Most of your business owner clients have knowledge and expertise in their own businesses, but must rely on an integrated group of trusted advisors, lawyers and accountants to manage their wealth.

Many of your clients undoubtedly end up frustrated and angry at mounting legal and accounting expenses. What many business owners don’t understand is that often the causes of seemingly out-of-control third party bills originate in their own shop, having to do with their own inadvertent mismanagement of external advisors.

Here are 10 suggestions you can pass onto your business owner clients:

1. Assemble your corporate and personal documents.

It is incredible how much time is run up over the years using lawyers’ and accountants’ offices as libraries and filing cabinets. Gather the key documents that form the permanent history of your company or group of companies in a readily accessible form. Binders are better than files for this purpose because they allow everyone to clearly see what is in the binder and access its contents. Regarding corporate documents, your binder library should include:

  • articles of incorporation
  • articles of amendment
  • banking resolutions
  • articles of amalgamation
  • any tax elections filed (rollovers, capital dividends)
  • loan agreements
  • major acquisition agreements
  • executive compensation agreements
  • confidentiality agreements
  • key employee agreements
  • major leases
  • option agreements
  • shareholder agreements
  • precis of any major litigation or any judgments or settlements reached
  • trademarks
  • resolutions declaring dividends
  • financial statements

Personal documents would include:

  • wills
  • powers of attorney
  • trust documents
  • net worth statements2. Create a basic corporate summary. The spine of this document is probably sitting in the corporate department of your lawyers office with your minute book right now. Don’t be shy to ask for it and expand it. Then you can give it to anyone working on your file so they have a basic understanding of what the company does, who owns it, the key points in its history and what they need to know when they are working on it. Lawyers can use this to quickly bring themselves up to speed on a file they may not have looked at it in a while. Don’t forget, they have hundreds of files in their office. It will save you money and make sure that everyone is working from the same set of facts if you keep this corporate summary up to date.

    3. Choose a central hub.

    Nothing adds to the cost and confusion faster than having a number of people issuing instructions and information. Once the confusion sets in and different sets of professionals start to speak among themselves to clarify their understanding, costs skyrocket. Even worse, time can be lost while people pursue dead ends because they have taken their instructions from the wrong person. In situations where there are multiple parties to the transaction, it can also magnify the tension and create ill will or a sense that your side is disorganized. Enough said. Choose one spokesperson and facilitator to coordinate the team of experts.

    4. Build a library of your greatest hits.

    You are likely to have a number of agreements you enter in to with some frequency and over time, you like some aspects of certain agreements over others. They may have been drafted by other lawyers or your own. It is worth gathering them in one place and identifying what you have seen ‘work’ and go wrong in the past and make them available to your lawyer before asking them to draft a similar document so that they can have a clearer idea of what your preferences are and there will be less costly back and forth drafting.

    5. Use the Internet to ask simple questions.

    Government agencies have put a remarkable amount of information on the internet and there are many questions that can be quickly answered online rather than by a call to one of your professionals. Where the issue is more complex, it lets you build the base to frame your question and focus only on the complex areas that require their expertise rather than general knowledge.

    6. Know what you want.

    This may seem like an obvious point, but before you hire a lawyer, it is worth spending some time considering your objectives going forward. Does your estate plan involve preparing the business for sale or grooming a family member for succession? Is that plan acceptable to your partners? The rest of the family? Can you see yourself working everyday for your children in the last years of your career? Is there only one logical purchaser in your industry? Are you ready to sell? Do you need key non-family employees to remain with the business to make the plan work?

    7. Commit internal resources.

    Make sure that the good intentions at the start, such as keeping information flowing, maintaining document records and providing support to the lawyers and other professionals, are not lost as the process drags on and competing obligations encroach. When lawyers step in to do what your staff promised to or have to call and follow up repeatedly, costs climb fast.

    8. Ask for a fee quote and communicate budget expectations.

    Maybe this should have come first in a lot of people’s opinions, but really, a fee quote is the easy part. Most lawyers are at a disadvantage at this stage because they do not have a true idea of the resources within the client or the experience in handling these kinds of transactions. It’s worth talking about this and who will be doing what so that you get an accurate quote that both sides can stick with and you will know what you need to provide at your end. Don’t be shy about asking how to keep costs down because most lawyers have a lot of experience to offer and do not want to find themselves in a tense fee collection situation. Ask not just the hourly rate of lawyers working on your file but ask for a flat fee — lawyers are much more accustomed these days to quoting on a flat fee basis rather than an hourly rate.

    9. Communicate in writing.

    E-mail and faxes are wonderful things and allow you to leave a trail of communication in your file of exactly where the file stands, what questions have been posed, facts updated and answers provided. It will make it easy and cost effective to bring new players to the situation up to date and for everyone to refresh their memories.

    10. Ask for monthly billing.

    Don’t let time and costs build up to some huge number out of a misunderstanding, past the point when action can be taken to fix things. Monthly billing lets everyone see as cost accumulates and lets you manage cash flow for professional fees.

    Sandy Cardy, CA, CFP, TEP, is senior vice-president, tax and estate planning, for Mackenzie Financial Corp. Annalee Sawiak, CA, has an extensive background in venture capital and international corporate structures and now focuses her activities as a strategic mentor to entrepreneurs managing change and growth.


  • Originally published on Advisor.ca