A Death in the Family: How one firm forged ahead after a partner’s unexpected passing

By Morgan Kavanaugh and Christopher Johnston

It’s the call no lawyer ever wants to get: A friend and colleague in your law firm has unexpectedly passed away. In January 2020, we got that call. Our friend and senior partner at the firm, Kyle Hegna, died tragically in a snowmobile accident. Kyle (a 1985 graduate of Gustavus Adolphus College who earned his JD at William Mitchell College of Law in 1989) had been a founding partner of the Edina law firm Wilkerson & Hegna, P.L.L.P. with Gary Wilkerson. In 2015, we became partners of the firm. 

Kyle was the type of person who was always positive and smiling no matter how stressful the situation. His laughter would fill the office. Kyle was more than a partner and colleague; he was a close friend and mentor. As a small, tightknit law firm, the news of Kyle’s death shocked us. We had just celebrated a successful 2019 and were looking forward to 2020. The feeling was like a punch to the gut. 

There are numerous articles on the rules that pertain to handling client matters after the death of an attorney. In Minnesota, the Rules of Professional Conduct Rule 1.3 requires that a lawyer must act with reasonable diligence and promptness in representing a client, and Rule 1.4 requires reasonable communication between the lawyer and the client. In short, have a plan. Be prepared for the unexpected and do not lose sight of the client even during a crisis. This article focuses on practice pointers for small firms arising from our experience as we navigated the situation. 

The framework that worked for us was five-fold. 

1. Assess and rally the team;
2. get organized and prepare for the mental toll; 
3. resist any immediate major changes;
4. focus on client communication and marketing; and
5. review the partnership agreement and Minn. Stat. §319B.08.

Assess and rally the team 

As we struggled to come to terms with the news ourselves, we came to the hard realization that this moment was not ours to spend mourning. We had the duty to act and act quickly to protect our co-workers, staff, and clients, as well as Kyle’s legacy.

On the day we learned of Kyle’s death, the remaining partners met in the evening at our offices in Edina. We worked out the points of a plan to guide the firm in the coming months from both a legal and business perspective. Kyle was a founding partner, and while we each had our own practices, he was the pillar of the firm with many important legacy clients. 

With the loss of a named partner, staff will have questions and concerns about how the firm will look going forward and the security of their employment. This is human nature. We knew we would need all hands on deck to deal with the challenges of the coming weeks and months. Long hours would be required from everyone. To that end, we reached out to each member of the firm to let them know the unfortunate news, but also to answer questions and assure each person that the firm was continuing forward with a plan. Although in shock, our highest duty was still to our clients and we needed to communicate that to our team. The mantra was, write it all down and stick to the plan. Shock and mourning affect us all differently, and often at different times. The knowledge that we had a plan became an anchor during those first few weeks and helped ensure that our team would buy in to the plan going forward. 

Get organized and prepare for the mental toll

During our crisis, we benefitted from the fact that our firm had always been very collaborative. We made the decision long ago to have an open door policy when discussing our cases with each other, regardless of its being non-billable time. This firm culture helped us maintain a big-picture sense of the firm’s case load, along with the workload of our staff and associates. We were also fortunate to practice in the same general areas of the law, which meant we had the existing legal and practical knowledge to transition files within the firm. Thanks to the help of our staff, active files were well-organized and we could transition into them without excessive or duplicative work. If files are disorganized or there is not a basic understanding of all current cases being handled within the firm, it may be impossible to comply with the due diligence and communication requirements of Rules 1.3 and 1.4 in the immediate aftermath of a partner’s death. 

In addition to transitioning Kyle’s files, we each had to manage our own existing files and calendars. The most urgent matter before us was a trial set for February. Kyle had prepared to attend this trial for several months prior to his death. While we were familiar with the case generally, Kyle was the lead. Fortunately, Kyle’s clients were understanding and very accommodating to the situation. We were also fortunate to practice in a state with understanding and accommodating attorneys and judges; we did not have any issues obtaining continuances in cases when requested. But, of course, in order to request such continuances, it is crucial to know the important dates and deadlines and promptly inform everyone involved in the case of the situation. 

As part of our initial meeting, we decided that we would contact every one of Kyle’s clients personally, whether they had active matters or not. We started by jointly preparing a list of names and phone numbers of all clients. We then broke out the list between urgent client matters, open client matters, and no open matters. Each of us took a portion of that list and began making calls, starting with the most urgent client matters. The sole purpose of the first call would be to inform clients that Kyle had died. We kept detailed notes of each call we made, and then set dates for follow-up conversations depending on their open legal matter. 

Kyle had become friends with many of the clients he represented over the years. Nobody had prepared us to deal with the mental challenge of informing Kyle’s friends and colleagues of the news. It was extremely difficult to make hundreds of calls met with disbelief or tears, day after day until the list was finished. It drained us. But it was also cathartic to hear from people connected to Kyle and share good memories of him. As a firm, we would take several breaks to debrief with one another throughout the day, eat lunch together, and generally talk about how each of us was handling the experience. This time to connect and process not only helped us survive those first couple of weeks, but also brought us closer together. 

Resist any immediate major changes

In the weeks following the news, we heard from hundreds of people reaching out to wish us well or just to check in on how we were doing. That is something that most people expect from any crisis they face, and it was obviously very helpful. But you will probably also hear from people you did not expect or want to hear from. Other law firms may believe the firm is vulnerable to acquisition. 

We received several calls and inquiries from other local firms asking about our interest in joining their firms or merging. Certainly there are business opportunities for law firms to acquire or merge with other firms all the time. There is no harm in taking these calls and listening to the sales pitch. Our team decided early on to commit to moving forward with the team we had in place. More importantly, we also felt that it was not an appropriate time to consider these inquiries, given our mental state. We wanted to focus on our clients, our staff, and the business moving forward.

We felt a strong desire to preserve and continue Kyle’s legacy. Even considering those inquiries at that time would have distracted us from our plan and immediate goals. As a practical matter, avoiding any immediate major changes after a crisis allowed us to better evaluate our options and to process significant amounts of information and emotions. It put us in the best position to make hard decisions. 

The same can be said for firm operations in general. For your staff and clients, losing a senior partner is a major disruption. The more you can keep the same, at least for the short term, the better. For us in particular, that meant putting aside some system and software changes that were in progress. We also decided that the firm name would not immediately change, and instead waited until February 2021 to announce the firm’s name change to Wilkerson, Hegna, Kavanaugh & Johnston, PLLP. 

Focus on client communication and marketing

How you deal with the immediate aspects of a crisis such as a partner’s death carries long-term implications for the law firm. Again, we were fortunate to be a very collaborative group, so most of Kyle’s clients had worked with everyone in the firm to some degree. From a marketing and business standpoint, it is important to make those connections between all partners and clients so that the firm can transition clients to other partners should the unexpected strike. And you must act fast. There is only a short window of time to impress upon clients that the firm is up to the task. 

Soon after our initial calls to clients, we filled our calendars with lunches, happy hours, and any opportunities to continue the personal connection with existing clients. Unfortunately, in March 2020, covid-19 led to lockdowns and quarantine, putting an abrupt end to those social activities that attorneys have traditionally relied upon for marketing. Like many others, we transitioned to new ways of making connections, primarily through video conferencing. In some ways, this allowed us to have a broader reach with existing clients, near and far, who were also by necessity becoming more receptive to these new forms of communication. We also expanded our digital marketing to include email newsletters and updates to ensure clients understood that we were still here, operating as usual, and ready to handle anything they needed. 

Review the partnership agreement and Minn. Stat. §319B.08

In addition to handling client matters with due diligence and ensuring business continuity at the firm, there is another immediate concern that is uncomfortable to address: What happens to the deceased partner’s ownership interest in the firm? 

In our business practice, it seems that many clients only look at their partnership agreements if something goes wrong. Interestingly enough, many lawyers operate the same way. A partnership agreement does not have to be very complex. Prior to Kyle’s death, we had been reviewing and updating the firm’s partnership agreement on an annual basis. At the very least, we would have a conversation about worst-case scenarios. What worked for our practice was a pretty basic and simple partnership agreement, but every firm will have different needs. 

Depending on the type of firm and practice area, the valuation of partnership shares could be the most difficult point to determine. Business valuation of any type can be challenging, but this is especially true for law firms. If you do not establish a valuation method in your partnership agreement, Minn. Stat. §319B.08 governs professional firms and the effect of the death of a partner. The default rule in Minn. Stat. §319B.08 to value ownership interests is to use “book value.” “Book value,” according to the statute, is determined “in accordance with the Minnesota professional firm’s regular method of accounting, as of the end of the month immediately preceding the death.” Do you know what the “book value” of your firm is at this moment? If your partnership agreement does provide a valuation mechanism and does not define book value, then it is generally defined as “the value of fixed assets, plus cash, plus A/R (accounts receivable), minus debt.” Having a working understanding of your firm’s business and a reliable CPA to navigate these questions is critical in resolving these difficult issues. 

There are also important timing requirements to keep in mind. Set forth in Minn. Stat. §319B.08, they include tendering notice of an offer to the deceased owner’s estate within 90 days of the partner’s death. In addition, you should consider what the firm is capable of offering as a means of payment for the shares. Generally speaking, a lawyer’s value lies in their billable time. When the ability to bill time ends, that will affect the firm as a business and its ability to pay the estate for those shares. While we all would like to put a high value on the business that we have worked hard to build, it is important to think about what is realistic for the firm to pay for an ongoing business that has just lost a partner and that partner’s ability to generate revenue. So in addition to having an agreed valuation method, it is vitally important to establish the mechanism for valuing shares and how it will be funded when the partner passes away. Even if the default rule works just fine for many firms, you should still be aware of what that means from a practical perspective for the firm. Always bring a qualified CPA into the discussion.