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In House Attorney vs Outsourcing

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Aug 30, 2008 3:15 am

What are the pros and cons of hiring an attorney on staff to do client estate planning vs. working closely with a law firm? (aside from the obvious cost of an additional salary). Is that taking on unwanted risk? I am also contemplating the same with bring a CPA on staff. I am looking to offer seamless comprehensive planning and want to be able to handle as much in house as possible. Thanks for the help.

Aug 30, 2008 1:58 pm

If, as I understand from an earlier post, you are not yet operating as an RIA, I’d strongly urge you to walk before you try to run.  What you contemplate requires both scale and expertise . 

In addition to the significant overhead in salaries, benefits and office space costs, you would likely need to establish separate legal entities as subsidiaries - a law firm and a tax firm - and each would have to satisfy the respective legal requirements of those industries.  You will then need to be aware of comply with all relevant legal requirements for an investment advisor, a law firm and a tax firm.  You will also have to accept the potential liabilities that go hand-in-hand with those activities.  The combination of added complexity, liability and - inevitably - cost is why you seldom see this all under one roof, and even then it is usually only found in a very large firm operating in a silo fashion.

In any event, such a structure is not required to approach “seamless” planning, whatever that is.  The critical element to that is tight coordination and communication between the advisors involved.  That does not require common ownership, nor does common ownership necessarily make that easier.

If you’re realtively new at this I’d urge you to simplify as much as possible and focus on doing what you know and not trying to get ahead of yourself or reinvent the wheel.  You can always make changes and adjustments once you get going and have some momentum. 

Aug 31, 2008 3:45 am

Why hire an attorney when you can set up a referral network with one…same benefits and MUCH cheaper,

Sep 2, 2008 1:43 pm

Agree completely with Morph. Perhaps you are getting a little ahead of yourself?

Sep 2, 2008 6:37 pm

Some states do not allow anyone who is not a member of the bar to share in any revenue from practicing law.  I looked into something similar a number of years ago, and at least in my state, there really wasn’t a way to set it up.

Most state bars take the protection of their monopoly VERY seriously.
Sep 3, 2008 2:52 am

Thanks for all the feed back. I am currently operating in a referral format with both a CPA and estate planning attorney but everyone is doing this. I am always looking for ways to be different and was wondering if this would be worth the hassle. It is one thing to say that I can refer you to someone who can take care of your taxes or estate planning, and it is a totally different thing to say that I have someone on staff who can take care of this for you. I would prefer the latter but not if it involves too much red tape. Thanks again for the feed back.