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Practice Contingency Plan

Why Do I Need a Plan?

Death, serious illness or injury can incapacitate a principal suddenly and does not discriminate – it can happen to anyone, regardless of age, health, lifestyle and other perceived ‘low risk’ factors.

Unforeseen events such as these can have significant ramifications for the day-to-day operation of your practice. Therefore, practice contingency planning should be an essential component of your law practice’s risk management strategy.

Practice contingency planning allows you to anticipate unexpected events and put arrangements in place ahead of time. Doing this will:

  • protect your client’ interests
  • ensure minimum disruption to your practice
  • reduce the need for regulatory intervention
  • support staff at a stressful time
  • preserve the value of your practice and your interest in the practice
  • avoid undue stress on family and friends.

VLSB+C Practice Contingency Planning Policy for Sole Practitioners

In recognition of the particular vulnerability of sole practitioners and sole directors of ILPs to sudden disruption, the VLSB+C has developed a policy to encourage sole practitioners to appoint another legal practitioner to step in and manage your law practice if you are suddenly unable to do so.

The VLSB+C will maintain a register of sole practitioners’ personal representatives and alternates. From 2019, sole practitioners will be asked to provide information about their nominees as part of the online practising certificate renewal process.

Resources & Guides to Contingency Planning

Frequently Asked Questions

  • Who can be a personal representative / alternate?

    A personal representative and alternate must be a legal practitioner who:

    • holds a current principal practising certificate and, if you have a trust account, is also be authorised to hold trust money
    • holds appropriate PI insurance
    • has made the required fidelity fund contribution.
  • How do I select the right person to be my personal representative / alternate?

    An ideal personal representative and alternate is someone who you know well, perhaps a practitioner who is a longstanding personal friend or a local lawyer. The person needs to be someone who:

    • is familiar with the areas of law in which you practice
    • you trust to be a potential caretaker of your practice, clients and staff
    • who is willing and able to take on the responsibility at short notice.

    A reciprocal arrangement with another practitioner may be an option. Although this may not always be practical if either of you has insufficient time to devote to another practice in an emergency.
    To assist you to select a personal representative and alternate, the LIV has prepared a checklist of relevant considerations.

  • What does my personal representative / alternate need to know about my practice before they agree to act?

    The LIV has prepared a checklist to assist you to identify relevant considerations.

  • How do I effect the appointment of my personal representative / alternate?

    It is recommended that you enter a formal arrangement, to ensure the scope and terms of the arrangement are clear to both parties, as well as reduce the need for, and associated cost of, a formal management appointment under the Uniform Law.

    The LIV is developing a power of attorney (contingency and business continuity) form to assist practitioners who wish to formalise the appointment of your personal representative / alternate in the event you are incapacitated due to serious injury or illness.

    However, in the event of your death, your powers of attorney do not survive. Therefore, you may wish to consider making appropriate provision in your will, either by appointing your personal representative / alternate as:

    • a limited or joint executor, or
    • a trustee to wind up or sell your law practice.
  • When will my personal representative / alternate have to act?

    The most common circumstances in which your personal representative / alternate may be called on to act are if:

    • you are incapacitated due to death, serious injury or illness
    • your practising certificate is suspended or cancelled, if the VLSB+C determines it is appropriate.

    Additionally, you may ask you personal representative / alternate to act as a locum when you are voluntarily absent from your practice, for example due to planned leave (personal, medical, carer’s, parental, etc).

  • Can my personal representative / alternate charge for the work they do?

    Yes. Your personal representative / alternate is entitled to charge clients for work undertaken while acting in such capacity. However, they must only do so in accordance with the existing costs agreement between your law practice and the individual client.
    It is up to you and your personal representative / alternate to determine whether any payment will be made for managing the affairs of your practice beyond what is chargeable in client matters. It is recommended that you expressly address this in your agreement, including the identification of whether what, if any:

    • annual retainer is payable
    • fees will be charged in relation to work undertaken other on client files
    • percentage of proceeds obtained in the sale of the practice and/or any client files or deeds can be retained.

    The VLSB+C may consider your personal representative / alternate has acted in conflict of interest if s/he benefits from acting otherwise than in accordance with the agreement.

  • What if I don’t have a personal representative / alternate in place?

    If you die or are incapacitated without a formal appointment of a personal representative / alternate in place, it is likely that the VLSB+C will need to appoint an external intervener under the Uniform Law, to enable someone to have the necessary powers to manage your law practice.

    External intervention is an invariably lengthy, disruptive and costly process (the average cost is $40,000). The VLSB+C appointee may not be known to you, and is unlikely to be familiar with your practice, clients or staff. Under the Uniform Law, s/he must conduct a full audit of the law practice before s/he can conduct its day-to-day affairs, attempt to sell it, or wind it up. The costs of the external intervention are borne by your law practice or estate.

    Thus, external intervention is an added pressure on your clients, staff and family at a time when they are already dealing with the implications of your unexpected absence, and practitioners are advised to take steps to avoid it by ensuring a formal personal representative / alternate appointment is in place.

  • Why do I need an alternate if I have a personal representative in place?

    The VLSB+C encourages you to appoint an alternate so that someone can step in if your personal representative is unable to act when required, to avoid the cost and impost of external intervention on your practice (see previous FAQ).