Your Hit By a Bus Plan with Jonathan Hawkins

Most law firm owners spend their time thinking about how to build the firm, bring in clients, improve operations, and grow revenue.

Far fewer want to think about what happens if they suddenly are not there to run it.

In this episode of The Founding Partner Podcast, Jonathan Hawkins tackles that uncomfortable but important question. For solos and sole owners in particular, an unexpected death or disability can create immediate problems for clients, employees, family members, and the value of the practice itself.

Jonathan calls the solution a “Hit By a Bus Plan.”

It is not simply a succession plan for someday. It is a practical plan for what happens if someday arrives without warning.

When Everything Stops Overnight

Jonathan begins with the true story of a successful 38-year-old solo attorney. The lawyer had a seven-figure-plus practice, a wife who worked as his office manager, and five children under eight years old.

Then he died unexpectedly in a car accident.

In an instant, the family’s income stream came to a halt. His wife was not an attorney, the firm had no meaningful plan in place, and there was little opportunity to preserve the value of what had been a vibrant practice.

The story illustrates why this planning matters.

You cannot prevent every tragedy. You can, however, prepare the firm so that an unexpected event does not create another crisis for the people depending on you.

Step One: Organize Your Practice

The first part of Jonathan’s plan is straightforward: organize the firm so another person can understand how it works.

That includes knowing which client matters are active and closed, where important documents are stored, how bank accounts can be accessed, and where to find insurance policies, leases, vendor agreements, and other ongoing obligations.

Passwords deserve special attention. Rather than maintaining an outdated Word document or spreadsheet, Jonathan recommends using a password manager and making sure the appropriate person knows how to access it if necessary.

He also recommends creating clear instructions and keeping the most important information somewhere obvious and accessible.

The goal is not simply organization for organization’s sake. Someone may someday need to walk into the practice and quickly determine what needs immediate attention.

Step Two: Choose a Backup Attorney

The second component is finding a backup attorney, sometimes called a designated or triage attorney.

This is the lawyer who can step in and begin sorting through the practice if something happens to the owner.

Choosing a name is not enough.

Jonathan has heard stories of attorneys being identified as someone’s designated lawyer without even knowing they had been selected. His advice is to have the conversation, get the person’s agreement, and ideally put appropriate documents in place outlining their authority and responsibilities.

Their role can vary. They might help sell the practice, transition clients elsewhere, or potentially purchase the firm themselves.

Whatever arrangement you choose, Jonathan believes the attorney should be compensated. They already have a practice of their own, and stepping into someone else’s firm during a crisis can be a significant undertaking.

Step Three: Fund the Transition

A plan also needs money behind it.

Employees still need to be paid. Leases and operating expenses continue. The backup attorney may need compensation. The firm needs enough time and resources to handle the transition responsibly.

Jonathan discusses several possible funding mechanisms, including key person life insurance, key person disability coverage, and business overhead expense insurance.

He explains that life insurance can provide operational capital following a death, while business overhead expense coverage can help with firm expenses when disability prevents the owner from working.

The purpose is simple: keep the lights on long enough for the plan to work.

Without short-term funding, even a well-designed transition plan can become difficult to execute.

The People Your Plan Protects

Jonathan identifies several reasons law firm owners should make this planning a priority.

First are the clients.

If a lawyer suddenly dies or becomes disabled, deadlines do not disappear. Statutes of limitation still matter. Courts, clients, and opposing counsel may need to be notified, and clients may need timely access to funds held in trust so they can retain new counsel.

Then there is the owner’s family.

A family dealing with death or serious disability already has enough to manage. Asking a spouse or other relative who knows little about the firm’s daily operations to suddenly figure out the law practice adds another enormous burden.

Planning can also reduce the risk of malpractice claims and insurance problems caused by missed deadlines, delayed notifications, or gaps in coverage.

A Better Firm Right Now

Perhaps the most overlooked benefit of this planning is that it can improve the firm long before an emergency ever happens.

To create a viable emergency plan, you have to organize the practice. You need better systems, cleaner records, documented processes, and clarity about how the business actually operates.

Those changes can make the firm more efficient and less chaotic today.

They can also make the practice more valuable as an asset. Jonathan works with law firm purchases and sales, and he explains that organized, well-run firms with established systems generally have greater value than practices that depend almost entirely on the owner keeping everything in their head or on their phone.

In other words, preparing a firm to survive without you can also help you build a better firm while you are still running it.

Closing Reflection

Nobody enjoys planning for death or disability. Law firm owners already have endless lists of things demanding their attention, and this is an easy project to push into the future.

Jonathan’s message is to stop pushing it off.

Find the designated attorney. Explore the appropriate funding. Organize the essential information someone would need to step into the practice.

As Jonathan puts it, “You just have to take a little bit of time and get it done.”

For solos and sole owners, that preparation can protect the clients who trusted you, the employees who depend on the firm, and the family who should not be left trying to untangle a law practice during a crisis.

For firms with multiple partners, the details may look different, but the question remains worth addressing through the partnership agreement.

A good law firm plan should not only explain how the business grows. It should explain what happens when the unexpected happens too.

AND MORE TOPICS COVERED IN THE FULL INTERVIEW!!! You can check that out and subscribe to YouTube.

Connect with Jonathan Hawkins:

Thank you for joining us for this episode of The Founding Partner Podcast. Stay tuned for more conversations and insights for law firm founders.

[00:00:00] Welcome to the Founding Partner Podcast. Join your host, Jonathan Hawkins, as we explore the fascinating stories of successful law firm founders. We’ll uncover their beginnings, triumph over challenges, and practice growth. Whether you aspire to launch your own firm, have an entrepreneurial spirit, or are just curious about the legal business, you’re in the right place.

Let’s dive in.

Jonathan Hawkins: This episode is for solos and sole owners of law firms. And there’s some stuff in here that could be useful for others as well. But today I’m gonna talk about what I call the hit by the bus plan. Some people call it succession plan, but really it’s putting in place a plan and the pieces if something suddenly happens to you, whether it’s death or disability, maybe you’re in a wreck, you’re in a coma, whatever it is.

[00:01:00] So I’m gonna start with telling a true story. This was a number of years ago. There was a, I’ll call him a solo 38-year-old. He had a couple contract attorneys, but it was basically his firm. Very successful practice for the setup, you know, seven figures plus on top of the world, doing great. His wife was the office manager.

So basically their entire family was involved. He had five kids under the age of eight. I think there were a couple sets of twins. Things were great, all good. And then one night on the way home he was in, unfortunately, in a car wreck and died. So in an instant the entire family income stream came to a halt because his wife was not a lawyer, and he couldn’t practice law.

And really, he had no plan in place at all, and I was told he may not even had life insurance in place for himself and his family. So in an [00:02:00] instant, seven-figure practice and the income that goes along with that came to a screeching halt. Some, I think, one or more of the contract attorneys tried to help place the clients in various places but basically, there was no value that was able to be extracted from that vibrant firm after this incident.

I guess there was AR and other things that may have been collected, but other than that, nothing there. Tragic, tragic situation. And we can’t stop things like that from happening. The world just imposes its will on us sometimes in unexpected ways. But you can put in a plan that will minimize these sorts of ill effects that come out and protect your family, you, if you’re disabled, your clients, your employees, all the above.

So what is the Hit By A Bus Plan? So really in my view, there are three big components. So let’s go through that. So number one, you’ve got to organize your [00:03:00] practice. You gotta pull together the who, what, when, and where, and how certain things happen in your specific practice. And you do that because if something happens and someone has to come in and try to triage the situation, they need to know how to get access to things, understand how to, for example, run a client list of active matters, which means you’ve gotta figure out, you know, how that happens.

I know some folks don’t mark files closed or open. You gotta get in the habit of doing that, so if somebody has to step in, they know which matters pretty quickly are open versus those that are closed, so they have to notify courts and people and all these things. They know how to do that pretty quickly and there are other elements of the things when I say organize your practice.

You know, you’ve gotta get all your passwords in a place where someone can find them. I do not recommend just putting them in a Word document or an Excel spreadsheet ’cause passwords change, and it’s just a pain to have to go [00:04:00] back and try to update that all the time, and you may not always have that.

So instead, I highly recommend a password manager. Then you only have to remember one password and put one password in a place where someone can find it. And frankly, that’s more secure generally anyway. So love password managers. I use 1Password. There’s some others out there, but highly recommend that anyway.

The other thing is gather your insurance policies in a place where they can be easily accessed quickly ’cause certain notices may have to be given to the carriers to make sure there are not lapses in coverage. Leases, other vendor contracts, anything that ongoing obligations ways to find those fairly quickly is very helpful.

Bank accounts what are they? How do you get access to them? Et cetera, et cetera. And then when you gather all these things you know, I always recommend print out the important ones. You don’t have to print out everything in your system, but you do need to print out some very important things.

If there’s any policy or systems or [00:05:00] processes to do any of these things, print those out, or at least instructions on where to find them. Definitely the password the list of various again, insurance contracts, et cetera, et cetera. And I tell people, put it in a place or in a folder that is bright easily to see.

For my clients, we use this folder here for those that are watching this on video. It’s a red sort of bag that you can put your documents in and zip them up. Then you tell your spouse or whoever it is that you trust where this thing is. Say, “If anything ever happens to me, this is where this place this thing is.

Go find it. It will give the instructions on how to access the firm,” et cetera, et cetera. Now the second piece, number two, you’ve gotta find what I call a backup attorney, some call them designated attorney, some call them triage attorney, whatever you wanna call it, but the person that will parachute in and triage [00:06:00] your practice if anything happens to you.

Generally speaking, if your spouse or family member is not a lawyer they’re really not supposed to be able to do that because of privilege and all these other issues. So most state bars require or strongly recommend that it’s an attorney, and I do as well. Now, once you find that person, you need to have a conversation with them.

I’ve heard stories from state bars where they have a list or someone has said, “So and so is my designated attorney.” Something happens, the state bar reaches out to that attorney and says, “We understand you’re the one that’s tasked with coming in and sort of triaging the practice.” And they’re like, “What are you talking about?”

So if you’re gonna pick somebody, make sure you have the conversation with them at a minimum so they know and agree to do these things. But better to take it to the next step and actually enter into an agreement and a series of related documents that actually gives them the power and the ability to get in there and do the things that need to be done.

And there’s lots of ways you can [00:07:00] structure these. It could be that they’re actually gonna step in and buy your practice, and you wanna lay out the terms of what that would be. Or maybe they’re not gonna buy it, but they’re just gonna help either sell it to someone else or shepherd the clients to various places.

So you need to sort of lay out exactly what their tasks are and you know, a component, and we’ll get to this in a second for number three, but in that agreement or in series of documents, you need to say you know, are they gonna get paid for this? And I think they should, because you gotta remember, they’ve got their own practice that they have to deal with, and coming in to triage yours is a big undertaking and one that, you know, agreeing to do this is not something that should be entered into lightly ’cause it is, it’s a big job.

It’s like a whole nother thing. So in my view, this person should get compensated for it in some way or another.

Real quick, if you haven’t gotten a copy yet, please check out my book, the Law Firm Lifecycle. It’s written for law firm owners and those who plan to be owners. In the [00:08:00] book, I discuss various issues that come up as a law firm progresses through the stages of its growth from just before starting a firm to when it comes to an end.

The law firm lifecycle is available on Amazon. Now, back to the show.

Jonathan Hawkins: So that leads to number three. So the third big piece in my mind is making sure there is a short-term funding element in place. Typically that’s an insurance type com product. That’s usually the cheapest, most straightforward.

In theory, you could have a segregated escrow fund reserve fund for something like this. I think that’d be good, but it’s dangerous because there’s a temptation sometimes to raid that fund, and it may not actually be there if and when someone needs it. So let’s talk about the types of insurance real quick.

The easiest I think is keyman life insurance. Now I understand some people may not be insurable, but for this purpose, it’s doesn’t have to be a huge policy, just enough [00:09:00] to provide operational capital to the firm. This is very different than what you might have for your family and all these things.

This is, if it’s triggered, it’s gonna pay money into the firm to pay lease payments, pay your employees to stick around, pay this triage lawyer pay any other expenses that come up. And it’s a good funding mechanism but it only happens in the case of death. So what do you do in the case of not death?

Maybe disability. There are a couple of other policies out there. So there are keyman disability policies out there. You’d have to shop those around. I’m not sure they always make financial sense. But there is another type of policy that’s related to disability. It’s called a business overhead expense policy, and that is really designed if something happens to you, it will fund the overhead expenses for your firm for some period of time.

The good thing about that is it’s, it triggers a lot quicker than a normal disability policy, typically within 30 days [00:10:00] versus 90 or more. And again, it provides the funding to at least pay employees, leases, et cetera, et cetera, keep the lights on while this triage attorney is in there managing or doing whatever it needs to do to your practice. All right, so those are three components.

So a question I get a lot is like, well, why do I even need to worry about this? I’ll be dead. Who cares? Let me give you four reasons. First one, you wanna make sure your clients aren’t harmed. Written plan that gives the triage attorney the instructions on where to find anything can ensure that deadlines aren’t missed, statutes aren’t missed.

Courts, opposing counsel, and others can be, and clients can be notified quickly. Proper set of documents will quickly give this attorney access to your trust account because I’ve seen it where client’s attorney dies they have a good chunk of money in escrow but they need to go hire another lawyer [00:11:00] and they need that money.

And it can take months, many months to get access to that. And that really hurts clients and their ability to handle their case through another attorney. So the second reason that I think this is important is you don’t wanna burden your family. If something bad happens to you, they’re gonna be dealing with all sorts of things as effect of that.

Why do you wanna throw your law firm into their lap as well? Especially if they’re not involved in your law firm. They probably don’t know what goes on in there day to day. I’ve gotten calls from family members over the years that are just thrown for a loop, and they don’t know what to do. And it’s just typically a big mess, and it just takes a lot of time to sort through.

Where if you do this on the front end, you can ease a lot of that burden on your family. All right. Third reason why I think you need to worry about this is this plan will minimize the risk of claims that may come as a result of some sort of issue [00:12:00] that might arise from the time something happens to you and the time somebody gets in there and sort of figures out what’s going on.

Let me just give you a quick example. So, let’s say you have a case, you know the statute of limitation is coming up in a month or two. You’ve got complaint drafted, you’re ready to file it. You know you’re gonna beat the statute, and then something happens to you, and you’re not able to file it.

And then by the time somebody gets in there and discovers what happens, what happened in the case, the statute’s been blown. And I’m sorry death, disability, that is not a defense to a malpractice claim. And back to the insurance issue let’s say you have insurance in place, but you haven’t properly notified the carrier in time that something’s happened to you.

There may be a lapse of coverage. So you trigger a claim, no coverage. Where are they going after? They’re going after your estate which definitely could affect your family or maybe you if you’re disabled and still [00:13:00] alive. So, that’s a very important reason to get this thing done as well.

And last reason I think is a good one too. This is, you know, to get this plan in place, I mean, we can get the papers in place pretty quickly. You can get your lawyer, you can your designated lawyer, you can get your insurance put in place. But for this plan, really, I think to be a viable plan is you gotta organize your practice, build the systems, make it run more efficiently, do all the things that can make someone stepping in make their life easier to figure out what’s going on.

In the process of doing that, and it never ends, but the process of doing that makes your practice more efficient. It makes it better run for you. It should make it more enjoyable to run so there’s less chaos, and it should be more profitable. And the other thing that this organization and setting up of the firm does is it makes it easier as an asset of something that might be sold later down the road.

I do a lot of, [00:14:00] you know, buying and selling law firms, and, you know, the practices that have lots of systems, that are organized, that are well-run are higher, have more value than the ones that are just a big chaotic, you know, running off my iPhone kind of practice. There’s really not a ton of value there, and you’re not gonna get much out of it.

So, that’s the fourth reason. So I’ll end with this. You know, these sorts of things are not fun to think about. You know, no one wants to think about being disabled, no one wants to think about dying, and we’re all very busy running our practices. I get it. I have my to-do list never ending. It just grows exponentially every day, it seems.

But this is one thing that I really encourage you to take the time and get it done. It’s not that big of a lift. You just have to take a little bit of time and get it done. You know, you just gotta find your designated attorney. That shouldn’t be that big of a deal. There’s a little bit of time maybe to get the insurance in place and the rest of it [00:15:00] in terms of organizing your practice and getting at least the base documents together, really you should be able to do that in a weekend if you just sit down and do it.

So, again, I encourage you, if you are a sole owner or a solo, get out there and do it. For those that have partners, this kind of thing is usually dealt with in a partnership agreement. And just a quick aside, years ago, when I joined a firm I joined as a partner, and within six months, one of our partners passed away.

I think we had six or seven of us partners, so we could rally around and share the load. A lot easier than if it had just been one of us or there were no other partners. But again, even if you have partners, this is something that I would encourage you to think about and address in your partnership agreement.

So if you have any questions or wanna talk through any of this, please reach out. I do this a lot. Happy to help. And I can point you in the direction, if you want some resources or need any [00:16:00] ideas.

Good luck out there.

OutroUpdatedWebsite-1: Thanks for listening to this episode of the founding partner podcast. Be sure to subscribe on Apple podcasts, Spotify, or wherever you get your podcasts to stay up to date on the latest episodes. You can also connect with Jonathan on LinkedIn and check out the show notes. With links to resources mentioned throughout our discussion by visiting www.lawfirmgc.com. We’ll see you next time for more origin stories and insights from successful law firm founders.

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Jonathan is the go-to attorney for law firm partnership issues and law practice sales. His expertise is unmatched, and he always provides clear, practical guidance. I confidently refer colleagues to him, knowing they’ll be in great hands. Plus, his podcast is a must-listen for attorneys. Highly recommend him for anyone navigating firm transitions!

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