If you think about it, it exists

Last week’s post mentioned that there is no central registry for wills (unlike, for example, the ASIC which records numerous key aspects in relation to every company registered in Australia) – see 'Challenging a Will due to a Later Inconsistent Document'

Thank you to all those that flagged that this statement is no longer correct, for those in South Australia.

In a similar vein as being the first (and to date only) Australian jurisdiction to allow trusts to have no mandated vesting date (see reference to this in the following post - 'Testamentary trusts and excepted trust income') the Law Society of South Australia has established a wills register.

The platform is broadly analogous to government registers such as ASIC and is fully electronic.

Importantly however –

1. It is not compulsory for lawyers to submit wills for registration;
2. the system is confidential and not available to the public (access is limited to lawyers working in South Australia);
3. there is no cost to lodge the will nor search the register;
4. practically the platform is likely to only be of utility to those domiciled in South Australia at the date they sign (and register) their will

Despite this innovation, as mentioned last week, best practice will likely remain (even for those able to access the new platform) that a person only ever sign one copy of their intended will, and generally ensure that the physical copy of any previous will is then destroyed.

Furthermore, if a will is registered, it will make it critical that any future amendments (via codicil) or any updated will is also registered.

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Challenging a Will due to a Later Inconsistent Document

A recent post listed the five main ways in which a will can be challenged – see Ways to contest a will

One of the aspects listed was the ability to challenge a will due to a later inconsistent document.

As there is no central registry for wills (unlike, for example, the ASIC which records numerous key aspects in relation to every company registered in Australia), often confusion can arise as to what is in fact a person’s last will.

Generally, any potential confusion is resolved as part of the probate process. In other words, before a court grants probate of a testamentary document, it must be satisfied that the document is the last statement of the will maker’s intentions.

There can be scenarios however where, even after probate has been granted, evidence is discovered that shows either a later will was made, or alternatively, material was brought into existence that overrides certain aspects of what was otherwise the person’s last will.

Particularly as technology improves, the complexity surrounding what is in fact a person’s last testamentary document is likely to increase and reinforce the approach adopted by virtually every specialist lawyer in this area of a person only ever signing one copy of their intended will, and generally ensuring that the physical copy of any previous will is then destroyed.

Resolutions v minutes – is there a difference?

Previous posts have looked at a number of the key aspects in relation to trust distributions (for example Trust distributions – 3 reminders for 30 June 2014, and A further reminder – read the deed).

One key issue in relation to effectively distributing from a trust is whether the trustee should prepare a resolution or minute.

The threshold issue under any trust instrument is making sure that the terms of the deed are followed.

This can include, for example:

1. If a decision is initially going to be made orally, confirming that there is the power to do so under the trust instrument. 
2. Methodically following all requirements set out in the trust instrument, including evidencing the decision by the date required under the instrument (regardless of what might otherwise be permitted under the tax laws). 

Assuming the above issues are properly addressed, then generally a trustee can invariably make a distribution either by way of a resolution or a minute.

A minute effectively records the decision made in an earlier meeting. It need not be made contemporaneously with the meeting (in other words, it can be prepared, dated and signed sometime after the meeting).

In contrast, a resolution is effective only from the date of signing. Where a circular resolution is made by a multiple director company or multiple trustees, it is valid on the date that the last director or trustee signs it.

Practically:

1. Sole director companies can only make distributions by way of resolutions. Generally, for trust distributions, this means that a sole director must determine how distributions are to be made and record by way of resolution the decision no later than 30 June in the relevant income year.
2. For individual trustees or trustee companies with more than one director, any decisions can be made up until 30 June and then later documented by way of a minute of meeting.
3. Again, subject to the trust instrument, where a trust has derived a capital gain, it should be possible to delay any decision at all until 31 August immediately following the end of the relevant financial year pursuant to provisions under the tax legislation.

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Remaking the professional service firm

George Beaton has been a significant contributor to the conversation about the reengineering of professional service firms.

With Imme Kaschner, Beaton has recently released the book ‘Remaking Law Firms' and it is a compelling read on many levels (see - http://www.remakinglawfirms.com/).

Broadly it captures all of the key themes facing professional service businesses generally, and particularly the legal profession.

Certainly, our experience as one of the so-called ‘NewLaw' innovators, reflects many of the core challenges and opportunities identified in the book.

One area however that I had difficultly agreeing with was the analysis about the need for time recording.

In particular, the book states –

To make this clear, we do not advocate the complete elimination of time recording.

Time recorded on a matter is a relevant component of the cost of production.

And of course revenue minus cost equals profit.

Every firm must know the extent to which its units of production, that is, matters, are profitable-and that is the reason why time must be recorded to track efficiency and improvements.

As many will be aware, authors such as Ron Baker have critiqued this area at length, and completely rejected the utility of time recording (see any of Baker’s books, for example – Implementing Value Pricing (see - http://www.amazon.com/Implementing-Value-Pricing-Business-Professional/dp/0470584610).

Our personal experience is the same as the conclusion reached by Baker. In particular, while recording time (even when pricing everything on an upfront fixed basis), our focus was always ultimately on what was chargeable.

It was not until we stopped recording time that the cultural shift finally took place to allow us to focus on what was valuable to the client.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago.

For many, the journey has started more recently and we believe it important to share our learnings.

In this regard, we are excited to be joining George Beaton as presenters at the 2016 ALPMA Summit, A Blue Print for Change, 7-9 September in Melbourne – see - http://www.alpma.com.au/Summit

Our upcoming Roadshow will also be a full day example of our contribution in this space.

Download the brochure.

Before then, our recent free webinar shared a number of insights - https://viewlegal.com.au/recorded-webinars/.

Watch the promo video below.

Outliers and the Professions

Last week’s post looked at Malcolm Gladwell's latest book.

Interestingly, Gladwell has previously also provided guidance on what types of factors may be of interest to the professions as the foundations of the time billing business model continue to be subject to intense scrutiny.

In particular, in Gladwell's book Outliers (see - http://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017930), he analysed the 'perfect storm' that allowed the legendary New York legal firms to seemingly come from nowhere and become arguably the western world's most famous and successful law firms.

The analogies given the current changes facing the time billing professions should be clearly identifiable, given the wave of innovative business models enjoying exponential rates of growth across a myriad of industries.

The key factors identified by Gladwell as the criteria for the successful New York lawyers were as follows:

1. be born in 1930 (40 years of age in 1970 when the revolution first began and a 15 year period of experience in takeover work while others were ignoring it); 
2. be an outsider; 
3. have parents who did meaningful work; and 
4. have a strong dose of ingenuity and drive.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago. In this regard, it is exciting to have been selected to present at the 2016 ALPMA Summit, A Blue Print for Change, 7-9 September in Melbourne – see - http://www.alpma.com.au/Summit

For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming July roadshow will be a full day example of this.

For your limited opportunity that lasts less than 2 weeks to access special early bird pricing for our Roadshow, download the brochure here.

Gladwell and the Future of the Professions

Recent posts have looked at recent publications that provide insight into the likely evolution of the time billing business model of most professions.

Another author that provides perspective on this theme is legendary thinker Malcolm Gladwell and his release David and Goliath (see - http://www.amazon.com/David-Goliath-Underdogs-Misfits-Battling/dp/0316204366).

In many respects, the book uses a myriad of practical examples to highlight how the theories underpinning Christensen's innovator's dilemma play through.

The central theme of the book is that the very things that make an incumbent, dominant market leader strong can in fact be their greatest weaknesses with someone who does not play by the rules.

Indeed, while I cannot easily see it referenced in Gladwell's book, the famous quote by Mark Twain is reinforced many times –

The best swordsman in the world does not need to fear the second best swordsman. The person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before, does not do the thing he ought to do and therefore the expert is not prepared for him, does not do what he ought to do and often the expert is then caught out and is ended on the spot.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago.

For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming July roadshow will be a full day example of this.

Download the brochure here.

Before then, our free webinar on Thursday this week (that is 28 April) will also share a number of insights (see - https://viewlegal.com.au/product/free-webinar-foundations-for-the-future-28-april-2016/)

Insights on the Journey to Value Pricing

For those who do not otherwise have access to it, the contribution I made to a recent eBook published by LegalTrek is extract below. The complete eBook that features among others Ron Baker, David Wells, John Chisholm and Ed Kless is available at the following link – https://legaltrek.com/afa-ebook/ Our legal services business has operated entirely on a fixed price basis since 2004.

This said, timesheets were not completely eliminated until 1 July 2013 (see photo attached!), shortly before founding our firm View.

There have been challenges, mostly unpredictable, however unsurprisingly no one in the team is likely to volunteer to fill a timesheet in ever again.

A key influence has been VeraSage, the international think-tank dedicated to eliminating hourly billing from the professions (see - http://www.verasage.com/). Consultant John Chisholm is the leading Australian based Fellow of VeraSage and is a fantastic mentor, as are the trail blazing firms associated with the group – see - http://www.verasage.com/thelist/

The key lessons we have learned in running a truly ‘timeless’ firm include:

1. Parkinson's Law is a serious challenge even without timesheets – perhaps counterintuitively our key performance metric is still time related; that being – what is the duration between agreeing on a scope of work and delivering that scope to the customer.
2. Communication both internally and with customers is vital. Many law firms only exist because of Murphy's Law (i.e. everything that can go wrong will go wrong). Successful fixed pricing almost entirely depends on carefully planning and agreeing a defined scope. If there is a legitimate change to scope that could not have been identified at the start of a project, there must be real time communication within the team and immediate engagement with the customer.
3. Centralisation of all team learnings in a logical and easily accessible manner is critical. This includes (using VeraSage founder Ron Baker's language) ‘AARs’, being after action reviews (see – https://www.linkedin.com/today/post/article/20130303194245-38251380-replacing-the-performance-appraisal). This 'non-billable' concept is rarely, if ever, done in a time billing firm. In a fixed price firm it is a discipline that must become automatic.
4. The Goldilocks Principle helps explain why we always provide the customer with alternatives in the level of service that is provided. The time billing professions remain essentially the only industry in the western world that do not empower their customers to choose service levels, and this one change to our approach has been vital.
5. The Donkey Principle explains that the best performing lawyers in a time billing model are generally of least benefit in a fixed price model - the impact of this culturally cannot be underestimated.

There are numerous other impacts that we have seen, sometimes on an hourly basis (no pun intended).

Ultimately, the most important lesson is the depth of cultural change because what timesheets do (even when you are fixed pricing) is create a focus solely on what is billable.

Without timesheets, the focus is solely on what is valuable.

This one concept has an impact on every part of a professional services business. Increasingly we are finding customers get this, and are allocating their legal spend accordingly.

As I suspect is the case for everyone in the VeraSage community, we happily share our experiences with others contemplating changing their business model.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago.

For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming July roadshow will be a full day example of this.

Before then, our free webinar on 28 April will also share a number of insights (see - https://viewlegal.com.au/product/free-webinar-foundations-for-the-future-28-april-2016/)

Image credit: Brian Turner cc