the practice ends and erp - isba mutual · 2018-10-17 · the practice ends and erp here today,...

The Practice Ends and ERPHere Today, Gone Tomorrow:Succession or Disaster when a Practice Ends

What we will cover today -

▶Overview of succession planning and why it’s important

▶Backup Lawyer arrangements

▶Why lawyers’ professional liability insurance and tail options need to be understood

Current Succession Trends▶ Solo lawyers▶ 29% of all practicing lawyers▶ 84% have no plan

▶ Lawyers practicing in firms with between 2 to 10 lawyers▶ 56% of all practicing lawyers▶ 80% have no plan

▶ Nearly 70% of ISBA Mutual policyholders are solo practitioners

Concerned Stakeholders

▶ISBA Special CommitteeSuccession and Transition Planning

▶ARDC John Cesario

▶ISBA Mutual Insurance CompanyAdded policy provisions for free tail upon death, disability and retirement

Causes of the Problem▶ Aversion to thinking about the end

▶ Procrastination

▶ Tendency to help others before helping yourself

▶ No one else can do what I do

No Plan – Who Helps?

Consequences of Not Having a Plan▶How will you be remembered?

▶By your clients

▶By your colleagues

▶By your family

What Happens When Nobody Helps

▶ARDC Cometh, Supreme Court Rule 776

▶Court-Appointed Receivership

▶John Cesario – Senior Counsel▶ jcesario@iardc.org

Know Your Resources

▶ARDC - https://www.iardc.org/Succession%20Planning.htm

▶ IBF - https://www.illinoisbarfoundation.org/warren-lupel-lawyers-care-fund

▶ ISBA - https://www.isba.org/practicehq/winddown

▶ IOLTA - http://www.ltf.org

▶Your Insurance Carrier – ISBA Mutual 866-473-4722

ARDC

▶Online Resources to Create Your Plan▶ Succession Planning Training Videos

▶Documents to Consider▶ Office Checklist▶ Limited Power of Attorney▶ Law Practice Coverage Agreement▶ Retainer Agreement Inclusion Language

Illinois Bar Foundation

Warren Lupel Lawyers Care Fund

▶Financial Support Provided For:

▶Funeral Costs

▶Medical Bills

▶Living Expenses

Illinois State Bar Association

▶Special Committee on Succession and Transition Planning

▶ https://www.isba.org/committees/successionandtransitionplanning

Make a Plan

▶Written agreement with another lawyer/law firm▶Maintain an office manual▶Add instructions to will/estate documents▶Include language in client engagement letters ▶Arrange for access to bank and trust accounts

▶Review your plan annually

Designated Attorney Representative

▶Proposed Supreme Court Rule 781▶Protect client interest▶Authorizations▶Liability is limited

Backup Lawyer System

▶What to look for in a Backup Lawyer

▶Initial setup of Backup Lawyer system

▶Be sure to review annually

Type of Policy Forms

▶Claims Made and Reported Policy: your coverage and limits of liability are only available during the policy term or any extended reporting period

▶Occurrence Policy: your coverage and limits of liability survive after the expiration of the policy

What is Tail Coverage?

ERP is known as Extended Reporting Period, or Tail Coverage

Insurance - Extended Reporting Period

▶Extends the period of time to report a claim after a Claims Made and Reported policy expires

▶It is not renewable

▶It is not cancellable

▶It is not an extension of the insurance coverage

Why you should get Extended Reporting Period Coverage:

▶Death – Free

▶Disability – unable to practice law – Free

▶Retirement – Free

▶Military Service – Free

▶Firm is Dissolving or Merging - Purchase

The Timeline – Claims Dates

Prior Acts

Effective Date

Expiration Date

Occurrence/Wrongful Act Date

Claim Made Date

Report Date

The Timeline – Claim Reporting No Tail

Prior Acts Date

Effective Date

Expiration Date

CurrentPolicy PeriodPolicy PeriodPolicy Period

Coverage Period NO coverage, NOT reportable

The Timeline – Claim Reporting with Tail

Prior Acts Date

Effective Date

Expiration Date

CurrentPolicy PeriodPolicy PeriodPolicy Period

Coverage Period NO coverage, IS reportable

Tail or Extended Reporting Period

Extended Reporting

Date

Summary

▶Succession planning is important, get a Backup Lawyer

▶Resources are available to create a plan

▶Activating an extended reporting period endorsement is critical

▶Protect your legacy

Thank You