Planning for the Legal Practice: Understanding the Law Society of Ontario’s New Contingency Planning Requirements for Lawyers and Paralegals

Law Society of Ontario Introduces Contingency Planning Requirements

It is trite to say that it is important to plan for the unexpected. Many lawyers and paralegals are in the business of helping their clients plan for the unexpected, whether through contract negotiations, settlement agreements, or preparing wills and powers of attorney. However, are these same lawyers and paralegals prepared for the unexpected as it relates to their legal practice? As of January 1, 2025, the Law Society of Ontario has implemented rules relating to client contingency planning to account for what happens if a lawyer or paralegal in private practice, referred to as a licensee, is unable to practice, either temporarily or permanently, due to illness, incapacity, sudden absence, or death.

Requirements under the Law Society of Ontario By-Laws: The Basics

By-Law 7.1 under the Law Society Act[1] dealing with operational obligations and responsibilities implements new contingency planning requirements.[2] Notably, the new contingency planning rules apply only to licensees in private practice and, specifically, not any licensees providing services under the Government of Canada, a provincial or territorial government, a municipal government, a First Nation, Metis or Inuit government, a legal aid clinic, Legal Aid Ontario, or in-house legal departments.[3]

By-law 7.1 requires that a licensee appoint another licensee to take steps to preserve, carry on, or wind up the practice of the licensee.[4] The licensee so appointed is known as an administrator. Stepping into another licensee’s practice may seem like an onerous task. However, the administrator has a very specific and narrow mandate. An administrator must (i) advise the incapable or deceased licensee’s clients that the licensee is not able to complete the retainer, and transfer the client matter to another licensee or return the file to the client; (ii) return or transfer any trust funds as directed by the clients;[5] and (iii) notify the Law Society of Ontario Trustee Services Department and the licensee’s insurer being the Lawyers’ Professional Indemnity Company of the licensee’s death, incapacity, or absence.[6] To allow the administrator to seamlessly complete the requirements, the contingency plan must contain details on how the administrator can access information, files, original documents, and client property, as well as information on how the administrator can access trust accounts and the licensee’s accountant or bookkeeper.[7]

Once a licensee prepares a contingency plan, it must be updated and reviewed annually. The plan must be in place by the end of 2025 and the licensee must confirm compliance with the Law Society of Ontario on the 2025 Annual Report whose deadline is March 31, 2026.

Although the contingency plan requirements are required for all licensees in private practice, not every individual practitioner must have a personal contingency plan. Licensees practising in law firms must confirm that the firm has a contingency plan in accordance with the Law Society of Ontario’s requirements.

Choosing an Administrator

The key element of the contingency plan is selecting an administrator. Generally speaking, an administrator should be a known and trusted licensee, ideally practicing in the same or similar practice area, and close in geography. Although the administrator can be from anywhere within the province, unless a licensee operates an entirely paperless practice, the administrator may need to physically access the premises or hard copy documents or originals.[8] As such, it is advisable to appoint an administrator who practices or lives nearby.

The administrator should be fully aware of their appointment and the duties required. Ideally, the licensee obtains written consent from the administrator.[9] It should be clear whether the administrator is personally carrying out the requirements or whether they will supervise a non-licensee such as a legal assistant, law clerk, office manager, or family member.  A licensee is not required to compensate the administrator but compensation is permissible, provided that compensation is “reasonable and justifiable based on the services to be provided.”[10]

The Law Society of Ontario has numerous resources and templates to help licensees prepare their contingency plan, including assisting licensees who cannot find an administrator.

Contingency Planning is Not Estate Planning

Contingency planning is intended to provide basic protections to clients’ rights in the event a licensee unexpectedly cannot provide legal services. However, contingency planning is not comprehensive succession planning or incapacity planning for the legal practice. An administrator has no obligation to step into an absent licensee’s shoes to carry on the practice. This means they are not providing legal advice to clients, attending court on a licensee’s behalf, completing any closings or transactions, or representing the client in any way. Accordingly, licensees are advised to go beyond the Law Society of Ontario’s contingency plan requirements and implement a succession plan whereby another licensee (known as a “successor”) takes over every element of the legal practice.[11] The best way to plan for a smooth succession of the legal practice is to prepare wills and powers of attorney. Licensees may consider preparing multiple wills so that a successor can be appointed as executor specific to the legal practice to continue, sell, or close the practice.[12] As for powers of attorney, licensees may consider preparing a separate continuing power of attorney for property dealing solely with their law practice.[13]

Contingency planning and estate planning, both designed to protect clients’ interests, also provide helpful guidance and peace of mind to a licensee’s colleagues, support staff, and family members who would be coping with the challenges of a sudden absence or departure.

The Takeaway: Ensure Compliance with Contingency Planning Requirements As Soon As Possible (and prior to 2026) and Plan for the Legal Practice

Lawyers have a fiduciary duty to protect their clients’ rights and interests. Being absent from legal practice without someone stepping in to mitigate the damage could severely prejudice a client’s legal rights. To ensure minimum protections in the event of a licensee’s temporary or permanent absence from practice, the Law Society of Ontario has created the contingency planning requirements for licensees in private practice to notify the licensee’s clients and transfer or return the file, notify the Law Society of Ontario and the Lawyers’ Professional Indemnity Company, and return or transfer client trust funds. The requirements are welcome to ensure that clients are aware of their lawyer or paralegal’s absence and ensure that their rights are not negatively affected.

To ensure compliance by end of 2025 and the subsequent March 31, 2026 deadline of the 2025 Annual Report, licensees are advised to start organizing their practice and documents for the contingency plan as soon as possible. Furthermore, in addition to the contingency plan, licensees should have wills and powers of attorney in place, where appropriate, with specific provisions regarding the legal practice. Although the contingency plan requirements are primarily geared at sole practitioners, the benefits of ensuring powers of attorney and wills are in place are applicable and advisable to all practitioners.

About the Author

Lori Isaj is an associate in the Wills, Trusts and Estates Practice Group at WeirFoulds LLP. She advises clients on all aspects of estate planning, estate administration, and powers of attorney. Lori can be reached at 416-619-2098 or lisaj@weirfoulds.com.

This article was originally published in Taxes & Wealth Management, March 2025, Issue 18-1.

Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.