Law Times

PAGE 4 NEWS November 19, 2012 • Law Times Planning ahead key to law firm succession W THE ESSENTIAL HANDS-ON GUIDE TO CORPORATE LAW IN CANADA BUSINESS CORPORATIONS IN CANADA – LEGAL AND PRACTICAL ASPECTS PAUL MARTEL Get a comprehensive analysis of the legal principles involved in all aspects of corporate law, as well as the judicial interpretation and application of these principles. This seminal work covers the theoretical and practical aspects of Canadian corporate law in a precise, accessible manner. Thorough references to corporate statutes offer insight on corporate law in all Canadian jurisdictions. You also get a comparative view of U.S. principles. Business Corporations in Canada – Legal and Practical Aspects features regular supplements that ensure you're up to date with recent legal developments. ORDER # 9240978-65203 $379 3 volume looseleaf supplemented book Anticipated upkeep cost – $319 per supplement 5-7 supplements per year Supplements invoiced separately 0-459-24097-8 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. BY GLENN KAUTH Law Times hile people facing an eventual sale experience a common problem: procrastination. "One of the things that we always teach is plan ahead," says Dennis Leung, senior issues can be different for law firms versus other types of businesses, most succession planning director at Campbell Valuation Partners Ltd. and Veracap Corporate Finance Ltd. in Toronto. Leung was a speaker at a recent To- ronto Lawyers Association dinner pro- gram focusing on succession planning as well as tax and wealth management at the Rosewater Room in downtown Toronto. The event touched on both succession planning issues for lawyers' own prac- tices as well as for their clients. For lawyers' own practices, the issues can be somewhat different given that the business is oſten dependent on an individual' when it comes to maximizing the value in any succession process, ensuring those clients remain with the firm is key. One way to do that, says Leung, is to bring in a junior lawyer early on who will be "an able successor who you're able to pass to your clients." In that way, clients will feel more comfortable staying with the firm when the senior lawyer leaves if they've gotten to know the successor through their business dealings and meetings. The more a business relies on a par- the greater the risk s relationships with clients. So ticular individual, involved in a transition. So for those lawyers who lack an obvious successor, another option is to remain with the firm for a couple of years, something a lot of buyers will request, says Leung. But succession planning in general isn't 'One of the things that we always teach is plan ahead,' says Dennis Leung. a manager at the firm. In some cases, they noted, there' tion on death. For example, in the case of corporate-owned real estate, a deceased taxpayer may be deemed to have realized an accrued gain on the shares of it. When the estate then acquires the shares at fair- market value, it, too, will be subject to tax without relief from the amounts already paid by the deceased. Among the strate- gies for avoiding that situation are a se- ries of steps that allow losses triggered by the estate to be applied against the capi- tal gains realized by the deceased. That strategy works in some situations, the speakers noted. Other issues explored at the event s a potential for double taxa- usually a simple task for either law firms or their clients. Oſten, says Leung, people don't anticipate major changes or growth when they initially set up the business un- der a shareholder agreement. How, for ex- ample, does the business introduce a new partner? Does the partnership agreement specify that? How do you determine the value of the business at that stage? These are the sorts of questions that can lead to litigation and keep lawyers busy, says Leung. Of course, people setting up a busi- ness oſten don't foresee animosity down the road. And with agreements oſten in- volving lots of interpretation, there are lots of possibilities for legal questions. Tax issues, of course, are a key concern when it comes to succession and estate planning. Addressing those issues at the Toronto Lawyers Association event were Peter Weissman, a partner at Cadesky and Associates LLP, and Nathan Wright, included options for advising wealthy clients on their financial issues. One of them, said speaker Tom McCullough, is a family office structure. According to Mc- Cullough, a family office is a dedicated team of professionals that oversees and manages the integrated financial affairs of wealthy families. The concept, he not- ed, originated more than 100 years ago in the United States, A family office, said McCullough, chairman and chief execu- tive officer of Northwood Family Office LP and Northwood Private Counsel Inc., helps clients with a myriad of financial is- sues such as finding tax savings, seeking the top investment managers, and mak- ing a sensible plan. According to Gerry Fields, modera- tor of the Toronto Lawyers Association program and CEO of the Cornerstone Group, the event was a success. "For se- nior lawyers, we felt the program would offer a dual opportunity to acquire must- know information for their own prac- tices while also assisting their clients with their family and non-family succession challenges," he said. 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