A ruling by the Quebec Administrative Labour Tribunal that held that litigation privilege applies only in civil matters and in adversarial proceedings but not in an administrative law context before a quasi-judicial tribunal with powers of inquiry was overturned by the Quebec Court of Appeal.
Legal Practice Management
-
Quebec Court of Appeal overturns labour tribunal’s interpretation of litigation privilege
-
Litigation funding gaining traction
Litigation funding is taking off. Endowment and hedge funds, private equity and other savvy investors are pouring billions of dollars to funds that invest in litigation, enticed by ostensibly attractive returns. It’s also an area that is evolving quickly, and the market is experimenting with a variety of different types of funding arrangements. Litigation funding is no longer solely intended for funding class actions or personal injury suits. Corporate and insolvency litigation, international arbitration, and whistleblower suits are growing areas for litigation funding. -
Quebec lawyers and notaries lose battle against title insurers
American-based title insurers do not practise law or provide legal opinions when drawing up, registering and discharging refinanced mortgages, the Quebec Court of Appeal held in a legal battle that pitted the insurers against the governing bodies of the Quebec legal and notary professions.Tags: title insurance -
Murder clauses
The list of private and public sector organizations that are trying to rewrite the rules and pass on risks to architects seems to be literally growing by the day. The City of Burlington in Ontario tried to do it, with its Request for Proposal (RFP) for the design of a new pavilion building. So too did the City of Kingston when it issued an RFP for a community centre. Educational institutions such as Ryerson University and the Colliers Project Leaders in Fort Frances had a go at it as did the Liquor Control Board of Ontario. And that’s apart from the biggest culprit, Infrastructure Ontario, a Crown Agency that has been the subject of untold spirited discussions among the architectural community. All told, the Ontario Association of Architects (OAA) issued half a dozen warnings over the past year to its 4,000 strong members about RFPs that were plagued with inappropriate, unfair and unreasonable conditions and expectations that unnecessarily subjected architects to unacceptable and uninsurable contract conditions. -
Sexual assault conviction does not, in itself, justify dismissal
A string of recent decisions by the Quebec administrative labour tribunal should give pause to employers – and employees too for that matter.
Sexual assault convictions do not, in itself, justify the dismissal of an employee because of constitutional protections against discrimination based on criminal records, held two recent but separate decisions by the Quebec administrative labour tribunal.
-
Managing workplace sexual harassment
The series of revelations over the past year that sparked a seismic shift in public awareness of sexual misconduct by powerful men has also cast a harsh spotlight on workplace sexual harassment. Emboldened by the groundbreaking #MeToo and #TimesUp movements, growing numbers of women are speaking out — and that’s making organizations skittish, more so because they are under growing pressure to take a zero-tolerance approach to unacceptable comportment in the workplace.
Yet workplace sexual harassment is hardly a new issue. It has been on the legal radar since at least 1989 when the Supreme Court of Canada held in the landmark case of Janzen v. Platy Enterprises that sexual harassment is a form of sex discrimination and violates human rights legislation. Fifteen years later, Quebec became the first jurisdiction in North America to ban non-discriminatory workplace harassment, a move followed by Ontario in 2009, and in the ensuing years other provinces followed suit.
-
Total amount of legal fees not necessarily covered by solicitor-client privilege rules Quebec appeal court
The total amount of professional billings paid to lawyers working on a mandate for public bodies is not necessarily automatically protected by solicitor-client privilege ruled the Quebec Court of Appeal.
In what is described as a precedent-setting ruling, the Quebec appeal court decision provides much-needed guidance and strikes a delicate balance between professional secrecy and public access to documents, according to legal experts.
“The importance of this lies with the distinction the Quebec appeal court makes between professional secrecy and public access to documents regarding legal fees paid by public bodies to lawyers,” said Pierre Trudel, a former director of Université de Montréal’s Public Law Research Centre. “The decision provides helpful guidance over what should remain protected by professional secrecy and what should be accessible to ensure public access to documents.”
But Bernard Pageau, who successfully plead the case, is under no illusions. Even if a leave to appeal to the Supreme Court of Canada is not filed or if the decision is not overturned, Pageau expects the ruling to upend longstanding practices by Quebec public bodies and the provincial Access to Information Commission gradually and begrudgingly.
“If it is a final decision, it will take some time before public bodies react and implement the changes,” said Pageau, the senior director of legal affairs at Québecor Média inc. “There may be public bodies that erroneously interpret the ruling or who will refuse (to grant access to documents) and we will end up having to bring the matter before the Quebec Access to Information Commission. But having a hearing before the Commission takes up to a year. That is a denial of democracy which prevents a citizen from exercising his democratic rights.”
In a unanimous decision, the Quebec appeal court held that legal billings are prime facie protected by professional secrecy because it generally contains a description of accomplished tasks, services rendered and often advice given but the total amount of legal fees paid to a lawyer working on a mandate for public bodies, such as municipalities or school commissions, are not automatically covered by solicitor-client privilege.
In a bid to reconcile the fundamental importance of privilege attached to the solicitor-client relationship with the principle of public access to documents, Trudel points out that Quebec appeal court Justice Paul Vézina introduced a two-step test. The first part of the test involves determining the “scope of the secrecy, that is whether the information is covered by solicitor-client privilege,” said Justice Vézina in a 19-page ruling in Kalogerakis c. Commission scolaire des Patriotes, 2017 QCCA 1253. Justices Robert Mainville and Denis Jacques (ad hoc) concurred with the August 22nd decision.
If it is, then the second part of the test comes into play: “whether or not this is one of the rare cases where it is justified to dismiss and allow the disclosure of information that is otherwise inaccessible,” added Justice Vézina in a decision that overturned the judicial review by Quebec Superior Court Justice Suzanne Courchesne and restored a decision by Court of Quebec Justice Diane Quenneville in Kalogerakis c. Commission scolaire des Patriotes, 2014 QCCQ 4167.
“With this decision, citizens and taxpayers will have more access to the total amount of legal fees disbursed by public bodies,” said Pageau. “There will be exceptions. It will always depend on whether disclosing the total amount will disclose confidential information. But now the burden of proof rests with public bodies to prove that.”
The case dates back to 2010 when a journalist working for the tabloid Journal de Montréal sought to find out the amount that a Montreal suburb paid lawyers in a suit launched by a citizen. The newspaper also wanted to know how much four Quebec school commissions paid in legal fees in a class action suit that was filed against them. In both cases the Quebec Access to Information Commission refused to provide the information, holding that the amount of legal billings is information protected by solicitor-client privilege as per section 9 of the Canadian Charter of Rights and Freedoms. The Commission relied, as it has for more than a decade, on the decision Commission des services juridiques c. Gagnier, [2004] CAl 568 – a ruling that held that legal billings are automatically protected by professional secrecy. “Since 2004, we could obtain nothing,” said Pageau. “It was systematic. As soon as we made a request for an access to information document asking how much in legal fees was spent in a case, they would simply respond we cannot because it was covered by solicitor-client privilege.”
The City of Terrebonne, a Montreal bedroom community, and the four school commissions argued that disclosing legal billings would reveal the financial means it has to defend itself and could compromise its ability to reach an out-of-court settlements.
Justice Vézina dismissed the arguments as speculative and unconvincing. He said that disclosing the total amount of legal billings does not infringe solicitor-client privilege in these cases because it does not reveal the services or advice provided by lawyers.
Just as importantly, Justice Vézina held that the objective of the province’s Act respecting Access to documents held by public bodies and the Protection of personal information is to spur “informed debate” and that cities and elected officials are accountable to voters.
“Municipalities have public funds to manage, and it is in the public’s interest to know what kind of resources a municipality devotes to legal fees,” noted Trudel. “That can be an indicator of how a municipality is managed. That is of public interest.”
Legal counsel for both the City of Terrebonne and the school commissions did not return calls.
This article originally appeared in The Lawyer’s Daily, published by LexisNexis Canada Inc.
-
Business heaves sigh of relief as federal government suspends controversial private right of action provision in anti-spam law
Canada’s business community has just heaved a huge sigh of relief.The federal government issued an Order in Council that suspends the controversial implementation of the private right of action under Canada’s Anti-Spam legislation (CASL) until the completion of a parliamentary review due to “broad-based concerns” raised by businesses, charities and the not-for-profit sector.
-
Managing partners say their lawyers are underperforming
Your boss is not impressed with your work. You underperform. You are not busy enough. You have weak business development skills. And on top of that you are resistant to change.
That is the telling, and damning, portrait laid bare by managing partners and chairs at 798 US law firms with 50 or more lawyers who were polled by American legal management consulting firm Altman Weil.
“Law firms are slowly changing – more slowly than we think is wise, but changing nonetheless,” says the survey entitled “Law firms in transition 2017.
But it’s evident that firm leaders are not pleased with the progress made within their firms to meet and confront the challenges posed by a rapidly changing marketplace that has too many lawyers and not enough demand for services. Indeed, according to 61 per cent of firm leaders, overcapacity is “diluting” firm profitability.
Eighty-eight per cent of firm leaders said they have “chronically” underperforming lawyers, and 82 per cent of them blame weak business development skills while 59 per cent point the finger at an flat or declining market.
There are more alarming figures. Fifty-two percent of firms report their equity partners are not sufficiently busy, and 62 per cent of firms said their non-equity partners are not busy enough. Lawyers other than partners and associates are not busy enough in 43% of law firms while in one out of four firms even associates don’t have full workloads.
With profits declining, nearly all firms (96 per cent) are reducing compensation, asking for individual improvement plans (79 per cent), removing chronic under-performers (73 per cent), and de-equitizing full partners (57 per cent). Lawyers hoping to become partners may have to think twice. Sixty-eight per cent of firm leaders think fewer partners will be awarded equity status in the future – and that this is an permanent trend in the future.
“Experience shows that the right response is to make a plan for improvement with a clear timeline, and to remove those lawyers who are not able to turn their performance around,” according to the authors of the survey. “This can be a difficult and painful process, but it is a critical step in addressing a fundamental threat to law firm financial health and long-term viability.”
And yet, more than half of law firm leaders still believe that headcount growth is a prerequisite for their firm’s success. But the way they are going to go about it is different. While nearly all of the firm leaders plan to pursue organic growth and the acquisition of laterals this year, half of all law firms said they have significantly changed their staffing strategy since the financial crisis. Firms no longer shy away from using contract lawyers, staff lawyers and part-time lawyers in a bid to cut costs and improve efficiency and profitability in light of growing competition, particularly from clients themselves as business is moving in-house — and managing partners are concerned. With reason. Two-thirds of firms report losing business to corporate law department insourcing.
Firms, at least some of them, are looking at pricing to improve efficiency and provide greater client value. Thirty-nine per cent of law firm leaders said their firms have made significant changes in their strategic approach to pricing, 44 per cent have not, and 17 per cent are considering it. However only 30 per cent of law firms are routinely linking discounted capped and alternative fees to changes in how work is staffed and delivered.
“This is a hugely significant and extremely troubling result that goes to the heart of successful change and illustrates a critical misunderstanding in many firms,” says the survey. “The strategic elements of a law firm’s business model are all interlocking gears in the same engine. A firm that does not consider the interaction between scope, staffing, pricing, project management and margin cannot achieve optimal performance.”
Improving practice efficiency is also top of mind for the overwhelming majority (94 per cent) of respondents. But only half said they have “significantly” changed their approach to the efficiency of legal service delivery, a finding that has prompted the authors of the survey to describe this as a “frightening disconnect.” Knowledge management and legal project management are the most common initiatives but they are proving to be difficult to put in practice.
A growing number of law firms are also exploring innovation. Half of respondents said their firms are “actively engaged” in creating special projects and experiments to test innovative ideas or methods. What’s more, nearly half of firms are currently using technology to replace human resources to improve efficiency. But not artificial intelligence, not yet at least. Only 7.5 per cent of firms said they have begun to make use of legal AI tools, and 29 per cent are beginning to explore their options. The majority (64 per cent) “are not doing anything” or are not even aware of what is going on in this area. “This is coming, and the day is not far off when ignorance will carry a steep cost,” warns the survey.
Partners are the source of the problem, “since their cooperation determines in large part whether change takes root in their firm.” Nearly two-thirds of law firm leaders say partners resist most efforts to change, and more than half (56 per cent) say most partners are unaware of what they might do differently.
The survey also takes a swipe at firm leaders. It points out that almost all law firms are doing strategic planning at both the firm and practice group level. But “many are doing so without a broad and deep understanding of the environment. This is a cardinal sin and can be catastrophic.”
-
Montreal law firm Langlois announces program for innovative startups
Montreal law firm Langlois Lawyers LLP has announced the launch of L-inc Project, a legal services program for innovative, growing start-ups.
The new program provides a wide range of legal services required when a business is starting up and during its first years, particularly dealing with incorporation, shareholder and employee agreements, and service agreements and commercial leases.
Besides “advantageous” fixed fees, the L-inc. Project provides businesses with access to mentoring services offered by well-established executives from among the firm’s clientele. The L-inc. Project strategic team is composed of lawyers from the firm’s business, technology, intellectual property, labour and litigation law groups.
“We know that each business has its own specific, distinct needs,” said Jean-François Gagnon, Langlois lawyers’ chief executive officer. “That is why we decided to create the L-inc. Project and make our business experience, legal expertise and network available to innovative businesses. We want to be an important partner in the growth of Quebec businesses.”This effort appears to address a common complaint by clients against law firms. A global research study by Deloitte concluded that conventional law firms are no longer meeting today’s business needs. The majority (55 per cent) of participants in the study – legal counsel, CEOs and CFOs — have taken or are considering a significant review of their legal suppliers.
Some law firms like Langlois and McCarthy Tétrault have seen the writing on the wall. “Our business is actually to make it as easy possible for clients to solve things in the most practical efficient way for them, and that’s why I get excited about the role that law firms can play because we should be best positioned to be the problem solver, this reaggregator of all these different pieces and solutions so that what the client sees at the end of the day is this simple integrated solution to the different problems that they have,” said Matthew Peters, the national innovation leader at McCarthy Tétrault.
-
Cultural change is the biggest challenge law firms face in keeping up with technology
An overwhelming majority of law firm leaders believe technology will have the greatest impact on law firms over the next five years but are deeply concerned that cultural changes may prove to be a barrier in keeping up with new technology, according to a new report.
The global legal industry is at a tipping point, and there is an urgent need for law firms to consider the longer term impact of technological change on their strategic and competitive market position, suggests a report by accountancy and business advisory firm BDO LLP. The report, entitled Law Firm Leaders Survey, polled the managing partners and senior partners of 50 international and United Kingdom law firms.
Law firm leaders believe that greater client demand, generational change and legal market consolidation will be factors that will affect the business of law over the next five years, but four out of five cited technology as the factor that will have the biggest impact. Yet while technology is considered a strategic priority for 94 per cent of law firm leaders surveyed, it is only a top strategic priority for only six per cent of them.
The practice of law however has been largely shielded by technological developments over the past fifty years, suffering little more than glancing blows. While the way that law professionals process and share information has evolved with new technologies, primarily with the emergence of personal computers, email, and the Internet, it did not fundamentally transform it.
“Technology’s impact on the legal sector is not new, but the degree of change over the next five to ten years is likely to be very different,” said the report.
Nearly one in five law firm leaders believe that artificial intelligence is the technology that will change their law firms. Some think it may replace the work of lawyers while others believe it will shed a significant layer of work and revenue from law firms. This in turn could bring about changes to the resourcing mix at law firms, the law firm model and its financial structures. Other law firm leaders would not go so far, believing the impact AI will have is unpredictable.
Artificial intelligence aside, nearly one in five law firm leaders believe that technology could lead to greater efficiency and productivity, but not necessarily a disruption to the business model. One in ten said that technology could lead their firms to offer new services to clients and it could change the way they are delivered. Technology, these law firm leaders believe, will enable or drive them to offer a wider range of services to clients, and provide better and deeper legal analysis.
“New technologies are likely to replace some the routine work which is currently undertaken by junior lawyers,” said one law firm leader. “In turn, this will have an impact on the shape of the law firm of the future.”
But almost half (49 per cent) of law firm leaders said cultural change is the “greatest” challenge law firms face in keeping up with new technology. There is an interesting disparity however between global and UK firms. Twice as many global law firm leaders believe that cultural change amongst the partnership – as opposed to across the firm – was the main impediment. UK heads were three times more likely to say the challenge lay within the firm compared to the partnership level.
Investments in technology too was a preoccupation of global law firm leaders. Nearly 30 per cent of them viewed new investment funding as their greatest challenge, “perhaps because of the scale of investment many are looking to make in new technology.” The nature of the partnership model is another factor that was cited.
“In this new world where technology and changing client demands are causing firms to reconsider how legal services are delivered, is it feasible that law firms can continue to provide legal services in the same way they have done for decades?” asked rhetorically Matthew White, international practice leader, professional services group at BDO. “Law firm leaders must accept that if they want to maintain competitive advantage they will have to be much bolder in their approach to overcome with these disruptive market changes.”
-
Legal profession concerned about algorithmic bias
Algorithms, the set of instructions computers use to carry out a task, have become an integral part of everyday lives, and it is immersing itself in law. In the U.S. judges in some states can use algorithms as part of the sentencing process. Many law enforcement officials in the U.S. are using them to predict when and where crimes are likely to occur. They have been used for years in law firm recruitment. And with advancements in machine learning they are also being used to conduct legal research, predict legal outcomes, and to find out which lawyers win before which judges.
Most algorithms are created with good intentions but questions have surfaced over algorithmic bias at job hunting web sites, credit reporting bureaus, social media sites and even the criminal justice system where sentencing and parole decisions appear to be biased against African Americans.
And the issue is likely to gain traction as machine learning and predictive coding become more sophisticated, particularly since with deep learning (which learn autonomously) algorithms can reach a point where humans can often no longer explain or understand them, said Nicolas Vermeys, the assistant director at Cyberjustice Laboratory in Montreal.
AlphaGO is a case in point. When AlphaGO, Google’s artificial intelligence system, defeated the 18-time world champion in the complex and highly intuitively game of the ancient Chinese board game GO, it was not just a demonstration of yet another computer beating a human at a game. GO, a game with simple rules but profound complexity, has more possible positions than there are atoms in the universe, leading some to describe it as the Holy Grail of AI gaming. It was a remarkable feat because AlphaGO was not taught how to play Go. It learned how to play, and win, by playing millions of games, using a form of AI called deep learning, which utilizes neural networks that allow computer programs to learn just like humans. More than that, the victory showed that computers are now able to rely on its own intuition, something that was thought only humans could do.
Another example is Deep Patient. The brainchild of a research group at Mount Sinai Hospital in New York, it is a machine learning tool that was trained to detect illness from data from approximately 700,000 patients. Deep Patient turns out to be good at detecting hidden patterns in the hospital data that indicate when people are becoming ill. It also appears to be really good at anticipating the onset of schizophrenia, a very difficult disease for physicians to predict. But the people behind Deep Patient do not yet understand why Deep Patient seems to be good at predicting schizophrenia and do not understand how it works.
“We have no idea how algorithms arrived at their decision and therefore cannot evaluate whether the decision has value or not,” said Vermeys, whose research institution is studying the issue of algorithmic bias. “There is a risk to relying completely on machines without necessarily understanding its reasoning.”
No human is completely objective, and so it is with algorithms as they have been programmed by programmers, noted Ian Kerr, a law professor at the University of Ottawa and the Canada Research Chair in Ethics, Law and Technology. Programmers operate on certain premises and presumptions that are not tested by anybody else which leads to results based on those premises and presumptions which in turn gives rise to bias, added Kerr.
On top of that it is very difficult to challenge such decisions because “whoever owns the algorithms has trade secrets, isn’t likely to show you the source code, isn’t likely to want to talk about the secret source and what makes the algorithm work,” said Kerr. “What justifies the algorithm is its success or perceived success which is very different from whether or not it operates in biased ways.”
Aaron Courville, a professor with the Montreal Institute for Learning Algorithms, shares those concerns. “We are really in a phase where these algorithms are starting to do interesting things, and we need to take seriously the issues of responsibility,” said Courville.
Europe is taking a serious look at these issues. Under the European Union’s new General Data Protection Regulation (GDPR), automated individual decision-making that “significantly affect” users will be restricted, argue Bryce Goodman of the Oxford Internet Institute and Seth Flaxman of the University of Oxford’s Department of Statistics in a paper. Expected to be in force in 2018, the GDPR will also effectively create a “right to explanation,” according to the authors. In other words, users can ask for an explanation of algorithmic decision that was made about them.
“This is where Europe and the U.S. go wild in their disagreements,” explained Kerr, who has also written about the issue of a right to explanation. “Europe starts with this principled approach that makes sense. If a decision is about me and it has sort of impacts on my life chances and opportunities, I should be able to understand how that decision was made. It invokes large due process concerns.
“The due process idea is that no important decision should be made about me without my own ability to participate. I have a right to a hearing. I have a right to ask questions. So all of these kinds of rights are kind of bound up in this notion of the duty to an explanation. And the hard thing is that an algorithm isn’t in the habit of explaining itself, which means that if that kind of law prevails then people who use algorithms and design algorithms will have to be a lot more forthcoming about the mechanisms behind the algorithm.”
Further reading:
Machine bias: There’s software used across the country to predict future criminals. And it’s biased against blacks by ProPublica, an American independent, nonprofit news organization.
Chief Justice John Roberts is a Robot by University of Ottawa law professor Ian Kerr.
European Union regulations on algorithmic decision-making and a “right to explanation” by researchers Bryce Goodman and Seth Flaxman.And for the technologically-inclined:Mastering the Game of Go with Deep Neural Networks and Tree Search by David Silver, the lead researcher on the AlphaGo project. -
Artificial intelligence: Law firms are a hard sell
Fernando Garcia is looking forward to the day when he can get his hands on Beagle, an automated contract analysis system powered by artificial intelligence that reads contracts in seconds, highlights key information visually with easy-to-read graphs and charts, and gets “smarter” with each reviewed contract.
Tags: artificial intelligence -
Not a single client satisfied
The disconnect between clients and large law firms is so significant and persistent that a growing number of clients are considering bringing more legal business in-house, exploring alternative legal service providers and are contemplating doing business with smaller firms that offer greater flexibility, reveals a report.
General counsel feel that large law firms make little effort to understand their business, do not appreciate the budgetary constraints they face, and receive little help when analyzing the complex portfolio of legal work given to them. Indeed, the report points out that not a single client was satisfied with what law firms provide.
“Earlier research commissioned by LexisNexis looked at barriers that inhibit change in the industry and a theme that consistently emerged was a disconnect in how law firms listen and act on the voice of the client,” said the report which was conducted by information provider LexisNexis and Cambridge University’s Judge Business School. “That this voice is not always heard, or can become distorted during interactions is both puzzling and potentially ominous, given how critical client relationships are for law firms.”
Part of the problem is that while both law firms and clients are aware of the disconnect, their interpretations of the magnitude and underlying causes are far from the same. Echoing findings by a 2016 global research study by Deloitte, the LexisNexis study noted that clients want solutions to their problems, and large law firms are not providing them. In fact 40 per cent of clients noted that senior partners of their law firms appear to lack more than a basic knowledge of their business. Several general counsel even went so far as to describe their interactions with partners as superficial, with partners often poorly briefed.
Clients want relationships, and do not view transactions as the essence of the relationship. Rather, clients look for law firms to “connect the dots, convey the bigger picture, suggest ways in which the law firm can create value for the client’s business and not just reduce costs,” noted the report.Law firms don’t see it that way. They tend to focus on the transaction, not relationship-building, and many law firms see no need to foster relationships. Law firms provide advice, and it’s up to the clients to translate this advice to solutions, as one partner put it.
It’s also no secret that the majority of in-house counsel are under intense pressure to shave costs and run a lean team. But general counsel complain that law firms do not seem to recognize that reality, and are in fact “underwhelmed” by their response. In-house counsel assert that law firms have “little appetite” to offer alternative business models. And when law firms do offer services at fixed fees, “clients see the parameters of the service changed so frequently the fee is actually variable,” noted the report entitled “Applying the voice of the client in law firms.” Further 75 per cent of clients stated that they get little help from large law firms when “analysing complex portfolio of legal work” given to them, be it spends, trends, type of work, the life cycles of cases and impact.
Unsatisfied clients are taking matters in their own hands, and are ending relationships with law firms more frequently than ever before, added the report. Twenty per cent of clients stated that they change “membership of their panels of law firms” more often that they wish. Moreover, 25 per cent of clients are considering moving more business in-house while others have begun working with much smaller law firms who offer the flexibility, visibility and responsiveness that they do not get from large law firms.
“The pace of evolution in the legal profession is unprecedented and although many of these changes are client-driven, it seems based on this research that the client voice is still not being heard loudly enough within the firm,” said Mark Smith, market development director at LexisNexis. “It suggests that law firms need to improve their ability to work in a joined up manner, focus on identifying opportunities that create mutual value, and start working harder at putting client relationships at the heart of everything they do.”
Law firms still have time to do something about the disconnect, suggests the report. To begin with, law firms should consider re-engineering processes and practices. Law firms should appoint key account representatives to help ensure close co-ordination between different teams because far too often law firms are uncoordinated in how they execute a portfolio of transactions with a client. They should also take their cues from the likes of consulting firms who provide “dashboards of the status of completed and ongoing activities,” with billing and associated information.It would also be in the best interests of law firms to spend more time building relationships with their clients and partners should better coordinate these efforts.
Law firms need to rethink core client strategies, suggests Kishore Sengupta of Cambridge Judge Business School. “To succeed in the current climate, lawyers need to be more than just great lawyers. They need to understand their clients’ businesses more deeply. Lawyers now need to implement clear strategies to manage client relationships, moving beyond pragmatic engagements to providing a sense of partnership where the client feels valued and protected.”
-
Federal budget will change how lawyers recognize income
It’s not only smokers and drinkers who have been targeted by the federal budget. Sin taxes are to be expected, and are par for the course.
But professionals such as lawyers, doctors and accountants have been taken aback by the proposal in the federal budget to eliminate their ability to exclude the value of work in progress in computing their income for tax years that begin or after Budget Day.
Taxpayers are generally required to include the value of work in progress in computing their income for tax purposes. But some professionals used to have the option to exclude the value of work in progress in computing their income. That allowed them to defer recognition of income (compared to full accrual) while being able to deduct the related expenses in the year they are incurred.
The budget does however provide some transitional relief, notes Lawson Lundell LLP. For the first tax year after budget day, 50 per cent of the lesser of cost and fair market value of the work in progress will be taken into account for the purposes of determining inventory for tax purposes. After that tax year, the full amount of the lower of cost and fair market value will have to be accounted for.
But as a McCarthy Tétrault bulletin points out, the federal government is concerned that this “billed-basis accounting enables these taxpayers to defer tax by permitting the costs associated with work in progress to “be expensed without the matching inclusion of the associated revenues.”
