- posted: Aug. 27, 2018
- Estate Planning
New Voluntary Trustee Designation Rules
- Applicability of Voluntary Designation Provisions
The Model Rules for Attorneys, published by the American Bar Association, have been adopted in large part by the Missouri Supreme Court. One such Rule is Model Rule 28, providing for appointment of a Trustee to administer the practice of a solo practice attorney who has been disbarred, has disappeared, has died, or has become disabled.
Missouri adopted and expanded this Rule as Missouri Supreme Court Rule 5.26. The Rule only applies to solo practitioners, not members of a larger firm.
- Recent Changes
Effective July 2017, substantial changes were made to Supreme Court Rule 5.26. Additional changes were made as of October 5, 2017. These changes were intended not only to clarify Trusteeship issues, but also to bring a new focus on the group of solo practitioners (including those in an office sharing arrangement), which comprise more than one-third of the Bar.
Historically, the ABA has reported that roughly 75% of licensed attorneys are in private practice, and of those just under half are solo practitioners. Many of the 2017 changes to Supreme Court Rule 5.26 were designed to address this group of solo practitioners through voluntary Trustee designation in the event of death or disability.
Each year, attorneys are required by Supreme Court Rule 6.01 to complete an Enrollment Form. At that time, under Rule 5.26(b), private practice attorneys are given the option of naming a Trustee to act in the event of the attorney's death, disappearance or disability.
The new voluntary Trustee designation provisions of Rule 5.26 apply only to attorneys engaged in the private practice of law. Attorneys employed by government agencies, or employed by corporate entities that are not primarily engaged in the private practice of law, are not required to designate a Trustee.
Under Rule 5.26(a)(2) private practice attorneys employed in a firm hiring multiple lawyers will come under the heading of being employed by a Fiduciary Entity. Attorneys so employed need only list their firm as the Fiduciary Entity and make no further Trustee designation. Because of the ongoing responsibility of a Fiduciary Entity to all its clients, no Trustee would be appointed for a disabled, disappeared or deceased lawyer practicing within a Fiduciary Entity.
Solo practice private attorneys are not required by Rule 5.26(b)(1) to designate a Trustee, but should give strong consideration to doing so. A Trustee may be called on to close a practice, and each solo practitioner should consider naming an attorney in whom they have confidence to competently close their practice and assist their clients with the transition to other counsel.
Perhaps more importantly, the Trustee may be called on to administer a practice until the designating attorney recovers from a temporary disability. A law practice takes a long time to build, and not all disabilities are permanent. Each solo practitioner should consider naming an attorney in whom they have confidence, and who has also agreed to administer and preserve the practice during the disability recovery process.
Under Rule 5.26(b)(1), the designated Trustee must agree to the designation in writing, and both the designating attorney and the designated Trustee must keep the writing. The designating attorney must so certify on the Rule 6.01 Enrollment Form.
If a private practice attorney (to whom Rule 5.26 applies) fails to voluntarily designate a Trustee, then under Rule 5.26(b)(3) the attorney is deemed to have designated any member of the Bar in good standing who is appointed by an authorized Court. Given the opportunity, most attorneys -- both those designating a Trustee and the Trustees who agree to be appointed -- are likely best served by discussing such issues in advance and entering into a written agreement.
- Trusteeship Appointment & Mechanics
- Appointment Process
- Events Triggering Rule 5.26
When an attorney dies, disappears, or becomes disabled, Supreme Court Rule 5.26(c)(1) makes provision for the Presiding Judge of the Circuit in which the attorney maintained an office to appoint a Trustee designated by the attorney or, lacking a pre-designated Trustee, any other member of the Bar to act as Trustee.
In addition, when an attorney is disbarred, Supreme Court Rule 5.27 gives the attorney fifteen (15) days to complete various duties to the clients, mostly in the form of returning files, property, funds and other unearned fees. If a disbarred attorney fails to comply with Rule 5.27, Supreme Court Rule 5.26(c)(2) further provides that the Circuit Court may appoint any member of the Bar as Trustee.
A Trustee can only be appointed under Rule 5.26(c) after a showing to the Court that the lawyer is unable to discharge their responsibilities to the clients due to disability, disappearance, or death, or a showing that a disbarred lawyer failed to comply with Rule 5.27 requirements following disbarment.
- Office Of Chief Disciplinary Counsel Participation
If an attorney becomes disabled or dies, participation in the appointment process by the Office of Chief Disciplinary Counsel (O.C.D.C.) is highly recommended. O.C.D.C. has a wealth of information and resources available to both the Court and for the Trustee. In the event of a disbarment, participation in the appointment process by O.C.D.C. is almost inevitable (from a practical standpoint) since O.C.D.C. has all the information about the disbarment, and subsequent Rule 5.27 actions and failures, of the disbarred attorney.
It is mandatory that notice of the appointment of a Rule 5.26 Trustee be given to the Office of Chief Disciplinary Counsel, regardless of the reason for appointment of the Trustee. The reason is that supervision, monitoring, and assisting the Trustee are duties to which O.C.D.C. is tasked by Rule 5.26(c).
- Attorneys Suitable For Appointment As Trustee
While the voluntary Trustee designation provisions of Rule 5.26 apply only to attorneys in private practice who are not employed by a Fiduciary Entity, the provisions of Rule 5.26(c) as to whom is eligible to be appointed as Trustee are considerably broader. Essentially, any member of the Bar in good standing is subject to appointment, provided they are deemed suitable.
Rule 5.26 provides no guidance as to whom is or is not suitable, but presumably the term is intended to allow a broad discretion to the appointing Court. For example, a full-time Prosecuting Attorney is probably not suitable to close out the private practice of a deceased attorney who did only criminal defense work.
- Appointing Authority
Only the Presiding Circuit Judge has the authority to appoint a Trustee under Rule 5.26(c), although the Presiding Judge may assign the Trusteeship (including the appointing authority) to another member of the Bench in that Circuit. Lacking such assignment, Trustee appointments under Rule 5.26 remain the sole purview of the Presiding Judge of the Circuit.
- Appointment Discretion
The appointing language under Rule 5.26(c) is not mandatory, instead stating that the Presiding Judge Amay (not shall) appoint the Trustee designated by the lawyer or, lacking such a designation, may appoint any member of the Bar who, under Rule 5.26(b)(3), is deemed suitable. Presumably the discretion allows optional appointment of a non-designated attorney by the Presiding Judge if the designated Trustee is unavailable or is deemed unsuitable by the Court.
- Coordination Of Appointments
Another reason to involve the Office of Chief Disciplinary Counsel in the appointment process is to prevent multiple Trustees from being appointed. If a solo private practice attorney maintains offices in multiple Judicial Circuits, the Presiding Judge in each Circuit has the authority to appoint a Trustee. Given the conflicts likely to arise in the event different Circuits appoint different Trustees, a single unified appointment of a Trustee or Trustees with authority to act in all Circuits would be clearly preferable.
- Mechanics of Trusteeship
To repeat, under Rule 5.26 a Trustee can only be appointed by the Presiding Judge, or by any other Judge assigned by the Presiding Judge to create and supervise the Trusteeship. Any other method will not result in a valid Rule 5.26 Trust.
Following the formalities to create a valid Rule 5.26 Trusteeship is important for multiple reasons:
(i) From the standpoint of the Court, coordination with the Office of Chief Disciplinary Counsel through the appointment process, and ensuring the Trusteeship is valid under Rule 5.26, will relieve the Court of responsibility for day-to-day supervision, monitoring, and assisting the Trustee -- duties that instead are tasked to O.C.D.C. under Rule 5.26(c)(2).
(ii) Under Rule 5.26(f), the Court will only be required to review 120 day reports from the Trustee, and to rule on any application for instructions presented by the Trustee.
(iii) From the standpoint of the Trustee, ensuring creation of, and appointment to, a valid Rule 5.26 Trust is crucial since under Rule 5.26(g) the Trustee is immune from liability from their actions in administering the Trust. If the appointment is not valid under Rule 5.26, the shield of immunity will not be raised. From the perspective of the Trustee, given the difficult circumstances under which they operate, and the difficult nature of the decisions to be made, immunity is obviously a must.
In any Rule 5.26 Trusteeship, regardless of the reason the Trust was created, the basic concept is that the Trustee is appointed to act to fulfill some (but not all) duties of the deceased, disappeared, disabled or disbarred lawyer to the following extent:
(1) Inventory active files and make reasonable efforts to distribute them to
(2) Deliver any undistributed active client files and any inactive client files to the
Chief Disciplinary Counsel for storage as required by Rule 4;
(3) Take possession of and review the lawyer trust and business accounts;
(4) Make reasonable efforts to distribute identified trust funds to clients or other
parties (other than the lawyer);
(5) After obtaining an order of the Court, dispose of any remaining funds and
assets as directed by the court; and
(6) Initiate any legal action necessary to recover or secure any client funds or
In essence, the Trustee simply must gather the client files and return them, gather the client funds and return them, gather the client property and return it, and then close up the practice -- unless the Trustee has pre-agreed to do more as part of the designation process.
- Cases of Clients
Under Rule 5.26(h), the Trustee is not required to accept employment of the clients of the disabled, deceased, or disbarred lawyer. While the Trustee may do so, there is no obligation to accept employment or finish cases for the clients.
From the perspective of the designating attorney, the terms (if any) under which the Trustee might agree to take up the cases of the designator's clients (preserving the designator's practice in the event of a temporary disability), is perhaps the most important point of discussion when considering a potential Trustee for designation.
In theory, the Trustee can make application (via affidavit) to the Court for payment of an allowance of reasonable attorney's fees, case expenses, and other costs. The details of how such application is made are set out in Rule 5.26(j). If allowed, the Trustee is given a Judgment against the disabled or disappeared lawyer or, if deceased, then against his or her estate.
Collecting a non-priority Judgment against a lawyer (or the lawyer's estate) is another problem altogether, and is not an issue addressed here. Not all disabled or deceased lawyers will have sufficient assets to pay attorney's fees or case expenses. In the event an attorney was disbarred and failed to comply with Rule 5.27, sufficient assets to pay attorney's fees or case expenses would be unexpected.
Notice of the application for allowance of fees and expenses must be given to the Office of Chief Disciplinary Counsel, to a disabled lawyer, to the personal representative of a deceased lawyer or, if none, to his or her heirs.
In the event no other funding is available, under Rule 5.26(j) the Office of Chief Disciplinary Counsel may (but is not required to) pay the approved fees and expenses from the Advisory Committee fund. That said, the Advisory Committee funds available to O.C.D.C. to reimburse Trustees are quite limited and, as a result, the amount budgeted from the Advisory Committee for any given Rule 5.26 Trusteeship is restricted.
All private practice attorneys should take the time to carefully read and consider Rule 5.26. If the voluntary Trustee designation principles apply, each lawyer should consider selecting another attorney in whom they have confidence to act as Trustee in the event of death or disability. The proposed designee should be contacted and frank discussions held about the potential for appointment and the willingness to accept an appointment. Discussions should include the possibility of short-term practice preservation in the event a disability is temporary.
If both attorneys agree, they should enter into a written agreement. The designating attorney should certify the designation as part of their annual enrollment, and the Clerk of the Supreme Court will maintain a list of designated Trustees.
One of the duties of the Office of Chief Disciplinary Counsel is to assist in administration of these Trusts all over the state, and they have a wealth of information available to any member of the Bar with questions about Rule 5.26 Trusteeships.
By: Joseph W. Rigler
DID YOU KNOW ? is presented by Williams, Robinson, Rigler & Buschjost, PC as a public information service only. None of the information contained herein is intended to be taken as legal advice. Each matter depends on unique facts which attorneys must consider in forming an opinion, and may depend on laws unique to a particular jurisdiction. No two cases are the same. If you want to know more about this subject, contact Williams, Robinson, Rigler & Buschjost, PC, or the attorney of your choice, and seek a formal opinion about your particular case.
Williams, Robinson, Rigler & Buschjost, PC provides legal services in South-Central Missouri, serving Maries County (including Belle, Vienna & Vichy), Crawford County (including Cuba, Steelville, Bourbon), Dent County (including Salem, Lecoma, Bunker), Phelps County (including Rolla, St. James, Newburg, Doolittle, Edgar Springs), Texas County (including Licking, Houston, Raymondville, Summersville, Cabool), Pulaski County (Waynesville, St. Robert, Richland, Dixon, Crocker) and may provide legal service in other locations on request.