The Last Billable Hour with Steven McClelland

As an attorney, you work hard to build your practice and serve your clients. But have you considered what would happen if something were to happen to you? This is where succession planning comes in. 

In today’s episode, estate planning attorney Steven McClelland  shared his insights on the importance of having a succession plan in place. 

Here are five reasons why every lawyer needs a succession plan:

1. 1. Protect Your Clients: If you were to become incapacitated or pass away, what would happen to your clients? A succession plan ensures that your clients’ needs are taken care of and that their cases are transferred to another attorney who can provide them with the same level of service you did.
   2. Protect Your Employees: Your employees are an important part of your practice. A succession plan ensures that they are taken care of and that their jobs are secure in the event of your incapacity or death.
   3. Protect Your Family: A succession plan ensures that your family is taken care of and that your practice is passed down to them if that is your wish.
   4. Protect Your Reputation: Dumping all your files in a dumpster instead of properly disposing of them is not only unprofessional but can also damage your reputation. A succession plan ensures that your files are properly organized and that your reputation remains intact.
   5. Peace of Mind: Having a succession plan in place gives you peace of mind knowing that your practice will continue to thrive even if something were to happen to you.

A succession plan is crucial for every lawyer. It ensures that your clients, employees, family, and reputation are protected and gives you peace of mind. So, take action today and create a succession plan that works for you and your practice. And be sure to check out the Maximum Lawyer podcast for more valuable insights and strategies to help you overcome challenges in your practice.

07:29 The importance of ending things properly.

09:22 72% of entrepreneurs do not have a succession plan

15:13 A checklist and key documents for succession planning, including a business power of attorney, agreement to close practice, and confidentiality and non-disclosure agreement. He offers to share these documents with listeners. Watch the full video on YouTube here.

Connect with Steven:

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Transcript: The Last Billable Hour with Steven McClelland

Speaker 1 (00:00:00) – So in today’s episode, we’re sharing a presentation from Max Khan 2022. Keep listening to hear Steven McClelland as we share his talk the last billable hour, you can also head to the maximum lawyer YouTube channel to watch the full video. Now to the episode.

Speaker 2 (00:00:17) – Run your law firm the right way. The right way. This is the maximum lawyer podcast. Lawyer, podcast. Your hosts, Jim Hacking and Tyson Metrics. Let’s partner up and maximize your firm. Welcome to the show.

*Steven McClelland * (00:00:38) – This is succession planning. Before we jump into it, I am excited. I’m honored to speak. I want to tell you a little bit about myself. I’m originally from Kansas, so if you’re from the West Coast, you probably flew over my very beautiful home state and I’m now in Arkansas. On the screen is my beautiful wife. It took me three years to get a first date with her, three years. And finally I wore her down and she said, Sure, I’ll go on a date with you. And so it worked out.

*Steven McClelland * (00:01:12) – And as you can see, we have three daughters now, so it’s getting pretty serious and they are a ton a ton of fun. So I really when they were introducing me, I do spend a lot of time, as you know, the Tea parties and and all that fun stuff. So, yes, like Tyson, I got my private pilot’s license a couple of years ago. It’s been a lot of fun. It was kind of a fun, I guess, the unicorn space kind of thing to try something new and get around and see the world from a different perspective. Of course, my wife had a different perspective on that too, and was terrified by the idea of me flying. In fact, that really kind of got me into thinking about succession planning because, you know, you hear a lot of stories the last billable hour. So my wife was concerned. She she said, look, okay, you’re flying now, listen, what happens if the power goes out in your plane? And I thought that’s a pretty fair question.

*Steven McClelland * (00:02:07) – I said, well, I’ve learned this. The plane actually has this dual magneto system, so that doesn’t need it doesn’t need power. It can still operate if it if it doesn’t have power. And she goes, okay, well, what if the engine quits? And I said, okay, that’s a problem. Probably going to land the plane like every pilot has ever landed a plane. What goes up must come down. And and I said, Honey, a good landing is one you can walk away from. A great one is one. You can reuse the plane. Right. And so she didn’t find much comfort in that. And she said, look, I really think you need to think more about this from a succession planning. What would happen if you die? And I thought that’s fair. So that was kind of the the reason I thought I need I need to delve into this. I need to put together a plan. And I know succession planning is not that hot of a topic, right? It’s not something that we get excited about, right? Everyone’s here to learn how to grow their practice, their thinking about how to get more employees.

*Steven McClelland * (00:03:05) – Right? Vas efficiency, all that good stuff. But the truth is, Stephen Covey said you got to start with the end in mind. We do that when we implement a new system or a new app, and I can’t think of a more end than actually the end, right? And I was surprised by how much we actually spoke about death earlier in the discussion this morning. It’s something that we all have to address. And I guess as an estate planning attorney, we have far horizons, right? We are always thinking about contingencies and the what ifs. Right. That’s really what gets clients into the door. That’s what they appreciate, the fact that that we do have a plan. So here we are. It’s not to be morbid, but just to give some clarity on our lives, in our practice. If you do estate planning, this is just a great add on that you can share with your your clients. So here is a dumpster. In a lot of ways, my state is very, very unique.

*Steven McClelland * (00:04:00) – The attorneys, there is some glory that they simply die in the courtroom or die at their office. I don’t know if your states are like that, but we have people that just will not give it up. We had a gentleman in my community. He was an attorney and he was dying of cancer and was taking clients two weeks before he passed. This is just kind of a common thing I see. I don’t know all the reasons behind it, but I don’t want to be working in my 90s as another gentleman is. I think at some point you got to go on to different different pastures. So we’re going to talk about that particular succession plan. But I have to tell you, if we can go to the next slide, that the reason I am here is because of a succession plan. Many of us stand on the shoulders of giants that preceded us. It could have been a mentor. It could have been some other attorney that you worked for. And that is Jim there in the middle.

*Steven McClelland * (00:04:53) – He was the giant whose shoulders that I stood on. He brought me on in law school to do estate planning. Didn’t even know what state planning was when I was in law school, and he taught me everything he knew. And he had mentioned, well, I had this rare form of cancer that could come back in a few years. He said About 5 or 10 years. And sure enough, I remember the fall day. He came into the office. He said, Stephen, I just got back from the doctor and they said, My cancer has come back. It is terminal. And they gave him about a year to live. And so it’s a conversation that you have with someone but is hard to swallow, right, to how that works. And so he basically said to me, he said, look, I have a year left. I want to spend it with my family. I want to travel until I get sick. I don’t want to turn this over to you. All of it is yours.

*Steven McClelland * (00:05:45) – And that was we did the same practice area, but that was a lot to enter. Emotions to substitute counsel on all these cases, to send letters to the clients and his past clients. At that point, it really wasn’t really about me. It was about, you know, helping him, you know, transition. And for him, the ability to walk away, the ability for him to spend time with it was worth more than anything, right? The fact that he could do that, there was no amount of money I could have paid him for that. He just wanted time. That’s what he wanted. And I was able to do that. And one of the interesting things in the state of Arkansas, he sent a letter to the bar and said, look, I’m dying and I need to surrender my license. They wouldn’t allow that. They wanted him to go in front of a judge to declare that he was was dying. And and he brought that letter to me. This is ridiculous.

*Steven McClelland * (00:06:38) – I don’t have time to go see a judge to tell him I’m dying. Will you just send him a death certificate? And that’s what we ended up doing. It was kind of a weird system. I don’t know why they needed it, but in our state, that’s the way to do it. That he taught me how to say goodbye. Does that make sense? But I’ll never forget, on this day, on September 18th, 2020, my wife said, Hey, husband, can you take the crib and take it to the dumpster? We’re done having kids. And I was so elated after three daughters, I thought, that’s enough, right? And so I get to take this this crib and disassemble it and throw it away is very therapeutic for me to do that. And as I’m giving the utility bill to the lady, I see a woman. I thought I recognized her. I wasn’t quite sure, but it wasn’t until I got up to the dumpster. I looked inside and I saw all these banker’s boxes, like, what are these banker’s boxes doing in here? And I looked a little bit and some of them had toppled over.

*Steven McClelland * (00:07:29) – And I realized that this was all firm files from an attorney who was retiring and the check statements were out, you know, just duplicate checks and the client names. And I’m thinking, oh my goodness, if you were a thief, this would be a gold mine, right? This particular attorney did a lot of adoption work, which I think is pretty private information and dealt with a lot of kids. And I thought, this is terrible, right? We have things like shred it in Arkansas. Don’t think that we don’t have those kind of companies. They actually come to your office and do this for you. So I couldn’t understand why you would think she would know better. You know, how you end things does matter. And she was married to the judge in town. And I’m thinking, you guys have got to know better than this, right? But essentially what they did was they dumped all their files and they don’t even live in the state anymore. They just got out. Right. So to say this is bad is to say that Titanic sustained a little paint image, Right? This is not the way to run our practices.

*Steven McClelland * (00:08:27) – This is not the way to set up the next person for success.

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*Steven McClelland * (00:09:22) – Statistically speaking, a rocket lawyer did a study back in 2017 and found that 72% of entrepreneurs do not have succession plan. And I imagine that number is probably around the same amount of attorneys, right? We are so busy in our practices and doing things and we’re trying to implement new systems, right? That we forget about having a plan in case something dies.

*Steven McClelland * (00:09:49) – There’s a great quote. I worked for an attorney many years ago and he said this. He said, It’s not the practice of law, it’s the administration of law that’s difficult. That’s basically what maximum lawyer is. It’s the administration of law, not. Of practice of law that we need help with. Right? No one’s telling you how to file family law cases. It’s the administration. And and this is part of that administration component. There’s two main things you got to worry about. You got to worry about incapacity and death. Right? I don’t know which one is worse. I had a funeral director tell me it’s better to be seen than viewed. I don’t know if that’s true. But in this context, literally, as I was preparing this, one of the attorneys in town had some type of a stroke and ran off the road and hit a tree, had to be airlifted to a hospital. Right. And he was out for for three weeks. And he was a solo. I don’t know what his plan was, but you got to be careful.

*Steven McClelland * (00:10:44) – There is short term and long term disability that’s beyond the scope of this presentation. But those things can happen suddenly, right? Like an airplane falling out of the sky is pretty sudden. And like my partner, you know, he had some indication he had a year and a year goes by pretty quickly. The truth is, no one in this room knows when they’ve seen more sunsets than they’ll ever see. Right. We don’t know if had a crystal ball would be amazing. I tell you exactly what to do. Those expiration dates that were given to us, you just don’t know, right? So you got to have some type of plan as you’re planning. You got to prepare for four different individuals. The first is you got to think about your employees, right? Many of them have stuck with you. They’ve helped you. Some of them are associates. You know, their main concern is, do I still have a job? For me, one of the ways I try to set them up for success is to make sure that my payroll is set 3 or 4 months in the future.

*Steven McClelland * (00:11:42) – I like to do that because I’m lazy and I don’t like to do it every month, but it’s already set. So if I did die on the way home and they’re at least going to get paid for 3 or 4 months, I don’t know if they’ll they’ll actually work. But they got money coming in, right? So you got to have some income in the bank to do that. I don’t know if you’ve thought about this, but, you know, they’re going to have to find another job eventually. Right. Put a reference letter for him. You know, dear future employer, if you’re reading this, I’m sad to report that I’ve passed and cannot highly recommend so-and-so has been a great employee. Put that in your file so they have something. I mean, how impressive would that be to their new employer to know that was the reason why they left. Simple takes, you know, five minutes. Do it for all your employees. Your clients are also concerned, right? Because they have legal matters.

*Steven McClelland * (00:12:28) – They’ve paid your retainers. They have case files and confidentiality. So I mentioned in my bio, my wife’s a medical provider and very smart, very brilliant. But when it comes to law, she has zero interest, right? She would not even know where to begin. And having done a state planning now for ten years, talked to thousands of families, okay, the number one goals my clients have are I don’t want to leave a mess for my family. That’s their number one goal. And the number one thing that children say, you know, is I don’t even know where to start. Right. Is no plan. Those are the two scariest things to hear. I don’t know where to start. Right. So you got to think about your family for them. You got to think about how to make it simple. When I was a solo, I had an agreement with an attorney in town that he would take over my case files. Right. And I know the struggle is all of us think, well, that attorney doesn’t do as well as I do.

*Steven McClelland * (00:13:26) – Right? We all think that. And that kind of prevents us from reaching out to them, that no one could take care of the clients the way that we do. Right. But the truth is, cemeteries are full of irreplaceable attorneys, right? Your clients will go somewhere else. They will find somebody else. Right? So you’ve got to make sure that you have an attorney that can help with that transition, a process. Also, third parties. You got utility accounts, right? You got to pay them to keep the lights on. Right. And so our our firm uses one pass and we heard about it. I really like it because you can set up manage folders. And so for the utility accounts, they have all that information. They’ve got notes in there, so I can share that with them and updated as need be. Right. It’s just a great way if I die, they’ve got access to those things. So what can you do today? I think, number one philosophy, you got to impress upon your people to have all the files in such a way that if you died, if they died, that somebody could pick it up and be able to take that file and work it.

*Steven McClelland * (00:14:22) – Okay. And so encourage them not just to put notes in there, but the question is, what are we waiting on and are we waiting on a deadline or are we waiting, waiting on the court? Are we waiting on, you know, a client to get us something? So there’s something in there about how the the next step in the case file very, very important. Make sure your accounting is up to date so someone has access to to that information, list your utilities. You got to do that. Make sure all your hearings are on the calendar. I don’t know why, but but some some attorneys have different systems. And I’m like, you got to put it all in one place. Right? Because that that was helpful to me because when I. Filed motions for all the hearings that were said on my partner’s calendar is very simple to do that, right? I had access to his calendar. I already mentioned setting up a payroll 3 to 4 months. But the bottom line is it’s about mindset.

*Steven McClelland * (00:15:13) – It’s about talking about it, thinking about it and doing a plan. Many of us, the problem is we want a perfect plan before we do anything right. And a lot of times that just it doesn’t happen. So my advice is a good succession plan that is done is better than a perfect one that never gets done. Right. Don’t let your families be the ones who say, well, this is what dad or mom wanted, right? This is how they wanted it to go. Put it in writing. It takes a little bit of time. And so the key documents. So at the end of my next slide, I have a QR code where if you put your name and email address, I’ll email you my documents, redacted it. But of all these documents for you, okay. To give you a head start, you don’t have to reinvent the wheel here, but it is for informational purposes only. I’m not warranting it’s going to work in all states. But the first thing is a checklist.

*Steven McClelland * (00:16:06) – What does your family and in my case have an associate attorney? What are the first things that they have to do? Prioritize that for them. Break it down so they know who to call and they have that information. Okay. Number two, a business power of attorney. So if I have a stroke, very common in my family. Elder men have strokes when they’re 75. Right. So I’m probably not going to be flying a plane in my when I’m 75 have a business power of attorney so that my employee, my associate, she has access to the bank account, she has some access. We set up a separate firm expense account. But the main one, I’m the only one that’s on there. Okay. I foolishly asked. I asked the bank. I said no. Can I put a beneficiary on this business account like a pod? We do that a lot of times in estate planning. And she laughed at me and she said, Well, businesses don’t die. I thought, Oh, I didn’t think about that.

*Steven McClelland * (00:16:55) – So you’ve got to have a power of attorney. You’ve got to have documents that allow for your people to access that account. Okay. Agreement to close practice. This was important into December. Every year we’re cash basis, so we have to pay taxes on what’s in our account. Kind of stinks. But in January, you have retained earnings, right? And so I worked out an agreement with how much of that retained earnings is part of the buyout to my wife. Does that make sense? I didn’t want that all to just go to the firm. But there’s significant amount of money in there and I didn’t want that just to think, oh, that’s all yours, right? To have that buyout now, it’s not perfect, but the fact that my wife doesn’t have a bunch of grief, it was definitely worth it. I got a confidentiality and non-disclosure agreement and a letter from the attorney to clients, which is very helpful. I want to set up my associate for success. So there’s a letter that says, Hey, I have died.

*Steven McClelland * (00:17:47) – I have the utmost confidence in my associate and you’ll love working with her. And I appreciate you being a client. I can’t tell you a better way to set someone else up for success. So I thank you all for your good attention. I hope that helped. If you have any questions, don’t hesitate to reach out to me. Last quote I have for you It’s not the load that breaks you, it’s how you carry it. And I love Maximum Lawyer because it teaches all of us how to carry that load just a little bit better. So don’t ever hesitate to reach out to me. Thanks.

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