Lawyers in Transition Part 18- Compensation and Insurance Are Crucial in Transitions
For a lawyer transitioning out of active practice – and for firms where a key member is leaving – compensation and insurance are two key concerns.
The matter of compensation is most likely covered by your Partnership Agreement, if you have one. Now is the time to pull it out and review it carefully with your partners and all other stakeholders. Everyone needs to be on the same page as to what it says and means.
If you’re a solo, you might wonder how you can realize the value of all the hard work you’ve put into building your practice. The obvious answer is by selling it. But what is your practice worth without you? How do you locate potential buyers?
A professional brokerage and transition service like The Law Practice Exchange can answer these questions.
What about insurance? Do you need to continue your malpractice coverage even though you won’t be actively practicing? For how long?
Then there is health, life and disability insurance. What if any changes need to be made in these coverages? Lawyers Insurance Agency – the NCBA-endorsed provider for NC lawyers – can make sure you remain protected on these and other fronts.
The Law Practice Exchange
If you’re planning to exit your practice, The Law Practice Exchange can serve as your confidential law practice broker. In this capacity, the LPE will (1) appraise your practice to determine its market value and (2) connect you with attorneys looking to expand their business by acquiring a practice like yours.
Once a match is found, the LPE will provide transition services to preserve the client and professional goodwill of your practice. This allows a value-based exchange between you and buying attorneys.
Along the way, issues involving clients, files or finances will inevitably arise. The LPE will guide you through them. Its team of advisors knows the marketplace. Their system is designed to help you receive the top value for the business you toiled so long to create.
Extended Reporting Endorsement
Attorneys leaving private practice can purchase an Extended Reporting Endorsement – often called an “ERE” or “Tail Coverage.” This is a vital endorsement to your professional liability policy that provides an additional period of time to report a claim after you leave practice.
Lawyers Mutual offers two ERE options: (1) a 4-year period (to correspond to the current statute of repose for legal malpractice in NC), or (2) an unlimited period. Note that while an ERE extends the time to report a claim, it does not cover against acts/errors/omissions occurring after your coverage under your policy ended.
If you have been a long-time Lawyers Mutual insured and you meet certain underwriting criteria, an ERE may be available at no cost or a reduced cost when you leave private practice. Contact the Underwriting Department at 1-800-662-8843 for further information about maintaining your professional liability insurance coverage.
Once you’ve got your professional liability protection in place, it’s time to turn to other insurance coverages. How will your departure from practice affect your health, life and disability policies? Do you need to purchase additional protection?
Lawyers Insurance Agency can offer expert guidance, so you can rest easy.
Five Practice Tips for Compensation and Insurance
- Start early. The sooner you begin thinking about insurance and compensation issues – and discussing these matters with your partners – the better off everyone will be.
- Review your Partnership Agreement. What does it say about compensation and insurance issues?
- Know the “9 Steps to a Successful Sale of Law Practice.” Learn more here.
- Educate yourself on malpractice protection after you exit practice. Read this Lawyers Mutual article: Maintaining Continuous Coverage.
- Ask for an insurance consultation. Schedule an appointment with a professional at Lawyers Insurance Agency to review your insurance portfolio.
Sources:
- The Law Practice Exchange https://thelawpracticeexchange.com/
- Lawyers Mutual https://www.lawyersmutualnc.com/extended-reporting-endorsements
- Lawyers Insurance http://www.lawyersinsuranceagency.com/
