Succession Planning Task Force
For answers to questions about retention of client files, click here.
The State Bar launched a task force last fall to look at succession planning by lawyers. The Succession Planning Task Force presented its final report and recommendations to the State Bar Board of Governors on April 25, 2014. At its June 10, 2014 meeting, the Board of Governors authorized the task force to continue working on this issue for another year.
The lack of succession planning has an impact on the State Bar because in many cases the State Bar is appointed conservator over the practices of lawyers who have died, disappeared, become disabled or been disbarred. They have left either an ongoing practice that needs to be closed down or have abandoned client files. To preserve, return, protect and, possibly, eventually destroy unclaimed client files, the State Bar may petition under Rules 66 through 69, Ariz. R. Sup. Ct., to become conservator over a lawyer's practice – often consisting of just a lawyer’s files -- when no one else is available to close the practice. Over the past two years we have dealt with an all-time high number of conservatorships and an all-time high number of files as part of those conservatorships.
When the State Bar becomes conservator, the State Bar takes possession of the client files. Pursuant to the Supreme Court rules and a Board of Governors policy, State Bar staff identify files that appear to be active or less than five years old. Those files are then inventoried to try to ascertain the clients' names and addresses. Staff sends letters to the clients asking whether they want their files, and will try to return as many as possible.
Any files older than five years are stored and not inventoried. Only after the conservatorship is closed may the State Bar destroy the younger files that are not retrieved or the older files that are not inventoried. On average of twice a year these files are destroyed.
Before the files are destroyed, State Bar staff reviews every file and removes original wills and other estate-planning documents, as well as capital-murder and certain other criminal-related files. This is a time- and labor-intensive process. Currently, the State Bar simply stores those preserved documents in the event that someone knows to contact the State Bar about them.
As a result, the State Bar is storing several different categories of files: files that are awaiting to be or are in process of being inventoried; older files that are not being inventoried but must be stored until they can be destroyed; and documents and files that the State Bar has determined should not be destroyed and has culled from closed conservatorship matters. The State Bar is storing more than 1,600 boxes of files, most in a rented facility of about 2,300 square feet.
Keep in mind that when the State Bar either is formally appointed conservator or somehow receives files, it explicitly is not taking over as counsel for the clients, but simply safeguarding the files while trying to return them or while storing them.
After studying the various parts of the succession-planning issue, the Succession Planning Task Force is recommending six specific courses of action:
- The State Bar should file a rule-change proposal asking the Supreme Court to amend Rule 41, Ariz. R. Sup. Ct., to clearly obligate all members to plan for their termination of or inability to continue a law practice. Planning would include, at a minimum, identifying another person who agrees to assume responsibilities for appropriately disposing of client-related materials or other property.
- The State Bar should file a rule-change proposal asking the Supreme Court to add comments to Ethical Rules 1.15 and 1.16 advising lawyers that they should not retain client-provided documents in their files; specifically directing lawyers not to retain original wills or other estate-planning documents; and advising that not designating backup counsel may result in the State Bar seeking to impose a conservatorship, which may include assessing the lawyer or the lawyer's estate with costs.
- The State Bar should educate members about the need for succession planning and give them the tools to accomplish it. Toward that end, the task force recommends that the State Bar:
• Publish a handbook on planning, which the task force already has compiled, and
• Make a concerted effort to educate all lawyers about the need to plan for the end of their legal careers
- The State Bar should file a rule-change petition asking the Supreme Court to streamline and clarify Supreme Court Rules 66-69 under which a conservator may be appointed to handle the affairs of a lawyer or formerly admitted lawyer. Changes would include directing State Bar to inventory only those files in which:
• the lawyer appeared to be actively representing a client;
• all files in which the representation terminated less than 5 years earlier; and
• older files that reasonably require further evaluation, such as those involving trusts and estates and
criminal capital cases.
- The State Bar should file a rule-change proposal asking the Supreme Court to amend Rule 43, Ariz. R. Sup. Ct., to amend the "participation certification" that financial institutions must sign every year if they wish to host IOLTA accounts to state that the financial institutions will honor conservatorship orders.
- The State Bar should adopt a plan to assess client files and documents that have been deemed "non-destructible" under current State Bar policy, including seeking judicial orders for storage or destruction.please read these documents:
Task Force's Original Report and Appendices
Task Force Supplemental Report and Recommendations
Recommendations Approved by Board of Governors