What happens in 2013, when the federal estate tax exclusion goes back to $1 million if Congress does nothing? What are the implications of the decoupling of Illinois' estate tax from the federal exclusion, so that any taxable estate over $2 million generates Illinois estate tax?
Steven E. Siebers's article in the September Illinois Bar Journal explores these and other questions and helps you advise estate-planning clients, especially married couples, in these uncertain times.
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. We are a five attorney firm in Detroit. Our firm does exclusively elder law and estate planning and most of our fees are based upon flat fees. Business has been steady and solid in spite of the recession. In an effort to improve profitability we are considering raising our fees but are concerned about adverse effects that it may have upon our competitiveness. We are already at the high end of the fee scale. Do you have any thoughts?
A. Raising fees is one approach to improving profitability. Clients are starting to push back more and more concerning legal fees. If you are at the high end of the rate scale I suggest that before charging off and raising rates you step back and conduct a process review by using an approach similar to the following:
NOTICE
If your bank does not yet appear on the List of Financial Institutions Eligible to Hold Trust Accounts as of September 1, 2011, do not panic.
There are now more than 300 financial institutions included on the List of Financial Institutions Eligible to Hold Trust Accounts. To date, only one small bank has refused to be included on that list. However, a significant number of banks have not yet submitted an agreement to provide overdraft notification, which is a prerequisite to being included on the list.
The ARDC and the Lawyers Trust Fund of Illinois are working with banks and other financial institutions to make compliance with the new provisions of Rule 1.15 as easy as possible. Some banking institutions have informed the ARDC that they want to comply with the new trust account rules, cannot meet the deadline, but are hoping to accommodate depositors as soon after September 1, 2011 as is possible. We believe that most of the banks that have not yet submitted an agreement intend to do so, but require additional time do so. There is no immediate need to change banks.
If your bank does not yet appear on the List, there is no need to move your account to a different bank until you know, for a fact, that your bank does not intend to agree to Trust Account Overdraft Notification.
Please continue to monitor the ARDC website, as we receive new Trust Account Overdraft Notification Agreements every day.
Please note that, in light of the problems caused in the wake of Hurricane Irene, certain banks headquartered on the East Coast may not be in compliance with the Rule by the effective date.
The act requires that the owner (1) sign in front of a notary and two credible witnesses and (2) have the same mental capacity to execute a TODI as is required to make a will. This new Act will take effect January 1, 2012.
You may review the text of this Act here.
The amended rule forbids non-interest bearing pooled accounts, imposes new recordkeeping requirements, and obliges banks to report IOLTA-account overdrafts. Read Helen Gunnarsson's summary of the changes in the September Illinois Bar Journal.
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am the chair of our three person management committee. Our firm, now entering second generation, is a 17 attorney firm in Kansas City, Missouri. We represent businesses and other institutional clients. We have several of our founding partners in their 70s and as they phase back and slow down we are discovering that the younger generation of partners have not developed client development skills. What should we be doing to get more business? We are not sure we even know how?
A. Research conducted over the years by numerous research organizations has shown that on average it costs five times as much (dollars/time investment) to get new clients than it does to get more business from existing clients. It just makes good business sense to leverage existing relationships.
Institutional clients are reducing the number of law firms that they use. According to BTI Consulting Group, corporations in the Fortune 1000 list are using 20% fewer core law firms than they did a year earlier. As a result fewer firms will be getting work from these companies and they will likely be the firms that successfully cross-sell their practices.
Recommendation From a Fortune 500 Client
Recently I was doing a telephone interview with the general counsel of a Fortune 500 company for our law firm client and I asked him if there was an opportunity for the law firm to get additional work in a practice area in which the company had no experience with the law firm previously and if an opportunity existed what the firm needed to do to earn the business. Here is his response
When your case rests on the X-rays and you learn the X-rays were thrown away, that's not a good day. Loss or destruction of evidence -- "spoliation" (one of my favorite legal terms) -- can make it impossible to bring or defend a lawsuit.
One option when that happens is to sue for spoliation of evidence, a bona fide tort in its own right. Another is to seek sanctions against the offender(s), and that's the option Judge Barb Crowder explores in the latest Trial Briefs, newsletter of the ISBA Civil Practice and Procedure Section. "[K]nowing the potential and most frequently used sanctions will assist counsel in evaluating what steps to take" when evidence is lost or destroyed, she writes. Read her analysis.
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. Our firm, a 22 attorney law firm in Chicago, has been contemplating acquiring a 6 attorney firm in the suburbs. We believe we have done an adequate job of due diligence regarding financials, people, culture, systems, and practice-mix compatibility. Our concern is client retention. What are your thoughts concerning how we can determine if the clients will stay with us?
A. Why not ask the clients?
Much can be learned by talking to the firm's clients. Structured telephone interviews and other forms of surveys conducted by a neutral third party can uncover many surprises as well as answers. Client satisfaction surveys can be one of the best due diligence tools that you can use.
It is good business practice to see how clients might react to a acquisition or merger. Understanding where your prospective firm's clients stand and how they feel about service quality can be one of the most valuable inputs into your due diligence process that you can get your hands on. Finding out where your prospective firm's clients stand can tell you a lot about their future retention.
Before you invest significant time, money, or effort in developing an overall acquision/merger implementation strategy, survey your prospective firm's clients to understand where their clients stand.
You must be careful using this approach and insure that it is done with the permission and in concert with the prospective firm. The approach must be setup, communicated and coordinated properly. It must be sensitive to clients and done in a way to communicate and reinforce positive rather than negative signals to the clients involved.
One year ago this month, Illinois lost a legendary legal services leader. Joseph Bartylak was passionately devoted to the cause of equal justice, and he furthered that cause not just by his brilliant and dedicated leadership of Land of Lincoln Legal Assistance Foundation for 27 years, but as a state and national leader of legal services.
ISBA Director of Legislative Affairs Jim Covington discusses legislation of interest to ISBA members. This week he covers Forcible Entry and Detainer: (Ford, D-Chicago; Martinez, D-Chicago) allows the plaintiff to include in a forcible entry and detainer complaint a request for the pro rata amount of rent due for any period that a judgment is stayed. Effective January 1, 2012.