January 2012 Bar Bulletin
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January 2012 Bar Bulletin

Planning for Practice Succession and Continuity

By Michelle Bomberger


In our practices, when we hear the term "business continuity," we most readily think of what to do in the case of a physical loss such as a fire, flood or earthquake. These physical losses are important risks to protect against, but "business continuity" planning goes beyond that.

Business continuity planning must also address the impact of losing a key person in the business or the potential risk associated with reliance on vendors such as IT or contract lawyers. It also allows you to address succession planning so that you can leave the business in a planned and organized way.

Physical Losses

Generally, physical assets are protected using insurance. In the case of a theft, fire, flood or other loss, the insurance company covers the costs (minus the deductible) for any losses, including replacement, litigation or other expenses incurred. That being said, other key practice issues arise that insurance does not address.

The company must maintain backups and key procedures to help it get back up and running in the case of a loss. An example would be the theft or loss of a sole practitioner's laptop computer. Insurance will pay the cost of replacing the laptop itself and may also cover the cost of obtaining new template documents or other key tools. The insurance may assist with issues of breach of confidentiality due to the files being lost.

The insurance, though, certainly could not help the attorney recreate the client files. The attorney needs to have a system, such as a backup process, to protect the firm from losing this data permanently.

People Losses

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