We’ve rolled out a new service for clients that has met with a considerable degree of success; so much so that we’re planning on expanding it in the coming months. Combining two of my favourite things – eating and getting free legal advice – our Lunch and Learn series focuses on getting small groups of clients into our office to talk about areas of law specific to their interest.
The intimate lunchtime gathering is the perfect setting. Instead of sitting and listening to a lawyer drone on about the law, the atmosphere is much more give and take and we get to talk about the real world business application of the law. It’s a good place to find workable solutions for our clients. And it’s a good place for us to find out what our clients are doing in their day to day operations – we do as much learning as anyone.
Inga had the opportunity to speak about our 30-60-90 Sue™ philosophy to a few groups recently and it was very well received – to some clients, the idea of getting paid for the work they did was somewhat revelatory – to others, it just tweaked the good habits that they already had.
Paul Voorn will be hosting a Lunch and Learn soon on Construction Lien Act considerations. If you perform any construction services or have an interest in commercial property, this event will be enormously beneficial to you.
I’m planning a complete corporate compliance Lunch and Learn in the coming weeks that will deliver a broad overview of the current legislative scheme and a focus on what smaller businesses really need to concentrate on in terms of legal compliance.
Also in the pipeline, some litigation-oriented events, focusing on the stages of a lawsuit, as well as some specific corporate events.
If you have any ideas for a topic that you’d like to see covered, or want to attend one of the lunches I’ve mentioned, please drop us a line.
Scott R. Young
Recent events in Japan offer many lessons for those prepared to learn them; among them, the importance of preparedness. The laws of probability dictate that on a long enough timeline, anything that can possibly go wrong, will go wrong. The question is when, not if. Some things we can usually predict within a few decades, like death – and some things are random enough to be almost completely unpredictable, like earthquakes, floods, fire and theft. But each of these crises happen in most businesses at some point.
As lawyers, we are often actively involved in our clients’ crisis management strategies. And because of this, we have some expertise in the field. Here are some tips from our experience:
Being Organized in Crisis Means Being Organized Before a Crisis.
If your organization flies by the seat of its pants, things aren’t suddenly going to shape up when the content of those pants hit the fan. Get organized now. Develop business plans, policies and procedures that make sense for your business and are sound and reasonable. Communicate those plans, policies and procedures throughout the organization as appropriate. Make sure everyone knows what to do on a day to day basis. That’s the starting point.
Develop a Comprehensive Plan for Crisis
In addition to your daily operating plan, develop contingency plans for various crises. Spend more time and energy for those crises that are more probable (think sudden loss or departure of key personnel) and less time and energy on the less probable scenarios (think Alien invasion).
Think about what you do and who does it and what will happen if they can’t. Think about what will happen if your business location becomes inaccessible or is destroyed. What will you do to continue your business? What happens to your documents? Are you insured? Where is your insurer’s contact information kept? Is your data safe and backed up offsite?
Put Plans in Writing
Communicate your plans and put them in writing. Make sure people know what to do when something goes wrong, or where to go to find out what to do. Make sure that documents that should be public are accessible (from multiple locations) and make sure the right people know where confidential documents can be found.
If you’re a sole shareholder and sole director of a corporation there are some things you can do to ensure an orderly transition in the event of your incapacitation or death. Have your lawyer prepare a resolution naming another director in the event that something extreme happens and you’re not able to make decisions for the company. Ensure that you appoint a trustee who is competent to actually run your business when you die. Prepare powers of attorney giving legal decision making powers to those who might need it. Powers of attorney can be crafted so as to take effect on any number of occurrences.
Run through your plans with peoplpe who know your business and who can help you troubleshoot omissions. Talk to your professional advisors – lawyers, accountants, and others who might be able to help tighten up the plan.
And when all is said and done, if you make it through a crisis and you’re in a position to help others, please do so. Text redcross to 90999 if you’d like to donate $10 to help the relief effort in Japan.
One of the best reasons to incorporate is so that your business becomes an asset that you can transfer to the next generation. A well-organized corporation can be the primary source of wealth for families. Yet many small business owners don’t take the necessary step of following up their incorporation with succession planning for the business.
If you are the sole shareholder of a corporation, or the primary directing mind behind a corporation, then you need to have a plan in place. In addition to your own Will and the selection of an Estate Trustee, you need to have written documentation that sets out your directions so that your business does not lose value in the days following your death.
Those plans may include a separate Will for the corporation, key-man or business continuation insurance, powers of attorney and management or sale instructions. This planning will ensure that the business that has taken so much of your time and energy becomes something of value to those you leave behind, instead of a burden.
Businesses that don’t have a succession plan in place tend to devalue quickly upon the death of a principal. Instead of doing business during this critical time, companies stagnate, while friends, family and employees struggle to decide what happens next and try to figure out how to run things. In the event that the business is to be sold, by this point it will have lost much of its value. If the business is to continue to operate, it may have suffered a significant hiccup in operations that could jeopardize its continued existence.
Putting together a solid business succession plan will require a good partnership between you and your legal counsel. It will require some frank discussion about your intentions, your appetite for risk and some detailed planning regarding the inner-workings of your corporation. It will take some time and some money, but it is vitally important if your business is to have value after you pass away.
If you have any questions, please contact us.
In this blog entry, I will tell you one simple rule that is guaranteed to reduce all of your legal fees, increase your protection from liability and ensure that your affairs are in order. Actually, I already have in the title of this entry – follow through.
If you have been reading this blog for the past few months (Hi Mom!), you will have garnered all sorts of tidbits about what lawyers do and how we do it. You will understand many of the areas where we can help you do what you do better and you will have some idea of how bad things can get when they get bad.
But the one thing that we can’t do in a lot of cases is finalize the work that we have done. That part is on you. I suspect that many people feel that once they have gone to the effort of making that appointment with their lawyer and giving authorization to draft a document or to act on their behalf in some capacity, they can breathe a sign of relief.
In reality, the value of what we do often doesn’t materialize until the job is done.
For example, I usually give my estate clients my standard legal advice after they leave my office, having just delivered their Will instructions – don’t die until we get this signed! While there is an attempt at levity there, there is also a very serious point – the work that you pay for isn’t doing anyone any good until it’s done.
Unfortunately life gets in the way. Between that first visit with the lawyer and finalizing the work, things happen. You may put off an e-mail asking for your instructions until later or you may leave a finished document in your desk drawer, to be signed at some convenient time that never seems to come.
Whatever the reason, if you have retained counsel to review your business processes and make recommendations, but don’t act on them, you have wasted your money. If you have retained counsel to draft a business agreement or to address a compliance issue, and haven’t signed off on the agreement, you have wasted your money.
But most importantly, delays in finalizing legal work mean that you are not protected, or that the problem that you brought to us, remains unsolved. This is the biggest issue and the one that can ultimately lead to the greatest cost.
If you have legal work in progress that is all but finished, please follow up on it and do what it takes to finalize it. You’ll be lucky if you never know how much that might save you.
If you work in the Greater Toronto area, then as I type this blog entry (Friday, G8/G20 day) you have likely realized this week that you needed to change how you work due to the summit meetings being held in our area.
Many have had to figure out how to work from home – and as of today, many are wondering if their home internet service provider will have enough band width to withstand everyone from Toronto working from home all at once.
Others have discovered the interesting back routes of Toronto in order to avoid closures due to motorcades and fences.
On Wednesday many of us also realized that we need to consider earthquake preparedness. Having grown up on the West Coast of Canada as soon as our office building started to sway, I reverted to the behaviour drilled into us in elementary school: I looked for overhead door jams to stand under. It was only at that time did I realize, there are no structural support door jams in our office – clearly, we need to address our earthquake preparedness.
Taking the lessons from this week a step further, all businesses, regardless of size, must be prepared in the event they are hit with a law suit. In particular, in this day of email and instant messaging, all businesses must have a Document Retention Policy, including an Electronic Document Retention Policy.
The document retention policy needs to set out the procedures for creation, storage, destruction and production of documents, including electronic documents. This involves addressing backup and storage needs, which thankfully due to advances in IT have come down significantly in cost and ease of accessibility for small businesses.
In addition to being law suit ready, a document retention policy ensures that you are complying with certain Government required retention periods, for e.g. Canada Business Corporations Act requires corporations to hold onto accounting records, meeting minutes and director’s resolutions for 6 years after the end of the financial year to which they relate and the Ontario Employment Standards Act requires businesses to hold onto employee name, address and dates of employment for 3 years after the employment ceases.
Failure to comply with legislated retention periods can lead to fines and the suggestion that businesses are hiding information in a law suit.
Be prepared – it’s not just for G8/G20 weekend – its for your entire business and this week is a good reminder of why you need to be prepared.
Inga B. Andriessen, Sr. Lawyer
Lately I’ve found that I don’t like the way I have traditionally answered the question: “What do you do?” My answer for the past 17 years has generally been “I”m a corporate/commercial trial lawyer”.
This response has generally lead to blank stares and for those brave enough, the follow up question “what is that?”
It has only taken me 17 years (I”m such a quick learner) to realize the simpler way to describe what I do is to say “I’m a trial lawyer who only handles business law.” O.K. …. so that is wordier and therefore, likely a work in progress, but it is a start down the correct path.
Corporate/Commercial Law is a technical definition. It is a Law School definition and one that we boring lawyer types understand – but it does not embrace the energy of what we really do: we’re business lawyers.
As a trial lawyer, I pursue and defend the rights of businesses in any situation they find themselves. Paul Voorn & Ann Hatsios are also Business Trial Lawyers (look, I shortened it already … I’m becoming a quicker study!)
As a business transaction lawyer, Scott Young of our firm advises businesses on all aspects of their work – from start up to wind up and the fun parts in between, including the particularly active Trade Mark aspects of business.
In my legal writing I’ve always believed simple is better – and stating we’re Business Lawyers just makes sense …. now to look into Trademarking that …. Scott?
Inga B. Andriessen, Sr. Lawyer (Business Trial Lawyer to be specific)
It’s not as if this topic is something we’re looking forward to, but it will be a reality for Ontario at the end of next month – the HST is coming and it will make a change to the bottom line on your legal fees.
Currently only GST is charged on legal fees. Certain disbursements, such as government fees, do not contain any tax at all and those disbursements will not be changing.
However, July 1, 2010 all legal fees will be subject to the HST effectively increasing your bill by 8%.
As businesses, we are all able to have the HST flow through, much as the GST has in the past and the expectation is that we will not notice the effect of the HST due to this.
However, if your business is contemplating a transaction such as a shareholder agreement, contract or asset transfer, you may wish to consider incurring the bulk of the legal fees before June 30, 2010 in order to reduce the fees which may not be offset by purchases.
Isn’t this a happy thought, right before a holiday long weekend? I suppose that is why Ontario calls it the May 2-4 weekend, you might need a 2-4 to feel better about the HST.
Inga B. Andriessen, Senior Lawyer
It’s the last day to file your personal income taxes, so tax status and the treatment of income is on my mind. That and the fact that we’ve had a few questions from professional clients recently about the advantages of incorporating their practices means that today we’re going to deal with Professional Corporations.
A Professional Corporation is available to select professional groups – lawyers, doctors and accountants, to name a few. From a legal perspective, the corporation does not offer the usual liability limitations associated with a corporate business structure. As the professions in question have a very profound personal aspect to the services they offer, the liability stays right where it should – with the professional providing the service and not with the corporation itself. Contrast this with an ordinary corporation where, absent negligence or malice, the liability for debts and most wrongdoings lies with the business itself.
There are significant tax advantages available to a professional corporation however. For those in a position to leave business earnings in the corporation, a substantially reduced corporate tax rate will apply to business income. Of course if those earnings are transferred to an individual, the individual rate will apply, so this is a benefit that must be considered carefully.
In addition to preferential tax treatment, certain business expenses may qualify as allowable deductions. The resulting reduction in taxable income can be significant. Together these two benefits can make incorporation a very attractive prospect.
If you have any questions about this or any other legal matter, please get in touch with us.
I find that as my clients age, as their children grow up and leave the home, as their friends come and go and as the nature of their estate matures, they periodically want to change minor details in their Will, to reflect the new realities. In fact, I highly recommend reviewing your Will every three years or so, to ensure that it meets your needs. However, the changes that need to be made are often minor and it is reasonable to wonder whether it is worth the time and expense to make the change.
Historically, lawyers used a document known as a Codicil to make the changes as quickly and as inexpensively as possible. A Codicil is a short legal document that amends only the portion of your Will that needs amending. A Codicil can be drafted quickly by an experienced lawyer, on limited direction, and can then be executed and kept with your Will. And as Wills were historically typed out in long form, they were by far the method of choice for making small changes to a Will.
While that all seems well and good, without exception, I always recommend AGAINST the amendment of a Will by way of Codicil. Here’s why:
- Codicils reflect small but important changes to a Will; if a Codicil is not executed properly, is not kept with the Will, is lost or contains a typo referencing an incorrect provision in the Will, it is worthless; and
- Codicils that change gifting provisions are very indiscreet. With the original gift readily apparent in the Will, a beneficiary who receives less by Codicil, or a jealous beneficiary who receives relatively less (or who is excluded outright) by Codicil, is much more likely to contest your Will, adding trouble and pain to your beneficiaries’ lives and adding the burden of significant legal fees to your estate.
So what’s the solution for someone who just wants to make a simple change in their Will? Cut and paste. Any Will that has been drafted in the past fifteen years should have been drafted on a computer. While a lawyer’s requirement to maintain books and records doesn’t specifically mandate that an electronic copy of your Will be kept by your lawyer, in practice, this is almost always the case.
Changing a minor detail in your Will should be as easy as asking your lawyer to cut and paste a new clause into your Will and having it executed as a fresh document. If you only have a hard copy of your Will and you move to a new lawyer, you can always ask that an electronic copy be forwarded to your new lawyer – it’s yours and you’ve already paid for it.
In practice, even minor changes to your Will can now be done quickly and cost effectively – and keeping all of your testamentary information in one document makes the administration of your affairs that much easier for your estate trustee.
If you have any questions about your estate planning needs, never hesitate to contact me by phone or at email@example.com
– Scott Young