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Are banks eating estates lawyers’ lunch?

|Written By Julius Melnitzer

Outdated law school curriculums are contributing to a bleak future for the trusts and estates bar, a Canadian legal futurist predicts.

Despite the concerns, lawyers remain at the forefront of estate planning, says Susannah Roth.

It’s a dire prediction some prominent members of Ontario’s estates bar don’t totally disagree with.

“While law schools stick to their knitting in teaching the tried and true trusts/estates course with an elder course option for the more adventurous, and lawyers make polite suggestions to clients about preparing a will, a vibrant wealth management industry is marginalizing the legal profession’s role in what is an emerging upscale buyers’ market for an application of ‘boomer law,’” says John Kelly, who spent 26 years as an Ontario-based lawyer and law professor and now works in Britain as president of Canada Law From Abroad, an organization whose mission is to “provide students with innovative, international, legal educational opportunities” that open the doors to “the new global legal services market.”

Kelly suggests lawyers counselling on so-called baby boomer law tend to limit their advice to suggestions that their clients make a will and appoint an executor for their estate.

“That’s the extent of the knowledge management capability they acquired in law school and commensurate with the traditional practice of law,” says Kelly. “It’s all pretty boring stuff that more often than not is paid lip service by the client who moves on, and for good reason.”

As Kelly sees it, where the clients move to are the major banks and their trust subsidiaries whom Kelly calls “the principal depositories” of boomer wealth.

“They undertook what in management jargon is known as a major ‘re-engineering’ of their boomer services,” he says. “In plain English, this translates into breaking down a product such as preparation of a will or probating an estate into all of its component parts and then developing a value-added service package that appeals to the client.”

The wealth-management package frequently contains a portfolio that includes a will planning kit and a simple guide to estate planning. Financial institutions can also provide management services that include advising family executors, managing property sales, and counselling beneficiaries on investing their bequests.

“‘Disintermediation’ is taking place,” says Kelly.

“In plain English, it means that lawyers are either pushed out of contemporary estate planning or marginalized. The bank, by positioning itself as point of first call, becomes the primary service provider and major fee earner.”

This “bigger picture,” says Kelly, is what lawyers aren’t confronting.

Susannah Roth of Toronto’s O’Sullivan Estate Lawyers PC agrees that law school curriculums should expand to enable prospective members of the estates bar to deal with today’s realities. “It would be very beneficial if law school taught some soft skills and offered business or accounting courses,” says Roth, a past chairwoman of the Ontario Bar Association’s trusts and estates section.

Still, she maintains that lawyers remain at the forefront of estate planning. “Our practice includes very involved estate planning where we take over the client’s whole situation or integrated planning with help from wealth managers and accountants,” she says.

However, Vincent De Angelis, current chairman of the OBA section, concedes that “to some degree” the major financial institutions are marginalizing the profession. “But that’s not just happening in trusts and estates,” he says. “It’s also happening in other areas like real estate.”

De Angelis, then, admits Kelly’s approach has some merit. “Kelly is right about the fact that lawyers have to retool and take a holistic, multidisciplinary, and multi-professional approach in which they are the quarterbacks,” says De Angelis.

“You can’t just focus on the nuts and bolts and you absolutely have to address planning. But succession law is very complex and law schools need to focus on its multidisciplinary aspects.”

Law schools, he says, should consider MBA programs in wealth management. Indeed, law students are among those enrolled at the wealth-management course offered by York University’s Schulich School of Business.

The difficulty, De Angelis says, is that the demand for professional advice comes down to money. “Most people don’t appreciate the importance of having a proper will, which far outweighs the cost of preparing it,” he says.

“So they go to the lawyers who are offering wills for $99 at Walmart stores.”

De Angelis worries that the trend to alternative business structures, an issue now under consideration by the Law Society of Upper Canada, could lead to the commoditization of legal services as a whole. “That’s unacceptable because, unlike other professions, we’re fiduciaries and attract solicitor-client privilege, two key concepts on which ABS will infringe,” says De Angelis.

The key to halting the slide, he suggests, is for lawyers to educate the public on the importance of proper wills and estates planning.

“But that’s not something you can learn in law school,” he says. “That’s the responsibility of the profession as a whole because the lawyers who are interested in providing proactive advice don’t have the resources or knowledge to market like the financial institutions do.”

De Angelis, who makes it clear he’s speaking only on his own behalf, notes organizations like the OBA are taking steps to get the message out with programs around making a will and powers of attorney.

“Educating the public with these types of programs will make it more likely that lawyers are the first point of contact for clients,” he says.

For more, see "Walmart law already here."

  • Philip Brent
    99% of clients do not require significant estate planning. Their prime asset is usually their principal residence and their non-real estate assets such as RRSP's and RRIF's have designated beneficiary clauses.

    There are legitimate situations where a more structured approach is required for complex family business arrangements, succession of shareholdings etc, are required.

    Estate lawyers are notoriously rapacious and they hate seeing fees slipping away to a more common sense approach.

    When I have a client who has REAL estate planning needs, I refer them to an estate lawyer, but very reluctantly, because I have had many grim, first hand experiences with the estate bar.

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