DATE: August 22, 2012
FROM: The Bruechert Law Firm
TO: The State of New York Unified Court System, Office of Court Administration
SUBJECT: Comment on the Proposed New Uniform Court Rule on the Appointment of Caretaker Attorneys
The Proposed New Uniform Court Rule on the Appointment of Caretaker Attorneys (“Proposed Rule”) fills a critical gap where solo practitioner attorneys (“solo attorneys”) fail to plan for an “inability to practice.” Such inability to practice may result from suspension, disbarment, incapacity, temporary or permanent disability, death, or disappearance. However, solo attorneys should be encouraged to enter into voluntary arrangements that satisfy the solo attorney’s ethical obligation to clients, and their moral obligations to others that depend on them, such as family and employees. It is the opinion of this Firm, that the Proposed Rule should be implemented coupled with programs to make solo attorneys aware of the risks of not having a voluntarily adopted plan, and encourage the implementation of such plans. The Proposed Rule should not impair the solo attorney’s freedom to enter into such arrangements.
Attorneys need to plan for an inability to practice in order to perform diligently and not neglect their clients’ matters.
Attorneys owe the highest duty to their clients and continue to possess such duty after they become unable to practice. The Rules of Professional Conduct require every lawyer to represent their clients competently and with due diligence. Rule 1.3(b) states that “a lawyer shall not neglect a legal matter entrusted to the lawyer.” Leaving the fate of their practice and clients’ matters up to the courts, does not fulfill an attorney’s fiduciary duty when the attorney could have planned for the efficient and expedient management and potential transition of the practice. Failing to plan for an inability to practice may be a precursor to neglecting a client’s legal matter.
Without a plan, in the event that a solo attorney is unable to practice, those who depend on the solo attorney are vulnerable because no one has the authorization to manage the solo attorney’s practice. The solo attorney’s clients are left without representation and without access to their files and property. Employee’s jobs are jeopardized and wages not paid. Since the practice is not managed, bills, rent, and other expenses go unpaid. Without access to the revenues from the practice, the solo attorney and his or her family cannot pay for personal expenses, such as medical bills. Upon the death of the solo attorney, the estate cannot realize the proceeds of a sale of the law practice if a buyer is not identified and the practice is not sold.
Voluntary agreements should be encouraged since they offer choice and efficiency.
One important benefit of entering into a voluntary agreement is choice. A solo attorney who plans ahead has the benefit of choosing his or her Caretaker Attorney and deciding under what conditions the Caretaker Attorney’s authority becomes effective. The solo attorney can also choose the amount of compensation that the Caretaker Attorney receives, and the appropriate fee split for the Caretaker Attorney’s representation of clients. The solo attorney can choose whether to retain or sell the practice and under what conditions such sale shall take place.
Another benefit to planning for an inability to practice is efficiency. A voluntary agreement gives the Caretaker Attorney the authority and ability to act immediately upon a determination of a solo attorney’s inability to practice. Soon after the solo attorney is deemed unable to practice, the Caretaker Attorney can enter the solo attorney’s office and begin managing. Since the agreement was prearranged, the Caretaker Attorney is more likely to be familiar with the solo attorney’s practice and procedures. The agreement may call for a compilation of all important information the Caretaker Attorney would need and use while managing the solo attorney’s practice.
Lastly, in addition to being efficient and expedient, voluntary agreements do not burden, strain, or otherwise add to backlog on the court system. But for instances of improper conduct, there is little need for the solo attorney or Caretaker Attorney to use the court system.
A competent attorney is an attorney with a plan. Nevertheless, a proper and comprehensive plan takes time to formulate and implement in order to realize the benefits and meet ethical and moral obligations.
The Planning Ahead Guide gives attorneys the resources to plan, but does not alleviate the problems of lack of time or motivation.
In order to assist attorneys in implementing their own contingency, continuity, and succession plans, the New York State Bar Association published the Planning Ahead Guide. While this publication contains important resources, it does not address the solo attorney’s main problem – time constraints. A comprehensive and thorough plan takes time to formulate and implement. Generally, a busy solo attorney does not have the time to read all the resources, draft the plan, negotiate with a Caretaker Attorney, make edits, and finally execute it.
Some solo attorneys may not even recognize the risks or that a problem exists. Others believe they are capable of researching, drafting, and implementing a plan for themselves. However, most solo attorneys remain without a plan.
Solo attorneys need to consider hiring third party firms, which create such plans in order to overcome these dilemmas. The Courts and the Bar Association should recognize and encourage these firms to help solo attorneys implement these important plans.
The Proposed Rule serves a critical role as a default mechanism for attorneys who do not have a voluntary arrangement.
As a default mechanism, the Proposed Rule is important if a solo attorney has neglected to plan for an inability to practice. However, in adopting the Proposed Rule, the Administrative Board of the Courts runs the risk that solo attorneys may be confused that the Proposed Rule is the solution to the problems facing solo attorneys described herein. The Proposed Rule should encourage solo attorneys to proactively adopt a voluntary plan and it should be clear that if they neglect to plan, the application of the Proposed Rule will result.
In the event of a solo attorney’s inability to practice, the Proposed Rule calls for the appointment of a Caretaker Attorney. This may be a time consuming process. In the case of a disciplined attorney, a departmental disciplinary committee, grievance committee, or committee on professional standards may commence a proceeding for appointment. In any other circumstance, the bar association or any interested person may commence the appointment proceeding in the county that the solo attorney maintained their law practice. If the solo attorney cannot be found, then a reasonable time must elapse before a proceeding may commence. A proceeding may be commenced only by an order to show cause supported by a petition or affidavit, which also must be served upon the solo attorney, his or her guardian, any partners, representative of the estate or any other responsible party capable of conducting the solo attorney’s affairs.
Then, upon application for appointment of a Caretaker Attorney, the court may take various actions. The court may order an examination of the solo attorney. The court may appoint an attorney to represent the solo attorney or appoint a guardian if he or she is unable to practice for a due to physical or mental illness or infirmity. The court may hold a hearing to determine if a Caretaker Attorney should be appointed or may dismiss the proceeding.
If a hearing is ordered, then the court may limit disbursement of funds in the affected attorney’s escrow, special or operating accounts. Such a limitation is not defined and may negatively impact a client with urgent matters. Also, files and client property are restricted from being removed from the solo attorney’s office. Obviously this is done to protect the clients and their confidentiality. However, again, many client matters and needs are time sensitive and any such delay may negatively impact the results. A solo attorney who has a plan can avoid these constraints on their clients’ matters.
The same procedures designed to protect the solo attorney’s clients may harm those clients due to the delay in the appointment of a Caretaker Attorney. By the time a Caretaker Attorney is appointed, the client’s needs may have expired. Injured Plaintiffs may be delayed in receiving their relief, a child’s custody may remain undetermined, business transactions may become stale, or market forces may render an opportunity moot. Any time sensitive reason citizens need lawyers may be impacted by the time consuming process of the appointment of a Caretaker Attorney. However, a proactive solo attorney who plans for an inability to practice will have another attorney managing their practice and servicing their clients immediately.
Under the Proposed Rule, if a Caretaker Attorney has not previously been selected, then the court will appoint a Caretaker Attorney. This attorney is likely unfamiliar with the practice, the clients, the staff, and may be unfamiliar with the solo attorney. Under the Proposed Rule, the Caretaker Attorney is constrained by section 1250.5, entitled “Role, Duties and Authority of Caretaker Attorney”. If there is a previous agreement, client consent to the representation by the Caretaker Attorney may be secured beforehand. Under the Proposed Rule, the solo attorney’s practice may only be purchased with court approval. With a prearranged plan, the Caretaker Attorney may have the first right of refusal to buy the practice, without any need for court involvement.
Lastly, under section 1250.6, entitled “Compensation of the Caretaker Attorney”, the Caretaker Attorney’s compensation for professional services rendered and for reasonable and necessary expenses incurred is determined in the court’s discretion. These details can also be determined in advance and incorporated in a prearranged plan.
The Proposed Rule is important in maintaining a solo attorney’s ethical duty to clients and moral obligation to others that depend on them. However, if a solo attorney plans for an inability to practice, then the solo attorney has a greater role in dictating what happens to his or her practice and the proceeds that results from its management and/or sale. Solo attorneys should be encouraged to enter into voluntary arrangements since such arrangements satisfy ethical obligations to clients, and to the extent not inconsistent therewith, provide great benefits to the solo attorney, the solo attorney’s family and employees, and even the court system. The Proposed Rule is an important default mechanism to be implemented only if solo attorneys fail to plan. In considering whether to adopt the Proposed Rule, it is imperative that solo attorneys are made aware of the risks of not having a plan, encouraged to implement their own plans, and the solo attorney’s freedom to enter such agreement is not impaired.