Posts

ACQ PHOTO

Canaccord Genuity acquires UK advisory firm McCarthy Taylor

Canaccord Genuity Wealth Management, the UK and Europe wealth management arm of Canada’s Canaccord Genuity Group, has bolstered its national presence by taking over Worcester-based financial advisory business McCarthy Taylor.

McCarthy, set up in 1998, offers bespoke financial planning and discretionary investment management services. The firm services clients across the Midlands.

Canaccord Genuity Wealth Management CEO David Esfandi said: “The acquisition of McCarthy Taylor represents an opportunity to expand our Midlands presence and creates a regional financial planning centre of excellence, which will be fully supported by our broader UK team.

“Together we share an unwavering commitment to expanding our offering of best-in-class fully integrated investment management and wealth planning services to discerning investors across the UK.”

The acquisition, whose financial terms were not disclosed, adds around £171m to Canaccord’s books.

McCarthy CEO Paul Taylor said: “Today marks an exciting chapter in the evolution of our business, and I am confident that joining Canaccord Genuity Wealth Management will bring significant benefits for our clients and our employees as we expand our services and opportunities.”

Paul Taylor will remain actively involved in the business to ensure a smooth transition.

In 2017, Canaccord Genuity Wealth Management snapped up British wealth manager Hargreave Hale.

For more information about Canaccord Genuity Wealth Management, please visit https://www.canaccordgenuity.com/wealth-management-uk/

LF PHOTO

Is outside ownership of law firms picking up steam?

One of the least interesting ways to end a conversation about legal innovation is also one of the most frequent. It goes something like this: “That change would require amendments to professional regulations.” Often, the regulation being discussed is the ban on nonlawyer ownership of law firms.

It’s a good way to end a conversation because, as Yale Law School professor John Morley puts it, it is “astonishing how little happens” on the issue of nonlawyer ownership in the United States.

But things are happening that are finally worth talking about. The State Bar of California voted in July to form a task force to study, among other things, allowing outside investors in law firms. Meanwhile, litigation finance giant Burford Capital Ltd. recently began discussing with law firms a financial structure that the company says would allow investors to own portions of today’s firms, with no regulatory changes required.

Commenting on the California task force, legal marketing executive Heather Morse asked if the news meant that a “game changer” for the law was “finally here.” The answer to that question is a resounding no. The task force won’t finish its work until 2020, so nothing has arrived yet. But the fact that a state bar association is studying the issue has, at least, generated a real discussion about an often taboo topic for the first time since 2016.

Legal innovators hope California’s task force comes to a much different conclusion than the efforts in 2016 of the American Bar Association’s Commission on the Future of Legal Services. That commission followed shortly on the heels of the ABA House of Delegates issuing a stamp of approval for professional Rule 5.4—the official ban on outside investors in law firms. A March resolution that year adopted “model regulatory objectives for the provision of legal services,” and noted that “nothing in this resolution abrogates in any manner existing ABA policy prohibiting nonlawyer ownership of law firms.”

Some of the harshest critics of the commission’s work exploring the concept were bar associations themselves. State bar leaders from Illinois, Missouri, New York, New Jersey and Texas wrote to oppose the idea of nonlawyer ownership.

“There is no need for non-attorneys to acquire ownership interests in firms, or any evidence that firms are in danger of losing access to complementary professional services if an ownership interest is not made available,” wrote Miles Winder III, then-president of the New Jersey State Bar Association. “The NJSBA urges the commission to not rehash settled concepts.”

William Henderson, a professor at the Indiana University Maurer School of Law who wrote a study that spurred California’s task force, says the issue is anything but settled. The rise of technology has put law firms on an uneven plane with new companies that are looking to enter the legal services market. Without the ability to co-invest in law firms, he says, people with the types of skills needed for today’s market—such as technologists, data analysts and others—will not be attracted to law firms.

“What we have is consumer protection for those who can afford legal services, but the ethics rules really limit the ones who can enter the market,” Henderson says.

Those ethics rules won’t be amended without a fight. Jordan Furlong, a consultant on the legal business based in Canada, points out that no bar association has voluntarily vanquished the prohibition on outside owners in law firms. In both Australia and the U.K., direct government intervention was the basis for allowing so-called “alternative business structures.”

Still, recent reforms to California’s bar association may work in reformists’ favour. Last year, the State Bar of California split into two parts: one contains the voluntary trade association activities, while another focuses on regulation and discipline.

That separation, along with a rule that put six nonlawyers on the bar’s 13-member board, limits what legal consultant Mark Cohen says is an incentive for bar associations to bow to pressure from their members to protect lawyers’ revenue streams.

As evidence of this incentive, Cohen points to a doomed pilot program, ABA Law Connect, that used Rocket Lawyer’s technology to provide consumers access to lawyers for as little as $4.95. The pilot was scrapped in early 2016 after bar leaders from Illinois, Pennsylvania and elsewhere wrote a letter decrying the program for what they perceived as a “blue-plate-special mentality.”

“The ABA Law Connect program is not in the best interest of the public, the legal profession or small businesses that operate in our states,” the bar leaders wrote.

Cohen disagrees.

“This is not really about protecting the public. How can they say that when roughly 85 percent of Americans who need legal services can’t afford them at the present rates?” he says. “I think this is just lawyer protectionism.”

Cohen and others believe that nonlawyer ownership in law firms would allow them to harness increasingly important technologies and professional skills to provide new and less-expensive types of legal services.

One example of that is the U.K.’s Gateley plc, one of the few law firms to list its shares publicly following bar regulation reform. The firm increased last year its number of employees by 8.8 percent, to 757 people, many of whom the firm’s chairman, Nigel Payne, says were drawn to the firm by the opportunity to own equity. More than 55 percent of the employees participate in a stock-option program, Gateley said in its most recent annual report in July.

“Being able to offer something different as an employer has helped us not only retain staff since the IPO, but also attract a wide pool of new talent,” Gateley wrote.

For those who are not inclined to wait out a decision from the California bar—or who operate elsewhere in the United States—there may be a near-term way to offer something different to employees.

Burford Capital, the litigation financier that wrote in support of the ABA’s 2016 commission on nonlawyer ownership, says it can finance new ventures that would provide corporate-like equity in today’s law firms. Burford hasn’t publicly shared all the specifics of the plan, but its co-founder, Jonathan Molot, who is also a professor at the Georgetown University Law Center, says it would involve spinning off the nonlegal functions of a law firm into a separate company. That company would receive investment from Burford or others. The firm’s partners would also be investors, allowing them to own a piece of what they helped build long after they stop billing hours.

“I think liberalising the ethics rules is a good idea,” Molot says. “But, that being said, because you’re not looking to move the entire profit center of a law firm into a permanent structure, only a slice of it, I think that can all be done now without any change.”

Change or not, it is a good time for talk.

Foreign PHOTO

Foreign businesses to UK: solve Brexit or risk £100bn in trade

Business leaders from the US, Canada, Japan and India have told the British government to solve the Brexit issue urgently or put more than £100bn worth of trade at risk.

Lobby groups representing business interests from the four countries took the unusual step of issuing a joint statement on Brexit before the European council summit this week. It came days after Airbus said its investment in the UK would be at risk from a hard Brexit, prompting the health secretary, Jeremy Hunt, to say the Franco-German aircraft maker’s intervention was “completely inappropriate”.

Groups representing corporate giants including Nissan, Bombardier and Facebook expressed their concerns on Monday that Britain was heading towards a disorderly departure from the EU, potentially affecting more than £100bn in trade and putting investment in the UK at risk.

“International businesses who are heavily invested in both the EU and the UK are calling for urgent progress on the key outstanding issues remaining in the talks,” they said in the statement. “Resolving as many of the remaining concerns as possible is becoming more urgent by the day – with the clock ticking towards the October deadline for a final withdrawal agreement.”

The statement was signed by the American Chamber of Commerce to the EU, representing companies including Boeing, Exxon Mobile, Facebook, Dell, Coca-Cola and FedEx. It was also signed by the Canada Europe Roundtable for Business, Europe India Chamber of Commerce and the Japan Business Council in Europe.

The statement said they recognised the complexity of finding a solution for the Irish border, but urged both the EU and the UK to continue to try to find agreement on the issue.

In the meantime, they urged policymakers to “dedicate time and thought at the upcoming summit” to address the remaining issues, including the role of the European court of justice, the future UK-EU regulatory regime and post-Brexit preparedness.

“Reaching agreement on these issues will provide businesses with more confidence that a withdrawal agreement can be agreed and ratified, thereby providing legal certainty for the proposed transition period and avoiding the worst-case ‘cliff-edge’ scenario in March 2019 ,” the statement said.

It reflects a growing frustration in business over the lack of a clear Brexit strategy two years after the referendum.

In the wake of the Airbus comments, BMW said it needed clarity on Brexit negotiations “in the next couple of months”. Car manufacturers are expected to issue a fresh and strong warning over Brexit at a Society of Motor Manufacturing and Traders (SMMT) meeting on Tuesday.

The car industry employs more than 800,000 people in the UK and the Japanese ambassador has warned Theresa May that his country’s firms will quit Britain if a botched Brexit makes it unprofitable to stay.

Koji Tsuruoka told the prime minister earlier this year that if “there is no profitability of continuing operation in [the] UK … no private company can continue operations”.

Both he and the outgoing boss of BMW will speak at the SMMT conference.

Japan’s business interests in the UK include Nissan, Mitsubishi, Panasonic and Honda, with trade with the UK worth £46bn. Nissan, Toyota and Honda began their UK operations in Britain in the 1980s and now build nearly half of all of the 1.7m cars produced in the UK last year.

The car industry is concerned that if the UK does not stay in the single market, it will be hit by costly delays in delivering components from the EU.

America’s import and export trade with the UK is worth around £43bn but it is also a heavy investor in business with a large presence in the UK in tech, pharmaceuticals and transport.

Canada’s business interests in the UK include the Bombardier aircraft wing factory in Belfast, which was recently saved from making thousands of redundancies after winning a legal challenge in a trade dispute with US rival Boeing and the Trump administration.

The UK ranks as Canada’s second most important trading partner after the US with bilateral trade worth CN$27.1bn (£15bn). India’s exports to the UK are valued at around $9bn (£6.79bn) with machinery and clothing among the highest value products.

Stewart PHOTO

Meet the $5bn tech boss who grew up without electricity

The BBC’s weekly The Boss series profiles a different business leader from around the world. This week we spoke to Stewart Butterfield, the founder of technology companies Flickr and Slack.

It is not the sort of upbringing you’d associate with one of Silicon Valley’s heavyweights.

But Stewart Butterfield spent the first five years of his life living on a commune in remote Canada after his father fled the US to avoid serving in the Vietnam War.

The young Mr Butterfield and his parents lived in a log cabin in a forest in British Columbia, and for three years they had no running water or electricity.

“My parents were definitely hippies,” says Mr Butterfield, whose mother and father had named him Dharma. “They wanted to live off the land, but it turns out there was a lot of work involved, so we moved back to the city.”

After the family relocated to Victoria, the capital of British Colombia, Mr Butterfield saw his first computer when he was seven, and taught himself to programme from that very young age.

Fast-forward to today and 46-year-old Stewart Butterfield – who founded both photo-sharing website Flickr, and business messaging service Slack – has an estimated personal fortune of $650m (£500m).

But perhaps in part due to his unusual upbringing he says he tries to live frugally.

“In truth I feel guilty spending too much money,” he says. “As a Canadian that world seems very strange and alien to me.”

Mr Butterfield also puts much of his success down to luck.

Mr Butterfield says that his seven-year-old self was fascinated by the first wave of personal computers.

“I was around seven in 1980, it must have been an Apple II or IIE that my parents bought,” he says. “I taught myself to code using computer magazines.”

Mr Butterfield – who changed his first name to Stewart when he was 12 – learned to make basic computer games.

However, he lost interest in computers while at high school, and ended up going on to study philosophy at the University of Victoria. From there he did a masters in the subject at Cambridge University in the UK.

In 1997 he was about to try to become a professor of philosophy when the internet “really started to take off”.

“People who knew how to make websites were moving to San Francisco, and I had a bunch of friends who were making twice as much, or three times as much, as what professors were making,” he says. “It was new and exciting.”

So Mr Stewart decided to give up academia and move to Silicon Valley.

After working as a web designer for several years he launched an online game in 2002 with future Flickr co-founder Caterina Fake, Mr Butterfield’s then-wife.

The game – called Game Neverending – failed to take off, and the pair were running out of cash. Frantically looking for a plan B they hit upon the idea of Flickr, going on to build the photo-sharing platform in just three months.

“The first camera phones were also coming out, and more and more households were getting internet connectivity, and then stuff happened so fast,” says Mr Butterfield.

Launched in 2004, Flickr was the one of the first websites to allow people to upload, share, tag and comment on photos.

Just a year later the founders sold the firm to internet giant Yahoo for $25m – although Mr Butterfield has since said this was the “wrong decision” as waiting longer could have meant a much bigger deal.

Nevertheless he moved on to bigger things with Slack.

It was 2009 and he and some partners had set up another online game, and again it failed. It did, however, spark a brainwave.

“As we were working on the game we developed a system for internal communication that we really loved,” says Mr Butterfield. “We didn’t think about it, it was very much in the background. But after a few years we thought maybe other people would like it too.”

It formed the basis for Slack, a service that today boasts eight million daily users, three million of whom pay for the more advanced features, and more than 70,000 corporate clients.

Slack enables employees to communicate and collaborate with each other in groups at work, and it has grown rapidly. IBM, Samsung, 21st Century Fox and Marks & Spencer are just a few big names to have signed up. Following a number of investment rounds Slack is now valued at $5.1bn.

Chris Green, a technology analyst at consultancy Bright Bee, says it is rare for an entrepreneur to create something successful out of the ashes of a failed project, and “almost unheard of to do it twice”.

“But if you look at Stewart’s career, it’s not just luck, he’s always been innovating in the background and looking for ways to bring order to chaos,” says Mr Green.

“That’s what Flickr and Slack have both done in their own ways.”

Slack does have competitors, though. Microsoft now offers a rival service for free with its Office 365 package, and start-up Zoom boasts a more expansive offering for about the same price.

“There is immense competition from some big well-funded companies so Slack will need to keep evolving,” Mr Green says.

Big tech firms have found themselves in the firing line for not paying enough tax – but Mr Butterfield says he would be happy for Slack to pay more taxes.

“I’d also like to see a more equitable tax policy. I have no problem paying tax. I don’t think companies are taxed enough, or critically, in the right way.”

Regarding the future, Mr Butterfield says that, unlike Flickr, he has no intention of leaving Slack.

“So many things had to go right get to this position – amazing luck was involved – and I am not so smart that I can just make it happen again,” he says.

“So if I ever wanted to see how far I could take it, this would definitely be the time to do that.”

Tax PHOTO

The 10 countries that make the most money from taxes

Paying taxes is something no one enjoys doing, but the amount individuals and companies pay varies enormously throughout the world. The Organisation for Economic Co-operation and Development (OECD) has calculated how much tax was paid in 2016 by 10 countries. Here’s what it discovered. How does your country measure up?

Australia: $348 Billion

The latest figures available show Australia raised $348 billion from its 24.13 million-strong population. Individuals pay income tax on a progressive basis from 19% to 45%. A Medicare Levy is payable on top to pay for public healthcare; this was increased from 1.5% to 2% in 2014, while since 2015 higher earners who don’t have private hospital cover must also pay the Medicare Levy Surcharge of between 1% and 1.5% on top. Corporate taxes stand at 30%, however the government is pushing for this to be cut to 25% by 2025.

Japan: $351.6 Billion

Japan received $351.6 billion from its population of 127 million, according to the most recent figures. In 2017 the country’s ruling bloc approved a plan to cut the corporate tax rate from 30% to 20%, although only for companies that raise wages and increase capital spending. Japan has a progressive income tax system, with rates from 20% to 40%.

South Korea: $371.1 Billion

South Korea, which received $371.1 billion from its 51 million population, is undergoing huge changes this year as the country enacts a 2018 tax reform bill. Some of the changes include adding a new 25% corporate income tax bracket for taxable income in excess of $270 million, instead of the previous flat rate of 22%. Meanwhile the top income tax bracket has been increased from 40% to 42% for higher earners.

Spain: $412.4 Billion

With a population of 46.6 million, Spain generated tax receipts of $412.4 billion in 2016 according to the report. The country operates a sliding scale of income tax from 19% to 45%, while the general corporation tax rate is 25%. Meanwhile, residents of the Andalucia region had some good news this year, as it was announced changes to inheritance tax rules mean that the vast majority of children or spouses will not have to pay it anymore.

Canada: $491.1 Billion

The system of paying federal tax is simple in Canada: there is a sliding scale of 15% to 33% depending on how much you earn, however it gets a bit trickier when you need to add on provincial and territorial tax as the rate you pay depends on your income – and where you live. The rates vary dramatically from 4%, the lowest bracket in Nunavut, up to the highest bracket in Nova Scotia of 21%. The country’s population of 36.3 million brought in a total of $491.1 billion in 2016.

Italy: $792.8 Billion

Italy’s 60.6 million-strong population helped contribute to vast tax revenues of $792.8 billion. Italians pay personal income tax of between 23% to 43%, plus regional tax which is typically between 1.23% and 3.33%

United Kingdom: $869.4 Billion

The UK generated $869.4 billion in tax from its population of 65.6 million people, according to the OECD report. The UK uses a progressive income tax system, where those living in England, Wales and Northern Ireland pay between 20% and 45% tax, while those in Scotland pay 19% to 46% tax depending in their earnings. Residents must also pay National Insurance contributions too, which are 12%, although workers who earn more than $62,380 pay only 2% on earnings over that threshold. The Corporation Tax main rate is 19% but is set to be reduced to 17% in 2020.

France: $1,115.9 Billion

With a population of 66.9 million, France generated $1,115.9 billion in tax. However it will be interesting to see the results of dramatic tax cuts President Emmanuel Macron made in 2017, including slashing the contentious wealth tax effectively by 70% and introducing a 30% flat rate on capital gains.

Germany: $1,305.7 Billion

A combination of being the biggest economy in Europe, a population of 82 million and a relatively high taxation system means Germany has the second-largest tax revenue in the report at $1,305.7 billion. In addition to income tax, which varies from 14% to 45% for very high incomes, everyone has to pay solidarity tax, which is capped at 5.5% of an individual’s income tax. Also, if you’re a member of a church registered in Germany, you will also be required to pay a church tax of 8% or 9% of your income, depending on which federal state you live in.

United States: $4,846.3 Billion

The US tops the list in the report for having the highest level of tax revenues, with $4,846.3 billion tax generated from its population of 325.7 million. However with the US going through huge tax reforms this year under President Trump, it will be interesting to see the impact that has on those figures in future. Most analyses suggests that while the changes aren’t the biggest tax cuts the country has ever seen, the reduction of the corporate tax rate from 35% to 21% is the biggest corporate tax cut in US history.

ADR PHOTO

ADR community to celebrate success, plan future in Edmonton

A first-of-its-kind symposium in Edmonton will celebrate the success of Alternative Dispute Resolution in Alberta. The method of conflict resolution is widely used across the province, saving Albertans time, money and stress while alleviating pressure on the province’s justice system.

The gathering will take place over two days at Lister Centre at the University of Alberta.

In addition to celebrating the past two decades of successful conflict resolution through mediation, the meeting will provide a chance for all members of the Alternative Dispute Resolution community to discuss how to continue an upward trajectory of success.

This is the first time members of both the non-government Alberta resolution community will be brought together with the Government of Alberta’s Dispute Resolution Network since the province launched the conflict resolution method more than 20 years ago.

Gilbert Van Ness is the co-chair of the symposium and he spoke on the Alberta Morning News about how ADR got started in the province.

“With programs to use mediation in small claims court, and then it expanded on the justice side of things,” Van Ness said, “to be used quite a bit in the area of family law to deal with divorces, child custody issues, things like that.”

Now, ADR allows individuals, families, businesses and even municipalities to access cheaper, faster, less adversarial and simply more effective methods of conflict resolution than turning to court.

“You’re putting the decision-making power in the hands of a third party, whether it’s a judge or a board,” Van Ness said.

“The strong power of alternative dispute resolution is keeping the decision-making power in the hands of the people whose lives it affects.”

Members of the ADR community have backgrounds in a wide range of fields and are educated through programs and institutions such as the ADR Institute of Alberta in mediation. Van Ness stressed the importance of this diversity in successful mediation.

“The practitioners, the people who do it, come from all different walks of life,” he said. “And so they bring all different kinds of backgrounds to this approach of problem-solving and conflict-solving. And that makes for much more dynamic potentials and solutions.”

The symposium on May 15 and 16 aims to set the stage for a future in which Albertans have the option to turn to mediation instead of spending thousands of dollars and hours of time in the justice system.

“One of our main themes is to make Alternative Dispute Resolution the first choice for the way you want to resolve conflict,” Van Ness said.

“Rather than, ‘I’m going to take you to court,’ we want to hear people say, ‘I’m going to take you to mediation’ as the preferred choice of resolving conflict.”

Keynote speakers include Court of Queen’s Bench Justice and ADR advocate the Hon. Madam Justice Joanne Goss, and Nancy Mannix, chair and patron of the Palix Foundation and the Alberta Family Wellness Initiative.