Tuesday, September 26, 2017

It’s the end of the professions as we know them …


The Legal Forecast is an innovative community that aims to advance legal practice through technology and innovation. It is a not–for–profit run by early–career professionals who are passionate about disruptive thinking and access to justice.

An interview I gave to The Legal Forecast is below, addressing a number of key issues facing lawyers and the professions more generally.

What is your advice for law students who aspire to work in a virtual law firm like yours? How can they best equip themselves with the skills necessary for the job?

The skills to work in a virtual law firm are arguably no different to any other work environment, however, our experience is that they are brought into more sharp focus, more quickly than what might otherwise be the case.

Our experience has been that those that thrive tend to:
  1. enjoy work as a critical component of achieving flow (as defined by Mihaly Csikszentmihalyi); 
  2. understand that purposeful work is a critical aspect of achieving flow; 
  3. embrace the concept that work-life integration, rather than work-life balance or work-life siloing is the key goal – this seems to be easiest for those that have significant, non-negotiable, other life responsibilities (eg children or parents they are responsible for caring for); 
  4. embrace the concept of making choices in each moment that lead to positive habits. Invariably, this involves choosing to do what must be done, as opposed to what is invariably ‘easier’ from moment to moment. 
What is the biggest challenge facing the legal industry?

Without wanting to be seen to be avoiding the question, my sense of things is that the biggest challenge facing the legal industry is the number of significant challenges arriving almost simultaneously and creating what some might argue is a ‘perfect storm’.

In no particular order, the key challenges are extremely well-known, and while each of them in isolation is a serious issue, the combination of them is arguably unprecedented, namely:
  1. The first time in the modern history of law firms that it is a sustained buyer’s market. 
  2. The pace of technology change outside the industry has for some time now been significantly faster than the pace inside the industry. The number of other adjacent industries where the incumbents have seen their protected position evaporate in a very short period of time means that it is difficult to build a coherent argument that the legal industry will not face a similar outcome in the short term. 
  3. The steadfast refusal of incumbent firms to take any serious steps to adopt a new business model is almost comical for those outside the industry. Any firm that tracks time in any manner (other than the lag time between receipt of instructions and delivery of a usable solution to a client), ultimately, views all aspects of their organisation through a lens of chargeable units. While the industry continues to debate the issue ad nauseam, the firms that are growing exponentially left timesheets behind some years ago. 
  4. There is then a myriad of other related impacts such as offshoring, AI, aggressive entry into the market by accounting firms and online providers, freelancing models, blockchain, augmented reality, big data and growing in-house teams. 
Ultimately the Bill Gates quote is critical – ‘We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.’

How would you describe the difference between technological disruptions and innovative disruptions to the legal industry?

Certainly, in other industries, the technology disruptions have only ever been an enabler to the more innovative business models.

In other words, it is the application of the technology that drives the truly sustainable changes, not the underlying technology itself.

There are countless examples of this. The one that is arguably the most stark and easiest to understand is that Kodak had the technology for digital photography over 30 years before Instagram was created – the technology was not new; the application of it was.

Do you envisage a change to the structure of the legal market; that is a move away from the traditional boutique, mid-tier and top-tier categorisation of law firms?


There are numerous extremely insightful thinkers that have answered this question in great detail. For example, see the work of Richard and Daniel Susskind, Chrissie Lightfoot, Jordan Furlong, George Beaton and Imme Kaschner.

My personal view is that at least in the short term, the firms that will succeed are those that do not fail the ‘Stealer’s Wheel’ axiom – i.e. they are not ‘stuck in the middle’, see – https://www.youtube.com/watch?v=DohRa9lsx0Q


In other words, it is the firms that are extremely nimble (for example, many firms, of which ours is one, have business plans that last no longer than a maximum of 90 days) or exceptionally large firms that essentially ‘own’ the client relationship (the big 4 accounting firms are a good example) should both have sustainable businesses (although for differing reasons).

Firms that are not extremely nimble or absolutely in the very top tier (as defined by buyers, not a firm’s marketing team) are likely to struggle.

You have stated that the ‘disruptive business model requires funding, resource allocation and working environments that are significantly different from those of the traditional firm’. Do you think we will see the larger firms with more funding creating disruptive business models whilst smaller firms struggle with a lack of resources?


Perhaps, counterintuitively, my personal experience has been that access to funding is one of the single biggest impediments to true disruption.

As has been profiled on many occasions previously, Clayton Christensen’s theory of disruption (i.e. the innovators, or perhaps more accurately incumbents, dilemma) is largely based on the concept that incumbents with adequate resources find it impossible to compete with disruptive firms with inadequate resources, because the disruptive firms simply do not play by the same set of rules.

Some large firms in other industries have been able to beat this challenge through a variety of techniques (Apple and Cisco are 2 high profile examples), however all of those techniques require a way of thinking that is (in Christensen’s view) almost impossible for incumbent firms to embrace.

The theories here however arguably are not particularly new – essentially, they are an iteration on Mark Twain’s quote ‘The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him.’

View Legal is completely virtual and all team members enjoy flexibility around their work arrangements. How important do you think flexibility is to the delivery of legal services?

For us, flexibility is a necessary, although of itself not sufficient, requirement.

While there is obviously a myriad of very important interrelated concepts, we generally refer to the ‘3 Fs’, being flexibility, fun and flow. Unless team members are regularly accessing each of the 3 Fs, then our ability to deliver outstanding solutions for customers is going to be tenuous.

What is a quote you often live by?

Yes – too many to list out here (indeed, every week, I publish at least one quote on Twitter, see – https://twitter.com/matthewwburgess?lang=en). Two of my books are also focused around key quotes, namely The Dream Enabler Reference Guide (see – https://www.amazon.com/Dream-Enabler-Reference-Guide-ebook/dp/B01BHOAJX0/ref=asap_bc?ie=UTF8) which is in essence the original business plan for View Legal, and ‘Laws for Life’ – the link here takes you to a free download for this book – https://viewlegal.com.au/laws-for-life/, the password is – laws4life, (please delete any pre-populated password).
This said, I was reminded recently of the quote that I put in the yearbook on graduating high school, which arguably remains relevant, from Friedrich Nietzsche, namely ‘Without great suffering, there can be no great excellence.’ In other words, if disruptive innovation was easy everyone would be doing it.

When you think of the word ‘successful’, who is the first person who comes to mind? Why?

This question is similar to the quote question – extremely difficult to answer.

In saying this, the first person I thought of was my wife Dyan. Whenever I think I may have too much going on, I never have to look very far to realise that I have it very easy. She successfully combines her own business, running our personal investment partnership, raising our 4 children (aged 7 to 13) and mentoring me.

Tuesday, September 19, 2017

1% **


Last week we were assisting with an asset protection and structuring re-arrangement & the referring adviser asked - why would an at-risk spouse retain a 1% interest in a property? As explained by an earlier post, the reasons can include: 
  1. Protection against spouse or relationship difficulties. 
  2. Protection against the majority owner seeking to encumber the property - no mortgage may be taken out over the property without the consent of the 1% spouse 
  3. For ease of security arrangements – a financier may prefer to see the at-risk spouse’s name on title documentation. 
  4. Stamp duty savings. It should be noted that in most states there are concessional provisions which apply where one spouse who owns 100% of a family home and transfers 50% (but no more or less) to their spouse. Indeed, some states, such as Victoria, allow the transfer of more than 50% of a home without any duty costs. 
** for the trainspotters, the title of this week’s post may remind some of legendary/notorious early nineties band Jane’s Addiction – see - https://vimeo.com/3867179


*** the visual this week is designed to remind - there are other ways to learn life lessons than destroying entire ecosystems 

Tuesday, September 12, 2017

Changing an appointor - just like changing a trustee; simple! (in theory ...)


A previous post explored the key revenue issues in relation to changing the trustee of a discretionary trust (see - 'Changing trustees of trusts – Simple in theory … not so simple in practice').

An equally important and related issue concerns a decision to change the principal or appointor role of a family trust. That is, the person, people, or company having the unilateral right to remove and appoint a trustee.

As regular readers of this blog will know, there does not necessarily need to be an appointor or principal provision under a trust deed. However, where there is one, a trust deed itself will normally set out in some detail the way in which the role of appointor is dealt with on the death or incapacity of the person (or people) originally appointed.

Where there are no provisions in relation to the succession of the appointor role, it is often necessary to try and rely on any power of variation under the deed to achieve an equivalent outcome.

Generally, from a trust law perspective, it is possible for the appointor provisions to be amended. However, any intended change must be permitted by the trust instrument, meaning the starting point must always be to 'read the deed' – a mantra regularly profiled in this blog. The decision in Mercanti v Mercanti [2016] WASCA 206 (this Court of Appeal judgment stands following the High Court's refusal to reject an appeal) being a leading example of the principle in the context of purported changes to appointorship.

The tax and stamp duty consequences of changing an appointor can be similarly complex.

Stamp duty costs on changing an appointor

In broad terms, the stamp duty consequences of changing an appointor provision can normally be managed in most Australian states.

This said, care always needs to be taken, particularly where the trust deed simply defines the appointor by reference to some other named beneficiary in the trust.

For example, it can often be the case that the appointor is defined as being the primary beneficiary of the trust and that primary beneficiary may also be a default beneficiary.

In these circumstances, depending on how the deed is crafted, there may be stamp duty consequences of implementing any change.

Tax Office views on changing an appointor

In relation to the tax consequences of changing an appointor, there are a number of private rulings published by the Tax Office which support the ability to change an appointor role, particularly if it is part of a standard family succession plan.

Arguably the 2 leading private rulings concerning the tax consequences of changing an appointor are Authorisation numbers 1011616699832 and 1011623239706. Broadly, these each confirm that there should be no tax resettlement on the change of an appointor where –

  • The relevant trust deed provides the appointor with the power to nominate new appointors and also allows for the resignation of an appointor; 
  • The intended change complies with the trust deed (the "read the deed" mantra again highlighted); 
  • The proposed amendment is otherwise analogous with the changing of a trustee and is thus essentially procedural in nature; and 
  • The original intention of the settlor is not changed such that there will not be any change to the beneficiaries, the obligations of the trustee or the terms or nature of the trust. 
Clark case

The conclusion that there should be no adverse tax consequences on changing an appointor is also supported by the decision in FCT v Clark [2011] FCAFC 5 ("Clark") and which has been profiled previously in this blog.

In particular, the Full Federal Court in Clark held that significant changes to a trust instrument would not of themselves cause a resettlement of the trust for tax purposes, so long as there is a continuum of property and membership, that can be identified at any time, even if different from time to time. That meant that, in Clark, although there had been a change of trustee, a change of control of the trust, a change in the trust assets and a change in the unitholders of the trust between 2 income years, this did not trigger a resettlement for tax purposes.

Rather, it is only where a trust has been effectively deprived of all assets and then 're-endowed', that a resettlement will occur.

While the Tax Office released a Taxation Determination (namely TD 2012/21) following Clark, it unfortunately does not provide any specific commentary around when the Tax Office will deem changes to an appointor or principal of a trust to amount to a capital gains tax event under CGT events E1 and E2 (ie a resettlement).

Rather, in broad terms, the Tax Office simply states that unless variations cause a trust to terminate, then there will be no resettlement for tax purposes.

While a number of examples are provided, which give some guidance around issues such as changes of beneficiaries and updates to address distribution of trust income, the examples ignore issues such as changing appointors and multiple changes (for example, changing beneficiaries, the trustee and the appointor as part of an estate planning exercise).

In conclusion - 1 related issue


Subject to the terms of the relevant trust deed, a change to the appointor or principal provisions should have no adverse revenue consequences. Any change should, even if not expressly required by the deed, be done with the consent of the incumbent appointor. This is because of the significant ultimate powers retained by the appointor.

This conclusion about the extent of an appointor's powers however does not mean that where an appointor or principal is declared bankrupt, their power of appointment is considered 'property' which vests in and can be exercised by the trustee in bankruptcy.

Historically, there has been some confusion around this issue, given that the property of a bankrupt under the Bankruptcy Act which is available for distribution to creditors includes "the capacity to exercise, and to take proceedings for exercising, all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit…".

However, it has been held that the right of a bankrupt to exercise a power of appointment under a discretionary trust is not property of the bankrupt (see Re Burton; ex parte Wily v Burton (1994) 126 ALR 557).

In that case, the argument of the trustee in bankruptcy centred on the fact that Mr Burton was the appointor and a discretionary beneficiary of a family trust. He could in theory therefore appoint himself (or an entity that he controlled) as trustee.

In rejecting the argument, it was held that the powers of an appointor are fiduciary powers that must be exercised accordingly, in the interest of the beneficiaries.

In other words, the powers of an appointor must be exercised solely in furtherance of the purpose for which they were conferred.

This means that the powers of an appointor do not amount to 'property' that passes to a trustee in bankruptcy.

The powers are also not something that can be exercised by the bankrupt for their own benefit.

The above article is based on an article that we originally contributed to the Weekly Tax Bulletin.

Image courtesy of Shutterstock

Tuesday, September 5, 2017

How to publish your own book in 48 seconds

As mentioned last week (9 reasons you should give away your IP in books) we have invested significantly in the ‘publish or perish' mantra.

Indeed, at last count, we had over 1.5 million words of published technical content. Our goal to ‘write the textbook' in each core specialisation has been achieved with books published in:
  1. estate planning; 
  2. trusts; 
  3. taxation of trusts; 
  4. testamentary trusts; 
  5. SMSFs; 
  6. structuring; and 
  7. asset protection. 
The majority of our books are independently published. This means that we retain complete control over every aspect of the publishing process and it provides us with significant flexibility to share our content with advisers.

When combined with our ‘why’, which most succinctly is simply ‘for friends', it creates interesting opportunities – hence the title of this post referring to the ability to publish your own book within 48 seconds, as opposed to taking 48 weeks, 48 days or even 48 hours.

For us, being for friends, means that all of our published content is able to be utilised by advisers however they feel may be valuable.

For example, in relation to our weekly blog posts, advisers can use this content as often as is relevant and, as long as an adviser checks with us, it can generally be entirely rebranded as an adviser sees fit.

More recently, we have helped advisers instantly create their own books using one of three broad approaches. Each approach simply takes one of our previously published books as the base content and then we either:
  1. Design the cover and branding specifically for the relevant adviser. The adviser creates a foreword (and indeed any other content the adviser wishes to contribute) - and our publishing team is able to help with any, or all, aspects of this process. 
  2. The next alternative retains the existing cover design and branding, however the adviser creates the foreword and any other content they wish to include for a ‘special print run’. 
  3. The final approach retains the relevant existing book ‘as is’, however a specially designed bookmark promoting the adviser is created for the adviser to hand out with every copy of the book. There is a significant amount of flexibility in relation to the ‘bookmark’ it can be a traditional bookmark, a postcard, trifold flyer or even a dust jacket. 
Regardless of which approach is adopted, our experience is that within around 48 seconds, an adviser can make a decision that best suits their objectives and have access to what we believe is the new standard in a ‘business card’ being one that cannot be easily thrown away.

To learn more about the books we currently have published, click here – https://viewlegal.com.au/product-category/books/, or have a look at our 25 second promo video here - https://youtu.be/a2ot00NAb24.


If you would like to explore how to publish your book, email events@viewlegal.com.au or phone 1300 843 900.

As mentioned last week, for those interested, our book ‘The Dream Enabler Reference Guide’ explores a number of the themes explaining our approach, see – https://viewlegal.com.au/product/the-dream-enabler-reference-guide/

Again - all comments or likes of this week’s post will go into the draw to win a copy of the book.


Tuesday, August 29, 2017

9 reasons you should give away your IP in books


At View we have produced over 1.5 million words of published technical content via a series of over 20 books.

Indeed we have ‘written the book’ (and in some cases more than one book) in each of our core areas of specialisation – estate planning, trusts, tax, smsfs, asset protection and estate administration.

There is a nominal price point to access the intellectual property (IP) in our books; indeed often we give interested advisers copies for free.

Why do we do this and why do we encourage all advisers who are interested in our approach to do the same with their IP?

The key reasons, in no particular order, are as follows –
  1. ZMOT (being the Google theory of ‘zero moment of truth’ before a buying decision is made) says that generally there must be 7 hours of free content, on 11 separate occasions, across 4 medias before a buying decision is made. 
  2. Books are the best way we know of to achieve the ‘7/11/4 rule’ and allow easy leverage into multiple channels (as one example, at last count, we had over 30 iterations sourced from our book content with podcasts, seminars, white papers, webinars, apps, online university level courses etc). 
  3. It has been argued that every CEO or business owner should have published at least one book. 
  4. Yes it is possible to achieve leverage without a book, however for most it would be like (for example) trying to succeed in the music industry without releasing recordings. 
  5. LinkedIn Influencer Ron Baker says ensuring he gives away all his intellectual capital each year forces him to replenish and this keeps him relevant – publishing a book helps achieve this aim. 
  6. There is a positioning with handing over a book that can not be easily replicated – it is a business card that is not easily thrown away. 
  7. The discipline, habits and learnings created by writing a book can not be underestimated – they have a huge impact on all aspects of your business and indeed life. 
  8. As has been observed widely – there is no greater ‘ROI’ than a good book. Books change lives and rarely cost more than $100. What other platform delivers this much value for such a nominal investment. 
  9. Books demonstrate that the author knows that information in the age of Google can, and indeed must and inevitably will be, free. Knowledge workers understand that the wisdom of understanding information is what is valuable. They also know that the insights of a wise and knowledgeable adviser are even more valuable. 
For those interested, our book ‘The Dream Enabler Reference Guide’ explores a number of the themes explaining our approach, see – https://viewlegal.com.au/product/the-dream-enabler-reference-guide/ 

All comments or likes of this week’s post will go into the draw to win a copy of the book. 


Tuesday, August 22, 2017

Document witnessing - measure twice; cut once


The rules in relation to witnessing wills (see the following post - Signing estate planning documents) and power of attorney documents are mandated by legislation.

This said, the rules for witnessing power of attorney documents are frustrating given each state has its own regime (see further comments in our earlier post - Witnessing powers of attorney). At one end of spectrum NSW essentially mandates that lawyers must witness whereas in WA there are dozens of categories of eligible witnesses including virtually all professions.

With other legal documents the rules are less certain and unfortunately will often depend on the application of internal rules by third parties.

Generally with most deeds they may be witnessed by one or more witnesses, not being a party to the instrument. While generally not strictly the position at law, the witness should ideally also not be related to anyone in the deed (for example, spouses should not witness each other signatures).

Practically, if documents are provided to (for example) a bank, the bank will generally require an independent 3rd party witness, regardless of the legal position.

Indeed, often financiers will refuse to accept any document where a witness has the same surname as the person whose signature is being witnessed.

Furthermore, often the bank’s position on refusing the validity of the witnessing does not come up until very inconvenient moments; often triggering significant time delays and unnecessary costs.


Image courtesy of Shutterstock

Tuesday, August 15, 2017

The most important tax tip for family law matters you will learn this week


As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’ at the following link - https://youtu.be/XZx3PozjtTg

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

If you go back many years to the introduction of the Division 7A regime in the late 1990s, early 2000s, one of the anti-avoidance provisions that they brought in was ultimately set out in subdivision EA of the Tax Act.

These rules said regardless of any other provisions, if a distribution was made out of a trust and it was left as an unpaid present entitlement (UPE) to a company and there was then a debit loan made by the trust, that debit loan has to comply with the Division 7A rules.

In this type of situation, some advisers try to argue that if the funds are lent out for income generating purposes and the interest on the debt is deductible, then the loan is not caught by Division 7A. The reality however is that the loan is a significant tax problem.

In this particular case study scenario, there were two key problems. Firstly, there was an EA problem because the trust had made debit loans when there were UPEs to a corporate beneficiary. In addition to the EA loans, there had been purported distributions by the trust to the wife over many years.

However, the wife was not a beneficiary.

So not only was there the big EA problem, there also had been a whole raft of distributions over many years that were completely invalid on the face of the trust instrument.

Ultimately, the parties entered into a settlement where the husband took over control of the trust, the wife got paid out all of her loan accounts, and was entitled to keep all of the historical distributions.

Now the interesting aspect is that the wife and her family lawyers asked for a tax indemnity in relation to both the failure to comply over the years in relation to EA and the inability to read the deed and thus the invalid distributions to the wife.

Then, three months after the wife had been paid out, the husband by chance gets a tax audit. The wife didn’t have to worry about the outcome of the tax audit because she was fully indemnified.