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Key Contingency Planning Steps for a Lawyer Practising as a Sole Proprietor


If you are a sole proprietor consider taking the following key steps when planning for death, disability, and other extended absences from practice:

  • 1. Choose Replacement Lawyer
    Choose a Replacement Lawyer and an alternate Replacement Lawyer entitled to practise law in Ontario to take control of your practice and protect the interests of your clients in the event of your death, disability, or other unexpected absence from practice.
     
  • 2. Discuss Plans with Replacement Lawyer
    Discuss with your Replacement Lawyer, the plans that you intend to make and ensure that they agree to assume the role.
     
    The following are some issues that you may wish to discuss at this time with your Replacement Lawyer:
     
    • The role of the Replacement Lawyer (e.g. wind up the practice or preserve and sell it)
    • When the Replacement Lawyer will step into your practice
    • Compensation for the Replacement Lawyer
    • The location of your Power of Attorney document, Last Will and Testament and how the Replacement Lawyer will obtain the document when required
    • The steps that you have taken or will take to facilitate the work of the Replacement Lawyer if the Replacement Lawyer should need to step into your practice
    • Where the Replacement Lawyer will find information about your practice if the Replacement Lawyer is required to step into your practice (e.g. the location of an office manual containing information about your practice and key contacts)
  • 3. Make Arrangements with Bank
    Discuss with your bank(s), the bank’s requirements to ensure that the Replacement Lawyer can access your trust and/or general accounts in the event of your death, disability, or unexpected absence from your practice.
     
  • 4. Grant Power of Attorney
    Grant a power of attorney for property to the Replacement Lawyer and to an alternate Replacement Lawyer to take control of your law practice and protect the interests of your clients in the event of your disability or unexpected absence from practice.
     
    We recommend that Planning Lawyers consider having separate Continuing Power of Attorney documents for their personal assets and law practice. In this way, the Replacement Lawyer will have full power and authority to operate, sell or wind down the Planning Lawyer’s law practice, while simultaneously ensuring that control over the Planning Lawyer’s personal assets such as family home and bank and investment accounts remain with the Planning Lawyer’s spouse, family member or whomever else is named as attorney for property with respect to personal assets. Naming a different person to act as attorney for the Planning Lawyer’s personal assets also gives someone other than the Replacement Lawyer (most often a family member or trusted friend) the ability to review the transactions undertaken by the Replacement Lawyer in respect of the law practice, and to negotiate and approve the price and terms of a possible sale of the law practice to the Replacement Lawyer.
     

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  • 5. Appoint Replacement Lawyer as Estate Trustee
    Appoint a Replacement Lawyer and a successor Replacement Lawyer as estate trustee for your law practice in your last will and testament.
     
    We recommend that Planning Lawyers consider preparing two Wills, one dealing with assets related to their law practice and the other dealing with all other assets. The purpose of having two Wills is to provide the Replacement Lawyer with full power and authority to operate, sell or wind down the law practice, while simultaneously ensuring that control over personal assets such as a family home and bank and investment accounts remains with the Planning Lawyer’s spouse, family member or whomever else the Planning Lawyer has currently named as his or her executor.

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  • 6. Prepare Written Agreement with Replacement Lawyer
    Consider entering into a written agreement with your Replacement Lawyer outlining both your responsibilities and the responsibilities of the Replacement Lawyer.
     
    Resource: 
  • 7. Prepare Your Practice
    Prepare your practice so as to make the task of your Replacement Lawyer easier. You should ensure that your practice is managed in a way that facilitates the task of your Replacement Lawyer when he or she is required to step into your practice. In this regard, in addition to ensuring that your practice is managed effectively, you should consider preparing an office manual outlining the procedures and other important information about your firm.
     
     Resources:
  • 8. Ensure Proper Financial Management
    Ensure that there are sufficient funds available to the Replacement Lawyer to cover for a period of time office overhead and expenses and if appropriate any arrangements for compensation to the Replacement Lawyer (e.g., unused line of credit if available, life or disability insurance, or other arrangements).
     
Created on: October 2014
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