Tax and Estate Planning for the Nouveaux Riches


One of the most enduring stereotypes in the legal profession, as well as in the public mind, is that of the private client solicitor. We are all familiar with the almost Dickensian image of the kindly practitioner who attended to the wills, estates, trust, and tax planning needs of coupon-clipping "old money". Estate and tax planning work was once an integral part of any business practice where the traditional inter-generational,relationship-based law firm/major client model was the foundation of most successful firms. It was viewed as necessary and important that a firm representing the business interests of a major corporate client also advised regarding the private affairs of key individuals who controlled or directed the corporate client. It was part of the continuity.

A Changing Market

And then came the 1970s and 1980s and the one-off transactional or project-based model of law firm/major client relationships that was to transform how the legal profession did business. Relationship-based, quasi-monopolistic linkages where large prestigious law firms did most, if not all, of the work for their respective corporate clients began to break down. As transactional corporate/commercial lawyers rose to dizzying heights in major full-service firms, trusts and estates lawyers found themselves pushed to the bottom. And, as corporate/commercial fees sky-rocketed, private client lawyers, unable to generate similar revenue, found it difficult to compete internally. Widely regarded as a loss leader, many firms began to cut back, or in some cases, dispense entirely with their private client practices, which were seen as time-consuming, non-competitive and, well, just plain dull.

In the US, private client lawyers soon saw which way the wind was blowing. A considerable number of major full-service firms witnessed a mass exodus of these lawyers who left to establish specialized boutique practices. Elaine Reynolds, a partner with the Estates and Planning Department at Campney & Murphy in Vancouver, is a member of the American College of Trust and Estate Counsel. Cross-border estate and gift planning work is a substantial part of her practice. From this vantage point, she watched the US developments with interest. "It pretty well happened that estate and gift tax lawyers in the US were not getting the respect they felt they deserved in large law firms. Securities departments were doing huge deals, and getting a percentage of the deals. Compared to securities and contingency litigation, estate and gift work was always billed out at an hourly rate and couldn't compete. So there were a lot of estate and gift tax boutiques forming."

Michael L. Fay, senior partner with Boston's Hale and Dorr LLP and Chairman of the firm's Private Client Department, concurs. "Boston is a little different," he points out, "but elsewhere-where there is not this baseline of private client work-it certainly became difficult based on trusts work alone for partners to generate revenue comparable to the corporate/commercial departments."

For the large firms, the issue was whether it made sense to retain this capability. And for the private client lawyers themselves, the question was whether it made sense to their clients to continue operating in an environment where the overheads were so high. Soon enough, says Fay, the inevitable happened. "We saw many groups heading off to form boutiques, where they had lower overheads and where they could service their clients properly."

In the UK as well, major law firms departed the practice area in droves. More than five years ago, leading firms such as Freshfields, Slaughter and May, and Norton Rose broke company with their private client practices in order to concentrate on "core businesses". Other firms such as Clifford Chance LLP and Linklaters & Alliance significantly reduced their commitment to the practice area. As Tim Newsome, a partner with Radcliffes' 22-lawyer private client group in London, notes: "It was certainly seen as a somewhat un-sexy area for a while. We were one of the few firms that benefited from the big City firms exiting the area." Tony Thompson, a partner with the 50-lawyer private client group at London-based Withers, also recollects many big firms backing out of the field. "When firms took that decision," he recalls, "the area was perceived as being one of inherited wealth, without a lot of real growth potential." For whatever reason, the end result was the same as in the US. Private client practices were suddenly no longer considered a necessary and promising practice area for the 'Magic Circle' of firms in London-and were quietly shed.

The Return of the Private Client

But the tables are turning. With the advent of the New Economy-and its multi-million dollar high-tech IPOs, dot-com millionaires, and aggressive, young entrepreneurs, private client lawyers have suddenly found themselves returned to favour. Where the client was once a grey-haired executive, a new client is knocking on the door: the information technology (IT) nouveaux riches. Young, technologically savvy, with incredible wealth that in many cases has been accumulated practically overnight, and a tendency to establish new businesses as quickly as they off-load old, this new client requires a myriad of personal advice relating to tax, estates, trusts and personal planning. Enter the private client lawyer. Add to this byzantine changes in tax laws, the globalization of business, an increased sophistication on the part of charities, and a huge boom in worldwide wealth, and-faster than you can say "shazam"-private client lawyers are in vogue and busier than ever.

As well as the work being more frequent and varied, the ability to gain entry to an important source of lucrative corporate work through an estates and trusts department is now seen as of significant importance to a full-service firm. Naturally, the IT nouveaux riches set cash registers ringing. If a firm can win such a client through a strong private client department, the chances of winning corporate or other work are considerably improved. Not only can a private client lawyer bring in new corporate business from individual IT clients or young entrepreneurs, a good department may also be the key to keeping just such a client from going elsewhere for their personal services-and thus avoiding the possibility that they will take their corporate work elsewhere as well. As partner Bernadette Dietrich at McCarthy T├ętrault observes, "If we are right in our prediction that this area will grow, then by not having such a department, obviously you have missed out on a lucrative business line. In addition to this, you might lose your client to a firm that can offer everything. And this is a far riskier prospect."

The arrival of the IT nouveaux riches has thus caused many US and UK firms to take a fresh look, with a number re-entering private client practice. Over the past decade, the largest private client group in Europe, at London-based Withers, has welcomed numerous lawyers from top City firms as they parted ways with their private client groups, including the entire private client team from Slaughter and May, as well as lawyers from Lovells, Clifford Chance, and Herbert Smith. As Tony Thompson at Withers explains: "In the last 10 years, we have certainly seen wealth accelerating. This is not inherited wealth, but clients who are actually making it, which makes the area more profitable and more exciting. And these clients have the liquidity to pay for the management of their affairs. After all, one million pounds cash is a lot different from one million in an estate."

Tim Newsome at Radcliffes points out that his private client group now contributes to 35 per cent of the firm's turnover, and that it has contributed to a large percentage of the firm's overall growth in the last three years-making the area all the more attractive to other firms. "Individuals now have greater value than companies, which means the area is now seen to be as sexy as corporate/commercial work," he observes. "There is a lot of new money being earned by a younger group, and we are seeing less inherited wealth. Old money is now seen to be pretty sterile, and new money is seen as being a reward for being innovative and able."

With London-based Clifford Chance recently re-launching its private client practice in what is generally interpreted as a move to attract the IT nouveaux riches, Thompson agrees that UK firms are waking up to the attractions the private client area has to offer. "I think they have realized that private client work involves an understanding of trusts and equity which comes into a lot of corporate work too. The use of trusts is adjunct to the structuring of all commercial deals. Slaughter and May have covered the problem by referring all their private client and trusts work to us, and Lovells have done so too. But Clifford Chance didn't." This has meant one thing, notes Newsome. "All the large firms are trying to grab private client lawyers back. There is a mad rush on for the same private client lawyers that they so unceremoniously dumped five years ago."

Benefits Beyond the Bottom Line

In addition to the wealth young IT clients can bring to a firm, they also bring more interesting, ongoing work and recognize the importance of professional advice. "These individuals stay with us," says Thompson. "They are serial entrepreneurs. We might put together an entire team for such a client, for example, which specializes in acting for entrepreneurs and investment banks, and which is eventually brought in on their IPO." The possibility of winning future IPOs from these "serial entrepreneurs" is just another sweetener winning firms back to private client work.

A number of other considerations are also exercising influence. For one, the increasing professionalism of wealthy families has meant that many have set up 'family offices', with financial advisors, managers and so on, thus providing a central operation from where a team of professionals are able to manage the family's affairs. This is an American development, which has caught on in the UK in the last five years. "It is a big industry," notes Thompson. "Again, this is much more interesting to firms, as you are essentially dealing with a whole business." Charities are another huge growth area for private client work, with government cuts in all social areas and increased private wealth contributing to a surge in such work. Today advice traditionally seen as private client work is required not just in relation to one-off issues, but in relation to a vast array of transactions. According to Thompson: "Our private client group really works across the board with other groups, corporate teams, charities teams, entrepreneurs and banking teams." Where once a private client practice may have been seen as a bolt-on to a firm, Thompson goes on to add that it is now "a necessary part of the job. It is not really a matter of cross-selling, but actually needing those people to do the job and providing the whole package."

In the US, firms are also cashing in on re-established or revitalized trusts and estates departments. Important firms include Palo Alto's Wilson Sonsini Goodrich & Rosati, Boston's Hale and Dorr, and one of New York's largest private client practices, Schulte Roth & Zabel LLP. Although private client work has been an important area for Hale and Dorr since the early 1900s, with its lawyers acting as trustees to old family trusts for almost a century, senior partner Michael Fay has nonetheless seen huge growth in the area in the last few years.

Predominantly, he says, it is as a result of the booming wealth of the IT nouveaux riches. "We certainly have a large number of high net-worth clients who are young and who have amassed their fortunes from being involved in IT one way or another. For most of them, they are the first person in their family to have achieved such enormous wealth and are looking for guidance, not only with answers but with knowing which questions to ask."

As in the UK, this new generation of wealth means big money for charities-and lots of charities work for private client lawyers. Just as giants like Rockefeller, Ford, and Carnegie have done before them, these younger clients are frequently interested in leaving only a small per cent of their wealth to family members with the majority going to charities and foundations. To assist wealthy young clients in achieving these philanthropic goals, Hale and Dorr intends to form a new interdisciplinary practice group, made up of lawyers from the private client group and corporate/commercial group, to be known as the "private philanthropy practice group". "Philanthropy," asserts Fay, "will be the singular most important sea change for this area. The most critically important element in the burgeoning area of private client work will be assisting clients to give it all back again."

Establishing this new practice group is not the only initiative Hale and Dorr has taken. In 1988, frustrated with being restricted in acting in any other capacity for clients than as 'trustees', the firm established as a separate entity Haldor Investment Advisors L.P., through which they could manage clients' funds and be registered as investment advisors. Due to the firm's dealings with venture capital and companies going public, the private client partners regarded the establishment of a wealth management fund as a perfect outlet to service their clients' needs. Now, through the investment fund, they are able to act as agents for their clients, much like banks and other investment groups. With 30 per cent of the money the firm manages now in agency accounts, it was a smart move. And with 5 partners, 7 associates, plus 8 professionals in the investment fund, there is no doubt that the private client practice is integral to the entire firm. "I may be prejudiced, but I think other firms-if they have a fresh look at the area-will certainly find something worthwhile," notes Fay. "For example, the many wonderful clients that we deal with are mostly peripatetic. They move from one executive position to another, and throughout these moves, we continue to have frequent contact with them. So when it comes to them starting up a new business or doing something new, who will they think of? The lawyer that they have been working with all along of course. In that way, a private client department is a source of continuing contact with the person who could throw big corporate work their way." Indeed, far from being a dour practice area servicing ageing patriarchs, private client practice is robust.

According to a May, 2000 study conducted by Merrill Lynch and Gemini Consulting in 1999, the number of millionaires around the world jumped by one million. There are now seven million people worldwide who have liquid financial assets of at least US$1 million. The study confirms that the increase in wealth, and in the number of rich individuals, is mainly attributable to the booming stock market prices of Internet companies, with global stock markets climbing 37 per cent last year as Internet companies share prices hit all-time highs. Executives from Internet and computer companies top the rich list worldwide. And these rich individuals are young-according to Fortune magazine the top 10 richest Americans under 40 years of age are all from the Internet/technology fields, including executives from Dell Computer, Gateway, Yahoo!, Amazon.com and eBay Inc. The Merrill Lynch study shows exactly what some US and UK firms, in re-entering the private client market, intuitively knew. With the super growth in the value of Internet companies, and the many senior employees benefiting from the increasing use of stock options, comes a new breed of rich. As some of the more prescient US and UK firms sensed, it is inevitable that these individuals will require an array of services which includes, but extends far beyond, wills and estates. In short, they are good people to know.

Most private client lawyers in Canada acknowledge that the first part of the cycle which took place in the US and UK-that of firms downsizing-also took place in Canada. Although almost all Canadian full-service firms have one or two lawyers who practise in the field, most of the firms regarded as leaders are mid-sized or boutiques. In a few cases, they operate as boutiques within full-service firms. As Rosanne Rocchi, a partner in the personal planning department at Miller Thomson LLP in Toronto, explains, "Personal planning was probably one of the first areas to be designated as non-growth by larger firms. We have certainly seen the larger firms abandon the concept of truly providing a 'full-service', and I think they were the first to jettison private client work as a result. Mid-sized firms, on the other hand, like Miller Thomson, and Goodman and Carr LLP, have always had a strategically important small business base and are reluctant to let it go."

Challenges in Transition

Nonetheless, even Miller Thomson's successful practice, with 4 partners and no associates, has not avoided market developments. As Rocchi again explains: "There is considerable pressure to make every lawyer a profit centre. But because of the pressure caused by maintaining hourly rates, personal planning lawyers have to make decisions as to fees." Rocchi also notes a difficulty in attracting the requisite talent to the area. "Entry-level people are the single greatest influence in the direction of law firms, and the selling points of personal planning work do not appear to be an issue to them. So, at this point," she laments, "big firms still have the trusts specialty, but a hiatus exists where there are no associates in the area." Toronto's Goodman and Carr, with 15 lawyers working in the area of personal planning, has been very successful in building one of the strongest practices. Nevertheless, at the same time as he was encouraging the firm's growth in this area, Managing Partner Gary Luftspring, like Rocchi, observed a different trend taking hold in the market. "A very significant number of firms have either given up or not deployed significant resources in personal planning," he notes. "With so few young people in the area, there are many firms who are effectively just administering it, but they have no succession in their practices."

McCarthy T├ętrault is one major full-service firm that has maintained a strong presence in private client work, viewing the general area of wealth management as a necessary and important adjunct to their corporate practice. As partner Bernadette Dietrich says, "It just makes sense that our clients be afforded the luxury of one-stop shopping." Still, Dietrich has also witnessed a general apathy on the part of other full-service Canadian firms. "It is my impression that a number of large firms were not growing the area. In the last few years, we have seen a number of individuals moving out of large firms to other firms, as it seemed personal planning was not an area on which the large firms wanted to focus."

Indeed, the drawbacks of operating a personal planning department are well known to the lawyers who work in the area. "The difficulty with personal planning work," notes Gregory Bowden, Q.C., partner with the private client group at Lawson Lundell Lawson & McIntosh in Vancouver, "is that there is no real way to measure the outcome or value of the outcome. You can set up a structure to pass on wealth, or a tax structure, but it is difficult to value the amount at stake. So, the hourly rate commands a lot of attention, whereas business deal fees don't."

While the recent history of many Canadian firms has mirrored the US and the UK experience in terms of exiting or downplaying private client work, most have yet to answer the wake-up call as to the new opportunities on offer. "Because Canada lags behind the US on these issues, we haven't seen other firms getting back into it here at all," observes Elaine Reynolds. Nonetheless, the firms that have stuck with personal planning work insist that it is a decision which continues to pay off. Howard Carr, a partner with Fasken Martineau DuMoulin LLP's highly successful trusts and estates department in Toronto, believes the decision of larger firms to downsize their personal planning departments is questionable. "Some firms got out of it because they didn't perceive that there is a reasonable rate of return. But if you try to develop this practice as a discount area, as a stand alone, it won't work. The trend has been for firms not to grow this area, but there are those who have been immune to the trend-those who have devoted resources to developing a boutique within a large firm setting-which is what we have done." Elena Hoffstein, also a Toronto partner with the department at Faskens, agrees. "What I have seen is a trend to shut down over a number of years-the support hasn't been given, and the department has shrivelled. But the firms who want to support the area are the smart ones. One need only look to the interest both banks and accountants are showing to recognize the huge bonuses it has to offer." Luftspring at Goodman and Carr is of the same mind. "Within the last few years, we've seen the whole area of wealth management growing. It has certainly become an area of keen interest for accountants and many financial institutions. For years, it has been seen by law firms in this country as a loss leader. But that is a huge mistake. On the money management side, people will pay, and it can be tremendously successful."

A Younger Market

Like Faskens, McCarthys is particularly alert to the opportunities which are presenting themselves. "There certainly seems to be a trend in wealth increasing at a younger age, which makes this area very profitable. And if this area is perceived to be a profitable one, everyone will eventually want some market share," says Dietrich. With this in mind, Luftspring at Goodman and Carr has paid close attention to US developments and the impact the dot-com multi-millionaires have had on law firm strategy. "For example," he says, "Boston started to see a lot of young people amassing large fortunes, and firms there realized it was an important area. It will potentially start here too."

Like in the US, it is the shift towards a broader client base, encompassing the traditional corporate executive as well as young entrepreneurs and high-tech clients, which has attracted Luftspring's interest. "There is no question that clients are getting younger," adds Luftspring, "Not just with IT, dot-coms, and entrepreneurs, but the children of the baby boomers are coming through and taking over from their parents." Rocchi at Miller Thomson has observed similar patterns emerging in her client base. "Traditionally, you did a lot of business succession planning for older people. Now you have the high-tech companies, the dot-coms, who are much younger, and very task-oriented. And there are also the IPO millionaires, who are more like the conventional clients."

The firms have also taken heed of the fact that clients are growing younger, literally before their very eyes. "There are more clients acquiring wealth in different ways, who are younger," notes Hoffstein. "These are young clients, who are very computer literate, and who have achieved tremendous wealth at a very early age." As Dietrich observes, "The last couple of years we have certainly noticed a shift. For one, the population is aging and they are passing on their wealth. Plus, there are the high-techs and entrepreneurs, who are quite different again. They have different issues and are looking for the next opportunity." In Vancouver, Bowden at Lawson Lundell is continually surprised by the emergence of the young nouveaux riches. "I have to prepare myself for the shock of the younger, wealthy person. I was just setting up a business for a 30 year old who has so much money, he needs to set up in Ireland for tax reasons."

Above all, it is clear that the expanding client base has had an impact on the kind of work private client lawyers now find themselves doing. As Elena Hoffstein at Faskens points out, there is a big distinction between a mature business person and an individual coming into a windfall, including dot-coms. Rocchi at Miller Thomson also notices the differences. "IPO clients," she says, "have really worked hard to be where they are, and are usually older, which means they are at a different stage in life. They tend to be risk averse, into money management and into the market, and are establishing trusts and preparing for the future. Dot-coms, however, have so much money, they don't know what to do with it. They are still circulating their wealth, getting into businesses, and not risk averse at all. Now they are 30, and still looking for things to do."

Contrary to the young client's conviction that they are immortal and do not require future planning, it is these young and wealthy individuals who need it more than most. As Bowden in Vancouver explains, "They don't generally have as much experience in managing their affairs, and have never really thought about personal finance structures. Older clientele have been exposed to that, whereas the younger client is looking for a different kind of advice. The focus is more on tax rather than estate planning." As such, the needs of the nouveaux riches are dictating the kind of work in which personal planning lawyers increasingly find themselves involved. "Today's clients are very savvy at their own business," says Luftspring, "but often they are not necessarily terribly street smart in a general way. Therefore the nature of the advice is becoming broader." Indeed, a shift away from trusts work towards tax and estates is cited by most lawyers interviewed, with younger clients less likely to be interested in trusts because they don't have families, and are often not into conventional money management. As Reynolds at Campney & Murphy notes, "The younger guys are interested in tax reduction, but they are really not there in terms of estate planning. We do more short-term work for the younger clients, and there is less long-term focus."

In recognition of the on-going legal services such individuals will require, it is the IT nouveaux riches that a number of firms are on the look-out for. Their personal needs offer an entry for the personal planning lawyer that lawyers in other departments may not have. If a young wealthy client turns to a private client lawyer for assistance, it is probable that in the future they will turn to that same lawyer when it comes to establishing a new high-tech venture. If the lawyer operates within a full-service firm, they will be able to refer the client to the other departments, thus potentially bringing an annuity of business to the firm.

Although all firms who maintain successful private client groups insist that these practices more than carry their weight, a well-established personal planning practice is obviously also proportionally valued according to the volume of future work to cross over into the entire firm. The opportunities are important to acknowledge when fees charged to 'personal clients' must be charged at a rate which is significantly less than fees that can be charged by other departments. As Bowden at Lawson Lundell notes, "If personal client work is done in conjunction with corporate work for that business-in a sense you are prepared to take a hit because the corporate work is staying with the firm. You are prepared to take a hit because of the cross-selling-either way."

Despite the opportunities which appear self-evident, many large Canadian firms have surprisingly not shown a similar initiative, leaving it to the small and mid-sized firms to capitalize on the new market. And opportunities missed are welcome news to mid-sized firms. "Mid-sized firms have always recognized the value of small businesses," notes Rocchi. "You grow with your client. From inception to going public-it is the easiest way to secure clients in the IPO area. Large firms have not paid sufficient attention to this area. Yet the work is cyclical, because IT and dot-com entrepreneurs have extraordinary money and influence to come."

Similarly, Campney & Murphy in Vancouver has always placed importance on its personal planning department for all the work that it brings the firm in addition to the profits it generates as a stand alone. "Our department brings in a lot of work," says Reynolds. "We bring in high net-worth clients, and can refer them to other areas. And it works the other way too. Lawyers bring in IPO clients and we see them for tax." Elena Hoffstein in Toronto could not agree more. "Cross-selling works both ways. We don't want a client to be going somewhere else for personal planning, as we might lose the rest of their business as well. Firms who don't get into this have missed opportunities."

Factors Outside the Marketplace

In addition to the emergence of IT nouveaux riches, private client lawyers point out that a number of other changes, both legal and social, are affecting practice. For example, all firms active in the field note a huge growth in charities work, due to an increased sophistication of the charities themselves, cuts in government funding for social programs, and the huge amounts of wealth that people are amassing today. At Miller Thomson, Rosanne Rocchi notes with admiration that not only do the younger millionaires want to fund projects, they also have the time and the inclination to actually run them. "Most of us in the area have always dealt with foundations, but these young people are establishing foundations which do far more interesting things. Education, health-they are interested in providing technological advances by partnering with these areas, like developing partnerships with universities to do research into particular areas." There is a remarkable "pay-back" taking place on the part of the nouveaux riches.

Other Canadian firms, as a result of their delay in recognizing the growth that personal planning practices can deliver, have given their competitors-the accounting firms and banks-a head-start in which to set themselves up as leaders in the field. It is no secret that accountants and banks have made a significant entry into wealth management, and are now inching their way towards including legal services as part of the package. Their aim, ultimately, is to become not just financial advisors, but the general advisor-a role traditionally reserved for lawyers. Goodman and Carr intends to meet the challenge head-on. "If we looked at lawyers 30 years ago, that is the role the lawyers played," Luftspring argues. "And their function was usurped by accountants right before our eyes. We have to fight to get that back."

Rocchi at Miller Thomson agrees. "At the same time that larger firms were deciding not to grow the area, Donahue Ernst & Young LLP, for example, targeted the small businesses. They are very well equipped to look after small businesses as a one-stop shop for financial advice, and can provide a real service to clients." While other firms wait to see whether a personal planning department is really worth the investment, the accounting firms are already getting into the cross-selling of services. "It is amazing what they are getting into," notes Elaine Reynolds in Vancouver. "Start-ups, IPOs. Some accounting firms will look for a buyer for a start-up, do the accounting work, do the planning for a trust, do the business departure from Canada, broker the sale, do the tax planning-everything! And accountants are now wanting to pick up law firms, but this is not happening in the reverse."

It is the accountants' ability to compete in providing "packaged services" and to capitalize on having frequent contact with clients that has enabled them to pull ahead of law firms in the area. As Reynolds points out, "Accounting firms have a real emphasis on creating a product, something they can sell at a percentage fee to their clients. Lawyers are not really positioned to do that as well. Accounting firms review their client needs every year. For example, they come up with a package and then search through their network for clients who fit the bill."

As one would expect, a range of responses to the competitive threat presented by the accountants is taking shape. Faskens, in particular, is keeping an open mind. "My inclination is to embrace them," says Carr. "Rather than develop a strategy to go into competition with them, my intuition is to develop a strategy for opportunities to work with them. But we still need to define ourselves, and outline where we can be of service." Hoffstein agrees, "Accountants can be both the competition as well as friends. Accounting firms bringing lawyers into their organizations is a challenge we have to take very seriously, but we also want to be co-operative." In Vancouver, Reynolds believes that, despite efforts on the part of law firms to compete, banks and accountants will soon take the competition to another level. "In terms of developing things, we are doing that, in terms of marketing, we are doing that. But at the end of the day, it is really the accountants and the banks who are in competition with each other because of the client contact they have."

Nonetheless, firms are directing their minds to formulating new lines of attack. "The personal planning area does need strategies," observes Bowden, "probably more so than other areas. We have to make it known to clients what options are available to them in terms of managing their affairs." Goodman and Carr, for one, hopes to beat the accountants at their own game by addressing the broader aspects of personal planning, and developing partnerships with ancillary wealth management funds. The firm plans to operate its ancillary partnerships in much the same way as Boston-based Hale and Dorr. So far, Massachussets is the only state in the US which permits ancillary money management by law firms. To date, the practice has not surfaced in Canada. Luftspring intends to change that. "It all goes towards developing a relationship and becoming the advisor. That's what the Boston firms did. If you are seen as the go-to for business advice, then there is no doubt that the ancillary areas will benefit too." Although the firm intends to have somebody external to the firm manage the proposed wealth management business, Martin Rochwerg, partner with the personal planning department at Goodman and Carr, believes that lawyers have special skills and advantages to bring to such a venture-not least being the deal flow they see. "Law firms are able to bring high investment opportunities to the attention of high net-worth clients," he notes. Luftspring agrees: "To start to become the trusted advisor, there is a natural tie-in with private equity and various areas," he says. "I don't see how you will make money as a law firm by just doing the legal side. The legal advice must go hand in hand with someone giving strategic advice as to what they will do with their funds. Clearly, when dealing with money management, there'll be a risk. We manage those risks, but they are not paralyzing."
Faskens has also considered the possibility of partnerships. As Carr notes, "Succession planning usually involves lawyers, accountants, financial advisors, and facilitators. Some firms are thinking about delivering and promoting these services. We have talked about how best to provide those services. But as to how we will deliver those services, whether through the firm or a separate business or a combination of both, I don't know."

While there is clearly no consensus as to strategy among the firms committed to private client work, there is nevertheless agreement as to what is at stake. Lots. The opportunities presented by the nouveaux riches are considerable. For confirmation one only has to look to the success of Hale and Dorr in the US or Radcliffes and Withers in the UK. Luftspring is clear as to where his firm is going. "There is tremendous opportunity in the area. If you show some foresight, there will be tremendous rewards." Elaine Reynolds in Vancouver agrees. "The future of private client work is huge. There is such an accumulation of wealth now. The time is ripe for doing private client work for these people." At Faskens, however, Howard Carr is more cautious. "Is there a future? Yes. Is the future mapped out? No."

Perhaps. Nevertheless, it is noteworthy that Clifford Chance-clearly one of the pre-eminent law firms in the world after its trans-Atlantic merger with New York-based Rogers & Wells LLP and by all accounts no slouch in discerning which way the wind is blowing-has re-entered private client practice, with a vengeance.