Your client, a local business owner, just told you he’s being sued. How do you help?
Ask to hear his version of the story. Sensitive conversations like these require you to be an active listener. You need to nod, smile and make eye contact. These actions send visual cues that keep your client talking and get you the details you’ll need to provide help.
2. Refer him to a lawyer
His business may be in trouble because his reputation is at risk. If he needs a lawyer to review his case, offer names of a few who specialize in business law.
3. Review his accounts
Detail what assets are in his name, the company name, or held jointly. Corporate accounts (if any) might be affected if he loses the lawsuit. He needs to know exactly what his business is worth. And he’ll need assurance that his personal accounts and assets are properly segregated from the business.
Show him which accounts he can take money from if he needs to while doing the least damage to long-term investing plans. Look at which assets can be liquidated easily, and suggest an order of redemptions based on his needs and cash flow. Then detail the tax implications of selling each of those assets.
Pay special attention to which assets he wants to, and needs to, protect. Dipping into an RRSP to keep the company afloat may work in the short term, but it means taxes will be withheld when deregistering.
He should also consider revised business projections and budgets for coming years in case the lawsuit negatively impacts revenues.
Help a client who’s being sued >