Causes, Not Symptoms, the Key to Business Model Reinvention

A recent post http://blog.viewlegal.com.au/2016/03/joining-dots-innovators-dilemma-and.html touched on the combination of the 'ping' generation and the fact that time billing effectively rewards those who allow Parkinson's Law to rule unchecked.

The book by Steven Harper 'The Lawyer Bubble' (see - http://www.amazon.com/The-Lawyer-Bubble-Profession-Crisis/dp/0465058779) details why the legal profession, and probably most other professions, will likely struggle to reinvent any of the core aspects of their business model, at least in relation to time billing, in the short term.

While a myriad of reasons are provided, perhaps the most compelling is the fact that universities across the western world are essentially factories for producing professional service firm graduates, who specialise in the areas rewarded by time billing such as:

1. long hours; 


2. rote learning; 


3. technology adverse; and 


4. engrained arrogance, particularly in relation to solutions that undermine the traditional personalised bespoke service offering (such as alternative business models, offshoring, outsourcing and automation). 

Harper argues that any change to the 'BigLaw' business model from within the profession will require that the university system starts to reward students who are able to demonstrate more innovative attributes than those outlined above. Just as importantly however, the owners of the incumbent firms must themselves create a demand for this style of graduate. As Christensen predicts however in the Innovator's Dilemma, the prospect of the incumbent firms having the vision to truly cannibalise their existing business model is at best remote.

As mentioned previously, we began the journey to address many of the above challenges over 10 years ago. For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming roadshow (see - http://viewlegal.com.au/roadshow-interest/) is another example of this.

Image credit: Book cover of The Lawyer Bubble Profession

Corporate Trustee Duty – A Practical Example

Earlier posts have looked at various aspects of corporate trustee duty – see http://blog.viewlegal.com.au/2010/06/corporate-trustee-duty-part-2.html

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to corporate trustee duty and trust splitting in Western Australia and Queensland in a ‘vidcast’ at the following link - https://vimeo.com/143839535

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

If, for example, you've got your mum and dad as the shareholders in a trustee company, and as part of the trust splitting arrangement, you're wanting to actually transfer the shares in that company, because you're wanting to transfer the ultimate control, what the stamp duty offices may do is notionally deem the value of that company to be exactly equal to the value of the assets inside the trust.

Effectively this creates a situation where, even though that’s invariably only a $2 company, for stamp duty purposes, the shares in the trustee company will be notionally deemed to be the same value as the family trust, and the shareholders will pay stamp duty on that value.

There are exemptions to that outcome, but the starting point is that it is dutiable.

If you're not aware of this risk and you've had clients enter into one of those transactions, you need to become very aware of it, because there's now data matching between the Australian Securities Commission and the revenue authorities in both WA and Queensland. Therefore if you do your share transfer and process it through ASIC and haven't lodged that with the Stamps Office, you'll likely get a letter from the Stamps Office saying ‘please explain’.

Joining the Dots - the Innovator's Dilemma and the Professions

Simon Sinek latest book is Leaders Eat Last (see - http://www.amazon.com.au/Leaders-Eat-Last-Together-Others-ebook/dp/B00DGZKQM8)

It has received excellent reviews, and having read it, I understand why (no pun intended – see - http://www.amazon.com.au/Start-Why-Leaders-Inspire-Everyone-ebook/dp/B002Q6XUE4/ref=pd_sim_kinc_1?ie=UTF8&refRID=03QHTP7C0X3YHPWYRCBH)

One of the most compelling aspects, which Sinek has also highlighted in an article (see - http://www.salon.com/2014/01/04/how_baby_boomers_screwed_their_kids_%E2%80%94_and_created_millennial_impatience/) is as follows –

Why would we think that we can do our work, check our phones, write a paragraph, send a text, write another paragraph, send another text, without the same damage to our ability to concentrate?

Generation Y thinks that, because they have grown up with all these technologies, they are better at multitasking. I would venture to argue they are not better at multitasking. What they are better at is being distracted.

Parkinson's Law further reinforces the dangerous ramifications of the 'ping' mentality - i.e. that completion of any task always expands to the available time, unless there is true and disciplined commitment to a narrower timeframe.

Our experience, having worked entirely fixed price for over 10 years now and having completely abandoned timesheets in 2013 largely mirrors the point Sinek makes.

Indeed, some of the most talented and outstanding lawyers when time billing often become unable to excel in any aspect of a fixed price model. Invariably, this leads to significant angst for the relevant lawyer, the surrounding team members and ultimately the clients.

In many respects, the innovator's dilemma assumes that at least part of the disruption of any industry will be driven by younger entrants, who do not have the level of investment in the heritage business model.

Another book in a similar space suggests this will not be the case at least for the legal industry, if not numerous other professions, currently wedded to the time billing model will be touched on in a future post.

Our upcoming roadshow (see -http://viewlegal.com.au/roadshow-interest/) will explore a number of these issues.
Image credit: Leaders Eat Last by Simon Sinek

The Soul of Enterprise … and the future of the professions

Many would be aware of our passion for up front, guaranteed fixed pricing rather than the traditional time-billing model of most law firms – previous posts explore this in more detail http://blog.viewlegal.com.au/search/label/fixed%20pricing.

Much of our inspiration in this regard comes from the VeraSage Institute, a revolutionary international think tank which, for many years, has been challenging professional services firms to price their services other than with reference to the Marxist derived labour theory of value that is time billing.

The VeraSage Institute founder (and LinkedIn Influencer) Ron Baker and fellow VeraSage Senior Fellow Ed Kless host the popular weekly iTunes radio show ‘The Soul of Enterprise’ – see - https://itunes.apple.com/au/podcast/soul-enterprise-business-in/id893874169?mt=2

Together with 2 leading Australian based members of the VeraSage community John Chisholm (see - https://www.linkedin.com/in/chisholmjohn) and David Wells (see - https://www.linkedin.com/in/david-wells-a27a2011) I was fortunate enough to appear on the show, exploring the excellent Richard and Daniel Susskind book from 2015 ‘The Future of the Professions’ – see - http://www.amazon.com/The-Future-Professions-Technology-Transform-ebook/dp/B010N9QJ5M.

A link to the podcast is as follows –
https://itunes.apple.com/au/podcast/soul-enterprise-business-in/id893874169?mt=2#episodeGuid=http%3A%2F%2Fcdn.voiceamerica.com%2Fbusiness%2F011449%2Fbaker021916.mp3%2F90565.

We began the journey to address many of the challenges the Susskind’s have identified over 10 years ago. For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming roadshow (see - http://viewlegal.com.au/roadshow-interest/) is another example of this.

The Soul of Enterprise interview explores many aspects of the book, including:

1. The likely impending end of ‘The Grand Bargain’ – meaning the monopolistic markets enjoyed by the professions will cease to exist;

2. The absurdity of the incumbent time billing business model in the new normal;

3. Technology and its re-writing of the rules of the professional services game;

4. How the ‘AI Fallacy’ lulls professionals into inertia – meaning that whether artificial intelligence performs human tasks better than humans is irrelevant; the only question is ‘does the job get done’;

5. What’s next and what’s now for professional service firms – by starting at the start and choosing a business model that sells value; not hours chalked up.

‘Fixed’ Pricing

As most will know, all work we do is on an upfront agreed scope and guaranteed fixed pricing.

Last week, I was reminded of the difference in our approach, compared to the vast majority of advisers.

An accountant that we work closely with referred a client to us who had been given a fixed cost estimate.

This ‘fixed’ cost estimate had already been exceeded by more than 100% of the initial quote and at the accountant’s best guess the job was only two-thirds complete.

Understandably, the client was concerned that any price that we might provide may in fact only be an estimate as opposed to a fixed price contract.

Fortunately, having worked with the accountant before, she was able to confirm to the client that our fixed prices were just that – fixed; and money back guaranteed. We are now working with the client and the accountant to bring closure to the outstanding steps.

Image credit: Simon Cunningham cc

Clark v Inglis and Trust Splitting

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses some of the key issues from the Clark v Inglis decision (please email me if you would like a copy of the case) and trust splitting in a ‘vidcast’ at the following link - https://vimeo.com/143343257.

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

Clark v Inglis was focused on an estate planning exercise.

As part of that estate planning exercise, there was a standard family trust under which the main asset was listed shares sitting inside the trust that overtime had grown significantly in value.

As part of that estate planning exercise, there was an asset revaluation reserve undertaken by the trustee of the trust.

As part of that asset revaluation reserve, and as part of the overall estate planning exercise, there was a distribution on paper effectively of that increase in value of the shares to the person who was actually making their will.

Glossing over some of the facts and the key issue as it relates to trust splitting, what happened under the estate planning exercise was that firstly, the trustee company, and therefore the control of the trust went to the kids of the willmaker from his first marriage (i.e. marriage No.1.).

However the big debt that was outstanding between the trust and the deceased person went to wife No.2.

The core issue was - was it a valid exercise of trustee’s discretion to revalue those assets and then notionally distribute them out?

If that was valid, what was the terms of the loan whereby the willmaker effectively was lending that money back into the trust and was that loan repayable by the trustee company into the estate and therefore passing to the second wife? Obviously, there was quite a lot of tension between wife No.2 and kids from the first relationship. The key take outs in the context of the trust splitting exercise were that yes, the arrangement was entirely valid; yes, the loan was outstanding and formed an asset in the estate; and yes, it was repayable on demand to the second wife.

Latest View app release – estate admin

Following the successful launch last numerous previous View Legal apps (in areas such as estate planning, business succession and SMSFs), we have now developed and launched another Apple and Android app.

The new app is in relation to estate administration and can be downloaded via the following links –

1. Apple – https://appsto.re/au/yweP_.i

2. Android – https://play.google.com/store/apps/details?id=view.legal.estate.admin

The administration of a deceased estate is a heavily regulated area and there are many aspects that can cause irreversible damage if misunderstood.

The View Legal Estate Admin app is designed to allow the user to narrow down some of the broad areas that might be relevant in relation to the administration of any deceased estate.

Depending on the answers provided, the app generates a free white paper containing general information about the key issues that are often relevant. All 7 of the View apps can be downloaded via our website – see - http://viewlegal.com.au/download-our-latest-apps/