Wealth Management

In a nutshell

Private client lawyers advise wealthy families, individuals, trustees and fiduciaries on all aspects of estate planning, including asset management, tax planning, wills and trusts, charitable contributions and various types of estate litigation. Matters can be purely domestic or have an international element if, for example, a family has non-US resident members, is seeking asylum in the country, or has invested wealth overseas.

A great deal of private client work is tax-based, especially with regards to income and estate tax. However, specialists in this area also need to ensure their corporate tax knowledge is up to date, as it's not unusual for their family clients to have multimillion-dollar businesses to their names. As Carol Harrington of McDermott Will & Emery highlights: “In addition to the original family business, one client owns casinos, two major league sports teams and a charitable foundation – that's a similar situation for a lot of clients.”

“The ability to deal with numbers is important. You don't have to be a maths wizard, but you can't be afraid of spreadsheets.”

Compliance is another important aspect of wealth management. Lawyers need to cultivate a lot of regulatory knowledge in order to advise their clients, who may have multiple requirements as shareholders of corporate entities, trustees of charitable foundations, charitable donors and recipients of trusts.

What lawyers do

•  Structure assets to create tax-efficient structures for private individuals seeking to transfer assets to family members or executives of estates.

•  Draft wills, trusts and estate documents.

•  Regularly meet with clients.

•  Aid families and wealthy individuals with their personal tax liabilities and solutions.

•  Establish and structure charitable organizations, as well as charitable endowments and funds.

•  Provide families with multi-jurisdictional advice pertaining to their international estates.

•  Liaise with private client lawyers around the world.

•  Represent trustees in litigation regarding their conduct when handling of an estate.

•  Communicate and discuss strategy within a team.

Realities of the job

•  Basil Zirinis, a leading wealth management partner at Sullivan & Cromwell, says: “Our practice is a mix of drafting, meeting, advising and researching.”

•  Wealth management tends to offer young lawyers more direct client contact than they'd typically get in a larger corporate or litigation department. “If you're a strong associate and you show drive, there is always the opportunity to be very involved with families face-to-face,” says Zirinis.

•  Building relationships with clients is an important part of the job, as Carlyn McCaffrey of McDermott Will & Emery explains: “Many private client attorneys end up with hundreds of clients over their careers. They don't work for them all at the same time, but they don't finish with a client either. Estate planning is a lifetime enterprise. If you had a client 20 years ago that you did good work for, chances are you're still working with them today.”

“Any one of my clients could call me with something crucial to them; their dad's had a heart attack, so what do they do?” – Carol Harrington, McDermott, Will & Emery

•  Harrington also drives home the importance of empathy and client-care skills. “These are real life people-problems; sometimes kids aren't financially responsible, for instance, and sometimes families don't get on.” She adds: “There's a crisis every minute and each client wants to be the only client you have. Any one of my clients could call me with something crucial to them; their dad's had a heart attack, so what do they do?”

•Research forms a large part of the role. “We're fortunate enough to have a practice where the questions are unusual and complex, and there are often no clear answers,” Zirinis notes. “We add value where the answer is unsettled, so the associates are doing research, but it's creative research. This makes it more challenging and more interesting.”

•Attention to detail is vital, especially when structuring assets for high net worth individuals (HNWIs). “It's important that you understand the law; it's technical, complex and it can get pretty complicated,” Harrington points out.

•Private client lawyers tend to juggle several matters at once. “This element is a challenge, but at the same time it's a high point. There's so much variety and you never see the same thing over and over again. It's thrilling, exciting and fresh,” Zirinis enthuses.

•An interest in tax and a good feel for numbers is a must. McCaffrey says: “The ability to deal with numbers is important. You don't have to be a maths wizard, but you can't be afraid of spreadsheets.” Often clients will have business interests that need to be factored in, but the more complex sums are usually sent to the firm's corporate tax teams to figure out.

Current issues

 “The global nature of wealth certainly has an impact on the practice,” says Amy Heller of Skadden. “It's increasingly common for wealthy families to have family members and assets in multiple jurisdictions, so it's important to have – at the very least – an awareness of other countries' laws and a sensitivity to other cultures.”

•  The changing nature of the law means that lawyers must remain flexible in their drafting of wills, trusts and other documents; they require many additional clauses to ensure their smooth adaptation to shifting regulations.

•  The new US administration's proposed tax plan aims to abolish the estate tax, which is currently set at 40% of estates larger than $5.45 million, or $10.9 million for those filing jointly. However, it is still unclear whether this proposed plan will go ahead in full, or whether amendments will be made.

•  Another significant proposed tax change by the new administration involves reducing the deductibility of charitable donations from the current 39.6% rate to 33%. Whether congress accepts the plan in full is yet to be seen.

•  According to a 2012 report complied by Emmanuel Saez and Gabriel Zucman, the top 0.1% of families in the US own almost the same share of wealth as the bottom 90% combined – signaling levels of wealth inequality not witnessed since the Great Depression. On a global level, a 2015 Oxfam report found that just 62 people own as much as 50% of the worlds' population combined. All of this, Carol Harrington believes, means that “there is a lot of work here to do. In the next ten to 20 years there is going to be the greatest transfer of wealth in the history of the world.”

“When families are fighting they want you to help them settle it, but given the emotions and family history it can very difficult... there is often no clear or perfectly right answer.” Basil Zirinis, Sullivan & Cromwell

Basil Zirinis' advice for aspiring wealth management lawyers:

•  Hone your diplomacy skills. “Because it's such a human area of the law, it can be extremely emotional. Do you leave assets outright? Do you trust your family? There is no right answer. When families are fighting they want you to help them settle it, but given the emotions and family history it can very difficult. It's not about 'right' or 'wrong' family members, it's just that there is often no clear or perfectly right answer.”
•  Tax it up at law school. “Students should definitely take as many tax courses as they can in law school – including corporate tax. The more of a background they have in tax, the more helpful it will be.”
•  But still keep it broad. “We do everything from corporate law to litigation in our practice – so the broadest possible academic experience is also important.”
•  Expand your language skills. “An international perspective on the world is helpful, especially because the explosion of wealth is global. It's not just the US and Europe anymore; it's China, Latin America and many other jurisdictions. That's where the most interesting work will ultimately be for young lawyers, so languages are extremely important.”