Please keep in mind that this is not legal advice.  The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to help you draft, interpret, negotiate or resolve a dispute about a joint venture, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers).  We have Toronto and Ottawa lawyers who can assist you in this regard (I would know, I’m one of them!).

So this blog will deal with the basics of a joint venture agreement or contract.  In other blogs, I’ll get down to the nitty gritty.

Definition
Plaint and simple, a joint venture is a contract between two or more parties to share resources, knowledge, skills, etc. towards a common objective.

Parties
As usual in these types of agreements, the parties are identified at the get-go (make sure this is done properly or else your contract won’t be worth the paper it’s written on!).

Recitals
This is the background story you want to tell that leads up to the formation of the joint venture.  It could go something like: Party X does Y and has Z.  Party A does B and has C.  The two would now like to join forces to make even more $$$.  So they’re agreeing to have a joint venture in accordance with the terms and conditions set out in the joint venture agreement or contract…

Definitions
It’s a good idea to set out the definitions you’re going to be relying upon near the top of the joint venture agreement (for ease of reference and good organization).  You could include definitions here about “Confidential Information” (assuming there will be confidential information passed between the parties as a result of the joint venture), what constitutes “Force Majeure” (e.g. act of God that relieves a party of liability under the agreement in certain circumstances), etc.

Business Structure
The joint venture agreement or contract will generally state how the joint venture is structured.  Is it simply two separate entities acting in concert through the joint venture agreement or contract?  Will there be a new corporation formed?  Will there be a partnership formed?  Will that partnership be a general or limited liability partnership?  For more discussion about the general forms of business one can structure in Ontario, check out this free information about business structures we’ve been accumulating.

Nature of the Relationship
So will the joint venturers be partners (capable of binding each other), corporate shareholders, or simply joint venturers (i.e. their rights and obligations are limited to the terms of the joint venture agreement or contract).

Term and Termination
How long will the joint venture last for and what events give rise to its premature termination?  Will the parties simply be able to give each other notice?  Will the joint venture dissolve by operation of law, by one party filing for bankruptcy, by one party attempting to illegally assign their interest in the joint venture to a third party, etc.?  Again, you should consult with a lawyer to find out what kinds of things typically go in this section.  Also important is what to do in the even of default.  Does one of the joint venturers become liable to pay the other if they are at fault?  Who determines fault and according to what test (e.g. sole and absolute discretion)?  There’s a lot to think about here…

Joint Venture Assets and Benefits
How will these things be deal with?  Will there be a percentage of ownership?  Will the benefits be based on revenues or profits?  Can these interests be assigned?

Operations
How will the joint venture be operated on a day-to-day basis?  Will the joint venture committee have the power to enter contracts on behalf of the joint venture?  Perhaps the joint venture committee will create a new corporation to take on a certain responsibilities and simply own equally the shares of the new corporation.  That new corporation would operate as a separate business, but its shareholders would be the joint venturers (who would elect the directors, who in turn would appoint the day-to-day officers).  This would be a good place to put reporting and record-keeping requirements too.

Joint Venture Responsibilities
Here, we get to the nitty gritty of who will be responsible for what in the joint venture. Separate paragraphs will be needed for each of the parties.

Joint Venture Management
Will there be a committee?  Will representatives from each of the parties be on the commitee?  Will there be a chairperson?  How will meetings be managed, votes and decision made?  Will there be direction from owners and delegation to the committee?  In my opinion, and as I’ve previously blogged about, businesses should be run as dictatorships with consultants, not as democracies (too many voices means things won’t get done).  

Representations and Warranties
What kinds of true, fair, and complete statements must the parties make to induce the other parties to enter the agreement?  The parties want to know that their joint venturer partners have the authorization and operational wherewithall to do what it is they are about to do.  If these representations and warranties no longer hold true, then what’s the consequence?  Notice?  Termination?  This should be spelled out here…

Liability and Indemnification
Will the joint venturers try to limit their liability from each other in connection with the joint venture?  Will they indemnify each other for their own wrongdoing – whether in contract, tort, negligence, misconduct, breach of statute or otherwise?

General Terms and Conditions
This section of the Joint Venture Agreement will deal with things like (which I’ve previously touched on in teh context of an independent contractor agreement):

• Notices
• Entire Agreement
• Governing Law
• Interpretation
• Assignment
• Waiver
• Cumulative Remedies
• Counterparts
• Enurement
• Entire Agreement
• Time of Essence
• Independent Legal Advice
• Force Majeure
• Severability
• Survival
• Currency

written by admin \\ tags: agreement, assets, bankruptcies, bankruptcy, blog, breach, business, circumstances, confidentiality, contracts, corporation, indemnification, lawyer, lawyers, liabilities, negligence, negotiating, Negotiations, partnership, percentages, relationships, separation, shareholder, shareholders, shareholdings, toronto

There are over 17,000 individuals in Toronto who can call themselves a Toronto attorney.  Each Toronto attorney typically has his or her own specialty.  The day of the general practitioner is not as it once was (and is slowly fading away).  In fact, specialization is a preferred strategy to earn above-average returns in any given industry.  Besides, think of how hard it would be for a lawyer who ‘does it all’ to keep up to date with the changing laws in every given legal area.  It’s way too difficult and that’s where negligence cases may arise.

In any event, I thought I’d spend some time discussing the various types of Toronto attorneys that you can come across on a day-to-day basis.  Here’s the first breakdown of types of Toronto attorneys (please keep in mind that this list of the types of lawyers out there is not exhaustive):

• Toronto Real Estate Attorneys: help you buy and sell residential, investment, farm, cottage, recreational, condominium, and cooperative properties.  They also you get a mortgage financing and refinancing as well.

• Toronto Personal Injury Attorneys: help you litigate, settle, or otherwise resolve claims arising from:
  • accident benefits claims
  • dog bites
  • disability claims
  • medical malpractice
  • motor vehicle accidents
  • negligence actions
  • personal injury claims
  • product liability
  • slip and falls

• Toronto Business Attorneys: help you to incorporate and organize, merge/amalgamate, and dissolve your business.  They can help prepare, review, interpret, revise, negotiate, litigate, and resolve the following business documents:
  • shareholder agreement
  • partnership agreement
  • joint venture agreement
  • franchise agreement
  • commercial leases
  • business acquisitions
  • regulatory compliance
  • constructions contracts
  • employment agreements

• Toronto Wills and Estates Attorneys: they offer services from a basic will and powers of attorney  to more complicated tax-planning structures, such as inter-vivos trusts and estates freezes.  They can also help personal representatives in the administration and distribution of estate assets.  Finally, they can litigate on behalf of beneficiaries or the estate trustee on issues such as mental capacity of the testator, validity of a will, etc.

• Toronto Family Attorneys: they can help you with your marriage breakup by drafting a separation agreement.  They can also help you with issues such as divorce, spousal and child support, child custody, possession of the matrimonial home, and the equalization of net family property.
  

• Toronto Criminal Defense Attorneys: they can help represent you against government bodies that have charged you with criminal or provincial offences (e.g. careless driving), including:
  • DUI (driving under the influence)
  • assault
  • sexual assault
  • fraud
  • theft

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Toronto law firms can help answer your legal questions, facilitate your transaction (e.g. business, real estate, wills and estates, family, etc.) or even represent you in court.  To find a Toronto lawyer or law firm, go to Dynamic Lawyers and make a post.  It’s free and anonymous and Toronto lawyers and law firms will respond to you with information and quotes for you to compare.

Here are some of the different types of law that Toronto law firms can assist you in:

• Accidents and Injuries: Involved in an accident where you suffered personal injury?
• Business: Need corporate or commercial agreements? Need to have a lawyer help you do a transaction?
• Charities and Not-For-Profit: Need to establish a Not-For-Profit corporation or obtain charity status?
• Civil Litigation – Higher Court: Have a serious legal claim that needs to be litigated in the Superior Court, Divisional Court, etc.?
• Civil Litigation – Small Claims Court: Have a legal claim (e.g. breach of contract, negligence, etc.) for less than $10,000?
• Constitutional / Human Rights and Freedoms: Challenging a law or government action / inaction?
  Criminal: Charged with a criminal offence? Appealing a conviction?
• Employment and Labour: Need an employment agreement? Unjustly terminated? Need to know your rights?
• Family: Going through a separation or divorce? Fighting to get custody or access? Dealing with spousal and child support?
• Government: Need to lobby the government? Need to resolve a dispute with a government agency?
• Highway Traffic Tickets: Charged with speeding or DUI? Need to fight traffic tickets?
• Immigration: Need to immigrate to Canada? Fighting against deportation?
• Insurance: Having difficulties with your Insurance company?.
• Intellectual Property: Need to register a copyright or trademark? Need help with a patent?
• Landlord and Tenant: Need a resolve a dispute? Need to know your rights?.
• Notary Public / Commissioner: Need to notarize or commission your documents?
• Real Estate: Need someone to facilitate your residential or commercial purchase, sale, or lease?
• Tax: Need help structuring your tax affairs? Need help resolving tax disputes with the Canada Revenue Agency?
• Wills, Estates and Trusts: Need a will? Need to update your will? Find out why having an up-to-date will is a must.

Try to consult with a couple of Toronto law firms and Toronto attorneys until you’re comfortable with whom you’re speaking with.  Toronto law firms differ in size, location, expertise, and reputation.  Go to Dynamic Lawyers and save time and money finding the right Toronto law firms and Toronto attorneys who specialize in the legal area you require!

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Please keep in mind that this is not legal advice.  The information provided herein is for educational purposes only.  If you believe you require assistance in reviewing, drafting, negotiating, etc. a Confidentiality and Non-Disclosure Agreement, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers).

Confidentiality and Non-Disclosure Agreements (also known as NDAs) are nothing more than ordinary contracts with specific terms related to the idea that one party (disclosing party) is going to provide information of a confidential nature to the other party (receiving party).  Breach of a Confidentiality and Non-Disclosure Agreement may result in a claim that can be enforced by going to court, through equitable remedies such as an injunction, or as otherwise set out in the agreement itself (e.g. arbitration, etc.).  In what follows, I’ll provide some general issues that are dealt with in these types of agreements.

1. Consideration
Like all commercial agreements, a Confidentiality and Non-Disclosure Agreement requires something that’s called “consideration”.  Consideration is something of value given by both parties to a contract that induces them to enter into the agreement.  Consideration is typically something like money for goods or services, etc.  One party receives something of value and the other party receives something of value.  This makes the contract valid, binding, and enforceable.  For a Confidentiality and Non-Disclosure Agreement, the consideration will likely be part of the overall agreement (e.g. I will give you confidential information to do something and then I’ll pay you in exchange for that something).

2. Definition of Confidential Information
Defining confidential information is of utmost importance.  The disclosing party will cast the net wide here to increase the receiving party’s obligations and liability with respect to the information it receives; the opposite is true of the receiving party (who wants a narrow definition of confidential information). Examples of types of confidential information include trade secrets, proprietary information, know-how, or information described in a Schedule. Use of a Schedule should still include an accurate definition of confidential information.  Sometimes, a disclosing party will also say that anything it labels confidential will be considered confidential information as well.

3. Exclusions from Confidential Information
Most confidentiality agreements will normally contain various exclusion clauses which outline the types of information which are deemed not to be confidential within the terms of the agreement.  Generally, these types of exclusions will include:

• information which is publicly available (i.e. information in the public domain);
• information which is already known to the recipient at the time of its disclosure to the recipient by the information provider;
• information which is received by the recipient from a third party who is not in breach of any confidentiality obligations to the information provider;
• professional expertise which the recipient had at the time of disclosure or which the recipient developed or enhanced as a result of reviewing the information or material provided; and
• information which the recipient is required by a court or regulatory body to disclose.

4. Limitations on Use of Confidential Information
The uses the receiving party is permitted to make of the confidential information should be clearly specified in the agreement. This will ensure that the recipient does not use the information for any other purpose.

5. Who Should be Bound by the Confidentiality Agreement
A Confidentiality and Non-Disclosure agreement may need to bind all relevant parties (e.g. parent companies, subsidiary companies, directors, officers, employees, representatives, etc.).  In many cases, it is not practical or necessary to obtain signatures from all relevant parties; in these cases, the receiving party should acknowledge and assume responsibility for making sure that these relevant parties comply with the agreement.

6. Required Protective Measures to be Taken by Recipient
The Confidentiality and Non-Disclosure agreement may include a provision requiring the receiving party to take all reasonable measures available to it to keep the confidential information in the strictest confidence.  Such reasonable steps may include:

• Electronic security (e.g. confidential information may be stored on a computer, server, network, cell phone, etc.);
• Physical security (e.g. confidential information may be in a filing cabinet, on a desk, in a box, etc.);
• Visitor control;
• Controls over photocopying confidential information; and
• Document and computer network control systems which limit access to the confidential information to those who are cleared for such access.

7. Return of Confidential Information
The Confidentiality and Non Disclosure Agreement may need to specify that, upon request, all of the confidential information, in whatever format, should be returned to the information provider and that all memoranda or other ancillary documents prepared by the recipient and based on the confidential information be destroyed.

8. Injunctive Relief
An injunctive relief clause may be included wherein the receiving party acknowledges that monetary damages may be an insufficient remedy and that the disclosing party should be entitled to injunctive or other equitable relief for any breach of the Confidentiality and Non-Disclosure agreement. In most cases where confidential information is being disclosed, the disclosing party cannot wait until a court determines the amount of monetary damages suffered. Here, the disclosing party will want to immediately apply for an injunction prohibiting any further disclosure of the confidential information.

9. No Liability Regarding Information
The agreement should make it clear that the disclosing party is making no warranty or other commitment regarding the accuracy or completeness of any information provided, and that there is in fact no obligation to provide any particular information to the other party.

In case you’re looking for an Ontario Mutual or One-Sided Confidentiality Agreement, then look no further:

Confidentiality and Non-Disclosure Agreement (Mutual)

This Agreement can be used to restrict both parties’ use and disclosure of confidential information that is being provided to it. If only ONE party is sharing confidential information and want to restrict the other’s use and disclosure of that information, then you can purchase a ONE-SIDED Confidentiality and Non-Disclosure Agreement:

Confidentiality and Non-Disclosure Agreement (One-Sided)

Here’s the sample Video Guide that comes with the Confidentiality and Non-Disclosure Agreement (Mutual):

Here’s the sample Video Guide that comes with the Confidentiality and Non-Disclosure Agreement (One-Sided):

All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? Best of all, if you DO need a lawyer and need some legal advice, simply make a post and get FREE quotes from Ontario lawyers focusing on the area of law you require!

written by admin \\ tags: agreement, arbitration, breach, business agreements, commercial agreements, confidential information, confidential nature, confidentiality, contracts, educational purposes, equitable remedies, guidelines for confidentiality agreements, injunction, lawyers, legal advice, money, negotiating, non disclosure agreement, non disclosure agreements, utmost importance

As with lawyers, the end of Realtors is often prophesized through the advent of sell-by-owner websites that cut out the 6% commission which Realtors and brokerages charge for a typical transaction.   The idea behind the website is simple: allow owners and sellers to negotiate a purchase and sale agreement for property without involving the middlemen.  This  trend has been ongoing for some time now and there are a number of websites dedicated to squeezing out Realtors, such as For Sale By Owner.

It is interesting to note that although this trend is currently being experienced in its infancy in the legal industry (i.e. where disruptive technologies like Dynamic Lawyers, automated document generation, etc. are making legal services more accessible, affordable, and expedient), there are many difference between Realtors and lawyers which would make Realtors in their traditional form much more obsolete and faster.

To begin, the barriers to entry to becoming a lawyer are much greater than they are to becoming a Realtor (which does not require years spent at university, articling, etc.).  Second, there is a real access to lawyer problem: affordable lawyer specializing in certain legal areas are somewhat hard to find (e.g. Lawyer Referral Service? YellowPages?  Friends and Family?  Who do you turn to?).  There is no such access to Realtors problem: everyone and their uncle knows of a realtor they can turn to in order to sell their home or help them buy a new one.  Moreover, Realtors spend an exuberant amount of money advertising their services in a cut-throat market.  Third, lawyers must often specialize in certain complicated legal areas which take years of experience and know-how to develop expertise in.  For the most part, all Realtors can provide the same basic services – whether it be assisting clients in buying, selling, or leasing a home, commercial office, farm, etc.  If there is specialization in the real estate industry, it is likely confined to geographic areas and types of homes; this doesn’t take away from the fact that all Realtors are capable of doing the same thing (i.e. filling in paperwork, negotiating, and finalizing a deal).  These three differences reveal that lawyers – particularly those who specialize in a complicated legal area such as tax litigation or commercial law – are and will continue to be in high demand and, as such, safe and secure from disruptive technologies that will take business away from other types of lawyers.

Overall, given the low barriers to becoming a realtor, the market prevalence and accessibility to Realtors, and the fact that they can all pretty much perform the same services to assist clients, I envision the end of traditional Realtors happening on a wider scale much quicker than it would for traditional lawyers.

written by admin \\ tags: agreement, continuings, end of realtors, end of s, for sale by owner, lawyer, lawyers, litigants, litigation, money, negotiating, Negotiations, purchaser, referrals, technology, Toronto lawyer Michael Carabash

For most people there is nothing that can take the romance out of an engagement faster than the request for a marriage contract. Somehow marriage contracts seem inconsistent with the commitment that is the essence of marriage. However, sometimes a marriage contract may be a good idea.

A marriage contract defines rights and obligations during marriage or on separation, divorce or death. In the absence of a contract, these rights and obligations are governed by the family law legislation in effect in Ontario. Because it must be applied to many different fact situations, the legislation is not tailor-made. It also gives a lot of discretion to judges, making it quite unpredictable on occasion. Many different judges, with many different points of view, hear family law cases. Finally, the legislation can change. Ontario has had two major revisions of its family law legislation since 1978. The laws that would govern your rights if you were to divorce today may not be the laws that will govern your rights if you divorce in the future.

A marriage contract permits couples to design a tailor-made result rather than being governed by legislation. They may do this because the legislation does not seem fair to them, because it does not suit their needs or because they want to try to avoid litigation if the marriage ends. Seen in this light, marriage contracts are not cynical; they are simply a tool couples use to define and tailor their rights.

For instance…

There are many reasons to contract out of the legislation. In general terms, and subject to some important exceptions, the legislation provides that spouses jointly share their net increase in wealth from the date of marriage to the date of separation or death. If one spouse is very wealthy at the time of the marriage, the legislation could result in a windfall to the other spouse. Through a marriage contract the spouses could agree to an unequal division in the increase in wealth. This does not mean the poorer spouse gets nothing; the spouses can negotiate a fair result. For instance, they could agree that the property division would vary depending on the number of years the marriage lasts.

A couple may also wish to contract out of the property provisions of the legislation if they are both financially independent and don’t want any claim to the other’s assets, or if either spouse has children from a previous marriage. In the latter case a marriage contract can ensure that the majority of the spouses’ assets goes to his or her children and not to the second spouse. As in the first example, this does not mean that the spouse is treated unfairly; the marriage contract can balance the interests of the spouse with the interests of the children.

Marriage contracts do not need to be signed before the marriage. They can be negotiated at any time. Sometimes they actually help couples in trouble make their marriage work. If a couple has experienced troubles in their marriage they may want a marriage contract going forward. Being clear about what would happen if a relationship ends (ie. knowing you will be treated fairly) can help some couples rebuild the trust they need to stay together.

What cannot be contracted

One large advantage marriage contracts have over legislation is flexibility – they can deal with one issue or asset or many issues and all assets. With the exceptions noted below, the potential terms of a marriage contract are limited only by the imagination. However, marriage contracts cannot deal with custody of or access to children or a spouses’ rights to possession of the matrimonial home. Further, any provisions in a marriage contract relating to the support, education or moral training of a child may be disregarded by a court if it believes the provision is not in the child’s best interest.

Cohabitation agreements

The law in Ontario also recognizes cohabitation agreements. People who are living together, or who intend to live together, may enter into a contract outlining their rights and obligations during or after their cohabitation, or on death. Cohabitation agreements are often a very good idea because the law in Ontario does not do much to protect the property rights of common law spouses. If you are in a common law relationship it would probably be a very good idea to define your property rights by contract. However, these contracts must be drafted carefully because unless it provides otherwise, a cohabitation agreement becomes a marriage contract if the parties marry each other.

In short, if your partner proposes a marriage contract or a cohabitation agreement don’t assume it means they don’t love you as much as they should. There are lots of times such contracts make sense. In fact, you may want to consider one yourself.

___________

Ingrid van Weert is a compassionate and dedicated family lawyer with extensive experience in both divorce law and in all forms of dispute resolution available in the divorce process – negotiation, mediation, arbitration and litigation. She can be reached at ingrid@ontariodivorcelaw.ca or at 416-214-1501.

written by Ingrid van Weert \\ tags: agreement, arbitration, cohabitation Family Law, contracts, court, custody, engagements, fairness, family, judges, lawyer, lawyers, litigants, litigation, major, marriage, mediator, negotiating, Negotiations, relationships, revisions, separation, what to include in a marriage contract

One of the most common and most damaging misconceptions I hear as a family lawyer is the idea that people in common law relationships have the same legal rights as married spouses do. No, no, no! If you’re in a common law relationship and think you have the same rights as if you were married, you’re wrong. And that mistake could cost you very dearly if your relationship ends.

At the end of a relationship, whether marriage or common law, the five main issues are custody of children, visitation rights for the non-custodial parent, child support, spousal support and division of property. There are many other issues that may come up as well – possession of the matrimonial home, life insurance, immigration status, wills and powers of attorney to name a few – but those are the big five.

In the first three categories there is not much difference between being married and living common law. The law tries to treat all children equally so the rights of children born in common law relationships are generally the same as those born into marriages. However, when it comes to spousal support and dividing property accumulated during a relationship there are very important differences between marriage and common law relationships.

Spousal support

If you are married you can claim spousal support under either the Divorce Act or under the Family Law Act. If you cohabit you don’t have spousal support rights under the Divorce Act. And the difference between the rights of married spouses and the rights of common law spouses under the Family Law Act is apparent right in the definition of spouse. A married spouse is a spouse – and hence has spousal support rights – from the instant they are married. A person is not even considered a spouse in a common law relationship unless they have been cohabiting continuously for three years or they are in a relationship of some permanence and are the natural or adoptive parents of a child. In other words, at the end of a common law relationship you can’t even seek spousal support unless you cohabited for more than three years or you and your partner have a child together.

Property rights

The difference in spousal support rights is minor compared to the difference in property rights between married and common law spouses. This is where I see people seriously hurt by the common assumption that the law treats married couples and common law couples equally.

In Ontario the Family Law Act gives married spouses very specific property rights; it does not give any property rights to common law spouses. A common law spouse can assert a property claim under a doctrine called constructive trust but these claims are difficult and costly to prove and are far less generous than the rights given to married spouses by the Family Law Act. In other words, if you let your partner put all or most of the property in his or her name in a common law relationship you may find he or she gets to keep it all, even if your income and work helped buy it.

The lesson in this is that if you live in a common law relationship you must make sure that you accumulate property in your own name. Don’t let all property go into the name of your spouse on the assumption that if your relationship ends, the property will be divided between you. That is not how the law works for common law relationships. Another solution is to enter into a cohabitation agreement setting out how property will be divided if the relationship ends. But please don’t assume you have the same property rights as your married friends.

Ingrid van Weert is a compassionate and dedicated family lawyer with extensive experience in both divorce law and in all forms of dispute resolution available in the divorce process – negotiation, mediation, arbitration and litigation. She can be reached at ingrid@ontariodivorcelaw.ca or at 416-214-1501.

written by Ingrid van Weert \\ tags: agreement, arbitration, common law, continuings, custody, damages, family, insurance, lawyer, lawyers, litigants, litigation, marriage, mediator, negotiating, Negotiations, parents, property rights, relationships, spousal support

A while back, I looked into what was required to form a multi-disciplinary partnership with non-lawyers (e.g. accountants, bankers, insurance agents, consultants, Realtors, etc.) to offer legal services.  I thought it would be great to have connections with professionals who could provide me with constant and good quality referrals.

But I quickly dropped the idea after discovering a simple truth: compliance with the Law Society of Upper Canada Rules of Professional Conduct and By Law 7 was more than I imagined I could handle!  Being a sole practitioner as it is – with trust fund accounting, insurance and law society filings, etc. – is already burdensome enough when compared with other occupations and professions.  But it’s got to be down-right scary for lawyers (in my humble opinion) in my position who are considering forming affiliations and multi-disciplinary associations/partnerships with non-lawyers.   Here’s why…

For starters, lawyers are ethically and legally not permitted to share, divide, or otherwise split any revenue, cash flows, or profits with non-lawyers generated in the context of providing legal services (LSUC, Rules of Professional Conduct, Rule 2.08(8); see also LSUC, Knowledge Tree, “Fees, Billings and Collection: Referral Fees, Fee Splitting and Division of Fees”).  Lawyers can do so through multi-disciplinary partnership, but not through affiliations or multi-disciplinary associations.

Affiliations

So what if a lawyer or law firm started paying non-lawyers for certain business services that facilitated the delivering/promoting of the former’s services?  Well this business structure could lead to an “affiliation” under the LSUC’s Rules of Professional Conduct (Rule 1.02) and By Law 7.  Simply put, an affiliation exists where one entity (e.g. person, business, organization, etc.) joins a lawyer or law firm to deliver/promote the latter’s services.  If this is the case, then the lawyer or law firm would still not be able to share, divide, or otherwise split revenue, cash flow, or profit generated in the context of providing legal services to the affiliated entity (LSUC, Rule 2.08(9)).

Furthermore, the lawyer or law firm would be subject to additional onerous ethical/professional obligations and reporting requirements, such as:

• Informing clients about the nature and scope of the lawyer or law firm’s affiliation with the affiliated entity and obtain their consent to proceed (Rules 2.04(10.1 ) and (10.2));
• Establish a system to search for conflicts of interest with the affiliated entity (Rules 2.04(10.1 ) and (10.3));
• Ensure that the lawyer or law firm’s advertisements do not mislead the public about who is providing the legal services (Rules 3.04(3), Commentary);
• Ensure that the lawyer or law firm own and maintain control over the law practice and that such practice is not operated on premises used by the affiliated entity for the delivery of the affiliated entity’s non-legal services (By-Law 7, s. 32); and
• Disclose to the LSUC a report disclosing information between the lawyer or law practice and the affiliated entity with respect to financial agreements, ownership/control/management of the law practice, the lawyer’s compliance with conflict-of-interest requirements, and the lawyer’s compliance with confidentiality requirements (By Law 7, s. 33(2)).

The bottom line is that forming an affiliation with non-lawyers is too burdensome and not worth it (because fees cannot be split).

What about a multi-disciplinary association? Well, if non-lawyers teamed up with lawyers to support/supplement the latter’s provision of legal services to clients, then the Law Society of Upper Canada’s multi-discipline rules could be triggered.  Such rules impose obligations on all of the members of the association.  For example, the non-lawyers would:

• Not be able to practice their profession, trade, or occupation except to support/supplement the lawyer or law firm in providing client services (By Law 7, s. 18(2)(1)).
• Have to give effective control to the lawyer or law firm over its practice of its profession, trade, or occupation (By Law 7, s. 18(2)3);
• Not be able to practice its profession, trade, or occupation independent of its agreement with the lawyer or law practice on the premises used by the association (By Law 7, s. 18(2)5); and
• Have to agree to be bound by the Law Society of Upper Canada’s Rules, Guidelines, By-Laws, etc. (By Law 7, ss. 18(2)2).

For their part, the lawyer or law practice would have to agree to comply with various onerous obligations, such as being responsible for ensuring that the non-lawyer members of the association use appropriate skill, judgment, and competence in performing its profession, trade, or occupation and in complying with the Law Society of Upper Canada’s Rules, Guidelines, By-Laws, etc. (By Law 7, s. 19).  As aformentioned, lawyers would not be able to split or share their revenues, cash flows, or net income with the non-lawyer members of the multi-disciplinary association.  So again, the costs far outweigh the advantages of this structure.

So that leaves us with the Multi-Discipline Partnership

A multi-disciplinary partnership involves non-lawyers supporting/supplementing lawyers in providing legal services to clients.  The non-lawyer members of the partnership would, once again, have to comply with the same onerous conditions as non-lawyer members of a multi-disciplinary association.   And so too would the lawyer .  The only difference is that lawyers and non-lawyers would be able to share revenues, cash flows, and profits through the partnership.

Overall, if non-lawyers are going to get involved in promoting and delivering legal services, then the Law Society of Upper Canada is going to have to re-tool its Rules and By Laws to open up the market.  We’ve already seen the large Bay St. law firms hire business managers to help run their law practices more as businesses than as legal professions; let’s keep moving down that road so that we can make legal services more accessible to the general public.

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