Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m M a y 2 0 1 4 25 quarter to half the value of the work) up front. . . . If a client doesn't want to do that, then that's a red flag." A client who won't pay before work begins may not pay when the work is done, he adds. Another way to prevent bleeding red ink on the ledger is by offering a fixed fee. Negotiating a fixed fee gives the cli- ent some certainty, which could be an incentive for them to pay half up front. But it doesn't end there — a credit limit should be assigned to the client and if the value of the work exceeds that limit, then a stop-work order should be issued until payment is made. Heenan Blaikie's operating capital took a major hit when partner after partner decided to leave, each taking their entire capital investment with them. This leads Cameron to suggest firms implement a capital payout policy. To avoid a run on capital contributions, necessary for the firm's operations, the policy should stipulate how partners should be paid out when they leave. It could be graduated over a number of years or limited to a percentage of annual net income to avoid a cash flow squeeze, particularly if a large volume of partners leave at the same time. But it's not just the firms that should protect themselves. Partners should too. That, says Mitch Kowalski, means they should heed the advice they regularly dispense to clients. "What Heenan Blaikie has shown is how fragile these firms are," says lawyer and author Kowalski. "To me, this is a huge wake-up call to understand the financials." He suggests partners push to get quar- terly financial details that lay out the firm's current status and show where it's heading. They should look for a detailed review of all of the costs and all of the revenue. Their review should include the budgeting for the current year as well as financials for past years, which would allow them to identify any trends. In addition to the numbers, they should look at the strategic plan for the firm for the next five to 10 years. He compares it to the advice lawyers give clients when purchasing a business: examine all aspects of the balance sheet. And he's certain that's something lawyers don't themselves do. He points at "the lightning speed" with which so many partners jumped off the Heenan Blaikie ship to join other firms. "There's no way they had time to do the due diligence on those firms. And yet, they would never advise their clients to do that. The bot- tom line for me is if I'm going to go into a partnership that would be the same as buying into a business. . . . If you suddenly wake up one day and say: 'Wait a minute, what's happened to my firm?' well, then, it's on you." He expects many of those lawyers will find themselves moving to yet another firm within the next year as they become more acquainted with their new environ- ment and realize it wasn't such a great match after all. He hopes some will strike out on their own with an entrepreneurial approach to create new firms with mod- els to better match the changing legal landscape. Many clients are demanding a better bang for their buck and with a fresh start, new, smaller firms can lay out a course to provide that while still ensur- ing they are profitable. TIME: EVENT: A Lunch-time Speaker Series on Getting Appointed to and Succeeding on Corporate Boards http://www.law.utoronto.ca/programs/GPLLM.html SPECIALIZATION IN BUSINESS LAW All Aboard! May 23: "Empowering Women to Succeed on Corporate Boards and in Leadership Roles" Speaker: The Hon. Dr. K. Kellie Leitch, Minister of Labour and Status of Women; Moderator: Prof. Anita Anand, U of T Faculty of Law June 24: "The Lawyer's Role in Advising Corporate Boards" Speakers: Carol Hansell, Founder & Senior Partner, Hansell LLP; Carol McNamara, Vice President, Associate General Counsel and Secretary, Royal Bank of Canada; J. Robert S. Prichard, Chair, Torys LLP; Moderator: Prof. Anita Anand, U of T Faculty of Law Cost: $25 + HST per session. Advance Registration is required. Please contact: 416-978-1400 / gpllm@utoronto.ca Time: 12:00 noon - 1:30 pm Location: Various: Please see website for details. 1 Professionalism hr. each dŚĞ'ůŽďĂůWƌŽĨĞƐƐŝŽŶĂů>>͘D͘ŝƐŶŽǁĂĐĐĞƉƟŶŐĂƉƉůŝĐĂƟŽŶƐĨŽƌ^ĞƉƚĞŵďĞƌ͕ϮϬϭϰ͘ WůĞĂƐĞĐŚĞĐŬŽƵƌǁĞďƐŝƚĞĨŽƌƵƉĐŽŵŝŶŐ/ŶĨŽƌŵĂƟŽŶ^ĞƐƐŝŽŶƐ͘ ofT_CL_May_14.indd 1 14-04-10 4:25 PM

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