Solicitor Sole Practitioners Group

Warning

This page applies to conduct issues occurring before 1 July 2007. For rules governing conduct after 1 July 2007, see rules.sra.org.uk.

PROTECTING YOUR PRACTICE IN EMERGENCIES

Have you ever wondered what would happen to your practice if you became mentally or physically incapable, or died suddenly? If the worst did occur, and you had not protected your practice, there is the possibility that your family or estate would be faced with the large expense of a Law Society intervention and a great deal of worry for those who were left to sort out your affairs. Making contingency plans should be seen in the context of proper business planning and as such should be an integral part of managing your practice.

The following recommendations may help sole practitioners and should be read in conjunction with Principles 3.10, 3.14 Annex 3c and Chapter 24 of the Guide to the Professional Conduct of Solicitors 1999 (8th edition) - (the Guide)

MENTAL OR PHYSICAL INCAPACITY & SUDDEN EMERGENCIES

a) First steps - it is important to make immediate arrangements to appoint a solicitor manager who will able to run the practice in the event that you become mentally or physically incapable, or due to other circumstances are unable to continue operating your practice, even if this is for a short duration. The solicitor concerned must be a solicitor qualified to supervise in accordance with Rule 13 of the Solicitors Practice Rules. This means the solicitor must have held a practising certificate for at least 36 months within the previous 10 years and have completed a minimum of 12 hours training in management skills.

The easiest way to effect the appointment is by executing an Enduring Power of Attorney (EPA). By giving the attorney general powers to act on your behalf you will enable your appointed solicitor manager to take over your practice. However, if your attorney has reason to believe that you are becoming, or have become, mentally incapable, he or she will have to register the EPA with the Court of Protection before continuing to manage your practice as the Power of Attorney will lapse temporarily.

The Solicitor Sole Practitioners feels on balance that the best arrangements are those which are the simplest. Provided that you have chosen your attorney very carefully, by allowing him or her total discretion to make whatever decisions are necessary for the good of the practice depending on the circumstances prevailing at the time, it will be easier for you to complete the statutory prescribed form. You may make more than one EPA, and you may wish to do so in order that different matters, such as personal savings accounts, are covered,. If you wish to restrict your attorney's powers, instructions can be given in the EPA, but take care with the drafting. Incomplete or ambiguous instructions can lead to the EPA being refused by those asked to accepted the attorney's authority (eg banks or other financial institutions) or being rejected by the Court of Protection if the EPA has to be registered.

If you wish, you can stipulate that the EPA should not come into effect until you become mentally incapable of managing your practice, or when your attorney believes you are becoming mentally incapable, in which case, as stated above, the EPA will have to be registered with the Court of Protection before it can be operated. This provision will not, however, cover sudden emergencies.

It is sensible to include a charging clause in the EPA (if appropriate).

Warning: with the repeal of s3.3 of the Powers of Attorney Act 1985 by the Trustee Delegation Act 1999, an EPA is unlikely to be valid to delegate for an indefinite period trustee powers in situations where a sole practitioner is a sole trustee of an existing estate or trust or executor of a testator who has not yet died. In these cases the EPA takes effect as a trustee delegation under the Trustee Act 1925 and so is valid for one year only, and it is necessary for receipts for capital monies to be given by two persons.

The Law Society has produced helpful guidance on preparing EPAs - contact the Policy Adviser to the Mental Health and Disability Committee in the Law Society's Representation and Law Reform Directorate (020 7242 1222). The EPA statutory prescribed form is also helpful.

b) Finding a suitable solicitor - this is probably one of the greatest problems for sole practitioners and is not easy to solve. Some practitioners will not come into contact with other local solicitors in their work and knowing whom they can approach and trust is difficult. One of the best ways is through "networking" with other local sole practitioners perhaps through the existence of a local Solicitor Sole Practitioners. If one does not exist, involvement in your local Law Society will put you in touch with other practitioners. The local Law Society might even be able to suggest practitioners who would be willing to help, perhaps someone who is semi retired.

Although the Solicitor Sole Practitioners would like to be able to set up a national network of solicitor managers, it has been found that local arrangements are best as sole practitioners need to assess for themselves the suitability of a particular solicitor and it could be that mutual cover with another sole practitioner can be agreed. It is possible to make arrangements with a local partnership, or one of the partners, and you may like to consider this if it is difficult to find another sole practitioner.

c) Your Bank - if you have a sudden emergency and know that you are going to be away for a certain time, you should inform your Bank of the identity of the solicitor who will be running your practice so there is no delay in operating client and office accounts. In all eventualities the bank will require evidence of a valid delegation. Individual banks may have different requirements before accepting a changed client and office account signatory.

d) Preparation - in an emergency there will be no time to prepare in advance for an incoming solicitor manager. Practice management considerations are therefore very important in this context. Anyone coming into another solicitor's practice must be able to take over with the least difficulty, and will find lists of clients, checklists or summaries in files, important contact names, addresses and telephone numbers, code numbers, insurance certificates and any other authorisation certificates, an office manual and any other organisational considerations very helpful. This is particularly important if you do not have any staff who can guide the person concerned, or the staff in the office are not well briefed themselves. There should also be precise instructions on how to access the data in the computer system, what information may be held only in the computer, and where the back up disks are kept.

e) Review - it is important to check from time to time that your designated attorney is still able to take over when required.

Remember to ensure that your family or partner, and your office staff know the arrangements you have made and where they can locate the relevant documents which ideally should be kept in one place.

Please also note that the Government plans to adopt the Law Commission's recommendation that Enduring Powers of Attorney should be repealed and replaced by Continuing Powers of Attorney. CPAs will enable a person to delegate decision-making powers on healthcare and personal welfare as well as finance.

WHERE A LOCUM IS NEEDED

If you do not already have an arrangement with a fellow solicitor, you may have to consider employing a locum in circumstances when you have an enforced absence but remain mentally capable.

a) Locum availability - Law Society Recruitment has a locum finding facility (020 7320 5880 - email: http://www.recruitment.lawsociety.org.uk) It may be helpful to decide beforehand whether the locum should be restricted to undertaking only certain types of work and if so whether some work should be passed to another firm, with the client's agreement. The Recruitment Service can offer general guidance on employing a locum. The Freelance Solicitors Group is an information and professional network for locum solicitors and listings of members are available from Natalia Siabkin (020 8992 3885). Some commercial recruitment agencies also offer a locum service.

b) Power of Attorney - if you have not already appointed an attorney with the relevant authority under an EPA, you will need to prepare a power of attorney in favour of your locum solicitor manager.

c) Insurance - locum charges can be high and you may wish to consider insuring yourself against this eventuality. The Law Society has arranged the availability of a short-term income replacement plan through Professional Affinity Group Services which is designed to cover the cost of running your practice for up to 12 months if you are ill or incapacitated. (Tel. 0345 125 461) This type of insurance is probably available from other sources as well.

d) Informing clients - in circumstances when you are able to plan you absence, it is important to notify existing clients who will be handling their work. This is a requirement under Practice Rule 15 which states that the client must be "given the name and status of the person dealing with the matter ….".

d) Preparation - the same considerations apply as above.

DEATH

a) Will - making a will is an absolute priority and this must include a means by which the practice can be managed at least in the short term. You must appoint a suitable solicitor as executor who will be able to manage the practice or give powers to your executors to enable them to appoint a suitably qualified solicitor to run the practice in the interim.

It is probably preferable for there only to be one executor for the purpose envisaged. There could be an appointment of the partners in a firm with a wish that only one should act. The appointment must be of all the partners otherwise it would be void for uncertainty.

On the death of a sole practitioner there needs to be a grant taken with reasonable speed. It is probably easier if a special executor takes probate for that part of the estate for which he is appointed by way of a separate grant from that taken by general executors.

The will can give authority for the solicitor executor to purchase the practice if no other arrangements have been made. You may like to consider instructions and suggestions to your executor in the form of a "side" document to the will that can be easily changed depending on circumstances. This process will enable the will itself to be kept as simple and clear as possible. However, do not forget to include a clause to cover your solicitor executor's charges. Decisions about continuation or winding up of the practice are best taken by the solicitor executor at the time.

A clause appointed a solicitor as a special executor is annexed.

There is more specific guidance in Principles 3.14 and Chapter 24 in the Guide to Professional Conduct but it should be noted that any solicitor taking over a practice will have to open fresh books of account and new bank accounts will have to be opened to enable the existing business to be continued. Any Investment Business Certificate issued to the deceased sole practitioner will be cancelled and a new Certificate will have to be applied for by the solicitor manager at the expense of the deceased's estate.

b) Preparation - the solicitor manager will be in the same position as someone taking over in an emergency (see above) and preparation is therefore very important to ensure that there is no difficulty or delay in representing clients properly.

c) Review - It is important to review your Will periodically, and to ensure that your appointed solicitor executor is still in a position to act.

It is important that your family or partner, and your office staff know where your will is kept and other relevant documentation as well as any other instructions you may have made. You could lodge a copy of your will with your designated solicitor executor. An EPA is revoked on death.