Article October 6, 2020

The compliance checklist in a context of succession

Carine Monge, B.C.L., LL.B., MBA, Chief Operating Officer, Corporation de services du Barreau du Québec

After completing your Business Model Canvas, conducting the SWOT analysis of your practice and mapping a structured process for your retirement, it is important to perform due diligence on your practice. This exercise is essential because it helps bring compliance to your attention.

Moreover, what does the word compliance mean? For many, it’s a term with a rather negative connotation that can trigger cold sweats or sleepless nights. Nevertheless, compliance in the broad sense of the word, beyond the regulatory sense, shows the way for establishing and growing a successful practice.

And so I recommend looking at some more practical points, such as:

  • Creating a specific transition plan over 3 - 5 years, to share with your employees and business partners.
  • Getting support from professionals who are accustomed to dealing with business transfers, like accountants, lawyers or tax specialists.
  • Ensuring your own finances are well planned out. Asking a colleague to help with planning.
  • Ensuring the buyer is competent and certified.
  • Assessing the buyer’s ability to successfully meet their clients’ needs. For example, would they allow you to speak with some of their clients?
  • Preparing a written agreement with your practice’s acquirer. Working with them on a plan B in case an unforeseen event, like COVID-19, takes place and changes the situation.
  • Keeping, maintaining and destroying records based on regulatory requirements.
  • Paying close attention to the records of vulnerable persons.
  • Having a well organized CRM with comprehensive notes to help any professional understand the client’s situation.
  • Finalizing all your active warrants.
  • Talking to your employees about your decision and remembering to include them in the sales agreement.
  • Informing business partners of your intention to retire.
  • Having a clear and extensive complaint file.
  • Protecting clients’ personal information.
  • Notifying clients of your retirement with a notice that should be as long as possible. A personal touch is always appreciated, and a call is more personal than an email.
  • Ensuring you have a liability insurance contract that extends coverage to at least five years starting from your practice’s date of termination.
  • Complying with the non-compete or non-solicitation clause.

Certain points on this list will not be easy to achieve, which is why it is so important to give yourself time. As I’ve said before: succession is not a specific event on a  timeline, it’s a process!

This list is obviously not comprehensive and may be adapted based on the firm you are associated with, your priorities and your corporate culture. As well, it may be wise to contact your firm’s compliance department to complete it.

Allow me to also mention that the new mandatory compliance course offered by Chambre de la sécurité financière addresses the issue of compliance as part of customer sales.

The next article of this series will be about principles for the segmentation of your customers, as you think about retirement.