Succession planning

Judy LondonOne of our policyholders recently asked me what might happen to his current projects in the event of his death. It’s important to think about these issues, especially if you‘re a sole proprietor or a small firm. Large firms rarely face difficulty if an individual licensed design professional is physically unable to provide professional services, but small firms could face catastrophic damage. Sole practitioners are often concerned that injury, illness, or death could result in the inability to complete a project. Some clients, fearful that projects may be delayed, may be hesitant to hire a sole practitioner unless a contingency plan is in place.

The simplest form of preparation for continuity on a project is developing a mutual arrangement for coverage with another firm. Forming a relationship with another sole practitioner or small firm with a similar practice can provide continuity of client service and viability of professional practice. By choosing to form a cooperative, reciprocal relationship with another small firm, transition is less disruptive to the client and staff.

There are many issues to consider when taking over a project from another design professional including registration laws, the client’s ability to void a personal services agreement, the legality of software use, confidentiality, and trade secrets. The issue of professional liability insurance should also be considered. Insurance information should be exchanged to confirm that both parties have the ability to defend their professional operations. The arrangement should be memorialized in writing after discussions with legal counsel and other business advisors.

Contingency plans developed as part of a succession plan can act as a hedge against the unexpected. It’s prudent to structure a backup system and inform your clients of its existence.

Another way to address this issue is to groom interns and associates not only in design but in project management, marketing, human resources, financial management, and technology.

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