July/August 2019

Finance

Solo Practitioners, It's All About Your Trust Account

Peter Roberts

When I was working at the Washington State Bar Association, we often discussed questions relating to the fate of a solo attorney’s practice and the trust account in the event of his or her disability or death. A state bar may offer a “custodianship” service wherein a volunteer lawyer is appointed to oversee the windup of another lawyer’s practice. Establishing a custodianship takes time, and access to the funds in the trust account remains a major hurdle. Jurisdictions may allow anyone to be a signer on the trust account or may limit a signer to being a lawyer, as is the case in Washington state. As long as the signer is healthy or there is a second signer on the account, no issues arise concerning a client’s ability to have access to their funds.

But In the Case of Bad Health

Your professional liability insurance carrier likely asks about your backup attorney, and it may be easy to think of a name for the purpose of completing the form, such as who might be appearing for you in court. Think about the challenge of finding another attorney to serve as your backup attorney who will function as described in the outline on page 71. Look within your practice area(s) and consider personality, trustworthiness, availability, age (i.e., ideally younger than you) and, above all, willingness.

The Washington and Oregon state bars offer a comprehensive guide that includes language for a written agreement between an “affected attorney” and an “assisting (or backup) attorney.” These jurisdictions recommend a formal agreement to help avoid misunderstandings about what role is assumed by the backup attorney. These materials are especially helpful for better understanding the several questions that may arise.

Come to An Agreement

The outline on page 71 is excerpted from Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death, available at https://bit.ly/2SM1huH, reproduced with the permission of the Washington State Bar Association.

Note that the outline is merely an overview. The reader retains the ethical obligation to consider an agreement in accordance with your particular needs and wishes, and to derive the agreement in compliance with your jurisdiction’s ethical rules.

The Trust Account Reconsidered

The staff at one bank branch told me the bank would accept any power of attorney form, whether obtained online or from a local office supply store, but only in the case of disability or incapacity. In the case of death, the bank staff told me the decedent’s will prevails and the personal representative must contact the bank.

My recommendation is to visit the relevant bank and ask to speak with an operations manager. Ask these questions and present language from a sample court order or other relevant document that delineates how to allow access to the trust account due to the likely pressing need for the clients to have access to their funds. A second signer on the trust account may avoid this delay yet also subjects that signer to exposure for the proper accounting of the funds in the account. This risk can be reduced if there is a proper audit of the trust account on a regular basis, particularly if the account is subject to a high volume of transactions.

Conclusion

Solo practitioners enjoy a wide choice of office settings, practice areas and lifestyle choices. But I hope you will use the ideas in this column to put a plan in place to minimize the delay your clients might experience to access their funds in your trust account so that their legal matter can proceed with another attorney in the event of your prolonged illness, incapacity or death. 

Peter Roberts

Peter Roberts is a private practice management consultant for lawyers. He was the former practice management advisor in the Law Office Management Assistance Program of the Washington State Bar Association for 13 years. He is active in the ABA Law Practice Division as co-chair of the Law Firm Finance Committee. pete@practicelawadvisor.com

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