Death will affect every one of us, ultimately. Incapacity may impact us. The inevitability of death and the possibility of incapacity makes planning essential. Failure to plan is planning to fail.

This inevitability is behind recent Law Society of Ontario (“LSO”) By-law amendments that require lawyers in private practice to develop and maintain a client contingency plan for preserving, carrying on or winding up their professional businesses. The requirement comes into effect on January 1, 2025. By March 31, 2026, lawyers must report compliance with the requirement to develop a contingency plan on their Annual Reports to the LSO.

At minimum, the plan must appoint another lawyer or paralegal as a plan administrator. The plan must, at minimum, require the plan administrator to:

1. Notify the LSO and the lawyer’s professional liability insurer of the lawyer’s ceasing to practice, whether temporary or permanently, due to illness, disability, death or other sudden absence;

 

2. Advise clients that the lawyer is no longer able to continue in respect their retainer and either arrange for:
   1. The transfer of the client’s file and client property to another lawyer, or

 

1. 1. The return of the client’s file and client property to the client; and

 

3. If applicable, attempt to access the lawyer’s trust accounts for the purpose of returning or transferring the trust funds as directed by the client.

The plan must be in writing and must be reviewed annually. Resources, templates, and checklists are available on the LSO website.

The making of the contingency plan is not only an LSO requirement. It is also part of the lawyer’s professional duty to protect a client’s rights. Further, the making and implementation of the plan serves to mitigate professional risk, both from a liability point of view and from a reputational point of view.

What does this new requirement mean for the rest of us? While the making of a contingency plan is now mandatory for lawyers, the reasoning behind the need for a plan applies equally to all of us, whether in our business or professional lives, or in our personal lives.

Will and power of attorney documents are an important part of an estate plan. In addition, communication with the person charged with the responsibility of administering the estate in the event of our incapacity or death is essential. The attorney for property or personal care or estate trustee should be advised of their potential responsibilities; should accept the assignment with a full understanding of the responsibilities involved and potential for liability; and should be educated with respect to the information needed in order to fulfill the task (ie. information about the nature of and how to access assets, accounts, banking arrangements, contact information, passwords, etc.).

It is important that estate planning professionals ensure that the estate planning client is aware of the need to communicate with and educate the attorney or estate trustee.

In addition, employers should consider what sort of “contingency plan” is in place in the event of the incapacity or death of an employee. Will key processes and passwords be lost if they are forgotten by a key employee?

The new requirement of a contingency plan for lawyers is a good reminder for all of us to consider and plan for the inevitable.

Thank you for reading.

Written by Paul Trudelle, Market Lead, Scotiatrust