass Just Because Digital Storage is Inexpensive

One final thought. I have found that some firms try to avoid the headache of having to work through much of the above by choosing to keep digital copies of client files indefinitely because virtual storage is inexpensive. They scan the file, destroy the hard copy, and keep the digital version.

On the surface, this may seem like a problem has been solved, but it really hasn’t. Again, your ethical obligations remain the same regardless. For example, as you replace or upgrade hardware and storage devices, all client data on those devices should still be reviewed to ensure nothing is prematurely lost. Similarly, you can’t simply abandon a cloud storage account or recycle or donate old devices without destroying all digital client files that were stored there. In other words, the issues remain the same whether your files are paper or digital because there is no digital storage exception in the Rules of Professional Conduct.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

How To Avoid The Small Firm Tail Coverage Trap

Written by Mark Bassingthwaighte, Esq.

Understanding the Tail Coverage Risk for Small Law Firms

Just as with small businesses in every sector, small law firms experience widely varying outcomes in terms of longevity. Some firms remain active for decades; others close their doors within a few short years. Regardless of lifespan, every small firm will eventually face a final day of operation. Without advance financial planning, however, the lawyers left standing as that day approaches may be about to discover they’re in a tail coverage trap, a preventable but costly exposure.

Why Departing Lawyers Often Skip Tail Coverage

In the later stages of a small firm’s life, it’s not unusual for partners to retire or move on and choose not to purchase tail coverage. The reasoning is straightforward. The “former attorney” language set forth in their firm’s malpractice policy makes it clear that they will have all the protection they need. However, there is an assumption that the firm will maintain continuous coverage after their departure. But what happens if those departures contribute to the firm’s eventual collapse a year or two later?

Common Causes of Small Firm Dissolution

Of course, departures aren’t always the catalyst. Financial struggles, partner conflict, the loss or disability of a rainmaker, burnout, or other operational challenges can all push a firm toward closure. As dissolution becomes imminent, the remaining lawyers typically begin exploring the availability of tail coverage, and this is when the surprise hits.

The Financial Shock of Tail Coverage Premiums

Lawyers are sometimes caught off guard when they learn that tail coverage premiums are due upfront, and that multi‑year tails cost more than anticipated. This is where the coverage trap becomes real because some firms simply lack the financial wherewithal to purchase the desired tail. Should that happen, every lawyer at the firm, including those who recently departed, will be left without coverage for their prior acts.

Practical Risk‑Management Strategies to Avoid the Tail Coverage Trap

Fortunately, small firms can take proactive steps to avoid this exposure. One effective approach is establishing a designated malpractice insurance premium savings account that includes funds earmarked specifically for future tail coverage. In addition, if lawyers begin departing in anticipation of a possible closure, they should be asked to contribute a portion of the estimated cost of a firm tail.

Why Business Planning Matters for Malpractice Risk Reduction

The larger issue is that many small firms never develop a plan for winding down the practice. From a risk‑management perspective, that’s a significant business planning misstep with real consequences, including the possibility of falling into the tail coverage trap. Learn from the experiences of others. If your firm hasn’t yet begun planning for an eventual closure, now is the time.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

How To Write a Closing-Your-Practice Letter

Written by Mark Bassingthwaighte, Esq.

Occasionally a lawyer will reach out to ask what should be included in a letter notifying active clients, whose matters cannot be completed in time, that the lawyer is closing her practice. Here’s the guidance I typically share.

Key Information Every Closing‑Your‑Practice Letter Should Include

Ordinarily, these letters should:

• Inform clients of any relevant deadlines or time‑sensitive issues
• Explain how and where they can obtain their file
• Advise them to hire a new attorney as soon as possible
• Clearly outline the current status of their matter
• Identify what still needs to be done
• Explain the legal consequences of failing to follow through
  
  

It’s critically important to ensure clients are fully informed about what is happening and what steps they must take next.

Additional Best Practices for Client Notification Letters

After covering the essentials, I also recommend:

• Offering to help clients find a new attorney by providing a few names or the number for a local lawyer‑referral service
• Including your file‑retention policy
• Providing post‑closure contact information in case clients need their file later, and
• Sending a follow‑up letter with a full accounting of trust funds and any outstanding fees.
  
  

These steps help ensure a smooth transition and reduce the risk of misunderstandings or complaints.

Sample Closing‑Your‑Practice Letter Template

Below is sample language you can adapt if you ever need to write your own closing‑the‑practice letter.

{Date}

Re: {Identify the specific matter}

Dear {Client Name},

Due to {Identify the reason, if appropriate}, I will be closing my law practice effective {Date}. As a result, my representation of you will conclude on that date. Because I will be unable to complete your matter before leaving the practice of law, I recommend that you immediately retain another lawyer who can see your matter through completion.

While you are free to select any lawyer you choose, I would be happy to provide you with a few names of local attorneys who practice in the relevant area of law. Our State Bar Association also operates a lawyer‑referral service. If you wish to contact them, their number is {Insert number}.

In light of {Insert the current status of the matter, including any deadlines or critical information}, it is imperative that you hire a new lawyer without delay. Given that {Set forth what still needs to be done}, failure to do so could result in {State the legal ramifications}. Once you have retained new counsel, please provide me with written authorization to transfer your file to your new lawyer. If you prefer, you may pick up your file from my office and deliver it personally.

I {or insert the name of the lawyer or firm who will} will continue to store my copy of your closed file for {List period} years. After that time, I {or name of lawyer or firm} will destroy my copy unless you notify me in writing within the next 30 days that you do not wish it to be destroyed. If I receive such notice, I will attempt to make alternative arrangements that better meet your needs. If you ever need a copy of your closed file before it is destroyed, you may reach me {or name of lawyer or firm storing the file} at {Insert number}.

Within the next {Number} weeks, I will provide you with a full accounting of any trust‑account funds still in my possession, as well as a statement of any outstanding fees.

You may continue to reach me at my current office address and phone number until {Date}. After that time, my contact information will be: {List name, address, phone, and/or email}.

It has been a pleasure to be of service to you. Please feel free to contact me if you have any additional questions or concerns.

Sincerely,

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

How to Select a Backup and Successor Attorney

Written by Mark Bassingthwaighte, Esq.

Solo attorneys face unique operational and ethical risks when unexpected absences occur. Illness, emergencies, or other disruptions can jeopardize client interests if no continuity plan is in place. Designating a backup or successor attorney is one of the most effective ways to reduce malpractice exposure and ensure uninterrupted client service.

Understanding the Difference Between a Backup Attorney and a Successor Attorney

For most solos, the same individual often agrees to serve as both a backup and successor attorney. While the roles are related, they serve distinct purposes:

• Backup Attorney - Provides short‑term coverage during temporary absences such as vacations, brief illnesses, or emergencies.
• Successor Attorney - Steps in to wind down the practice in the event of the solo practitioner’s death, disability, or incapacity.
  
  

Neither role involves running a second practice long‑term. Clarifying this distinction can make it easier to find a colleague willing to serve, especially if there’s a decision to make the arrangement reciprocal.

Key Qualities to Look for When Selecting a Backup/Successor Attorney

Choosing the right individual is essential for protecting clients and minimizing risk. Look for someone who:

• Is competent and experienced in your primary practice areas,
• Is unlikely to encounter significant conflicts of interest,
• Has the time, or the ability to find the time, to take on additional responsibilities for short‑periods of time, and
• Understands the ethical obligations involved in stepping into your practice.
  
  

Once selected, make sure to let your staff know who this person is and how he or she can be reached in the event of an emergency.

Essential Preparatory Steps

Beyond designating a backup/successor attorney, there are several other things you should do as part of the process.

• Prioritize maintaining a current office procedures manual that discusses the calendaring system, conflict system, active file list, open and closed file systems, accounting system, and any other key system. This can be valuable in expeditiously bringing the designated attorney up to speed on how your practice is run.
• Keep critical systems such as the calendar and conflict systems current at all times.
• And make certain that all files are thoroughly documented and current as to their status because the designated attorney will need to make decisions based upon what’s in your files. Mistakes can and will be made with poorly documented and/or incomplete files.
  
  

Reducing Malpractice Risk Through Proactive Client Communication

Finally, proactively informing clients about your backup/successor attorney arrangement reinforces transparency and demonstrates your commitment to protecting their interests. Including a brief notice in your fee agreement is a simple, effective way to set expectations and reduce confusion during an emergency. Consider using something along the lines of the following:

Succession Planning / Backup Attorney Notice:

While I strive to deliver excellent legal services to every client, I also have an ethical obligation to protect your interests during any extended absences, such as a vacation, an illness, or in the event of my unexpected death or disability. To accomplish this, I have named [insert name] as my backup attorney. This attorney will be available during any extended absences or may step in to assist in the closing of my practice should that ever prove necessary. I will provide advance notice of any planned absences, and my office staff or backup attorney will contact you with information on how to proceed should any unexpected event occur.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

Aging Lawyers and Competency: How to Manage Age-Related Risks in Your Law Practice

Written by Mark Bassingthwaighte, Esq.

A Conversation That Sparked a Larger Reflection

In the middle of a conversation with one of our insureds about the difficulty of learning to say no, the fine gentleman I was speaking with suddenly shifted gears. He wanted me to know he was fully aware of his age and had already taken steps to ensure he continues to practice law competently. What struck me most was his willingness to ask colleagues to tell him if they ever noticed him starting to slip mentally, because in his words, “the day will come when…” This level of self‑awareness is rare; and as a risk manager, I found it reassuring.

Growing Old Gracefully as a Legal Professional

This lawyer is someone I would describe as aging gracefully. He’s not in denial, and he’s not fighting the aging process tooth and nail. Instead, he recognizes that age brings certain risks, and he’s doing something about it. His comments prompted me to take a closer look at several age‑related risks lawyers face and how to responsibly manage them.

The Risk of Unexpected Absences

One of the most obvious risks associated with aging is an unexpected event, for example, a medical crisis or other emergency that results in a short‑ or long‑term absence. Should this happen, someone must step in and temporarily take responsibility for your client matters, even if you’re not a solo practitioner.

Of course, for solos, this issue is especially significant. It underscores the absolute necessity of having a backup attorney in place. Regardless of your age, if you haven’t already identified one, now is the time.

The Importance of Keeping File Status Current

Next, don’t overlook the related file status problem. Lawyers don’t always keep files as current as they should. I believe for many it’s a time and trust thing. There’s never enough time and just about everyone trusts their own memory. Here’s the problem with that line of thinking. Memory isn’t as trustworthy as one ages, and if you’re not available due to an unexpected event, it doesn’t matter anyway.

Committing to keeping all file statuses current always is essential, no matter your practice setting. It’s one of the simplest ways to reduce risk.

Subtle, Gradual Risks of Aging

Beyond sudden events, aging brings subtle risks that often develop gradually. Sooner or later, most lawyers notice that their memory, hearing, or vision isn’t as sharp as it once was. I’ve heard a wide range of concerns:

• Difficulty seeing everything clearly on a computer screen, leading to fears of misreading information or entering incorrect dates.
• Increasing forgetfulness and the worry that it’s only a matter of time before a hearing is missed or a filing deadline slips by.
• Anxiety about hearing loss, especially the fear of mishearing a client or judge, but feeling too embarrassed to ask for something to be repeated.
  
  

These concerns are real, and they’re more common than many lawyers admit.

Practical Steps to Address Age‑Related Risks

Fortunately, there are many ways to address these risks proactively.

• Use checklists to ensure nothing is overlooked.
• Seek additional training on your office technology because as tech evolves, so does the standard of care.
• Prioritize relevant CLE to stay current in your practice areas. Decades of experience don’t eliminate your obligation to keep up with changes in the law.
• Be open to slowing down when necessary. At some point, the time and energy required to stay on top of everything may no longer be there. This might mean taking fewer matters or stepping away from certain types of work.
  
  

Proactive planning isn’t an admission of decline; it’s a hallmark of professionalism.

Addressing Visual and Hearing Challenges

Some age‑related challenges have simple solutions. A larger monitor or adjusted screen setting can resolve many visual issues. If hearing is a concern, schedule a hearing evaluation. The goal is to work on the problem, not ignore it.

Risks in Long‑Term Attorney–Client Relationships

A final risk worth noting involves long‑term attorney–client relationships. First, remember that these clients are aging too. As their needs change, they may ask for help in areas outside your expertise. It can be hard to say no, but sometimes that’s exactly what is required. Refer the matter out or take the necessary time to come up to speed. Anything less invites trouble. Second, be mindful of the possibility that some long‑term clients may be experiencing forgetfulness or confusion. Take the time needed to ensure they understand your advice and thoroughly document your files focusing not only on the advice given, but on the decision‑making process as well.

Aging Gracefully in the Practice of Law

In summary, since no one has found a way to stop the aging process, the day will eventually come when it’s time to step away from practice. Until that day arrives, do all you can to age gracefully. Be aware of your limitations as they arise and be open to hearing the concerns of others. Identify your specific risks and take steps to responsibly address them.

I say this because I’ve had to sit down with a few solos over the years and be the one to tell them their time had come. Trust me when I say that aging gracefully is the better choice.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

The Ins and Outs of Tail Coverage

Written by Mark Bassingthwaighte, Esq.

To this day I still receive an occasional call from an attorney wanting to know how to go about purchasing a tail policy, and my response is always the same. I need to make sure that the caller understands there really is no such thing as a tail “policy.” Clarification on this point is important because confusion over what a tail is and isn’t, can have serious repercussions down the road. To help you avoid similar misperceptions, here’s what you need to know.

Why You Can’t Purchase a Standalone Tail Policy and Understanding What Tail Coverage Is

An attorney leaving the practice of law can’t purchase a malpractice insurance policy because he or she will no longer be actively practicing law. There simply is no practice to insure. This is why an attorney can’t buy a tail “policy.” What you are actually purchasing when you buy a tail is an extended reporting endorsement (ERE). This endorsement attaches to the final policy that is in force at the time of your departure from the practice of law. In short, purchasing an ERE, which is commonly referred to as tail coverage, only gives you the right to report claims to the insurer after your final policy has expired or has been cancelled.

Understanding What Tail Coverage Isn’t

An ERE is not a separate policy that provides additional coverage. It provides no new coverage for any act, error, or omission that occurs after the ERE goes into effect. For example, if a malpractice claim were to make several years into retirement from work you did as a favor for a friend while in retirement, there would be no coverage for that claim. This is why risk managers often say never draft a will for someone during retirement. As tempting as it may be, don’t practice “a little law on the side,” because your tail coverage will not apply to any of that work.

The Risk of Reducing Policy Limits Before Retirement

Another common misunderstanding arises when an attorney semi‑retires and reduces policy limits to save money on their premium during their final years of practice. The problem with this is that insurers will not allow insureds to increase limits right before full retirement because no new policy will be issued. For many attorneys, the short‑term savings from reduced limits end up not being worth it because all claims reported under their ERE will be subject to the remaining limits of their final policy in force at retirement, and those limits may not be sufficient.

How Reduced Policy Limits Impact Your Tail Coverage for Years to Come

By way of example, if you were to reduce your coverage limits from one million per occurrence/three million aggregate to five hundred thousand per occurrence/five hundred thousand aggregate during the last year or two of active practice in order to save a little money, you will only have coverage of five hundred thousand per occurrence/five hundred thousand aggregate available to you for all of your retirement years assuming there was no loss payout under that final policy. In terms of peace of mind, for many that would be an insufficient amount of coverage. Therefore, if you anticipate wanting those higher limits of one million/three million during your retirement years, keep those limits in place heading into retirement.

When Tail Coverage May Not Be Available

Unfortunately, the availability of tail coverage is not guaranteed. Most insurers prohibit the purchase of an ERE if a policy is canceled for nonpayment of premium or if the insured failed to reimburse the insurer for deductible amounts paid on prior claims. Failure to comply with policy terms and conditions; suspension, revocation, or surrender of a law license; or allowing coverage to lapse can also create availability issues.

Tail Coverage Considerations for Solo Practitioners

Practice setting matters as well. For retiring solo practitioners, many insurers offer tail coverage at no additional cost if the attorney has been continuously insured with the same carrier for a specified number of years. Because tail coverage can be expensive, shopping around for the cheapest premium late in your career may cause you to lose the opportunity for a free tail. Review your policy provisions or speak with your carrier well before retirement to avoid unintentionally forfeiting this benefit.

Tail Coverage Issues for Attorneys Leaving Multi‑Member Firms

The situation is different for attorneys in multi‑member firms. When an attorney retires, leaves the profession, or makes a lateral move, some insurers will not offer an ERE because the firm’s policy remains in force after the attorney’s departure. This is often less problematic than it sounds, as the departing attorney may be covered under “former attorney” language in the policy definition of insured. Because definitions vary among insurers, you should discuss this with your firm’s malpractice insurance representative well in advance of any planned departure. I can share that under two ALPS policies, and subject to certain conditions, we provide some of the most comprehensive tail options in the industry, including free individual EREs in the event of death or a call to active military service.

Time Limits for Purchasing an Extended Reporting Endorsement

Be aware that the window to purchase an ERE can be quite short. Most policies provide a 30‑day or shorter period beginning on the effective date of expiration or cancellation of the final policy. A few restrictive policies even require the insured to exercise the option on the date of cancellation or expiration. Review your policy language well before leaving the profession because you never want to unintentionally miss the window of opportunity to purchase an ERE.

How Long Tail Coverage Lasts

The length of time under which a claim may be reported under an ERE varies depending upon what is purchased. Options typically include fixed or renewable one‑, two‑, three‑, four‑, or five‑year reporting periods, as well as unlimited reporting periods. If available, the unlimited option is generally the most desirable, especially for attorneys who drafted wills later in their careers.

How Much Tail Coverage Costs

The cost of an ERE is usually specified in the policy. It is often a fixed percentage of the final policy premium and can range from 100% to 300%, depending on the length of the reporting period purchased.

Why Every Attorney Should Review Their Malpractice Policy’s ERE Provisions Now

Given all the above, if you’ve never reviewed the ERE provisions in your policy, now is the time. Here is one reason why: if the unexpected were ever to occur, (e.g., the sudden death of an attorney still in practice), tail coverage can be obtained in the name of the deceased attorney’s estate if pursued in accordance with policy provisions. This is why even attorneys who are not nearing retirement should have at least a basic awareness of ERE requirements. You never know when that knowledge may matter.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.

What Lawyers Should Know Before Entering an Of Counsel Relationship

Written by Mark Bassingthwaighte, Esq.

The term “of counsel” gets used in a variety of ways. Some firms apply it as an honorary title for retired partners; others use it for attorneys who are neither partners nor associates, and still others use it to describe part‑time lawyers with a formal affiliation. Some even try to use the designation purely as a marketing tool, hoping the appearance of a close connection with another firm will attract business. Setting ethics aside, that might sound appealing, but the risks associated with misusing the term are significant and should not be taken lightly.

What Is an Of Counsel Attorney? Ethics‑Based Definitions

Various ethics opinions across the country define “of counsel” as something distinct from a traditional firm attorney. An of counsel lawyer is not a partner, associate, shareholder, or member of the firm. Instead, the designation is appropriate only when the attorney has a close and continuing relationship with the firm. Any attorney who shares significant liability with the firm or has managerial responsibilities should not be designated as of counsel.

Similar titles such as “special counsel,” “tax counsel,” “senior counsel,” and the like are treated the same way and carry the same requirement of a close and continuing relationship.

What Counts as a Close and Continuing of Counsel Relationship

A close and continuing relationship requires ongoing, regular, and frequent contact for the purpose of consultation and advice. The of counsel attorney must be more than a one‑case advisor or a referral source. This is why lawyers sometimes find themselves in ethical trouble after designating someone as of counsel when that person’s only role is to send business to the firm. Ethics authorities view this as misleading communication to clients.

Who Can Properly Be Designated as Of Counsel (and Who Cannot)

To avoid common pitfalls, evaluate the designation from the perspective of a disciplinary committee. An attorney should only be listed as of counsel if they are genuinely available and committed to providing counsel to the firm.

Examples of acceptable of counsel relationships include:

• Retired lawyers,
• Withdrawing partners or associates,
• Part‑time practitioners,
• Permanent non‑partner/non‑associate attorneys,
• Partners on leave, and
• Probationary partners‑to‑be.
  
  

Examples of unacceptable relationships include:

• Outside consultants,
• Suspended lawyers,
• Single‑case affiliations,
• Attorneys who merely share office space, and
• Public officials not actively practicing with the firm.
  
  

Can Firms or Multiple Attorneys Serve as Of Counsel? Jurisdiction‑Specific Rules

In some jurisdictions, a law firm may serve as of counsel to another firm; an attorney may be of counsel to more than one firm, or an attorney may be of counsel to an out‑of‑state firm. However, the rules vary widely. Before establishing any of counsel relationship, review relevant ethics opinions or consult bar counsel in your jurisdiction.

Key Risks Lawyers Face in Of Counsel Relationships

Of counsel affiliations raise several risk‑management concerns, particularly around:

• Imputed disqualification,
• Vicarious liability,
• Malpractice insurance coverage gaps, and
• Disputes over the terms of the relationship.
  
  

Each of these deserves careful attention before entering an of counsel arrangement.

Imputed Conflicts of Interest in Of Counsel Arrangements

For conflict‑of‑interest purposes, the affiliated firm and the of counsel attorney are often treated as a single entity. This means conflicts the of counsel attorney brings may prevent the firm from representing certain clients, and vice versa. Because imputed disqualification runs both ways, conflict checks become more complex, and the cost of missing a conflict can be substantial. Address conflict procedures upfront so everyone understands the added burden and agrees the benefits outweigh the risks.

Vicarious Liability Risks Between Firms and Of Counsel Attorneys

Although a firm is not liable for the independent acts or omissions of an of counsel attorney acting outside the scope of the affiliation, claims can still arise based on client perception. Overly broad use of letterhead listing the of counsel attorney can create the impression that all attorneys are involved in all matters.

To reduce this risk, create two versions of letterhead, one listing the of counsel attorney and one without, and use the version with the of counsel name only when that attorney is involved in the matter. The of counsel attorney should follow the same rule.

Malpractice Insurance Coverage Issues in Of Counsel Relationships

In the unfortunate event of a claim, coverage problems can arise when an affiliated firm has done work on a matter that the of counsel attorney was not involved in or awareness of but was unfortunately listed as “of counsel” on the letterhead that was in use.

Should this of counsel attorney not have coverage under the affiliated firm’s malpractice policy, there may be a significant problem because the of counsel attorney’s own policy will often not afford coverage either.

The reason for this is the of counsel attorney’s own policy will only cover work done on behalf of clients of the named insured, which is the of counsel attorney’s own firm. In this situation, the of counsel attorney would be facing a claim that arose out of work done for a client of the affiliated firm, thus no coverage.

Questions such as “who is the client,” “who is the attorney of record,” and “who is the named insured” are common, and they underscore the necessity of investigating and addressing the insurance coverage issues early on. Appropriate coverage for the exposures of both the affiliated firm and the of counsel attorney can usually be obtained if the issue is addressed at the outset.

Why You Need a Written Of Counsel Agreement to Avoid Disputes

The best way to prevent misunderstandings is to have a written, signed of counsel agreement. At a minimum, it should address:

• The purpose of the relationship,
• The duties of the of counsel attorney,
• Any limitations on authority,
• Compensation,
• Overhead and benefits,
• Termination procedures, and
• Dispute‑resolution processes.
  
  

Reasonable minds can differ, and memories fade. A written agreement protects everyone involved.

Final Risk Management Considerations for Of Counsel Relationships

The most important principle to keep in mind is joint accountability. Clients will naturally view the affiliated parties as a single entity, especially when they interact with both. Of counsel relationships can be valuable, but only when created with client interests, not marketing optics, as the driving force. When used as a branding strategy rather than a genuine professional affiliation, the risks far outweigh the benefits.

Mark Bassingthwaighte, Esq., serves as Risk Manager at ALPS, a leading provider of insurance and risk management solutions for law firms. Since joining ALPS in 1998, Mark has worked with more than 1200 law firms nationwide, helping attorneys identify vulnerabilities, strengthen firm operations, and reduce professional liability risks. He has presented over 700 continuing legal education (CLE) seminars across the United States and written extensively on the topics of risk management, legal ethics, and cyber security. A trusted voice in the legal community, Mark is a member of the State Bar of Montana and the American Bar Association and holds a J.D. from Drake University Law School. His mission is to help attorneys build safer, more resilient practices in a rapidly evolving legal environment.

NOTE: This material is intended as only an example which you may use in developing your own form. It is not considered legal advice and as always, you will need to do your own research to make your own conclusions regarding the laws and ethical opinions of your jurisdiction. In no event will ALPS be liable for any direct, indirect, or consequential damages resulting from the use of this material.