Everyone loves a winner, it’s been said. And who doesn’t like to win? Then again, are all wins created equal?

As an attorney, my goal is to help every client walk away from their experience with me feeling like a winner, even if that means all I did was help them stay out of more trouble than they were in when they came to me.

I recently obtained an Order for Final Discharge on behalf of the personal representatives of a Probate Estate in Marin county. Decedent was a medical doctor with a solo practice housed in a co-op clinic owned and operated by a well-regarded, successful medical corporation. Decedent had a relationship with the corporation for many years and operated out of the clinic without a signed lease or profit-sharing agreement, on nothing more than a handshake deal with the Doctor CEO of the corporation. The arrangement had apparently served all the parties well, as the decedent and the clinic each made good money and, by all accounts, enjoyed a friendly and trusted relationship.

Such arrangements are sometimes fine – until they are not. And often enough they go from fine to not-fine when someone dies.

Decedent died intestate, leaving only two heirs, his daughters, who, fortunately, got along – even if they didn’t quite trust each other completely. As a result, they petitioned the court for appointment as co-administrators of the estate, which was granted.

How much trouble were these two young women in when they came to me?

Their father was, without being too judgmental about it, eccentric. His medical practice generated well into the mid-six figures in revenue each year and his handshake deal with the clinic left him more than enough to contribute generously to his 401(k) retirement account and to enjoy a comfortable living filled with travel and fulfillment of his pleasurable appetites.

The problem for my clients was that, aside from the few thousand dollars he had in his checking account at death, the only real assets in his estate were the medical practice and the 401(k).

Well, that’s not completely accurate. The problem for my clients was that, when he died, the good doctor was in the midst of defending a multi-million dollar malpractice claim. With no malpractice liability coverage.

In a more perfect world, my clients would have been able to execute a small estate affidavit to gain control of the funds in the checking account, since their father owned no real estate and the amount in question (including his meager personal property) was under $150,000. California Probate Code §§ 13000-13210. Since the doctor had been smart (and perhaps kind) enough to designate his daughters named beneficiaries of his 401(k), the funds in that account passed to them outside of probate. California Probate Code §§ 5000-5048.

Since the world we live in is far from perfect, however, I counseled my clients to open a defensive probate action to get themselves appointed personal representatives of their father’s estate literally days before the creditor in the malpractice case filed one requesting that she be appointed administrator. Yes, you can do that. 

My clients’ greatest fear when they came to me was their potential personal liability in the light of the malpractice claim their father was battling when he died. To make matters worse, the clinic had cross-claimed against the decedent, alleging an indemnification clause in the unsigned lease agreement that formed the basis of the handshake agreement between them. For reasons far too complex to go into in this blog, I ended up spending over a year guiding my clients through the process of getting the malpractice claimant’s ultimately baseless lawsuit dismissed and negotiating a release of claims between the estate and the clinic.

In the end, we filed a Final Report with the Probate court showing a basically bankrupt estate and received our Final Discharge order without my clients ever having had to appear before a judge.

But what about the medical practice, one might ask. Surely it was worth more than $150,000? Again, that’s a matter far too complex to get into in this blog post but perhaps one day could be a case study example for a post on business valuations.

One of the daughters sent me a note after we got the discharge order, saying, “I know ours wasn’t a big important case as these things go but I can’t thank you enough for your support and counsel and for keeping us on the right path when our own fear and lack of legal knowledge would have led us into trouble.”

I replied in a note to them both, “Thank you for the kind words and gratitude. It was truly my honor to guide you through a difficult, confusing, and stressful process. And please don’t think yours was not “a big important case” in my eyes; it absolutely was, because I know it was big and important to you.”

Published in AAC, Professional, Strategy