The Practice Ends and ERP Here Today, Gone Tomorrow: Succession or Disaster when a Practice Ends

Transcription

1 The Practice Ends and ERP Here Today, Gone Tomorrow: Succession or Disaster when a Practice Ends

2 What we will cover today - Overview of succession planning and why it s important Backup Lawyer arrangements Why lawyers professional liability insurance and tail options need to be understood

3 Current Succession Trends Solo lawyers 29% of all practicing lawyers 84% have no plan Lawyers practicing in firms with between 2 to 10 lawyers 56% of all practicing lawyers 80% have no plan Nearly 70% of ISBA Mutual policyholders are solo practitioners

4 Concerned Stakeholders ISBA Special Committee Succession and Transition Planning ARDC John Cesario ISBA Mutual Insurance Company Added policy provisions for free tail upon death, disability and retirement

5 Causes of the Problem Aversion to thinking about the end Procrastination Tendency to help others before helping yourself No one else can do what I do

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7 No Plan Who Helps?

8 Consequences of Not Having a Plan How will you be remembered? By your clients By your colleagues By your family

9 What Happens When Nobody Helps ARDC Cometh, Supreme Court Rule 776 Court-Appointed Receivership John Cesario Senior Counsel

10 Know Your Resources ARDC - IBF - ISBA - IOLTA - Your Insurance Carrier ISBA Mutual

11 ARDC Online Resources to Create Your Plan Succession Planning Training Videos Documents to Consider Office Checklist Limited Power of Attorney Law Practice Coverage Agreement Retainer Agreement Inclusion Language

12 Illinois Bar Foundation Warren Lupel Lawyers Care Fund Financial Support Provided For: Funeral Costs Medical Bills Living Expenses

13 Illinois State Bar Association Special Committee on Succession and Transition Planning

14 Make a Plan Written agreement with another lawyer/law firm Maintain an office manual Add instructions to will/estate documents Include language in client engagement letters Arrange for access to bank and trust accounts Review your plan annually

15 Designated Attorney Representative Proposed Supreme Court Rule 781 Protect client interest Authorizations Liability is limited

16 Backup Lawyer System What to look for in a Backup Lawyer Initial setup of Backup Lawyer system Be sure to review annually

17 Type of Policy Forms Claims Made and Reported Policy: your coverage and limits of liability are only available during the policy term or any extended reporting period Occurrence Policy: your coverage and limits of liability survive after the expiration of the policy

18 What is Tail Coverage? ERP is known as Extended Reporting Period, or Tail Coverage

19 Insurance - Extended Reporting Period Extends the period of time to report a claim after a Claims Made and Reported policy expires It is not renewable It is not cancellable It is not an extension of the insurance coverage

20 Why you should get Extended Reporting Period Coverage: Death Free Disability unable to practice law Free Retirement Free Military Service Free Firm is Dissolving or Merging - Purchase

21 The Timeline Claims Dates Prior Acts Effective Date Expiration Date Occurrence /Wrongful Act Date Claim Made Date Report Date

22 The Timeline Claim Reporting No Tail Policy Period Policy Period Current Policy Period Prior Acts Date Effective Date Expiration Date Coverage Period NO coverage, NOT reportable

23 The Timeline Claim Reporting with Tail Policy Period Policy Period Current Policy Period Tail or Extended Reporting Period Prior Acts Date Effective Date Expiration Date Extended Reporting Date Coverage Period NO coverage, IS reportable

24 Summary Succession planning is important, get a Backup Lawyer Resources are available to create a plan Activating an extended reporting period endorsement is critical Protect your legacy

25 Thank You