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LAW OFFICE MANAGEMENT The HST is coming, the HST is coming Is your law firm prepared? Many aren't and they may be in for some nasty surprises. BY K EVIN MARRON C ollecting taxes from clients is cer- tainly not part of a law firm's core business. It's a task lawyers are usu- ally content to leave to support staff and accountants. That's why many lawyers have paid little attention to any of the details involved in the move to harmon- ized sales tax (HST) in Ontario and British Columbia. And it's the reason why some law firms and sole practitioners are in for a few nasty surprises, according to tax experts in both provinces. "My view is that lawyers are gener- ally not prepared," says tax lawyer Terry Barnett, a Vancouver-based partner at Thorsteinssons LLP and head of the firm's commodity taxation practice. There will be a scramble, he says, as law firms try to get their systems programmed for the new tax at the last minute and realize that lawyers will have to make judgments on non-routine issues that cannot be handled by computer programs and sup- port staff alone. "I think lawyers are going to have some difficulty in implementing it, espe- cially small law firms that provide ser- vices to clients outside the province," says Cyndee Todgham Cherniak, counsel in the Toronto office of Lang Michener LLP. For small law firms and sole practi- tioners serving clients in their own prov- ince, the transition to HST will likely be relatively painless, providing they set up their billing and accounting software or their manual billing and bookkeeping processes to collect HST on all services performed after July 1 and also track the tax paid on expenses. Software pro- grams are providing updates to help with the transition. LexisNexis Canada Inc., for example, will offer an upgrade in June for the latest version of PCLaw and provide users of earlier versions with a workaround. Once these are installed, users will just have to enter the tax rate and modify the date range so the soft- ware can calculate the HST based on the transaction date, according to product manager Ravi Puvan. Toronto family and employment law- yer Garry Wise says he plans to simplify matters by billing all clients at the end of June for work done prior to the HST implementation date. Work carried out and billed before that date is clearly not subject to HST, while work carried out and billed subsequently generally will be. Wise, whose clients include a large number of individuals and small-busi- ness people, says his main concern about the HST is that it will add eight www. C ANADIAN Law ye rmag.com JUNE 2010 21 MATT DALEY