Influencing Change in Law Firms: The Role of Paraprofessionals and Legal Professionals

On December 13, 2018, Bill C-86 received Royal Assent, thereby amending certain provisions of the Canada Business Corporations Act (“CBCA”).

The updated provisions include new record keeping requirements for private companies incorporated under the CBCA. As of June 13, 2019. The updates affect those with “significant control” of a company defined as:

Section 2.1(1)

• (a) an individual who has any of the following interests or rights, or any combination of them, in respect of a significant number of shares of the corporation:
  • (i) the individual is the registered holder of them,
  • (ii) the individual is the beneficial owner of them, or
  • (iii) the individual has direct or indirect control or direction over them;
• (b) an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or
• (c) an individual to whom prescribed circumstances apply.

A “significant number of shares” is further defined as:

Section 2.1(3)

• (a) any number of shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares; or
• (b) any number of shares that is equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value.

Summary

Private CBCA corporations must now maintain a register of all individuals who fit the above description, and include in the register the names, birth dates, residence (for tax purposes) and other required data.

Shareholders are now obligated to provide true and accurate information when requested by the corporation.

At least once per financial year, the corporation must review and update this information. Once the corporation is aware of any changes, it has 15 days in order to amend the register accordingly. Failure to properly update the information can result in fines of up to $5,000. However, directors or shareholders knowingly providing false information can result in fines of up to $200,000 and/or six months of imprisonment.

The CBCA requirements ensure that corporations (or the law firms that manage the records for those corporations) must undertake a greater number of tasks each year to ensure the corporate records’ compliance.

The process of updating minute book records will be daunting and tedious, especially if the information is stored in physical minute books binders. Document generation tools and clearly organized cloud-based data and databases can make compliance with the new requirements more manageable.

While the new requirements apply only to privately held CBCA corporations, it is certainly possible that the provincial legislatures will debate and perhaps adopt similar requirements.

At MinuteBox, we have already begun internally testing some new features (to be released in 2019) built specifically to support lawyers and clerks through this process.

This piece is a list of suggestions and helpful solutions in order to help us, as a legal community, get through the tumultuous times, and ensure we are in the best possible position when this is all over (it will happen… I swear!).

Here we are. The vast majority of lawyers are working from home, trying to find a sense of normalcy in a world that changes by the hour (sometimes less). I always knew the legal industry would undergo a cataclysmic change, but never in my wildest thoughts did I envision a global pandemic would be the catalyst.

Let’s get one thing clear. There is no single-source rule book for how we, as a profession, undertake our role in the current circumstances. These are uncharted waters and we are all navigating them for the first time. Good luck!

But I firmly believe lawyers are smart and resourceful. They will find ways to provide services to clients and ensure the job gets done.

Even at times when we feel helpless as professionals, there are steps lawyers and law firms can take to ensure our industry makes it through this crisis:

Communicate with your clients: Ensure they are well accommodated. A simple phone call goes a long way to build goodwill. In times of uncertainty, “Hi, how are you?” shows concern and empathy. Find out what kind of support they need and offer your services, if you can.

Communicate with other lawyers: One big (normal) fear we may have is that other lawyers are farther along in their management of this crisis than we are. This can lead to uncertainty, anxiety, paranoia and doubt. Rest assured, every lawyer is feeling the stress and everyone is, to at least some degree, underprepared for a situation like this. Speaking with colleagues will not only help settle your thoughts, but may also introduce you to some novel solutions they have uncovered which can help your practice as well.

Explore what doesn’t work: What PAIN POINTS are you specifically feeling now when it comes to your ability to practice? What is not working and what needs fixing. What really grinds your gears when it comes to your practice? These might not be identified immediately, but over the coming weeks, begin to explore which processes are important and which are dead weight.

Take stock of your processes: Do a little process mapping. How were things done before the current health crisis? How are they done now? What can be improved and what was waste? Process mapping for different parts of your practice can help zero-in on areas that can be improved.

Take advantage of government resources: The federal and provincial governments have been providing capital for businesses and individuals. It is important to inform your clients about what’s available, but also determine if you or your firm is eligible. Find out if you are eligible for the Temporary Wage Subsidy (TWS), the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Business Account (CEBA) and the Canada Emergency Response Benefit program (CERB).

Don’t be afraid to push the envelope when it comes to novel ways to practice: Remember, above all else your duty is to provide service to your clients (in a safe, ethical and secure manner). Think outside the box and be a trailblazer!

Embrace the quiet: Lawyers are notoriously busy, always working on client deadlines (whether actual or self-imposed). Without a doubt, those times will return, guaranteed! But in the meantime, enjoy working fewer hours. Embrace a 9-5 work routine. Take an extended lunch at the kitchen table. Watch an episode of the Price is Right (it’s good for the soul!).

Take the time to be honest with yourself: Anxiety, nervousness and fear are human emotions. And although we sometimes work superhuman hours, we must find time to cope and express our emotions to ourselves and to others.

As lawyers, we are made to feel we have all the answers all the time. It’s alright to take a little bit of time to find the best approach to provide optimal service to your clients and yourself.

If you remember nothing else, remember Rule # 1: Stay healthy. The rest we can figure out together!

Absent double-monitor computers and the ability to send emails on smartphones, in many ways lawyers continue to practise the same way they have for generations. The legal industry has oft been described as the last great mature industry to modernize. However, growing pressures from clients and stiffer competition from new legal service providers are compelling law firms to slowly introduce new processes and technologies in order to internally increase work efficiency and externally create client value.

Legal technology can be divided into two tags: necessary and nuisance.

Necessary technologies, the smaller of the two categories, are tools a modern law firm needs in order to function. Photocopiers, email and the telephone are just three examples.

Alternatively, nuisance focused technologies, where the vast majority of legal technology falls under, provide solutions that are faster, better and cheaper than existing methods and processes. These solutions alleviate real nuisances, but are not required to practise law. For example, AI powered due diligence software “reads” contracts and parses out key information. However, teams of junior associates can perform the very same task, albeit at a slower rate and higher price. Nuisance alleviating technologies are value-added solutions that law firms should strongly consider implementing but are reticent to adopt.

The Legal Technology Sales Triangle

For law firms, the consideration to adopt nuisance alleviating technologies is based on three factors: the simplicity of the technology, the product or service’s ease of use, and how quickly the financial returns are realized. These considerations, taken together, form what we at MinuteBox call the “Legal Technology Sales Triangle.” The degree to which each node is considered and satisfied may help determine whether a law firm will adopt a new nuisance alleviating technology.

Simple

Make sure your nuisance alleviating technology is simple in the eyes of lawyers. While outsiders see an industry inching towards modernization, lawyers feel that they’re on a bullet train moving at top speed. Understanding lawyers’ perspectives is essential when presenting new technologies or innovations to law firms.  Too much change too quickly is risky, and lawyers, as practitioners of risk aversion, will more often than not opt to remain on familiar turf.

So when pitching nuisance alleviating technologies to lawyers ask yourself the following questions:

1. Is my presentation too technical?
2. Will lawyers understand what I am trying to do?
3. Is this a tiny step or radical step in terms of how lawyers and law firms work?

Easy-To-Use

Many lawyers have been practicing the same way for decades and are prone to reverting back to tried and true processes whenever new technologies are introduced. Familiarity with tools and techniques creates a pervasive stickiness. Even though some steps in a legal process may be redundant, lawyers still follow each step. Their individual technique works for them.

Therefore, as a starting point, any new technology must be as easy or easier to use than whatever techniques or solutions the lawyers are currently using. That means if the current process takes five steps, any new solutions must be five steps or fewer. It doesn’t matter how complex the new step; a mouse click, an extra button press, even excessive load times all repel lawyers back to their preferred techniques.

New nuisance alleviating solutions must also be out-of-the box ready. Law firms are busy and are looking for end-to-end solutions that don’t require a lot of onboarding on their part.

The one exception to the easy-to-use requirement is if each additional step yields exponential returns. For every additional button press, mouse click or lag time, the financial return must be high.

Instant Return

The sooner a firm can see financial returns from the adoption of a technology the faster that firm will adopt it. For the vast majority of law firms, strategic decisions are made by the senior leadership, often composed of very senior partners nearing retirement. There is thus a lack of incentive for some decision makers to adopt high cost technologies which only yield returns in the distant future.

While some new technologies can positively impact a firm’s financial position in the long term, the immediate value in the eyes of the decision makers is limited. Instead, senior decision makers will be more inclined to invest in technologies that may be less impactful but have immediate financial returns.

The Legal Technology Sales Triangle is by no means a comprehensive tool when it comes to selling nuisance alleviating technologies to law firms. Yet it adds a sense of perspective for how most firms operate and the considerations they weigh when deciding to adopt impactful technologies.