State Bar of California Trusts and Estates Section

PRACTITIONER'S CHECKLIST

INTRODUCTION

The purpose of the Practitioner's Checklist is to aid the practitioner found in the position of having to come in and take over, sell or wind down the law practice of a disabled or deceased practitioner. In order to accomplish this, an emergency checklist is suggested to provide guidance. The purpose of the checklist is to raise and stimulate discussions about the issues that may arise upon the sudden death or disability of a practitioner. The checklist is not all inclusive but it is intended to suggest the steps and considerations that should be taken at such a time.

The goal of the checklist is to maximize the value of a law practice following the death or disability of the practitioner, which would in turn provide for the continuance of the practice and/or facilitate the sale of the practice with no decrease in value. In addition, the checklist is meant to be preventive in the sense that it will assist in avoiding the take over of the law practice by the California State Bar, pursuant to Business & Professions Code Section 6180, et seq. When the State Bar comes in, the State Bars' primary concern is the protection of client confidentiality and the return of files to the client; not the continuance of the practice or the sale for the benefit of the deceased or disabled practitioner's heirs.

Although taking over the practice of another may seem a simple matter, it is a trap for the unwary which, if not handled correctly, could lead to fee disputes, litigation with the deceased or disabled practitioner's heirs and/or malpractice actions.

The first Checklist presented is entitled, "Emergency Procedures Before Walking Through The Door (and Shortly Thereafter)". This Checklist is also intended as a guideline to be used by the practitioner prior to his death or disability so that both his clients and his practice are protected.

EMERGENCY PROCEDURES CHECKLIST

The checklist as presented is intended to prioritize to some extent the steps that should be taken upon entry into the disabled or deceased practitioner's office. However, the actions needed to be taken will vary and there are no hard and fast rules as to the order of the checklist. If and when it becomes necessary to step into the deceased or disabled practitioner's law office, the checklist will aid one when doing so.

COURT AUTHORIZATION

Because the issue of, among other things, client confidentiality, professional liability, compensation, and the difficulty in determining the scope of authority required to continue or to sell a practice, it is recommended that consideration be given to obtaining authorization from the court which would define the incoming practitioner's authority. However, because the petition procedure will take some time to initiate and process through the court, the steps listed in the Emergency Checklist may need to be taken immediately and at the same time that consideration is being given to petitioning the court.

EMERGENCY PROCEDURES BEFORE WALKING
THROUGH THE DOOR AND (SHORTLY THEREAFTER)

1. Consider a petition to establish authority to operate the practice.

The petition should address at a minimum the following:

A. Scope of authority;

B. Whether the purpose is to preserve the practice or wind down the practice;

C. Gaining control over trust accounts and other business accounts;

D. Compensation to the incoming practitioner and the source of the compensation;

E. Reporting requirements to the court;

F. Bond requirements and source of payment of the bond;

G. Malpractice issues, e.g. potential conflict in whether the duty is to reserve the estate for the deceased lawyer versus the duty to inform the client.

2. Secure client trust funds and/or other business accounts: Identify all accounts; freeze accounts until formal authority is obtained by court petition; establish procedure to obtain and authorize emergency withdrawals during the petition process.

3. Secure the files and the office: If appropriate, may be accomplished with the assistance of office personnel who are instructed to limit access to files and records and instructed that files are not to be removed.

4. Review the calendar for imminent calendaring deadlines such as statue of limitations, court appearances, discovery deadlines, depositions, appointments, etc.

5. Establish how the incoming practitioner will be compensated, taking into consideration the type of case, e.g. contingency, estate administration, division of statutory fees, and extraordinary fees.

6. Identify any potential Conflicts of Interest and take appropriate action.

7. Malpractice issue - if malpractice found - duty to preserve the estate for the deceased lawyer versus duty to tell client.

OFFICE PROCEDURES

1. Bank Accounts

A. Determine location and account numbers of all bank accounts related to practice. These may include client trust accounts, client accounts on which the attorney has signing authority, or accounts which the attorney is maintaining for the client, i.e. estate bank accounts.

B. Notify banks that attorney has died or is no longer practicing so that accounts can be properly flagged on the bank's records.

C. Determine authorized signatures on accounts. Make changes in signing authority as appropriate.

D. Locate current statements, checkbooks and deposit records on accounts. If current statements cannot be located, contact the financial institutions.

E. If appropriate, attend to deposit of any fee payments.

Note: Only an individual with specific court authority will be able to obtain information on the accounts, change the signatures, or otherwise deal with the bank accounts.

2. Insurance

A. Obtain copies of all policies.

B. Notify carrier(s)/agent(s)/broker(s) of death/disability of insured.

C. Determine policy limits.

D. Determine anniversary dates/renewal options.

E. Determine if coverage is currently in force.

F. Determine if any premiums are currently due.

G. Errors and Omissions - If insured has died, determine if tail coverage is available.

H. General Liability - business interruption insurance - coverage for death or disability of insured?

I. Workers Compensation - Determine if quarterly reports required.

J. Health and disability for employees - (I) decision re: continuation of employees/duration of employment; (ii) determine if contributions due.

3. Safe Deposit Box/Safe

A. Determine location of any safe deposit box/safe related to practice.

B. Locate key for the safe deposit box/combination of the safe and any inventory of contents.

C. Obtain access to the safe deposit box/safe to inspect the contents.

Note: Only an individual with specific court authority will be able to gain access to a bank safe deposit box.

4. Mail

A. Locate any post office boxes used for the practice.

B. Arrange for regular collection of the mail. If necessary put in a change of address request with the post office.

5. Bookkeeping System

A. Determine type or nature of bookkeeping system. Determine whether it is computerized.

B. Determine who maintains office books and records.

C. Locate office bookkeeping records. If records are on computer, determine location of disks containing the relevant information.

D. Locate accountant for the practice.

6. Timekeeping System

A. Identify type or nature of timekeeping system. Determine whether it is computerized.

B. Determine who maintains timekeeping system.

C. Locate timekeeping records.

A. Identify type or nature of billing system. Determine whether it is computerized.

B. Determine who handles client billing.

C. Locate client billing records.

D. Determine status of accounts receivable.

8. Accounts Payable

A. Determine existence and status of lines of credit and/or business loans.

B. Determine status and amount of other payables related to operation of office - rent; utilities; supplies; lease obligations or maintenance contracts on equipment; library subscriptions; personal property or building insurance; personal property taxes; estimated income tax payments; business license fees; employee expenses (payroll, withholding taxes, health and disability benefits).

C. If payment of accounts cannot be made in a timely manner, contact appropriate individuals to advise of status.

9. Payroll

A. Determine type or nature of system (in-house computer system, manual system, payroll company).

B. Determine who is responsible for handling payroll.

C. Determine whether payroll and withholding taxes are current.

D. Determine whether employer quarterly returns are due.

10. Computer Systems and Operation

A. Identify type of computer system utilized for the office. (This information may already have been determined in connection with 3-7 above.)

B. Locate password or access codes.

C. Determine type of backup system utilized. Locate disk or tape storage.

D. Locate any office procedures manuals related to use of computer system.

11. Office Equipment

A. Identify and locate all office equipment - telephones, voicemail, fax machines, copiers, postage meter.

B. Determine whether equipment is leased or owned. If in a multi-tenant office, ascertain whether there are any office sharing arrangements with respect to equipment. If attorney is primary tenant, determine whether there are obligations to other tenants to provide or maintain equipment.

C. If practice has been stopped or discontinued for any period of time, arrange for retrieval of voicemail messages and faxes.

D. If office will not be reopened or remain in operation, arrange to redirect telephone calls and faxes. Make arrangements to discontinue or redirect voicemail.

12. Office Rent/Lease/Ownership

A. Notify landlord of death/disability

B. Obtain copy of lease/review provisions regarding notice/default/termination. Seek counsel, if necessary.

C. Confer with personal representative re: Decision concerning continuing maintenance of leasehold.

D. Determine if any arrearages.

E. Determine if property tax payments due under lease.

F. Determine renewal deadlines/options to renew.

G. If building is owned by decedent/conservatee, coordinate with personal representative or conservator. Determine if decedent/conservatee created subtenancy arrangement. Determine nature and extent of obligations under subtenancy.

13. Personnel Issues

A. Determine who knows what about the ongoing operation of the practice (interview secretary/office manager)

B. Determine which employees, if any, are necessary for the continuation, sale, or winding down of the practice

14. Retirement Plan

A. Obtain copies of plan and Summary plan documents.

B. Determine which employees participate in plan.

C. Determine if annual contributions to plan have been made; if so, how much, dates made.

D. Provide CPA with information concerning contributions.

E. Consult with ERISA counsel regarding questions concerning plan administration, plan termination, and other due diligence issues.

15. Executory Contracts

A. Determine if any outstanding executory contracts related to or unrelated to law practice in addition to lease of premises or equipment.

B. Coordinate with personal representative if executory contracts exist.

16. Library

A. Evaluate nature and extent of library holdings.

B. Determine status of library subscription services for periodicals, reporters and updates. Determine whether these should be maintained or discontinued. (Maintenance may be important to future sale of the collection.)

CLIENT PROCEDURES

1. Calendaring/Docketing System

A. Determine whether the system is computer-based or in book form. If computer-based, identify the person responsible for inputting data. Determine the method used to indicate statutes of limitations and tax filing deadlines.

B. Locate calendars aside from whatever is in the computer, e.g., separate calendars kept by receptionist or secretary or carried by the attorney.

2. Status of Cases Generally: Determine if there is a list of pending cases and outstanding work to be done. If so, the list would shortcut going through files to determine what work remains to be done.

3. Client Trust Account Records

A. Locate the client trust account or accounts.

B. Determine whether each account is one on which interest is paid to the State Bar, or one on which interest is accumulated and belongs to the client.

C. Locate the trust account records. Determine whether there is one centralized record of all trust account records or separate record in individual client files. Identify the procedure used for withdrawing funds from the client trust account and applying the funds to outstanding invoices or returning unused amounts to the clients. Determine who, in addition to the attorney, is authorized to sign on the account. Determine whether there is an annual accounting for the trust account or accounts.

4. Conflict Checking Process

A. Determine whether there is a computer-based conflict program.

B. Check for conflicts on the part of the attorney or attorneys practice before files are opened and before engagement letters are sent.

C. If there is no computer-based conflicts program, determine whether some other index or system exists- e.g., a card index.

5. File-Opening Procedure

A. Determine whether there are new client/new matters forms or procedures. If so, determine whether clients are identified by names or by number less codes.

B. Determine whether there is a method of identifying different matters for the same client. Identify the person responsible for opening new files.

6. Client Lists

A. Determine whether there is a computer based list of clients with corresponding addresses and telephone numbers. Determine whether the client list is included in a timekeeping and/or billing system.

B. If time is recorded manually, locate the ledger cards with client information.

C. Determine whether there is a list of active files.

D. Determine whether there is a list of closed files.

E. Review client list to determine whether other necessary information is found there, for example, identification of the type of matter and its present status.

A. If there is a computer-based system, attempt to find a database, which may be identified by the program name.

B. If there is a database, determine the kinds of information contained in it; client names, addresses, telephone numbers, etc.

C. Determine whether the information in the database can be sorted by the computer "search" function.

8. File Organization and Storage

A. Determine whether there is a central filing system.

B. Identify the means of organizing or identifying the files; are files arranged by client name, a client code, or some other arrangement.

C. Determine whether there are files not included in the central system, e.g., in the attorneys' office.

D. Determine where all files are stored-in the office, off-site, the attorney's home.

E. Find out how files are retrieved from storage.

F. Determine whether there are different designations for active files, closed files, discarded files.

A. Determine whether the office retains any original documents.

B. If so, locate place or places of storage, for example, a safe or locked file cabinet or off-site location.

C. Determine whether there is a log or index for retained original documents.

D. Review files to determine whether copies of documents are stamped to indicate location of originals.