Law Times

PAGE 4 NEWS Firm now a trendsetter Continued from page 1 there yet but we do envision a union with an American fi rm," Parish said. "Our approach is to get other pieces of the jigsaw in place fi rst." Historically, Ogilvys hasn't neces- sarily been a trendsetter in the legal marketplace. It was the last of the large Montreal fi rms to move to Toronto; it only recently opened an offi ce in Calgary; and it doesn't have a branch in Vancouver. Th e fi rm maintains its only foreign offi ce by way of a small representative contingent in London, England. At the same time, if the partners have ever seriously considered ex- panding in any way to the United States, it's been a very well-kept secret. Th e emphasis has always been global, not continental or, until relatively recently, even national reach. Still, Ogilvys is a trendsetter now. "I predict that this announcement will create a lot of change in the legal landscape," said Ogilvys' chairman Norman Steinberg. "Canadian law fi rms may not disappear but they will partners who may not have joined the local fi rm without the international connection," Steinberg said. Toronto managing partner John West is quick to chime in on that issue. "Whenever we've had approaches from partners in other fi rms, the discussion Whenever we've had approaches from partners in other fi rms, the discussion inevitably turns to our international plan, so obviously we believe that the association with Norton Rose is an attractive recruitment prospect both on the partner and the university recruiting level. follow our lead in some way." If Ogilvys has its way, however, those other fi rms will be following without some of their partners. "Norton Rose has been very successful in other juris- dictions in recruiting very high-quality inevitably turns to our international plan, so obviously we believe that the association with Norton Rose is an at- tractive recruitment prospect both on the partner and the university recruit- ing level," he said. Norton Rose did consider other Canadian fi rms, but Parish said Ogil- vys was a "standout transaction" and an "incredible fi t." What is known is that Blake Cassels & Graydon LLP, one of the 10 Canadian fi rms larger than Ogilvys, declined after Norton Rose approached it, according to a se- nior partner. Just how quickly others may follow Ogilvys remains to be seen. But one thing is clear: suddenly there's a much more formidable contender in the Ca- nadian legal market sweepstakes. With the announcement that South Africa's fourth-largest fi rm, Deneys Re- itz, would join Norton Rose as well, the group becomes a top 10 global legal practice with 2,500 lawyers in 38 offi ces worldwide. It also puts the fi rm in the global top 20 for profi tability. LT Counsel to be jointly and severally liable Continued from page 1 and the preservation of these ele- ments benefi ts all Canadians." In an interview, Elaine Marchand, chairwoman of the CBA's national taxation law section, tells Law Times she would like to see lawyers excluded altogether from the reporting obligation. At the moment, when a transaction takes place pri- marily to achieve a tax benefi t with no other bona fi de pur- pose, the government labels it an aggressive transaction. But it only becomes report- able by both advisers and tax- payers when it has two out of three hallmarks: the adviser's fee was contingent on the tax benefi t achieved; the adviser required a confi dentiality agreement; and contractual protection was an element of the transaction. In Marchand's view, the con- tingency provision is too broad to be indicative of a reportable transaction because lawyers are increasingly using fees that take into account the success and im- portance of a matter. "Lawyers are increasingly pressured by the market to off er alternative billing arrangements to clients," she says, noting she fears coun- sel are being "transformed into agents of the state" to help with the collection of tax revenues. Marchand adds it's important to remember that tax avoidance isn't illegal in Canada. "You've got law-abiding citizens consulting lawyers on their rights and ob- ligations. And all of a sudden, those lawyers are statutorily bound to disclose some of the information passed from the cli- ent under threat of penalty." Stephanie Rubec, a spokes- woman with the Department of Finance, says the government has considered a number of sub- missions that raised concerns about solicitor-client privilege. "Where a solicitor has taken reasonable steps to determine whether particular information is subject to privilege and to ensure that any reporting obli- gation he or she may have will otherwise be satisfi ed, the pro- posed rules are not intended to impose either a reporting obli- gation or penalty." Looking for new business leads? an enhanced listing on Looking for new business leads? an enhanced listing on CANADIANLAWLIST.com works f CANADIANLAWLIST.com works for you! ou! Get an enhanced listing on enhanced listing on www.canadianlawlist.com. 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The enhanced listing includes the option of: and convenient online vehicle to advertise your firm, your practice or your website. www.canadianlawlist.com, you'll It is a highly efficient, cost-effective convenient online vehicle to advertise a highly efficient, cost-effective firm, your practice or your website. www.canadianlawlist.com. It's Canada's most popular and reliable online network for the legal community, bringing thousands of lawyers together with clients year. Th ere's also a due diligence defence that exempts advisers from penalties when they've taken steps to prevent a failure to report, but questions remain over whether a good-faith judg- ment that a transaction wasn't reportable would be enough to trigger that provision. Bruce Russell, head of the regional tax service group at McInnes Cooper in Halifax, says any exceptions for solicitor- client privilege need to be writ- ten into the legislation to ensure it has the full force of the law rather than relying on extensive explanatory notes in the act. Russell was a panellist at a recent webcast on the new leg- islation by the Society of Trust and Estate Practitioners. Th e organization has also written to the minister of fi nance to express its concerns with the amendments. "It's just some of the eff ects seem out of propor- tion and inappropriate," Russell says. "Th e penalties are quite strong for advisers, promoters, and taxpayers." Th e legislation would make advisers jointly and severally li- able with taxpayers subject to a limit of the total amount of fees they charged. Where the avoid- ance activity is part of a series, the penalty appears to apply to the fees received for the whole series even when other actions taken aren't avoidance transactions. In its submission to the government, the society said penalties could quickly escalate well beyond the amount of any tax benefi t a client obtained in November 22, 2010 • Law Times 'It seems quite clear that we're being asked to breach the solicitor-client privilege,' says Suzana Popovic-Montag. the reportable transaction. "An adviser should not be jointly and severally liable with a client to pay the penalty for non-disclosure of a reportable transaction," the submission maintains. "Th ere is no legal principle that would justify an adviser having to underwrite a client's failure to comply with the law." According to Marchand, lawyers' own reporting obliga- tions would inevitably infl uence them when advising clients giv- en the threat of a penalty hang- ing over their heads. "If they're divided and think- ing what are the consequences to them as advisers of a given opin- ion or result while at the same time giving advice to the client, that's not a place where lawyers should be," she says. LT

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