Some basic planning steps can help ease a lawyer’s transition out of practice and into retirement, Toronto estates and trusts lawyer Suzana Popovic-Montag told a recent gathering of lawyers at the Law Society of Ontario (LSO).

Popovic-Montag, the managing partner of Hull & Hull LLP, was a speaker for the LSO’s e-course Succession Planning for the Legal Practitioner, where she laid out a checklist she has developed for retiring lawyers, the highlights of which are below.

Apart from a few extra considerations surrounding shareholder agreements for lawyers who operate their practice in a partnership or through a professional corporation, she explained that the key requirements are basically the same for all legal practitioners developing a succession plan.

“These basic steps are not particularly demanding on the retirement lawyer,” Popovic-Montag said. “They can nevertheless go a long way in streamlining the transition from the management of a law practice by the planning lawyer to the replacement lawyer.”

Step 1: Create an office procedure manual

A comprehensive manual including details on the opening and closing of files, storage of firm contacts, conflict checks and various other processes involved in the practice can come in handy for the smooth day-to-day running of the firm, as well as bringing the lawyer’s successor up to speed, according to Popovic-Montag.

“Preparing a manual and ensuring that it is available to the replacement lawyer will allow him or her to refer to a guide outlining how the practice normally operates,” she said.

Step 2: Choose a replacement

Finding a replacement lawyer, and ideally an alternate as well, is one of the most important tasks a retiring lawyer must complete.

“These should be individuals who are licensed to practice law in Ontario and familiar with your areas of practice,” said Popovic-Montag. “Before putting any plan into place, it is imperative that a discussion takes place with the intended replacement lawyer to ensure that they are made aware of your plans and to ensure that they are agreeable to assuming the role.”

Step 3: Authorize the replacement lawyer

Documents, including a continuing power of attorney, should be drawn up, authorizing the replacement lawyer to operate the practice on behalf of the planning lawyer, Popovic-Montag said.

The replacement lawyer should also be named as an estate trustee under a secondary last will and testament dealing only with the law practice and related assets, she added.

Step 4: Disability or life insurance policy

Planning lawyers should decide early on whether a disability or life insurance policy is needed to aid their replacement to gain access to the funds to match the practice’s existing liabilities and expenses and decide on an option together.

Other types of insurance may also form part of a contingency plan, including professional liability, property or business interruption insurance.

Step 5: Compensation

A prominent feature of initial discussions with a replacement lawyer should touch on the issue of compensation, Popovic-Montag said.

“Most planning lawyers will want to provide the replacement with reasonable compensation while maximizing the assets that will be available for his or her beneficiaries,” she added.

Step 6: Providing sufficient funds

Planning lawyers must make sufficient funds available to their replacement to cover office overheads and other expenses that are expected to become payable during his or her management of the practice, Popovic-Montag said.

In addition, the planning lawyer should be in touch with their financial service providers to set up contingency plans in the event of their incapacity or death, she suggested.

Step 7: Securing planning documents

The original planning documents should be kept in a place that is both secure and easily accessible to both parties.

Step 8: Review and update your contingency plan

Once a contingency plan is in place, it needs to be periodically reviewed to account for changes in circumstances, Popovic-Montag said.

“For example, if the health of the replacement lawyer is declining, the planning lawyer may wish to reconsider his or her appointment as limited attorney for property and/or estate trustee,” she added.

“Also, if the firm becomes more or less profitable than in the past, it may be wise to renegotiate the compensation of the replacement lawyer.”