1. Disability Insurance for Law Firms –
It’s all in the details
By Uri Gutfreund, RPLU
Law Firm Insurance Guru
Founder, The Managing Partner Forum™

2. Check Box Policies
2
Medical: Aetna PPO
D Dental: Guardian
Vision: VSP
Long Term Disability: Unum
Life Insurance: Unum

3. Today
• Who is REALLY at risk here
• Law Firm Workshop
• Disability Policy Checklist
• Next Steps
3

4. What your lawyers think they do
4

5. What your lawyers really do
5

6. What Could Possibly Go Wrong?
Your inability due to sickness or injury to
engage in the substantial and material duties
•Total Disability – Perm / Temp
•Partial Disability – Perm / Temp
6

7. 7
Have a Plan

8. Your Team
8

9. Fabulous Frank
9

10. Financial Snapshot of Frank
• Billings $700,000
• Annual Compensation: $200,000
• Monthly: $16,600
• Firm Profit: $200,000
10

11. 11

12. Plan in Action
The first three months – Continuation Plan
Monthly $11,000 (2/3 pay)
After three months - Insurance Program
Monthly $10,000 (60% of Earnings)
Transition Time for Firm and Frank
Revenue Protection Rider $3,300 (20% of earnings)
Return to Work Incentive Up to 100% for 3 years
12

13. Disability Tax Issue
Employee pays premium = Tax Free benefits
Employer pays premium = Taxable benefits
13

14. 14

15. Disability Tax Solutions
Best Choice: Hybrid
Employer pays premium
+
Employee voluntarily pays imputed income =
Tax Free and Best Rates
15

16. Super Sally
16

17. Financial Snapshot of Sally
• $2 million Book of Business (20% of total firm)
• Total Compensation: $600,000
• $25,000 draw
• Very profitable areas practice
• 50% of firm profits
17

18. 18

19. Plan in Action
The first three months – Continuation Plan
Monthly $16,500 (2/3 Draw)
After three months- Insurance Program
Monthly $30,000 (60% of Earnings)
Group Disability + Individual Disability = $30,000
Earnings to include all sources [k1, bonus, etc.]
Revenue Protection Rider – up to $5,000 p/m
19

20. Sally and The Firm Move On
After 6 months partnership rules totally disabled
Transition for the firm
Key Person Disability Insurance pays $1.5 million
•$1m goes to buy out Sally
•$500,000 towards retooling of the firm
20

21. Reliable Rick
21

22. Financial Snapshot of Rick
Hours: 1,800
Billings: $700,000
Annual Compensation: $156,000
Monthly: $13,000
22

23. 23

24. Plan in Action
The first three months – Continuation Plan
PTO and Informal Continuation Plan
Monthly $8,500 (2/3 pay)
After three months - Insurance Program
Monthly $7,800 (60% of Earnings)
Transition Time for Firm and Rick
Return to Work Incentive Up to 100% for 3 years
24

25. Rick’s Occupation
25

26. Rick’s Litigation Specialty
”material duties of your occupation / specialty”
• 50-60 hour work week
• conducting discovery
• drafting pleadings and
motions
• attending depositions
and court hearings
• phone conferences with
clients and opposing
counsel
• preparing Summary
Judgment and
numerous other
motions
• trial preparation
• legal research
• daily travel out of the
office to attend court
hearings, depositions,
mediations or client
meetings
26

27. Loyal Lisa
27

28. Financial Snapshot of Lisa
• Full time employee
• Compensation: $48k ($4,000 monthly)
• What does the firm do?
28

29. Crisis?
• No crisis at the firm
• No Material Financial impact at the firm
• Need to hire someone ASAP
• Lisa’s family has a material
financial crisis
29

30. Plan in Action
The first three months – Continuation Plan
PTO and Informal Continuation Plan
After three months - Insurance Program
Monthly $2,400 (60% of Earnings)
Transition Time for Firm and Lisa
Return to Work Incentive – Up to 100% for 3 years
30

31. Your Team
31

32. Program Checklist
Plan and Synchronize your income replacement plans
Short Term Disability Bridge Plan
Effective Earnings Loss Test
Correct Earnings Definition
Appropriate Occupation Definition
Partner Revenue Protection Rider
Strong Return to Work Incentive
Improved Partner Offset Formula
Bonus Riders: Catastrophic Disability (ADL), Pension
Contribution, COBRA Costs
32

33. The Law Firm Administrator
33

34. Next Steps
How is your firm impacted by disability?
1)Assemble the stakeholders and team
2)Workshop your Partners, Associates & Staff
3) Develop your Firm Disability Program
34

35. Your opinion matters!
Please take a moment
now to evaluate this
session.
Thank You!