Small firm lawyers and sole practitioners received tips yesterday on how to get properly paid by clients and the government. The information session was part of the Law Society of Upper Canada’s Solo and Small Firm conference taking place yesterday and today at the Metro Toronto Convention Centre. 

Family lawyer Andrew Feldstein and tax lawyer Vitaly Timokhov took turns to the podium and presented their tips for effective billing systems and tax strategies:

Don’t oversell: If you promise something you cannot deliver, you’re asking for an angry client who will not willingly pick up the tab, Feldstein said. “Never oversell. If anything, undersell,” he said. Clients might come to you and say another lawyer told them a certain thing could be done, but if what they’re asking for seems farfetched, don’t guarantee it, Feldstein said.

Select the right tax form: Different tax forms for things like sole proprietorships, limited liability partnerships, and professional corporations qualify you for different benefits, said Timokhov. Know the differences and choose the one with maximum benefits, he told lawyers. Once you select a form, follow the formal rules, which is something many people fail to do.

Be very cautious about giving quotes: Always make sure your clients know it’s impossible to determine exactly how much their case will cost them, Feldstein warned lawyers. “If you do give a quote, do it in writing,” he added, noting the written quote should indicate the possibility of exceptions. Clients might say their case is an easy one, but experience has taught Feldstein they’re not always right. He gave an example of a man who retained him for an “easy” divorce. That client went to the doctor’s office that same afternoon, found out he had contracted a sexually transmitted disease because his wife had been unfaithful to him, and got arrested after a confrontation ensued between the pair. It was no longer such a straightforward case.

Consider a profession corporation: “Lawyers are not proactive when it comes to professional corporations,” said Timokhov. If a lawyer has a net practice income of $130,000 and has personal living expenses tallying up to $70,000, they will be taxed $39,600 under a proprietorship but only $31,000 as a professional corporation, he said.

Pay tax only on already received income: Don’t pay taxes on income you will receive in the future, said Timokhov, who also noted not all expenses are deductible.

Bill every month: Preparing your bills can be a real pain, said Feldstein, but you’re still better off billing your clients every month than doing it less frequently. “If you bill every month, you will find you have better collections and less clients asking for [volume] discounts,” he said. Clients also want to know how much they’re spending. If the bill comes as a shock after four months, good luck getting paid the full amount, he added.

Canada

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United States

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Dr. K. Ansarian Dentistry Professional Corp. v. Dr. A. Mohajeri Dentistry Professional Corp., Ontario Superior Court

Two dentists who shared a space "cannot stand each other" anymore and no longer want to work together. But their business arrangement stipulates they can only renew the lease on the common premises as the "tenant," which is both of their professional corporations together. One dentist refuses to do that, meaning they'll both be out if they can't work out a deal, while neither will let the other negotiate separately with the landlord to extend the lease. As a result, they've been engaging in legal wrangling resulting in stacks of paper up to a metre in height to find some way to avoid losing their place of business.

Lawyers recognize profound changes to the legal market, but firms are largely sticking to their old business models — often showing a lack of understanding of the forces driving those changes, according to a study released this week.

(Image: Shutterstock)

The survey from legal consulting group Altman Weil shows 96 per cent of law firm leaders identified “more price competition” as a permanent development, but only 29 per cent are changing their “strategic approach” to pricing.

Meanwhile fee discounts — which survey author Tom Clay calls “non-strategic” changes to pricing — were up. The survey showed 21 to 30 per cent of fees were based on discounted rates, and in large firms of 250 or more lawyers, 31 to 40 per cent of fees are being discounted.

The use of alternative fees such as non-hourly based billing is also up, but still only represents 10 per cent of fees collected, according to the Law Firms in Transition Survey, which received responses from law firm leaders at 238 U.S. law firms with 50 or more lawyers.

Survey respondents report widespread awareness of changes to the legal market but firms appear slow to adapt. While many respondents report making short-term adjustments to their hiring and billing practices, few are making broad, strategic shifts to their businesses.

Although 96 per cent believe an increased “focus on improved practice efficiency” is a permanent development in the legal market, only 45 per cent report that their firms are making significant changes to their strategic approach in order to increase efficiency.

Firms do appear to be making some big changes, for example by creating fewer new partners while upping their use of part-time and contract lawyers, which Clay says keeps costs down and boosts profitability.

Often it takes time before new recruits become profitable, so in these lean times firms are reluctant to hire new lawyers. Instead they are becoming less focused on size and more concerned with efficiency. Only half of respondents said increasing their lawyer headcount was key to their firm’s success. “They’re just hiring fewer people, because they can’t keep them all busy,” says Clay.

With firms hiring less, 40 per cent of respondents say they now outsource non-lawyer functions. And while only 7.7 per cent outsource legal work, 20 per cent of firms with at least 250 lawyers said they outsourced legal work.

So what are firms’ priorities then? The top answers were increasing revenue, generating new business, law firm growth, and profitability. Fewer than six per cent cited delivering value to clients as a top priority, and less than three per cent mentioned improving efficiency. Clay says these responses show firms are not heeding the needs of their clients.

“This is very troubling,” he notes. “Law firms that do not put client needs at the top of their priority lists and align themselves with those needs misunderstand what is driving the forces of change in the legal market in 2013.”

The report suggests one possible explanation is resistance to change among senior partners.

“Along with many external market pressures, there is internal drag from partners who don’t fully understand the need for change, who don’t feel any sense of urgency to change, or who are simply resistant to doing things differently,” says Clay.

Although Canadian firms were insulated from the worst effects of the global recession, Clay says all the issues affecting U.S. law firms are at play in Canada as well.

“I get the sense that it’s not as dire in Canada by any stretch. But the dynamics in the profession are the same.”

The complete 63-page survey report is available for download here.

Canada

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Federal court judge dismisses unions' challenge against B.C. mining company, Toronto Star

Drug policy experts denounce Ottawa's stand, call for decriminalization of all drugs, Vancouver Sun


United States

Bankrupt bookstore owes nothing to holders of $210.5 million in gift cards: judge, Reuters

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International

Prosecutor in former Italian prime minister's sex trial received series of threatening letters,  Reuters

China Agritech Inc. directors lose bid to escape lawsuit brought by shareholders, Reuters

Bay Street law firms are (finally) jumping on the diversity bandwagon.

As one of its many diversity initiatives, everyone at Norton Rose Canada's Toronto office participated in the international Day of Pink on April 10 to fight bullying and homophobia.

Sixteen firms announced today they have joined forces to form the Law Firm Diversity and Inclusion Network in an effort to promote these values within the legal profession.

This follows the establishment of the Legal Leaders for Diversity in June 2011, which is an organization of in-house counsel that promotes diversity within the legal departments of corporations across Canada.

Douglas New, a partner at Fasken Martineau DuMoulin LLP in Toronto and co-chairman of the firm’s diversity committee, says LLD has been very active in encouraging major law firms to join their initiative.

“Once we started to meet, we realized that each of the firms is doing some of the same things, some of the firms are doing different things, and there’s a lot to benefit diversity and inclusiveness [at] both the law firms and the community in which we serve by sharing some best practices between the firms,” he says.

The signatories of the network include: Faskens, Norton Rose, Bennett Jones LLP, McMillan LLP, Blake Cassels & Graydon LLP, Goodmans LLP, Borden Ladner Gervais LLP, Gowling Lafleur Henderson LLP, Osler Hoskin & Harcourt LLP, Davies Ward Phillips & Vineberg LLP, Heenan Blaikie LLP, Stikeman Elliott LLP, Dentons Canada LLP, McCarthy Tétrault LLP, Torys LLP, and WeirFoulds LLP.

“All of these law firms have their own initiatives going on internally and so this is a way that we can all share best practices and do things more uniformly,” says Andrea Raso Amer, a partner at Dentons Canada LLP in Vancouver and co-chairwoman of the firm’s diversity committee.

“[And] to make it clear not only to the legal community but also to the community at large that diversity and inclusion is something that law firms don’t just give lip service to, it is really something that we want do and improve upon.”

The network’s core values include:

•  Sharing ideas for the promotion of diversity and inclusion in connection with recruitment, retention, and advancement within law firms.
• Working with Legal Leaders for Diversity and other general counsel, law departments, business leaders, and professional associations in their efforts to advance diversity and inclusion.
• Supporting outreach programs in law schools and the broader community.
• Promoting thought leadership and constructive dialogue on issues of diversity and inclusion.
• Evaluating our efforts.

The last point has been a bit of a stickler as not all firms currently track their demographics.

“It’s not good enough to say we have X number of people of this background within our firm,” says Raso Amer. “It’s do they feel included? Do they feel that they have a road to progression? Do they feel that they have the opportunities that everybody else has?”

Dentons, formerly Fraser Milner Casgrain LLP, was the first firm to voluntarily gather metrics about its personell makeup when it conducted its first firm-wide survey in November 2008, which included a portion on self-identification in various equity-seeking groups.

“It was a way of measuring to some extent how we were doing internally,” says Raso Amer, adding working groups were developed as a way to address certain issues that arose as a result of the survey. Dentons conducted a second survey last year.

Douglas Rienzo, a partner at Osler and chairman of its diversity committee, says the firm conducted its first survey last fall to establish a benchmark.

"You can look around and say, ‘Well gee, I think we look pretty diverse,’ but until you actually go out and measure you really can’t say for sure,” he says.

New is of the same mind. “In order to know whether the programs you put in place are working, you have to know where you started,” he says.

Not all 16 firms have conducted surveys to gather diversity statistics, but most said they’re open to the idea.

They say not only will diversity initiatives benefit the firms, but clients as well.

“We try to represent the communities in which we operate,” says Troy Ungerman, a partner at Norton Rose and a member of its Canadian diversity commitee. “So if we have clients that are looking to do business in other jurisdictions, for instance, the extent to which we have a workforce that represents that community can be helpful from a business perspective for the client; it may make negotiations easier, it may make dealing with political or cultural sensitivities a little easier as well.”

“The more diverse we are, then the more understanding we’ll have of various cultures where [our clients] are doing business,” adds Rienzo.

The International Chamber of Commerce has announced an agreement with Arbitration Place in Toronto to bolster the international body’s presence in North America.

Arbitration Place will provide office facilities for the ICC International Court of Arbitration to conduct its operations in Toronto.

Under the parameters of the agreement, Arbitration Place will provide office facilities for the ICC International Court of Arbitration to conduct its operations in the city. In return, ICC will advocate the use of Arbitration Place for arbitration hearings in Toronto.

Established just before the opening of an office of the ICC court’s secretariat in New York, the agreement is in line with the ICC’s objective to make the services of the Court’s Secretariat more accessible to parties, their counsel and arbitrators in the region.

“This is a very significant development for arbitration in Canada. I am thrilled by it,” says Barry Leon, chairman of ICC Canada and head of the International Arbitration Group at Perley-Robertson Hill & McDougall LLP.

Leon says arbitration practitioners are increasingly considering Canada as a venue for their arbitrations to resolve commercial and investor-state disputes.

Having the ICC commit to a presence at Arbitration Place will help make Toronto and Canada become more of a focal point for international arbitration, he adds.

“All Canadians who participate in international arbitration will benefit from this focus by the ICC on Canada,” says Leon.

“We are thrilled that the ICC, one of the oldest and most respected institutions for international commercial arbitration in the world, has recognized the quality of our facilities and service and will be advocating the use of Arbitration Place for hearings,” says Kimberly Stewart, CEO of Arbitration Place.

Canada

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United States

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International

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A decision by the Alberta Court of Appeal last week has some wondering if judges need more education around the powers of devices they themselves probably use every day.

‘[D]id they think it was small little elves within BlackBerry devices who were routing text messages to who they were going to?’ asks one lawyer. (Photo: Shutterstock)

In R. v Cockell the court reversed the conviction of Brian Allan Cockell on three counts of child luring using a computer system under s. 172.1(1) of the Criminal Code because it decided it wasn’t convinced the lower court had determined that the BlackBerry smartphone used to text message the complainants was in fact a computer system.

The accused used a BlackBerry to text message two girls aged 12 and 13. Contact was first made using using the chat service Nexopia. The meetings through Nexopia led to an exchange of cell phone numbers and text messages, then to physical meetings and sexual encounters with the girls.

The case raises serious questions about how the Crown and the judge in the case understand commonly used devices, says McCarthy Tétrault LLP technology and IP lawyer Barry Sookman, who blogged about the decision.

“I think it is a matter of judicial education. I’m sure they all use cell phones — I’m sure they all have smartphones — did they think it was small little elves within BlackBerry devices who were routing text messages to who they were going to? What would this be if it’s not a computer?”

All of the communication in question from the accused was sent via text message from a Blackberry to the complainant.

In his blog, Sookman note the offence of “luring a child” under s. 172.1(1) of the Criminal Code requires the offence be committed by means of a computer system within the meaning of s. 342.1(2) of the Criminal Code. That section defines the term “computer system” as “a device that, or a group of interconnected or related devices one or more of which, (a) contains computer programs or other data, and (b) pursuant to computer programs (i) performs logic and control, and (ii) may perform any other function.”

In its decision the appeal court stated:

There simply was no evidence, direct or circumstantial, that the appellant’s Blackberry was a computer system, or as to the content of any communications made by computer.

The trial judge incorrectly believed the defence to have admitted that the Blackberry met all the requirements of the definition of “computer system” in s 342.1(2) of the Criminal Code. He stated at para 20 of his decision that only the issue of identification was in play in relation to the three luring counts. His reasons do not otherwise address the issue of whether the Blackberry was a “computer system.”

But Sookman says the Crown should have brought forward technical evidence if there was a need and if there was a need for judicial evidence it could also have been decided based on judicial notice.

He notes there are also a number of previous cases where a cell phone has been proven to be a computer system. For example, in In R. v. Rocha, another Alberta court had previously held that given the broad definition of “computer system,” a cell phone could fall within the definition of computer system.

“For the judges not to recognize how basic the definition of a computer system is is really quite surprising in 2013. Are we going to have the same problems with the new anti-spam law proving a smartphone is a computer?”

Parliament amended the luring offence in July 2012 to remove the requirement that it be effected via a computer system, substituting instead a provision that it occur via telecommunications.

The accused was unsuccessful in his appeal on other counts on which he was found guilty including two of sexual assault, two of sexual interference, one of abduction, two of possession of child pornography and one count of making child pornography.

Canada

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Mayor Ford's lawyer says it's too early to consider action over drug allegations, Reuters

NDP calls for RCMP investigation into $90,000 cheque from Harper aide to Mike Duffy, The National Post


United States

Justice Department investigates Fox reporter over leak, The New York Times

Courts turn to Urban Dictionary to demystify slang, The New York Times


International

High Court in Britain orders compensation for asylum-seekers who were tortured, The Guardian 

Guatemala's Top Court Annuls Genocide Conviction, Reuters