A Guide to Succession Planning for Solo Law Firms

When it comes time to retire, many lawyers can simply give notice to their employer or other partners. But what about solo attorneys who hold all the responsibility for their practice? This is where solo law firm succession planning becomes critical.

The solo lawyer who uses the right legal software can help their succession planning immensely. Clio Manage helps streamline your client management in a way that could ease the way for the sale, merger, or other disposition of your practice.  

What is a succession plan for a solo law firm?

A “succession plan” is the process a solo lawyer will follow when transitioning ownership of their firm or closing it down. This plan can be implemented when the solo practitioner retires, but it can also be put into effect due to unexpected events, such as death or disability. Succession plans can also be relevant when a solo practice undergoes a structural change, like merging with another law firm. 

Why is succession planning important for solo attorneys?

Solo attorneys face unique challenges that lawyers in larger firms do not when planning for succession. 

Risk management

Solo practitioners without succession plans in place face significantly higher risk than other attorneys. Since a solo attorney does not have other lawyers to pick up the slack in their absence, any long-term disability due to accident or illness could be disastrous. For example, the practice could be left unmanaged, resulting in missed deadlines, damaged client relationships, and even malpractice claims. These risks may be even greater in the event of the solo attorney’s unexpected death. 

Ethical and professional obligations

All attorneys owe ethical and professional obligations to their clients, and succession planning ensures that these obligations are met in the event of an unexpected event.

For example, the ABA Model Rules of Professional Conduct state that the designation of a successor attorney may be a professional obligation for solo attorneys. Rule 1.3 requires an attorney to act with reasonable diligence and promptness in client representations. Comment 5 to the rule states the following:

“To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”

Beyond any legal or ethical obligations, you also want your client matters handled well in your absence. It is unlikely any successful solo attorney was able to maintain their practice without caring about their clients and being devoted to their representation. In short, you owe it to your clients to get your succession planning done right.

Peace of mind

Solo lawyers have a lot on their plate between running a business and maintaining a legal practice. Put simply, putting a robust succession plan in place means that you’ll have one less thing keeping you up at night, knowing that your practice will be in good hands if the unexpected happens.

If you run a small firm, your succession strategy will look different from that of solo attorneys. Learn more about succession planning for small law firms here.

What are the main strategies for solo attorney succession planning?

The right succession planning strategy for a solo attorney will depend on their overarching strategy for ending their legal career. Below are some of the more common succession planning strategies for solo lawyers: 

Winding down and closing the practice

For either planned retirement or the unexpected, such as death or disability, many solos may choose to simply close their practice. While you will miss out on the financial benefits of selling your firm, not all solo practices are easy to sell, and closing the business may ultimately be the simpler option.

Either you or your successor attorney could announce the closure of the firm at a future date and provide clients with the opportunity to find new counsel. Alternatively, you or the successor attorney could wind down the practice by not taking any new legal matters and completing all existing matters.

Training a successor 

Another option is to recruit an associate whom you will then train to be your successor. The associate could eventually be made a partner, and then take over the firm upon your retirement. However, this is a long-term plan with some level of uncertainty, since you cannot be certain the attorney will stay with your firm and be up to the task of taking the reins.

Selling the practice

The solo practitioner could also sell their practice to another lawyer or law firm. This depends on the practice having a client base and types of legal matters that can be transferred to another firm, which is not always the case for solo firms. Although the attorney could sell their practice for a lump sum, often the purchase price is paid out in installments over the course of several years, and the selling attorney may need to stay on in an advisory capacity to help the buying firm retain their clients.

Transition to a temporary partner or Of Counsel role

Some solos may have the option of merging their practice with another solo practitioner or small firm, or being acquired by a larger firm. The attorney may need to stay on as a partner or in an Of Counsel role for some time. This is an attractive alternative for ensuring client continuity while allowing the attorney to retire on an accelerated timeline, all while receiving the payout for the merger or acquisition.

What are the key components of a solo law firm succession plan?

Once you have determined your succession strategy, you’ll need to create your succession plan. At a minimum, your succession plan should contain these key elements.

Finding a successor

The first step is designating a successor for your firm. As noted above, your succession strategy might involve the sale, merger, or acquisition of your firm, in which case the successor will depend on who is buying your firm. Nonetheless, you should choose a designated successor to take over in case of your unexpected disability or death. You should ideally find a successor who works in the same practice area and has little to no conflicts of interest with your client base. 

Entering into a formal agreement with the successor

This designated attorney must be able to review files, notify clients, and take necessary actions, including transferring matters to other attorneys. The formal agreement with the successor should clearly spell out their duties and responsibilities, whether that includes closing or selling the practice. You’ll also need to address your successor’s compensation.

Ensuring accessibility of key information

Both the attorney successor and any firm that buys or merges with your practice must be able to quickly access key information. This includes not only client and case information but also banking and accounting details. Take special care with attorney trust accounts, including IOLTA accounts. Include login information and passwords for computer systems, online accounts, and software.

When should I start succession planning?

Many solo attorneys make the mistake of delaying succession planning until they are close to retirement. Unfortunately, the unexpected can happen at any time, so solo lawyers must prioritize succession planning early in their careers to ensure they have coverage.

Remember, too, that succession planning is an ongoing process. You should review and update your succession plan regularly to account for changes in your practice. 

How do I inform my clients about my succession plan?

Solo attorneys should be transparent with their clients about the existence of a succession plan. Practice management software like Clio helps you track which clients you have informed about the plan and legal matter details. 

Solo attorneys can leverage technology for their succession planning

Solo attorneys have too much responsibility and too much on the line to leave their succession to chance. Succession planning can buy them a smooth transition, a comfortable retirement, and peace of mind. 

The right legal technology can make this process seamless by giving a successor attorney a platform to easily review all legal matters and details on the day-to-day running of the practice. Check out how Clio can simplify and centralize firm operations—including billing, calendaring, communication, and document management—by scheduling a free demo today.

We published this blog post in October 2024. Last updated: November 14, 2024.

Categorized in: Business