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Main Index
Index:
* THE WORLD BANK GROUP'S ANTI-CORRUPTION PROGRAM
* Working Beyond the Age of 50
* Doing Business in Canada - An Immigration Perspective
* THE WORLD BANK GROUP'S ANTI-CORRUPTION PROGRAM
Anti-Corruption Working Group
Taking The Corruption Out of Giving
International Bar Association Conference
September 17-22, 2006
Bruce Zagaris, Esq.
Berliner, Corcoran & Rowe
1101 Seventeenth St., NW, Suite 1100
Washington, D.C. 20036
(202) 293-5555
fax: (202) 293-9035
bzagaris@bcr-dc.com
THE WORLD BANK GROUPS ANTI-CORRUPTION PROGRAM
by Bruce Zagaris
During the last year the World Bank Group has begun a number of anti-corruption initiatives that, together with the taking effect of the Council of Europe and U.N. Convention Against Corruption (UNCAC), should have an important impact on the procurement processes of international financial institutions (IFIs).1
The Department of Institutional Integrity (INT) is the internal unit designated by the World Bank Group to investigate allegations of fraud and corruption in Bank Group operations and allegations of staff misconduct. INT now has a robust group of professionals that are quite proactive in their approach.
In addition to conducting investigations, INT also helps improve compliance with World Bank policies and prevent corruption through a variety of means, including training Bank staff to detect and deter fraud and corruption in Bank Group projects and improve control and compliance systems. Since 1999, the Integrity Department has investigated and closed over 2,000 cases.
The Bank publishes an annual integrity report with aggregate data, outcomes and generic descriptions of significant cases.
To ensure the independence of its activities, the Director of the Integrity Department reports directly to the President of the World Bank Group.
I. ACTIONS TO REPORT FRAUD AND CORRUPTION AND BLACKLIST INELIGIBLE PERSONS
INT investigates allegations of fraud or corruption in World Bank Group-financed operations, as well as allegations of staff misconduct within the Bank Group. Persons doing business with the World Bank Group are asked to report fraud and corruption.
Examples of issues which should be reported to INT for further review include: suspected contract irregularities and violations of the Banks procurement guidelines; bid manipulation; bid collusion; coercive practices; fraudulent bids; fraud in contract performance; fraud in an audit inquiry; product substitution; price manipulation; substandard or inferior parts or materials; cost or labor mischarges; kickbacks, bribery or acceptance of gratuities; abuse of authority; misuse of Bank Group funds or funds entrusted to the Bank Group; travel-related fraud; theft and embezzlement; benefits and allowance fraud; conflict of interest; misrepresentation; forgery;
involvement of Bank Group staff in any of the afore-mentioned.2
When contacting INT, complainants are asked to make their complaint as specific as possible, including specific details of the alleged wrongdoing such as where and when (dates and times if available), who is/are the perpetrators, how the individual or firm committed the alleged wrongdoing, and why you believe the activity was improper. Complainants are asked to furnish any available documentation or witnesses to corroborate their allegations.
If the complainant prefers to remain anonymous, INT suggests using its anonymous phone line or a free email service such as Hotmail or Yahoo. This way, the complainant could correspond with INT as necessary, to seek clarification or additional information. Should complainants prefer to remain anonymous, the Bank will still investigate their complaints and do
its best to examine the allegations that they provide. However, complainants are asked to bear in mind that anonymous allegations are often more difficult to pursue and often do not fully address all of the complainants concerns.
II. BLACKLISTING AND DISCLOSING INELIGIBLE AND SANCTIONED
PERSONS
If a sanction is imposed on a respondent to a World Bank Sanctions Committee proceeding, as provided in Section 13(d) of the Sanctions Committee Procedures, information concerning the identity of each sanctioned party and the sanctions imposed is publicly disclosed.
Persons found to have committed fraud or corruption are subject to various types of penalties, including letters of reprimand and debarment for a period of time or permanently.
When the World Bank provides financing to its member countries for investment projects, each project is governed by a legal agreement between the World Bank and the government agency who receives the funds. One of the key obligations in the loan agreement is that governments abide by the Banks procurement policies as detailed in the Guidelines:
Procurement under IBRD Loans and IDA Credits and the Guidelines:
The Banks Web site includes a list of ineligible firms.3 The listed firms and individuals are ineligible for World Bank-financed contract for the periods indicated because they were found to have violated the fraud and corruption provisions of the Procurement Guidelines or the Consultants Guidelines, clauses 1.14 and 1.22, respectively . These findings were made through
an administrative process that permitted the accused firms and individuals to respond to the allegations.
In the case of a debarred firm, ineligibility extends to any firm or individual which directly or indirectly controls the debarred firm or any firm which the debarred firm directly or indirectly controls. In the case of a debarred individual, ineligibility extends to any firm which the debarred individual directly or indirectly controls.4
Investigations of fraud and corruption are confidential and the WBG does not normally comment publicly on them. However, under special circumstances, the Bank may confirm that an investigation is occurring or has been closed, or that a Bank report conveying the results of the investigation has been sent to the appropriate counterpart in the Government.
A designated Bank representative will make such confirmation with the approval of (i) in matters pending before the Sanctions, Committee, the Chair of the Sanctions Committee, with the concurrence of the General Counsel; and (ii) in all other matters, with the approval of the Chair of the
Investigation Policy Committee, with the concurrence of the General Counsel. In the case of IFC or MIGA matters, General Counsel refers to their General Counsel.
III. VOLUNTARY DISCLOSURE PROGRAM
On August 1, 2006, the World Banks Board of Directors formally approved a Voluntary Disclosure Program designed to strengthen the Banks anti-corruption programs.5 The Voluntary Disclosure Program (VDP) is an initiative to uncover corruption in World Bankfinanced projects through the voluntary cooperation of participating firms and individuals.6 The
program, to be managed by the Banks Department of Institutional Integrity, permits entities that have engaged in past fraud and corruption to avoid administrative sanctions if they disclose all prior wrongdoing and satisfy standardized, non-negotiable terms and conditions.7
The VDP will require private sector participants to commit to stop baying bribes or engaging in fraud, corruption, collusion or coercion. They must disclose all past misconduct in Bank projects or contracts during the five years prior to their entry into the VDP, implement a monitored compliance program for three years, and pay the costs associated with participation in the VDP.
Private sector firms, NGOs, and individuals can participate, although entities under active investigation by the Bank are not eligible. In exchange for full cooperation, participants avoid public debarment for disclosed past misconduct and benefit from the Banks assurances of confidentiality. To date, the Bank has publicly debarred more than 330 firms and individuals, whose names and terms of sanction are posted on the Banks Web site.8 World Bank President Paul Wolfowitz appointed Susan Rich Folson, a former U.S.
Republican party activist, to manage the program. Bank officials believe that information provided by participating companies will expose patterns of corruption in bank projects and reveal the identity of other corrupt participants. The information will also help the bank modify
the design and implementation of projects to minimize corruption.9
While the VDP does not impose monetary penalties, participants must pay for most costs associated with the process. These costs can be significant, especially for large firms with international operations and a history of involvement in WB projects.
The VDP adjusts to the size of the participant, and the Bank has offered to provide technical assistance with VDP obligations to firms with fewer than 50 employees. Such assistance could include performing internal investigations, drafting investigation reports, developing compliance programs, and monitoring implementation.10
The Bank will share non-confidential information resulting from a participants disclosures in a redacted format the protects the identity of the participant and in aggregate form in annual reports. The WB will keep a VDP participants identity confidential permanently, unless the participant violates the material terms and conditions of the VDP and is publicly
debarred.11 A country provided with VDP disclosures in a redacted report can use those disclosures to guide its own independent investigations the program does not preclude a country from taking action against any entity it discovers and finds liable under its laws.12
The WB has initiated the VDP pursuant to Article 37 of the UN Convention Against Corruption (UNCAC). The provisions of Article 37 urges to countries to encourage persons who participate or have participated in the commission of an offense to furnish information useful to competent authorities for investigative and evidentiary purposes, in exchange for mitigated punishment.
Because both the UNCAC and the OECD Anti-Corruption Convention have come into force, firms now have greater law enforcement risks.
Additionally, in many countries the cost of paying bribes is becoming prohibitive for many firms. Companies also do not know which other
companies are disclosing information under the VDP and may want to avoid being named by a VDP participant.13
The VDP program has detailed provisions for the operation of a compliance monitor. The CM monitors the participants compliance with the VDP terms and conditions. The CM must have access to the files, books, records, materials, sites, and employees. The participant exclusively bears all reasonable costs, including compensation and properly incurred expenses, associated with the retention of the CM. The VDP ensures the independence of the CM. For instance, the participant cannot terminate the CM without the prior written consent of the WB.
The participant must terminate the CM promptly on written request by the WB and choose a successor CM within 60 days after such termination. The participant cannot hire any CM with whom the participant had a prior relationship. The participant cannot invoke any doctrine or privilege to prevent the CM from transmitting any information, reports or documents to the WB.
The CM must send written reports on the first, second, and third anniversaries of the date when the participant received written notification from the WB that Verification was complete. As part of its annual comprehensive review, the CM must make scheduled visits to the participant.
The WB may direct the CM to make unannounced visits and inspects of the participant if the WB has a reasonable basis to believe that the participant has engaged in misconduct. The WB may also make such unannounced visits itself. The CM must make written reports on the adequacy of the policies, procedures, and compliance measures that the participant is required to devise and implement under the VDP terms and conditions, the status of the participants implementation of the policies, procedures, and compliance measures; any finding by the CM of any continued misconduct by the participant, and reasonable recommendations where appropriate.14
Other international financial institutions will likely emulate the World Banks Voluntary Disclosure Program. In conjunction with new anti-corruption conventions, the VDP may help reduce bribery in international procurement. It will bring new prosecutions and civil lawsuits by
a host of victims, including governments, companies who lost procurement due to corruption, and non-governmental organizations suing on behalf of citizens and consumers. In short, if widely adopted, the VDP may significantly reduce future corruption in World Bank projects and procurement.
IV. INITIATIVES TO ENSURE TRANSPARENCY AND GOOD GOVERNANCE
The Bank has also worked to ensure that aid for natural resource projects results in sustainable develop, especially in less developed countries. The Banks involvement in Chads oil projects exemplifies this work.
On July 14, 2006, the World Bank and Chad reached an agreement on the use of Chads oil revenue, resolving a growing dispute over Chads oil industry.15 The agreement requires Chad to use 70 percent of its 2007 budgetary resources for poverty-reduction purposes, which include health, education, infrastructure, de-mining and rural development.16 The agreement became possible partly because the dynamically increasing price of oil gives Chad with an unanticipated windfall.
The agreement involves a 650-mile pipeline that the bank helped finance in 1999 so landlocked Chad could export its oil.17 The World Bank approved a $4 billion pipeline to carry oil from fields in the south of Chad to Cameroon. In mid-2004, the oil began flowing, bringing more than $400 million to Chad.18 Until the end of 2005, most oil royalties were paid into a special fund in London, where they were earmarked for poverty reduction projects such as schools and health clinic.
In October 2005, Chad President Idriss Deby unilaterally ended that arrangement, explaining that he needed more money for security forces as fighting by rebels increased and refugees continued to come across the border from Sudan. On January 6, 2006, World Bank President Paul Wolfowitz effectively blocked the governments access to the London fund after he was unable to persuade Deby to suspend his action ending the arrangement. In April 2006, an interim agreement of
three months freed some of the money.19
Chad, one of Africas most impoverished countries, was ranked last, alongside Bangladesh, on Transparency Internationals 2005 index of corruption perceptions.
The new agreement, which only covers 2007, brings a greater portion of Chads oil revenue under the control of an independent oversight committee and simultaneously gives the Chad government more flexibility to spend the money on electricity and telecommunications infrastructure instead of traditional poverty reduction programs. Next year a final agreement to
deal with Chads oil revenue will be discussed.20
According to the World Bank, the Bank and the Chadian authorities have also agreed to strengthen the College de Controle et Surveillance des Revenues Petrolieres an independent body with oversight on the use of the oil revenues for poverty reduction by making sure it has adequate resources.21
The agreement allows the World Bank to continue its anti-corruption program while affording Chad more discretion to spend its oil revenue. Development and corruption specialists will closely monitor implementation of the agreement to see if it actually results in more development, reducing corruption and poverty in Chad.
V. ANALYSIS
The World Bank Groups initiatives on blacklisting and disclosing sanctioned persons, its Voluntary Disclosure Program, and its initiative to establish a trust fund to ensure funds from Chads oil production are spent on essential programs for its people all exemplify the significant
anti-corruption efforts recently undertaken by the WBG. Because the programs are relatively new, it is difficult to judge their effectiveness, but the ingrained nature of corruption in international procurement suggests challenges ahead.
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1 These initiatives come as part of World Bank President Paul Wolfowitzs focus on anti-corruption efforts. See Bruce Zagaris, Wolfowitz Outlines World Banks Anti-Corruption Plan, 22 INTL ENFORCEMENT L. REP. 229 (June 2006).
2 World Bank Group, Department of Institutional Integrity, Reporting Fraud and
Corruption, World Bank Web site, accessed Aug. 8, 2006.
3 World Bank Group, World Bank Listing of Ineligible Firms, http://web.worldbank.org.
4 Id.
5 The following section is reprinted from Bruce Zagaris, World Bank Initiates Anti-Corruption Voluntary Disclosure Program, 22 INTL ENFORCEMENT L. REP. ___ (October 2006) (forthcoming).
6 Pascale Dubois and Bart Stevens, World Bank Launches Voluntary Disclosure Program, World Bank Press Release No. 2007/35/INT, Aug. 1, 2006.
7 Id.
8 Id.
9 Krishna Guha, World Bank in Broad Anti-Corruption Drive, FIN. TIMES, Aug. 6, 2006.
10 World Bank, Frequently Asked Quests About the VDP, http://web.worldbank.org, accessed Aug. 7, 2006.
11 Id.
12 Id.
13 Id.
14 World Bank, Department of Institutional Integrity, VDP, VDP Protocol 8
Participant Hires a Compliance Monitor, July 20, 2006.
15 The following section is reprinted from Bruce Zagaris, World Bank and Chad Reach Agreement on Use of Oil Profits, 22 INTL ENFORCEMENT L. REP. 371 (September 2006). Lydia Polgreen, World Bank Reaches Pact With Chad Over Use of Oil Profits, N.Y. TIMES, July 15, 2006, at A5, col. 1.
16 Paul Blustein, Chad, World Bank Settle Dispute Over Oil Money, WASH. POST, July 15, 2006, at D1, col. 4.
17 Id.
18 Polgreen, supra.
19 Blustein, supra.
20 Polgreen, supra.
21 Diana I. Gregg, World Bank, Chad Reach Deal On Channeling Oil Revenue for Poor, DAILY REP. FOR EXEC. July 17, 2006, at A11.
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Main Index
* Working Beyond the Age of 50
| Senior Lawyers Group |  |
Presented by Jay G Foonberg
Copyright Jay G Foonberg. Beverly Hills, CA. All rights Reserved.
(All material used with the permission of the author.)
INTERNATIONAL BAR ASSOCIATION 2006 Conference
McCormick Place Convention Center
Chicago, Illinois
Thursday, September 21, 2006
9:30 a.m. - 12:30 p.m.
Jay G Foonberg, Esq.
August 9, 2006 Jay G Foonberg, Esq.
Mailing Address:
9461 Charleville Blvd., #416, Beverly Hills, CA. 90212-3017
Telephone (310) 652-5010 Facsimile (310) 652-5019
E-mail: Jay@FoonbergLaw.Com
www.FoonbergLaw.Com
www.Foonberg.Com
www.SeniorLaywers.Org
ABOUT JAY FOONBERG
Jay Foonberg is often introduced as the man who needs no introduction. He is an internationally known author of books and articles and a much in demand speaker to bar associations and Continuing Legal Education organizations throughout the world, having spoken in every one of the 50 U.S. states, every one of the 10 Canadian Provinces, and on every continent including Antarctica and several foreign countries in English, Spanish and Portuguese. He also facilitates firm marketing retreats and seminars.
The word Foonberg will produce 27,700 links on Google, or visit www.Foonberglaw.com for more information.
Mr. Foonberg is and has been an active member of the House of Delegates of The American Bar Association and of many State Bar of California and American Bar Association committees, sections, divisions, etc. He is past Chair of the Senior Lawyers of The State Bar of California and a Council Member of The American Bar Associations Senior Lawyers Division. He was a founder of the California, American Bar and Inter American Bars Law Practice Management Sections. He was also founder of the Beverly Hills Bar Associations Citizens Law School in 1991.
He has been decorated by the governments of Brazil and Argentina for his work in international trade. Mr. Foonberg is the recipient of the Donald C. Rikli Lifetime Achievement Award of The
American Bar Associations General Practice, Solo and Small Firms Section, as well as the recipient of the Lifetime Achievement Award of The American Bar Associations Law Student Division.
He is also the recipient of the prestigious Harrison Tweed Award as the Most Outstanding CLE Educator in the United States. Additionally, Mr. Foonberg is the recipient of the Louis Goldberg award as the Most Outstanding Attorney - Certified Public Accountant in the United States.
Mr. Foonbergs published books include: How to Start and Build a Law Practice (5th Edition), How to Get and Keep Good Clients (2 Edition), Finding the Right Lawyer, The ABA nd Guide to Lawyer Trust Accounts, and How to Draft Bills Clients Rush to Pay (2 Edition). All nd are available from The American Bar Association. He is now completing his work on How to Close or Sell a Law Practice and Successfully Retire. His books are also available as CDs and
DVDs.
His 7 Habits and 2 Rules of a Successful Law Practice - From Womb to Tomb will soon be published in book, CD, and DVD formats. Mr. Foonberg received his law degree from UCLA Law and has studied at Harvard Law School, Cambridge University England and Duke University School of Law.
Mr. Foonberg keeps physically active by running marathons, having run his first marathon at age 56, and has completed 32 marathons as of April, 2006. He has completed at least one marathon or half marathon on every one of the 7 continents, including Singapore and Kenya in 2004 and Antarctica in February, 2005.
He welcomes your comments on the materials and your suggestions for improving them. He also responds to email requests for help. A complete biography and list of publications can be found on his website.
His publications can be found on his website: Foonberglaw.com or on The American Bar Associations website.
ABOUT THE AUTHOR AND THE OF COUNSEL RELATIONSHIP
Copyright Jay G Foonberg. All rights reserved. (Reprinted with the permission of the author.)
For more than 25 years, Jay Foonberg has either himself been an Of Counsel or had a law firm in which others were Of Counsel to his law firm. (For purposes of brevity, the Of Counsel relationship and the Of Counsel may be referred to as simply OC.)
Jay Foonberg graduated UCLA Law School in 1963 and started his practice immediately after being admitted in January 1964. His practice grew until he had a firm of more than 70 people, including 14 lawyers, when it imploded in the 1980's.
Early in his career, while still a sole practitioner he shared offices in a suite with another lawyer, who was 25 years older than him. When Jay had to move because his firm was growing, he offered the other lawyer an Of Counsel relationship whereby the OC would in effect have his own practice but would be available to Jay and vice versa as needed.
The OC received a free office including library and office equipment and free telephone reception, but the OC had to pay for his own secretary.
The motivation for Jay was not the OCs legal expertise as such, but rather the OCs 25 years advantage in living experience and being able to give advice when asked for.
From time to time Jay would ask the OC how he would handle a situation. Jay did not always follow the OCs advice, but the OCs opinion was always helpful to Jay in making his decisions. This relationship lasted through Jays firm growth and several moves to
increasingly larger offices. After more than 20 years of this relationship, Jays firm dissolved and the OC decided to retire. For the next 10 years, Jay was a partner in two successive law firms and decided he did not want the management and other problems and pressures of being a partner. He then became an Of Counsel to a medical malpractice defense firm for 6 years followed by being an Of Counsel to an aviation negligence defense firm for 10 years.
One of the principal causes of the earlier break up of his own 70 person firm and subsequent problems with other firms was the fact that Jay traveled extensively for his bar associations and personal travel, and was frequently out of the office. While the partners liked making the big money they were making, they (and their spouses) were unhappy with the amount of time Jay was not in the office, believing they would make more money if Jay stayed in the office. As an Of Counsel, Jay was free to travel to ABA and other bar meetings and personal travel as much or as little as he wished.
There are and were down sides to being an Of Counsel, especially to one who was used to being the boss. Jay had lost the power to make decisions, but on the other hand did not have the responsibility of executing the decisions of others. It was far less stressful and he made much more money, being able to keep his fees for himself (except for the agreed amount paid to the firm), not having to support an entire organization.
This article is intended to present some of the practical advantages and disadvantages to both the lawyer and the firm, to be found in the Of Counsel relationship. Jay leaves the theoretical what ifs and scholarly study to others.
It is Jays hope that relating his experiences will be helpful to others considering the Of Counsel relationship.
This article can be of great help in acquainting lawyers and firms with the Of Counsel. Before actually signing an Of Counsel agreement, both the lawyer and the firm would be well advised to consult with a lawyer to be sure there are no ethical violations under the applicable law. One would also be well advised to contact the Senior Lawyers
Division of The American Bar Association for their publications and information concerning the Of Counsel.
Jay Foonberg has presented information on the Of Counsel to lawyers from many nations. It seems that the Of Counsel is basically an American concept for lawyers other than those retiring from their own firms. Accordingly, ethics references are limited to American Bar Association pronouncements. Each of the 50 U.S. states and six jurisdictions have their own ethics rules, often in conflict with each other and often in conflict with The American Bar Association. Accordingly, the reader should not assume that the rules are the same throughout the United States.
HOW CLIENTS BENEFIT FROM THE OF COUNSEL RELATIONSHIP
Clients benefit when their individual lawyer has access to the experience and resources of a firm and the firm has access to the experience and resources of an individual lawyer who is neither a partner nor an associate of the firm.
The world population is changing both demographically and economically. Many countries have an aging population. The bar is also changing demographically and economically.
The traditional structures of the legal profession and the traditional needs of clients have both changed. The Of Counsel relationship is in many cases the perfect solution to the changes in both the profession and the public. (For purposes of brevity, the Of Counsel relationship and the Of Counsel may be referred to as simply OC.)
As our society and economy and laws become increasingly complex, there is a tendency for lawyers to narrow their practice areas into areas of law where they feel comfortable and competent. At the same time there is a need by clients for lawyers who have the experience they need. Often a firm does not have the experience or competency needed by a client. Similarly an individual lawyer may have great amounts of experience in one or more areas, but not in the specific area needed by the client or the specific matter.
Referral of matters to and from lawyers and firms have been the traditional method of lawyers helping their clients when the lawyer or firm recognizes that a particular matter is beyond their level of experience or expertise.
The changing economics of law firm practice and of individual lawyer needs has created the opportunity for the OC relationship. The end result of the OC is that the client benefits from the individual OC having the benefit of the resources of a firm and the firm has the resources of the individual lawyer. In both cases the relationship is utilized as needed.
The law of lawyers goes back thousands of years, but the law of the OC relationship is only a few decades old, having been formally recognized by the American Bar Association in 1963 and then having been radically changed since the first recognition, Accordingly the law and rules of the OC relationship are newly developing and often the rules do not answer the needs of the clients or the lawyers. It cannot be emphasized strongly enough that any lawyer or firm wishing to use the OC relationship to benefit clients must first carefully examine and periodically re-examine what is or is not permissible or required in the applicable jurisdictions.
I would strongly recommend the classic updated work, The Of Counsel Agreement by Harold Wren and Beverly Glascock, available from the American Bar Association to a lawyer or firm considering
the OC relationship.
Interestingly enough, the OC is more often defined by what it is not, rather than what it is. An Of Counsel is a lawyer who is neither a partner nor an associate of the firm or firms to which the lawyer is Of Counsel. The OC is a hybrid. In nature hybrids take on both the good and the bad characteristics of the sources and often require different treatment than either of the sources. Similarly, the OC takes on many of the good characteristics and some of the not so good characteristics of the sources and requires some special treatment. Normally, a hybrid produces a superior end result, so too, in law the hybrid produces a superior end result in terms of client service as well as meeting the needs of the OC and of the firm in circumstances where the benefit to the client might otherwise be lost or not otherwise available.
As will be set forth, there are many reasons why an individual lawyer may not want to part of the traditional Partner or Associate structure of a law firm and many reasons why the law firm does not want the individual to part of the traditional partner or associate structure.
A. Some of the more common reasons that a lawyer might want to be an OC rather than a partner or associate might include any or all of the following:
1. The lawyer wants a less than full time responsibility in order to do other things as well as practice law. A. desire to slow down and smell the roses with fewer responsibilities on the part of senior lawyers over 60 is common.
A need for flexibility in accepting or rejecting work and scheduling.
Child care responsibilities and parent care responsibilities are increasingly factors to be considered as child bearing is deferred and parents have longer lives. The individual lawyer needs flexibility in when and where the lawyer can work with the firm. These increasingly are factors in the lives of lawyers in the 30 to 60 year age group.
New lawyers want to go out on their own and leave what they irreverently call being a lab rat in the rat race or the jungle or the factory of the modern law firm. They believe they have or can develop a client following, but do not want the overhead or management responsibilities of their own firm. They do not want the restrictions of being an associate or partner in terms of case or client acceptance or rejection. They correctly determine that being part of a large organization is not what they want as their career in law. They may or may not feel a need for back up while they develop their practice. They may not have the resources needed to start their own firm.
2. An experienced lawyer at any stage of his or her career find himself or herself out in the street due to no fault of his or hers. He or she may be the victim of a post merger practice consolidation or lay off due to the loss of a major client or due to the firms financial problems, all unrelated to the particular lawyer who may not have sufficient client following to be kept on. As the need and greed of many firms to maximize profits grows, the lawyer may be considered expendable and summarily fired. Ths is especially a problem for lawyers over the age of 45 who are not likely to be hired by any firm.
3. The OC may be retired or semi retired from the firm or another firm or government service in the same or different geographic area.
B. There are many reasons, most economic, why a firm may want or need the experience and expertise of a lawyer, but not want a lateral hire or lateral partnership.
Some of the reasons the firm might want an OC relationship rather than a lateral hire or partnership might include any or all of the following:
1. A probationary period to determine if the OC could or should become a partner.
2. If the OC is a recognized name, the inclusion of the OCs name on the letterhead may increase the stature and client attraction ability of the firm.
3. A source of expertise on an as needed basis. When the firm needs the expertise on an irregular basis and does not want to increase the number of firm lawyers to acquire the expertise.
4. A source of legal work for the firm from the OCs clients and contacts.
5. Depending on the firms accounting system, the firm may be able to include earnings from the OCs clients, while simultaneously raising
earnings per partner, because the OC is not a partner.
6. Exclusion of the OC from the firms pension or profit sharing plans and other fringe benefits afforded to partners and associates (medical, insurance, vacations, sick leave, etc.).
7. Exclusion of the OC from various payroll taxes, disability insurance,
workers compensation etc. (This may be a matter of employment law
generally dealing with the differences between an independent contractor (the desired status) and an employee.)
8. OC may be provided with otherwise unused or unneeded office and staff facilities.
9. Exclusion of the OC from partnership meetings and decisions.
10. Bringing the OC in, as an OC will not disrupt the normal road to
partnership in the firm, thus avoiding dissatisfaction among associates who would view the OC as butting in the progression to partnership.
C. The firm and the OC are free to make any financial arrangement mutually acceptable. Typically the firm provides use of an office as needed, reception and use of library and equipment. The OC is compensated based on the amount of work done and/or client origination. There normally is no minimum number of
hours required.
Among the principal disadvantages are:
1. There must be a continuing and ongoing relationship between the firm and the OC. The relationship cannot be for just one case or matter.
2. The OC may not ordinarily be an OC to more than two firms.
3. There may or may not be a requirement that any division of fees be disclosed to the client and the clients permission gotten.
4. The division of fees rules for lawyers not in the firm may or may not apply (work, responsibility, etc.).
5. The OC will be treated as a member of the firm and the firm will be treated as employing the OC for purposes of conflicts.
6. The firm will in most, if not all cases, be responsible for the malpractice of the OC even though no other person than the OC did the work. (The reverse may not be the case in that the OC generally will not have responsibility for the malpractice of the firm in matters not involving the OC.)
A general history and application of some of the rules governing follows. As indicated earlier, it is not the purpose of this article to provide a dissertation on the ethical aspects of the Of Counsel relationship, but a very brief history may be of some
help in trying to understand prior decisions or opinions.
Prior to 1963, no opinions expressly dealing with the Of Counsel were promulgated by the American Bar Association (ABA). Most of the opinions relate to what the term Of Counsel should be interpreted as meaning when it appears on a letterhead or card and when it must be used. In reality the opinions also spell out permissible elationships
between lawyers and firms.
1963. Informal Opinion 678.
Of Counsel should be used by former partners of a firm who are retired or semi retired. (A concept still believed to be the role in the 21 century). It should also be used when a lawyer st has retired from public service or another law firm and is available for advice and consultation in specific fields of law. (Special Counsel would also be used). The relationship, however, could not be for one case only.
1964. Informal Opinion 710.
Recognizes the term Of Counsel as applied to a retiring Judge joining a law firm and makes it clear that the Of Counsel is neither an associate nor a partner and would be professionally responsible and compensated only for the work on a particular matter as an independent contractor.
In reality this Informal Opinion sets the stage for the common definition of an Of Counsel being neither an associate nor a partner.
1969. Informal Opinion 1173.
Indicates several points including that an individual lawyer could not be Of Counsel to more than one firm and still maintain a required continuing close and ongoing relationship with the firm. The opinion also prohibits a firm (more than one lawyer) being Of Counsel to another firm. (As will be indicated, this informal opinion has been overruled, but many do not realize it has been overruled.)
1972. Formal Opinion 330.
This opinion is important for formally recognizing that an Of Counsel is neither a partner, nor an associate nor an outside consultant. It also allows being Of Counsel to 2 firms or lawyers, but would require a close and continuing relationship. This opinion also apparently permits being Of Counsel to a sole practitioner as well as to a firm of more than one lawyer.
1990. Formal Opinion 90-357.
This opinion fairly well eliminates the concept of the Of Counsel being only for retired or semi retired lawyers. The relationship is available to part time lawyers, firm to firm relationships, lawyers on a partnership track, lawyers not on a partnership track, lateral hires, and other relationships. The concept of daily ongoing contact is expressly disavowed. Titles including special counsel or tax counsel or other titles are included in the definition of Of Counsel.
Creative and imaginative compensation agreements are allowed so long as other rules are followed. Disfavor of one case only relationships; purely a fee forwarding arrangement: being an outside consultant; or only having occasional contacts between unrelated lawyers are looked upon with disfavor.
USING THE OF COUNSEL RELATIONSHIP
AS AN ALTERNATIVE TO GETTING THE JOB YOU WANT
The author wishes to acknowledge the invaluable assistance of Willard Ferreira, UCLA law student for his assistance in doing research and obtaining materials for this article.
This article is being prepared as an article for the ABA Student Lawyer magazine and inclusion in the 6 edition of the book How To Start & Build A Law Practice, but the th information is of value to any lawyer at any stage of his or her career and to all firms.
The author has been a lawyer for more than 4 decades. After the dissolution of his first firm, after more than 20 years, he became a partner for several years in a second law firm and then became an Of Counsel for 6 years to a third firm and finally an Of Counsel for 10 years to a fourth firm. Accordingly, he has experienced the pluses and minuses of the Of Counsel relationship compared to being an associate or partner.
The author finds much to like and little to dislike in the Of Counsel relationship. Both the new lawyer and the firm should keep an open mind in considering the relationship. In many situations, being an Of Counsel will be the only way for the new lawyer to become associated with a good firm that otherwise cannot or will not hire the associate.
The Of Counsel relationship may also encourage the firm to take a closer look at a potential hire. A new lawyer, seeking a job should understand and possibly utilize the modern usages of the Of Counsel relationship as an alternative to getting a traditional job. The history of the creation and development of the Of Counsel relationship from an ethics point of view will be very briefly covered, but the emphasis of this article is to examine some of the economic and practical causes of the creation and changes and to understand how the new (post 1990) Of Counsel relationship can be utilized in the 21 century by any st lawyer at any stage of the lawyers career. Firms can be educated to utilize the Of Counsel relationship as an alternative to a traditional job or partnership even for a new lawyer who cannot get the job he or she wants. The Of Counsel relationship is no longer confined to retirement and semi retirement situations.
In 1990, recognizing economic changes in the profession, the American Bar Association promulgated Formal Opinion 90-357. In theory, this opinion simply reconciled the previous ABA Model Code of Professional Responsibility with the new ABA Model Rules of Professional Conduct. Both the Model Code and the Model Rules were the successors to the previous ABA Canons of Professional Ethics.
In reality, this Formal Opinion, acknowledges and changes the rules of the Of Counsel relationship, allowing for the creation of imaginative relationships which can meet the needs of a changing
profession. Many of the previous informal opinions have been expressly overruled or modified and many were impliedly overruled or modified by Opinion 90-357. The opinion acknowledges that changes in permissible lawyer conduct are involved. This opinion must be carefully read and re-read before taking action in a given jurisdiction.
It must be emphasized that the ABA Opinions are not law anywhere. It is up to individual states and jurisdictions and entities to either adopt the opinions or not adopt the opinions or to adopt them in a modified form. This process of adopting or not adopting may take years and even decades to occur.
Accordingly, the new lawyer and indeed any lawyer must carefully examine the specific rules of the specific situation in a specific jurisdiction before taking action. Conduct which is expressly permitted in one jurisdiction may be expressly prohibited in another jurisdiction. A long time ago in a place far away the practice of law was very different than it is today.
Prior to 1990, lawyers often had womb to tomb relationships with their law firms. A lawyer often practiced with only one firm his or her entire professional life. Employers considered hiring an associate as a long term investment, possibly for life, for both the associate and the firm.
It is generally agreed that in approximately 1990 there was recognition of a convergence of 3 forces providing a perfect storm.
1. Law students began emerging from law school with huge undergraduate and law school indebtedness. Universities saw huge profits in increasing tuition and fees to students who could get easy money in the form of loans that would never have been made in the normal world of debt and repayment ability. Getting as much money as possible early in ones career in many instances became important than obtaining the satisfying job that led to a lifetime relationship. To be able to pay newly hired associates enough to repay indebtedness, firms, began examining the performance of the lawyers, including the senior partners.
Microscopic attention was devoted to making money and concepts of Hourly Utilization Rates and Return on Investment and Profitability and Market Share began replacing the concepts of happiness and collegiality and a long term rewarding career.
As firms began emphasizing profits above all else, a career in the law became a job in the law. Lawyers of all ages and stages of their professional careers were unceremoniously fired and thrown out of the firm when they could no longer provide the net profits expected of them.
2. There were radical changes in the economics of a law firm. Law practice management by lawyers became law office management by non lawyers and lawyers who were devoting their time to managing for profits rather than actually practicing law.
For the first time in U.S. History the total supply of legal services exceeded the demand for legal services. The causes were many and varied and beyond the scope of this article. Many believe that the primary cause was and continues to be the graduation of more lawyers from Law Schools than the need for new lawyers. Some law schools did not increase their enrollments in the chase for more profits, when they realized their graduates were not getting jobs as easily as in prior times. Most law schools greatly increased their enrollment and many began advertising to get students, promising high income as an incentive to become a lawyer.
The traditional larger buyers of legal services increasingly began employing in house counsel and legal assistants while simultaneously squeezing their outside counsel to be less expensive. Large clients began using fewer and fewer outside lawyers and firms to be able to negotiate lower prices in many traditional areas of law practice. Clients at every level began shopping for lawyers. Cheapest price became the mantra of many clients.
As hourly profits and short term firm profits became the goals of law firms, the firms began cutting back on training costs and the traditional mentoring and advice given by older lawyers to new associates diminished since the mentoring resulted in lost hourly billing for both the older lawyer and the new lawyer. Since
firms did not want to spend time and money training new lawyers, client getting and keeping ability rather than excellence of legal work often became the criteria for who would make partner and who would be summarily fired.
To replace training costs, some firms aggressively began hiring lawyers who were already trained away from the firms where they had received their training.
Some called this lateral hiring and some called this practice associate stealing. The Firm did not want to include these hires in the distribution of the firms profits and the lateral hire wanted a title and prestige beyond being an associate in order to enhance his or her status with potential clients.
3. As with the rest of the population lawyers began living longer. They had and continue to have a need for income after they are no longer as productive as they once were. Nature requires a slowing down, but the firms wanted a speeding up. Lawyers no longer worked until they died. 20 to 30 years of life expectancy has been added and due to the high costs of living well, and educating children not enough had been saved to provide for these additional years. Senior lawyers needed to work beyond the previously traditional retirement at age 60 or 65. As indicated earlier, it is not the purpose of this article to provide a dissertation on the ethical aspects of the Of Counsel relationship, but a very brief history may be of some help in trying to understand prior decisions or opinions.
Prior to 1963, no opinions expressly dealing with the Of Counsel were promulgated by the American Bar Association (ABA). Most of the opinions relate to what the term Of Counsel should be interpreted as meaning when it appears on a letterhead or card and when it must be used. In reality the opinions also spell out permissible relationships between lawyers and firms.
1963. Informal Opinion 678.
Of Counsel should be used by former
partners of a firm who are retired or semi retired. (A concept still believed to be the role in the 21 century). It should also be used when a lawyer st has retired from public service or another law firm and is available for advice and consultation in specific fields of law. (Special Counsel would also be used). The relationship, however, could not be for one case only.
1964. Informal Opinion 710.
Recognizes the term Of Counsel as applied to a retiring Judge joining a law firm and makes it clear that the Of Counsel is neither an associate nor a partner and would be professionally responsible and compensated only for the work on a particular matter as an independent contractor.
In reality this Informal Opinion sets the stage for the common definition of an Of Counsel being neither an associate nor a partner.
1969. Informal Opinion 1173.
Indicates several points including that an individual lawyer could not be Of Counsel to more than one firm and still maintain a required continuing close and ongoing relationship with the firm. The opinion also prohibits a firm (more than one lawyer) being Of Counsel to another firm.
(As will be indicated, this informal opinion has been overruled, but many do not realize it has been overruled.)
1972. Formal Opinion 330.
This opinion is important for formally recognizing that an Of Counsel is neither a partner, nor an associate nor an outside consultant. It also allows being Of Counsel to 2 firms or lawyers, but would require a close and continuing relationship. This opinion also apparently permits being Of Counsel to a sole practitioner as well as to a firm of more than one lawyer.
1990. Formal Opinion 90-357.
This opinion fairly well eliminates the concept of the Of Counsel being only for retired or semi retired lawyers.
The relationship is available to part time lawyers, firm to firm relationships, lawyers on a partnership track, lawyers not on a partnership track, lateral hires, and other relationships. The concept of daily ongoing contact is expressly disavowed. Titles including special counsel or tax counsel or other titles are included in the definition of Of Counsel.
Creative and imaginative compensation agreements are allowed so long as other rules are followed. Disfavor of one case only relationships; purely a fee forwarding arrangement: being an outside consultant; or only having occasional contacts between unrelated lawyers are looked upon with disfavor.
ADVANTAGES TO THE OF COUNSEL RELATIONSHIP AS OPPOSED TO BECOMING SELF EMPLOYED OR UNEMPLOYED
1. The OC may be able to create and maintain a relationship with a particular firm that would otherwise be unattainable due to financial or other considerations and obligations.
2. The OC can maintain what is almost a sole practice with minimal overhead.
3. The OC may have unlimited access to he firms expertise and form files.
4. The OC can essentially be a solo practitioner with the resources of an entire firm behind him or her to help with major matters when additional staffing and expertise are important.
5. In effect, the OC can be a sole practitioner with no or low occupancy costs for overhead for common expenses like rent, library, reception and equipment usage.
6. The OC may have access to mentoring or guidance in matters not often handled by the OC.
7. The OC will have coverage for clients when the OC is temporarily incapacitated.
8. Communication costs can be reduced or eliminated by combining into the firm's systems for telephone, email, fax, etc. It is recommended that the OC maintain separate numbers in addition to the firms numbers. These separate numbers can be explained as private or direct numbers.
9. With greatly reduced overhead, less pressure to accept cases and clients due to cash flow problems.
10. Unwanted cases and clients can be steered to the firm with the OC still receiving economic benefit.
11. Depending on the local rules, the OC may able to receive a division of the fees without client notification or permission. (This is a sensitive and rapidly changing area of law.)
12. If the OC is actively seeking a job, it is normally easier to get a job if one has a position than if one is unemployed. The OC position creates an atmosphere of being in a firm which makes job seeking much easier.
13. In most cases, the OC will be legally and ethically free to take firm clients when leaving the firm. Since the OC is not a partner, the OC does not have a fiduciary relationship to the other partners and since he or she is normally at the level of associate, covenants not to compete may not be likely to be enforced. It should be noted parenthetically, that client taking without firm permission and blessing is not a good idea if the OC expects or hopes for referrals from the firm. The jurisdiction's law and ethics and the legal status of the OC should be carefully researched before deciding that one wants to take clients when leaving.
14. The OC position can allow the OC to start or build a practice while seeking to become an associate or partner at the same firm or another firm or open ones own practice.
15. Unlike an associate, an OC has unlimited income potential. The income of the OC can easily exceed the income of a partner or of an associate.
16. Should the OCs firm have a bad year because of loss of a client or matter, the OC will not be required to reduce income or have responsibility for the partnerships liabilities. Conversely, of course, the OC would not share in the big year or matter of the firm.
17. The OC may be able to take on a smaller number of matters to give each matter the degree of care it needs. Some law firms have sacrificed clients best interests on the altar of financial return.
DISADVANTAGES TO THE OF COUNSEL RELATIONSHIP
TO THE OF COUNSEL POSITION
1. The office provided to the Of Counsel may be one of the lesser offices. The Of Counsel may only have the use of an office on as needed basis, or may even be relegated to only using a conference room to see clients.
2. The OC will not be invited to attend partners meetings. The OC may feel that he or she has been demoted to a position where his or her opinion and experience are not wanted.
3. The OC will not be invited to associates meetings.
4. The OC may not be able to build any social relationship with the people in the firm.
5. The OC may have no voice with respect to the associates or staff assigned to help him or her.
6. The OC may find that his or her cases go to the bottom of the pile in terms of quality and quantity of legal and staff assistance available when there are firm matters requiring people at the same time.
7. Associates or staff may be suddenly pulled off the OCs matter when an important firm matter requiring more lawyers or staff suddenly appears.
8. Associates with nothing else to work on may be assigned to the OCs matters.
These associates may be those that other partners in the firm do not want working on their matters.
9. The OC may be treated more like a tenant than a colleague.
10. The OC may find there is no one available to do the work on his or her matter when there is a conflicting firm requirement for staffing.
11. Associates may feel there is no road to partnership doing work on the OCs matters.
12. Conflicts of Interest rules may create problems. For purposes of conflicts, the OCs clients and the firms clients may be aggregated. Depending on the jurisdiction, it may be possible to use the wall of silence to prevent disqualification when there is a conflict.
13. OC will have to police the firms client agreements if the OC is going to do work on the firms matters to be sure division of fees is properly covered. Failure to comply with local rules in terms of the client fee agreement between the firm and the client may prevent OC from being paid his or her agreed upon fees for work done and client origination.
14. OC will have to police firms malpractice policy to be sure of inclusion on the policy. The OC may lose tail eligibility or coverage from OCs prior firm by being in practice and may or may not be able to get tail coverage under the new firms policy.
15. American law generally protects clients by prohibiting covenants not to compete by lawyers. A few states seem to try to protect the interests of the firm by allowing covenants not to compete when a lawyer retires from a partnership receiving benefits from the firm.
The OC might find that he or she cannot represent clients that he or she brought to the firm.
Up
Main Index
* Doing Business in Canada - An Immigration Perspective
| by Lainie M. Appleby and Joel S. Guberman |  |
With the continuing globalization of international business and the competitive nature of the business world, successful organization are aware of the immigration demands that can impact international travel.
In order to maintain positions in the international market places knowledge of how to attend at meetings, work and ultimately, immigration to a country are important in developing a cognizant business strategy.
Like most nations, Canada has specific requirements and criteria that enable businesspersons to do any of the above. The legal sources of authority concerning same are the Immigration and Refugee Protection Act and the corresponding Immigration and Refugee Protection Regulations.
When seeking entry to Canada for any purpose, the primary determination is whether the businessperson intending to travel requires a Temporary Resident Visa.
If this is required, an application for a visa must be made at a Canadian Embassy before travelling. If a Temporary Resident Visa is not required, the businessperson must possess a passport that is valid for the duration of his or her intended stay in Canada.
The current countries requiring Temporary Resident Visas are noted at http://www.cic.gc.ca/english/visit/visas.html. The list changes on occasion. Often to reflect the political climate or other concerns.
Business Visitors
A business visitor is a foreign national who intends to undertake one of the following activities:
a) purchasing Canadian goods or services on behalf of a foreign business or
government;
b) receiving training concerning purchased Canadian goods or services;
c) providing or obtaining training at the Canadian subsidiary or parent of the company that employs them outside of Canada, provided that any goods or services produced as a result of the training are incidental;
d) representing a foreign business or government in order to sell goods on behalf of that entity provided that the foreign national is not making sales to the general public in Canada.
More generally, a business visitor is an individual who is seeking to . . .engage in international business activities in Canada without directly entering the Canadian labour market. Business visitors are only permitted to engage specifically delineated types of work without a permit. The
Regulations define work as:
an activity for which wages are paid or commission is earned, or that is in direct competition with the activities of Canadian citizens or permanent residents in the Canadian labour market.
In order to qualify as a business visitor, the applicant must not directly enter the Canadian labour market, the individual must not be remunerated for his or her business activities from inside of Canada and his or her primary place of business and the profits accrued must remain primarily H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc outside of Canada.
A business visitor includes those engaging in business activities relating to research and design; growth, manufacture and production; marketing; sales; distribution; aftersales service and general service. In certain circumstance after-sales services is also considered business visitor activity.
As well, Foreign nationals who are entering Canada for the purpose of supervising installations of machinery purchased outside of Canada or to dissemble equipment purchased from Canada that will be re-installed outside of Canada may enter as business visitors.
In addition to the general business visitor provisions, specific business activities are noted as permitted without the need of obtaining a work permit. This includes: diplomats, consular officers, officials from the United Nations, certain military personnel, full time students who are working on campus, graduate students, teaching assistants, research assistance, clinical clerkships for medical students, certain aviation accident inspectors, emergency service providers, expert witnesses, thesis examiners and some performing artists.
The performing artists who are classified as business visitors include the World Wrestling Entertainment wrestlers, guest artists performing at a concert, travelling circuses, foreign bases musical and theatrical groups and their crew. Further, film producers, film and recording studio users and people appearing as guest in the Canadian media will be permitted entry as a business visitor.
Professional and amateur athletic teams and individuals coming to Canada to complete will be admitted as business visitors; this also includes amateur coaches/trainers, jockeys racing horses from foreign based stables and race car drivers. Note that coaches coming to work for a Canadian team are generally required to apply for a work permit, with the exception of certain
professional sport leagues where there are reciprocal arrangements for referees.
Also included in the business visitor category are employees of foreign news companies entering Canada to report on current events occurring in Canada. Public speakers and seminar leaders fall within this provision if the event in which he or she is participating is less than 5 days. Members of the clergy who are assisting a congregation in achieving spiritual goals and preaching are also admitted as business visitors. Airline personnel and truck drivers operating a foreign vehicle are also part of this group.
Work Permits
In devising a plan to conduct international business, it may become apparent that there is a necessity to post a foreign worker in Canada for a temporary, yet significant amount of time. If the foreign worker will be actively involves in day to day business operations of a company or could be construed as entering the Canadian labour market, a work permit is required.
There are a number of avenues available in order to obtain a work permit. To determine the type of application that is most appropriate the foreign workers country of citizenship, job title, duties and responsibilities in Canada and the company's corporate structure need to be evaluated. As well, applicant that will be working in certain sectors or who originate from certain countries may be subject to medical examinations.
International Treaties
Individuals who are citizens of the United States, Mexico, Chile or one of the 124 countries that are signatories to the General Agreement on Trade in Services may be eligible to make an H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc application for a work permit by way one of three international treaties that include provision to facilitate the international movement of workers.
These treaties are the North American Free Trade Agreement, the Canada-Chile Free Trade Agreement and the General Agreement of Trade in Services.
Within each of these agreements there are provisions concerning business visitors, professionals and intra-company transferees. The NAFTA and CCFTA also include clauses pertaining to workers who may apply for a work permit pursuant to treaty trader or investor provisions.
Professionals
Each of the aforementioned treaty includes provisions concerning the temporary entry of professionals. The professionals able to make applications for a work permit are specifically noted in lists that are annexed to each agreement. The NAFTA and CCFTA list the same occupations of which over 60 are noted. GATS professionals are limited to Engineers,
Agrologists, Architects, Forestry professionals, Geomatics professionals, Land Surveyors, Foreign Legal Consultants, Urban Planners and Senior Computer Specialists. Each treaty specifically delineates the educational requirements necessary to demonstrate that a foreign worker is a professional.
The requirements for GATS professionals are particularly onerous, as in additional to holding the proper educational requirements, professional qualifications must be recognized by the professions governing body in Canada and in certain occupations the provincial licensing requirements must be met. Further the maximum length of stay for a GATS professional is 90 days.
Professionals applying for work permits pursuant to NAFTA or CCFTA must be citizens of either the US, Mexico or Chile and hold the appropriate educational qualifications for the profession in which he or she will be engaging in Canada. Americans and Mexican can make an application for a work permit as a professional at the port of entry by presenting evidence of his or her citizenship, a letter of employment from the company outlining the nature of the work to be performed and the offered salary and copies of his or her educational credentials.
The work permit will be issued for a one-year period and can be renewed in one-year increments. Chilean citizens must make application for a work permit as a professional at the Canadian Embassy in Chile. In addition to applying for a work permit, the applicant must also apply for a Temporary Resident Visa. Because the application for a work permit as a professional will likely be for one year, a Chilean national will likely be subject to undergoing medical examinations since the intended stay will be for a duration of greater than 6 months. In addition to the items noted above, there are also application forms that need to be filed.
Intra-company Transferees
In order to make application for a work permit as an intra company transferee pursuant to the provision of NAFTA or CCFTA, the foreign worker must have been employed at the company outside of Canada for one of the three years preceding the application. Employment in a managerial, executive or special knowledge position is necessary. The foreign worker can be transferred to an affiliate, branch, parent or subsidiary of the company where he or she is H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc
currently working. Mexicans and Americans can make this application at the port of entry or a Canadian Consulate or Embassy. Chilean applicants must apply at the Canadian embassy.
A work permit as an intra-company transferee can be granted for an initial period of up to three years. Foreign workers applying as specialized knowledge workers can make application to renew to a maximum of five years, while foreign workers in managerial or executive positions can renew to a maximum of seven years.
While the GATS provisions concerning intra-company transferees are similar to those of NAFTA and the CCFTA, there is a distinction in that the company outside of Canada for must have employed the applicant not less than one year in the period immediately preceding the application.
Additionally, the company must be engaged in a business that is noted in one of the GATS services sectors. These service sectors are: business services, communication services, construction services, distribution ervices, environmental services, financial services, tourism and travel related services and transport services. Individuals making applications for a work permit as an intra-company transferee under GATS may apply at the port of entry or the Canadian Consulate if he or she is a citizen of a non-Temporary Resident Visa requiring country.
Citizens of countries requiring Temporary Resident Visas must apply at the appropriate Canadian Consulate or Embassy. Applicants receiving a work permit for specialized knowledge will be issued a work permit for one year. One-year renewals can be made; however, the total duration of stay cannot exceed three years. Managers and executives will be issued work permits for an initial period of three years and a renewal can be requested for a long as the work that is being performed continues to be beneficial to Canada.
An existing company seeking to establish in Canada may apply for an intra-company transferee work permit under any of the treaties. These types of applications will result in an initial work permit of one year.
Investors
Only the NATFA and the CCTFA contain an investor category under which an application for a work permit can be made. Therefore, only Mexican, Americans or Chileans are eligible to make this type of application. Further, both the applicant's citizenship and that of the company must be the same and at least 50% of the company must be held by citizens of a signatory county.
Investor category work permits are issued for one year, but can be renewed. There are two types of investor application -- treaty investors and treaty traders. The applicant can be the investor, the trader or an employee of the investor or trader company.
An application as a treaty investor may be made in circumstances where the applicant is responsible for directing and developing the operation of an enterprise in which there has had been a substantial investment or is actively in the process of investing a substantial amount of capital.
Employees with skills essential to the success of the operation may also apply under this category.
The particular amount of money to be invested depends upon the total value of each operation and the figure that would be necessary to properly establish such a business. These applications must be made at a Canadian Consulate/Embassy An application as a treaty trader can be made when a business or individual carries on substantial trade in goods or services with the other member nation.
An American or Mexican operation must
H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc conduct over 50% of its international trade with Canada in order to be eligible. Note that the trade
can be with respect to either good or services. A foreign worker applying for work permit must hold a supervisory, executive or essential skill position. This application is also made at a Canadian Consulate/Embassy.
Confirmation by Human Resources Development Canada
Although noted above are methods for applying for a work permit without the need for confirmation and below are further exceptions, the prevailing means by which to obtain a work permit is intended to be by seeking confirmation from Human Resources Development Canada.
Generally
As Human resources Development Canada is the government authority responsible for labour market concerns, immigration officers are ask to consider these expertise with respect to advise regarding whether a given foreign worker will have a neutral or positive effect on the labour
market, whether the foreign worker is able to transfer skills to Canadians or whether employing the individual in Canada would be beneficial. Additionally, Human Resources Development Canada may look to whether an employer has taken steps to recruit Canadians.
Human Resource Development Canada offices are located throughout the country. The application for a temporary job offer is submitted to the local office that had jurisdiction for the area in which the employer is located. An application for Human Resources Development Canada is a two-part
process. The initial submissions are made to Human Resources Development Canada and these submissions address the aforementioned concerns. If Human Resources Development Canada confirms that offer of employment by making a positive determination, the second part of the
application is filed.
Upon receiving a positive confirmation from Human Resources Development Canada, the application for a work permit, and Temporary Resident Visa if necessary, is filed with a Canadian Consulate or Embassy. American citizens, American green card holders and citizens of
Miquelon and St. Pierre have the option of making application at the port of entry. The work permit that is issued will be issued for the length of time for which the confirmation was sought.
Generally, this will be one or two years.
In the event that an extension is required, another application is made to Human Resources Development Canada for confirmation. Upon receiving confirmation, the application to renew the work permit can either be submitted to a Canadian Consulate, the port of entry where applicable or
for processing from with inside Canada to the Cases Processing Centre in Vegreville, Alberta.
National Confirmations
Human Resources Development Canada has issued national confirmation for three areas. These include confirmations for Canada research chairs, exotic dancers and information technology workers, the foreign worker can apply directly for a work permit.
The information technology workers who are able to utilize this program are Embedded Systems Software Designers, Software Products Developer, MIS Software Designers, Multimedia Software Designers, Senior Animation Effects Editors, Software Developer (Services) and Telecommunications Software Designers.
Applicants must hold a minimum of a Baccalaureate
degree or a technical school certificate, have knowledge of French or English, and two to four H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc years of experience and training, specifically in designated technologies. Appropriate wages are also set out for this program. Foreign workers complying with the criteria outlined and possessing a relevant job offer may apply for a work permit at a Canadian Consulate or Embassy, with the exception of U.S. citizens, green card holders, and citizens of St. Pierre and Miquelon who may apply at the port of entry.
Human Resources Development Canada Confirmation Exempt Categories
In addition to applying for work permits pursuant to treaties and Human Resource Development Canada confirmation, there are other methods to apply for a work permit. These are known as Confirmation Exempt Categories. Generally, all applications of this kind are made at a Canadian
Consulate or Embassy, along with the appropriate application for a Temporary Resident Visa when applicable.
Significant Benefit
To make a successful application for a work permit in this category, strong arguments must be presented in order to demonstrate that there are exceedingly clear social, cultural or economic benefits to Canada. Immigration officers are instructed that using this provision in situations
where the only benefit is economic is extremely rare. This category may be useful when applying for a work permit for a foreign worker of international acclaim or when the foreign worker must attend in Canada for a prestigious occasion. As well, if there is an extreme urgency surrounding the applicant's admission, an immigration officer may be more inclined to issue a work permit on the basis of a significant benefit.
Entrepreneurs / Self-Employed
An application under this category may also be considered with a view to the potential benefit to Canada. Making this type of application will be more difficult when an application for permanent residence in the same category has been filed concurrently. However, in situations where there are compelling or urgent reason for admission when an applicant's permanent resident case has been approved but the documents have not been issued, an officer may consider issuing a work permit. As above, there must be a clear demonstration of the benefits that will result from the admission.
Intra company Transferees
This intra-company transferee provision is open to all individuals, regardless of citizenship and whether their country of citizenship is party to a treaty, who have been employed by the company outside of Canada for at least one year out of the three previous years. The applicant must currently hold a senior managerial or executive position or a specialized knowledge position. The transfer to Canada must be to a similar position. Further, immigration officers must also determine that the transfer will be a benefit to Canada.
The corporate relationship between the company in Canada and the company abroad must be parent, subsidiary, affiliate or branch.
In making this application, the foreign worker must intend to spend a minimum of 25% of the duration of his or her work permit in Canada. Senior executives or senior managers will be issued an initial work permit of up to three years and renewals may be requested. Though the applicant must demonstrate that he or she wishes to remain in Canada temporarily.
Specialized H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc knowledge workers are issued work permits for a maximum of one year and one-year renewals
can be issued for a maximum of 3 years.
Reciprocal Employment
While not subject to HRDC confirmation, applications for work permits that are made under this category should a have a neutral effect on the labour market. The purpose of this confirmation exemption is to allow for the gaining of international experience and the provision of cultural interchange for foreign workers, Canadians and employers. Although Citizenship and Immigration Canada has a number of formal exchange programs in place, the reciprocal employment provisions provide an opportunity for foreign workers to make application for work permits when a Canadian employer is able to demonstrate that the company participates in the international exchange of foreign workers. Evidence of Canadian sent to work abroad is necessary.
Spouses or Common Law Partners of Skilled Workers
When a foreign worker working in a professional, managerial or highly skilled occupation is issued a work permit for Canada, his or her spouse may also apply for a work permit. The principal workers permit must be valid for a minimum period of 6 months and the duration of the work permit that is issued will be for the same duration as the principal applicant. The work permit that the spouse or common law partner receives will be ''open'' in that he or she will be permitted to work in any occupation. Note that if the spouse or common law partner intends to work with children or in a health care field he or she will be required to undergo medical examinations.
Permanent Residence
Often once a foreign worker comes to Canada, it is determined that it is to the company's advantage to have the foreign worker remain in Canada on a permanent basis. To achieve this an application for permanent resident can be made as a skilled worker; an entrepreneur, an investor or a self employed applicant. In addition to achieving the requisite number of points (75 for
skilled workers and 35 for business immigrants), all individuals applying for permanent residence are subject to medical and security clearances.
Skilled Worker
Skilled workers are assessed according to criteria noted in a selection grid resulting in the achievement of a specific number of points. Points ranging between 1 and 24 can be awarded depending upon the applicant's achievement in each of the following categories: age, education, experience, abilities in French and English, experience and adaptability.
Points for adaptability can be attained as a result of a spouse having formal educational credentials, past periods of work or study in Canada or having relatives in Canada.
Currently, an applicant must be able to attain 75 points. An applicant must have at least one year of work experience within the past 10 years in a management occupation or in an occupation normally requiring university, college or technical training. Additionally, an applicant must have enough money to support themselves and their dependants as they settle in Canada.
H:\Natalie\Chicago papers and web\Chicago Papers\Doing Business in Canada- An Immigration Perspective.doc
Entrepreneurs
An entrepreneurial applicant is an immigrant who will own and manage a business in Canada that creates an employment opportunity for Canadian citizens or permanent residents. To be eligible for immigration as an entrepreneur, an applicant must have past managerial experience based upon specifically delineated criteria for two years out of the five prior to filing the application, have a net worth of at least $300,000.00CND and intend to manage and control a business and create a job for a Canadian for a period of one out of three years following landing in Canada.
Investors
Investor applicants must invest $400,000.00 CND in a designated provincial or territorial fund in Canada. The full amount of the investment is guaranteed repaid in approximately 5 years time, but without interest. To qualify as an investor, the applicant must have a legally obtained net
worth of $800,000.00CN and have past managerial experience, in addition to have controlled a percentage of equity in a controlling business for two years in the five year period preceding the date of the application.
Self-Employed
To make application as a self-employed permanent resident, the applicant must have at least two years of experience in the five years before the date of application. The experience must have been undertaking self-employment in cultural activities or athletics, participating in cultural activities or athletics at a world class level or farm management experience. A self-employed
applicant must have the intention and ability to be self-employed in Canada and to make significant contributions to cultural activities or athletics or by purchasing and managing a farm.
Conclusion
Considering the availability of business visitor entries to Canada, work permits for Canada and applying for permanent residence in Canada are all-important tools in devising a viable international business plan. A careful evaluation of corporate immigration matters undoubtedly will facilitate on-going and continued success in the international business market.
Joel S. Guberman is a Partner at Guberman, Garson, Bush in Toronto Canada. He practices exclusively in immigration law with a concentration in business immigration and may be contacted at joel@ggbilaw.com.
Lainie M. Appleby is a Partner at Guberman, Garson, Bush in Toronto, Canada. She practices exclusively in immigration law and may be contacted at lainie@ggbilaw.com
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