GPSOLO October/November 2010
Preparing for Disability, Disaster, and Death
By John D. Kitch
Misfortune comes to all men.
Hurricane Katrina slams into the Gulf Coast, destroying homes and businesses, including lawyers’ offices. A tornado devastates the downtown area of Clarksville, Tennessee, effectively putting the entire legal community out of business. A lawyer rides his bicycle over a railroad track and wakes up in the hospital with a brain injury, no memory of the accident causing it, and a long road to recovery ahead. Another attorney with no history of health problems dies from a sudden heart attack.
None of us will get out of this alive. Many of us will become disabled before we die. Many will face life-threatening surgeries, terrible accidents, floods, earthquakes, fires, or hurricanes. And yet, surprisingly few lawyers take the time to plan ahead with even the most elementary precautions to protect their clients, their families, and themselves for the inevitable turmoil surrounding death, disability, or disaster. Too often we are the cobblers whose children go barefoot, and sometimes the shoes we build for our clients won’t withstand the rough road of our own unforeseen misfortune.
Find a Backup Lawyer
Rule 1.3 of the American Bar Association Model Rules of Professional Conduct states that “A lawyer shall act with reasonable diligence and promptness in representing a client.” Comment 5 to that Rule states, in part:
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.
Although the Comment is not binding, it is instructive to the diligent lawyer. Each and every solo or small firm lawyer should have one or more backup lawyers in place for each area of his or her practice to protect clients. Each chosen backup should be competent in the designated area of practice, and the diligent lawyer’s contract with clients should contain a clause permitting the use of the backup and permitting the backup’s access to the clients’ otherwise confidential information for the limited purpose of protecting the clients’ immediate interests. Of course, clients are free to take their business elsewhere if they so choose, but at least this prevents the loss of the clients’ rights (and prevents a potential malpractice case against the unfortunate lawyer or his or her estate). It may also preserve the diligent lawyer’s practice for when he or she is able to return. Further, the careful lawyer will make arrangements for someone to have the ability to access the lawyer’s bank accounts, including the trust account, if disaster strikes. The trust account holds the clients’ money; if they want it, there needs to be a mechanism for them to get it.
You need to have a current list of clients with a brief description of the subject of the representation, together with the suggested backup person. Your staff or the backup must be able to contact all clients, tell them of the circumstances, and arrange an immediate consultation for discussion of any necessary immediate action to preserve their position. You also need a list of judges before whom you have matters pending and a list of counsel with whom you have current matters; staff or backup also must contact these people to let them know what has happened. The collegiality of the bench and bar will, in most instances, allow for a reasonable period of time for the backup lawyer to take the necessary steps to protect the client’s interests.
Protect Your Data
I cannot stress enough the need for another kind of backup—backup for your computer data. If your computer were stolen over the weekend or if the hard drive were to crash—and it will—you must have the ability to recreate everything. Your data is the key. Think about having an on-site backup as well as one off-site. It doesn’t make sense to have just one backup sitting next to the computer it backs up; both would go up in smoke in the case of a fire. You can use external USB hard disk drives, or for that matter even thumb drives, depending on the amount of data, and you should rotate them between on-site and off-site, always making sure that each is current. There also are several good companies you can use to back up your data online, but you need to be sure that confidentiality of client files will be maintained. Prudent lawyers back up once a day, but even once a week is better than nothing. The question is simply how much data you are willing to lose.
Another computer issue concerns your passwords. Most of us use passwords for accessing our computers and for other related matters. Please, please, password protect everything that needs to be kept confidential, and change your passwords frequently. Don’t use your child’s birthday or your pet’s name; those are too easy to determine. Don’t put a sticky note with the password near the computer. However, make sure someone else has your passwords in the event of your illness or death; that backup lawyer we talked about above will need to get into your computer to serve your clients if you can’t.
Get a Will and Health Care Directives
Do you have a will? In my home jurisdiction of Davidson County, Tennessee, our probate judge reports that fewer than 40 percent of the lawyers whose estates came before him in the last three years had a will. He also reports that this failure to prepare for death prolonged the court proceedings, cost a great deal more money than if there had been a will, and in some cases generated serious battles and destroyed relationships among family members.
If you don’t have a will, most states have one for you—it’s called the law of intestate succession. Intestate succession generally will pass your assets as you would wish, but it might not. What if you are divorced and have a child with a disability? What about charities to which you might like to make a postmortem gift? What about avoiding fights among your family members over who gets what piece of your jewelry or antique furniture? Good estate planning and writing a clear, detailed will can go a long way to avoid the problems attendant to its absence.
A health care power of attorney and living will are also necessary. These documents tell your family and your health care providers who is to make health care decisions and/or end-of-life decisions if you cannot, as well as informing them of your wishes ahead of time. You should include relevant HIPAA language regarding access to medical records and permitting communications with health care professionals for those doctors who insist on seeing such language before disclosing any information.
You also need a durable power of attorney in case you become incompetent or otherwise unable to sign legal documents, and I would suggest including HIPAA language in that as well. Assume you are in a coma and your spouse needs to access the equity in your home to pay bills. He or she will not be able to do so without your power of attorney. The power can be springing, such that it only can be used if you are disabled and will be revoked if you cease to be disabled, or it can be general. Regardless, you need one just in case.
Make a list of everything you own, where it is, and who the contact person is. This list should include life insurance policies, pensions and retirement plans, IRAs, 401Ks, lockboxes, securities, bonds and other investments, bank accounts, and any other items of significant value. Life insurance companies hold an untold number of policies on which payments have been made for a long time but which are not accessed upon the insured’s death, simply because no one knew they existed. Make a list of your law office accounts payable, and more importantly your accounts receivable. Your family will need money if you are incapacitated, and you need a plan to pay the bills while you’re out. Do not automatically assume your loyal secretary will stick around to help; he or she may be looking for another job unless you have provided for him or her so that it is easier or more advantageous to remain.
Insure Yourself and Your Practice
Insurance of any kind is costly but necessary. You must have professional liability insurance to protect you and your family from losing all your hard-earned assets in the event of disaster, disability, or death. Don’t think that a statute of limitations would be tolled because of an unanticipated surgery or that an aggrieved client would hesitate to sue your estate. Make sure the insurance is in an amount sufficient to cover any claims that could arise—otherwise, your family could be left with nothing.
Life insurance is a necessity as well. It provides reasonably ready cash for your family at a time when they need it, and probating your estate can take a long time. Also think about a policy on yourself payable to your assistant at the office, both to reward loyalty over the years and to avoid his or her need to abandon your practice to find another job; your family and your backup lawyer will need the help to transition your practice to wherever it needs to go. Further, consider a life insurance policy on your critical staff members payable to you. One catastrophe I haven’t yet mentioned is the death of the assistant who knows everything about your office that you don’t, and a life insurance policy on his or her life can give you the necessary wherewithal to hire temps until you locate a suitable long-term replacement.
Health insurance is a must. Anyone who practices bankruptcy law will tell you that the high cost of health care is a big factor in many people’s insolvency. Even if you recover from a traumatic injury or debilitating illness, the cost of hospitals and doctors can put you back on your heels for a long time to come. Also consider disability insurance. It is costly, but having it may keep the lights on while you are out.
I recommend business interruption insurance. If your office is destroyed by fire or flood or your computer crashes, it will take some time for you to recover, during which time you won’t be doing much work for or generating income from your clients. Business interruption insurance will at least pay something while you reconstruct, perhaps enough to cover regular expenses and a little more. Finally, a good umbrella policy can be useful in case any of your other coverage turns out to be insufficient to make you whole.
Make a Contact List
Whom do you want told of your disability or death? Friends, colleagues, your college or university, your place of worship or contemplation? Lawyers are by nature gregarious. We know many people and belong to many organizations that mean something to us. It is sad when people die and those they knew well are unaware, simply because no one told them. Make the list.
Make Your Final Wishes Known
It is wise to give your family direction about your final wishes. What lawyer would you want to have handle your estate? Tell your significant other so he or she will know where to turn. Do you want to be buried, cremated, or have your remains donated to science? What about organ donation? Do you want to have a funeral or simply a memorial service? Don’t leave people guessing at this stressful time in their lives. Tell them what you want, and they will be comforted in carrying out your wishes.
By now you may wish you hadn’t begun reading this article. Thinking about the unpleasant things that may befall you is not a source of joy. Nonetheless, I can assure you that if you take these steps to prepare for misfortune, you will experience a sense of comfort and relief that you have done what you could do to protect those about whom you care. The well-known business writer and commentator Peter F. Drucker once said, “Long-range planning does not deal with future decisions but with the future of present decisions.” Make those present decisions you need to make, and make them now.