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If you are a sole practitioner or sole director of an ILP, our Practice Contingency Planning Policy is something you should be aware of.
We have developed the policy to help you as a sole practitioner or sole legal director of an ILP to manage your law practice’s affairs in the event you are unable to work for an extended period of time.
The policy was developed specifically to encourage you to devise a plan that will facilitate another legal practitioner stepping in to manage your law practice if you are incapacitated. A practice contingency plan enables you to plan for how your practice should be managed in your absence, and minimises unnecessary anxiety and disruption for your family, staff and clients.
Why having a plan is a good idea
If you do not have a practice contingency plan and are unable to run your practice due to illness, injury, death or another reason, we may need to appoint a Manager to run your practice in your absence. An appointed Manager has all of the same powers as you over your law practice. He or she will be required to deal with trust money, client files and all other aspects of the law practice and may wind up or sell the practice if it is considered necessary. The average cost of a Manager in these types of circumstances is approximately $40,000, and liability for these costs will fall on you and your law practice.
Having a practice contingency plan in place allows you to nominate a friend or colleague who is a legal practitioner to manage your practice (if you are temporarily unable to do so) or wind it up or sell it (if you are permanently incapacitated). This is in your best financial interests. Not only will it save you the cost of paying for a Manager, it will also make life easier for your clients, family and any staff of your law practice at what may be a distressing time.
Importantly, having a practice contingency plan gives you a degree of control by enabling you to have a say in who will look after your practice if you are no longer able to do so.
What does a plan require?
When establishing a practice contingency plan, you will need to appoint:
- A Personal Representative to take over your law practice in the case of your death or incapacity; and
- An Alternate who can step in if your Personal Representative is unable to take over your practice when required.
Who should you choose to appoint?
Whoever you choose as your Personal Representative and Alternate should be familiar with your field of law and be able to step into your shoes quickly. They could be someone you know well – a friend or colleague – or someone who you deal with on a commercial basis through a professional relationship. They must also meet all of the same requirements as you, in order to be able to take over your law practice. For example, they will need to hold a principal practising certificate and, if you have a trust account, they must also have trust authorisation.
Reporting to us
From mid-December 2018, when renewing or varying your practising certificate through LSB Online, you will be asked to provide details of a practice contingency plan, if you have made one. We will maintain a record of these plans, and you can make changes to your plans at any time.