Alternative arrangements – when an LPA’s additional clauses are not enough

When the paperwork exists, but the business still fails

Many business owners assume that once they have a Lasting Power of Attorney (LPA), and perhaps even carefully drafted “business continuity clauses” within it, they have solved the problem of incapacity.

In reality, some of the most serious business failures happen after an LPA is in place.

The reason is simple:

An LPA can authorise decision-making, but it cannot manufacture a functioning business.

Consider the following example…

A web design and hosting business is run by a highly capable principal. Over time, he becomes increasingly central to every aspect of the business: technical work, client relationships, pricing, supplier management, and financial control. Six staff rely on him, but none are fully trained to operate independently.

He later puts an LPA in place. It includes sensible clauses:

1. attorneys may continue trading the business
2. priority should be given to staff wages
3. advisers should be consulted before major decisions
4. the business should be preserved if viable

On paper, this looks robust.

Then the principal suffers a stroke.

Despite the LPA being valid, the business still unravels.

Why?

Because the LPA only solves one problem: legal authority. It does not solve:

1. operational knowledge
2. staff trust and hierarchy
3. technical system access
4. client confidence
5. real-time decision-making capability

By the time authority is activated, the business is already structurally fragile.

Why additional LPA clauses often fail in practice

Many LPAs attempt to deal with business risk by including detailed instructions such as:

1. “continue trading where possible”
2. “consult accountants before disposal”
3. “protect employees”
4. “avoid liquidation unless necessary”

These clauses are well-intentioned, but in practice they are limited.

1. Instructions do not create operational competence

An attorney may have legal authority to run the business, but still lack:

1. technical knowledge
2. understanding of client contracts
3. pricing logic
4. system access
5. staff authority or respect

In the example case, the principal’s son is effectively thrust into control. Staff resist him because:

1. he was not trained
2. he does not know the systems
3. he does not understand workflows
4. he lacks credibility within the team

The LPA does not solve any of this.

2. Banks, systems, and platforms do not follow LPA instructions automatically

Even where an LPA exists:

1. banks may require separate mandates
2. IT systems may require specific admin access
3. hosting providers may refuse changes without verification
4. payment systems may freeze unusual activity

So even a perfectly drafted clause saying “the business should continue trading” may be practically impossible to implement immediately.

3. Clauses cannot replace missing governance

A common hidden problem is that the business has:

1. no deputy manager
2. no second-in-command
3. no documented systems
4. no delegation culture

In that situation, the LPA simply transfers pressure, unfairly, onto an unprepared individual.

4. Staff dynamics override legal authority

One of the least recognised realities is that staff do not respond to legal documents — they respond to:

1. competence
2. familiarity
3. consistency
4. trust

If an LPA appoints a family member or outsider who lacks credibility, staff may disengage or resist. The business then loses its operational core even though legal authority exists.

Practically, all business is built upon trust.

What actually works when LPAs are not enough

The lesson is not that LPA clauses are useless — they are necessary — but that they must sit inside a wider system of continuity.

1. Operational redundancy (the most important missing layer)

A business must function without the original principal through:

1. trained deputy or operations manager
2. delegated technical authority
3. documented systems and workflows
4. shared access to critical platforms

Without this, the LPA has nothing stable to “operate”.

2. Pre-agreed management structure

Instead of relying on emergency instructions, a business should already have:

1. clear hierarchy
2. defined decision-making authority
3. interim leadership provisions
4. board-level continuity rules

This prevents the need to improvise leadership during crisis.

3. System access and control planning

Practical continuity depends on access, not legal wording. In our above example practical continuity relies on access to:

1. hosting and domain control
2. billing and subscription systems
3. password vaults
4. source code repositories
5. client databases

If these are not accessible, authority is theoretical.

4. Gradual succession, not sudden substitution

In the example case, the son is introduced only at the point of crisis. It is not ideal for the LPA and plans to be shared for the first time upon a crisis as it can leave the LPA feeling unprepared. When a crisis occurs, it is often too late to put a Lasting Power of Attorney and other essential plans in place. Taking action early can provide certainty, protection and peace of mind for you and your family.

A functional alternative would be:

1. gradual exposure to operations
2. involvement in decision-making before incapacity
3. staff familiarity with successor
4. supervised responsibility over time

Without this, any appointment under an LPA is likely to fail socially even if it succeeds legally.

5. External stabilisation as a legitimate option

Where internal succession is not viable, the business should be able to call on:

1. interim professional managers
2. technical contractors
3. turnaround advisers
4. external directors

This can preserve value while longer-term decisions are made.

Conclusion

LPAs with detailed business clauses are an important safeguard, but they are not sufficient on their own.

The key limitation is this:

An LPA transfers authority, not functionality.

The example shows that even a well-prepared legal document cannot prevent collapse if:

1. the business depends entirely on one individual
2. systems access is not shared
3. staff are not trained to operate independently
4. succession has not been embedded early

Real resilience comes from combining:

1. legal authority (LPA)
2. operational delegation
3. system access planning
4. governance structure
5. and trained succession

How We Can Help

Many business owners spend years building successful businesses, yet few have a plan for what would happen if they were suddenly unable to lead them.

The most effective arrangements combine legal protection, operational resilience and clear succession planning. By taking action now, you can help ensure that the business you have worked so hard to build continues to thrive, whatever the future may bring.

To discuss your circumstances in confidence, please contact our Private Client team.