Information Sheet on Change of Ownership, Including Partnership Splits and Change in Entity

05/08/2024
Knowledge

How To

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LEAP requires at least 60 days’ notice prior to the Change of Ownership date to ensure relevant documentation is prepared, authorised and your datafile creation or update (according to which option you choose) can be completed in a timely manner.

It is important that you seek independent financial advice from your accountant as LEAP cannot offer any advice regarding structural set up.

There are two separate items that need to be considered and instructions given when a firm changes its ABN (as a new ABN signifies a new entity and LEAP has an Agreement with your old entity):

LEAP Account: what happens to the Agreement the law firm has with LEAP; and
LEAP Data File: what happens to the data file of the firm.

Your LEAP Account

No New Entity Created

If no new legal entity is created (e.g., change in the directors of an incorporated legal practice) LEAP agrees an acknowledgment of the change is sufficient by way of completing a Change of Name Form, and the current LEAP Agreement does not need to be revised.

New Entity/ies Created

Most changes in ownership result in the creation of a new legal entity.

If the entity behind your law firm changes the current LEAP Agreement needs to be revised. This is because the entity with the current Agreement has changed.

Entity Structure Change / Addition of Partners / Acquisitions

If the rights to the data file are simply being transferred to a new entity, LEAP agrees to novate your existing LEAP Agreement to the new entity. The number of co-termed users for the new entity must match the total number of co-termed users from the current entity/ies.

Please refer to Option 1 – Update Existing Datafile

Firm Split / Dissolution / Mergers

If there is a split, dissolution or merger the renewal date of the current Agreement will be brought forward. If both sides of the split are continuing with LEAP, each new entity will enter into a new LEAP Term.

The sum of co-termed users under the new Agreements must match the number of co-termed users of the current Agreement. It is important to note that if only one side of the split will be using LEAP, their new Agreement will need to account for the total number of co-termed users under the current Agreement. The Agreement for the number of co-termed users for each new entity will have to be made between the new entities.

LEAP will only accept instructions on the split of users and data with agreement of all parties involved. For transparency, all communication from LEAP will include all parties involved.

Your LEAP Data File

No New Entity Created

If the legal entity behind the law firm remains the same, there is no change required for your LEAP data file and you can simply continue using your current data file. If you would like to update your existing letterhead, tax invoice or firm details including bank accounts within LEAP please let us know.

New Entity/ies Created

If a new legal entity has been created this means that the firm has a new ABN. As a result, it is usual for new bank accounts to be opened and there is a new MYOB or Xero company data file. It is important that you obtain independent accounting advice about your needs.

LEAP strongly recommends a new LEAP data file be used for the new entity as this results in a clear line between the old and the new entity.

What Happens to the LEAP Data File of the Old Entity?

LEAP provides the following options:

Renewing Old Entity data file for historical access on a new LEAP Term.
Retaining 1 LEAP user in Old Entity data file for historical access until end of current Agreement.
Not renewing Old Entity data file.
- Temporary access required for 30 days in order to manually export data from the LEAP datafile at the then standard LEAP User Amount.
New Entity will continue to use its current data file; no action required for Old Entity data file.

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If the change of ownership involves a split, dissolution or merge LEAP will only accept instructions on the old entity data file with agreement of all parties involved. All communication regarding the old entity data file will include all parties involved for transparency.

What are the Options for the New Entity?

Option 1 – Update Existing Data File

We change your existing data file and update it with your new entity details i.e. bank accounts, letterhead, linking to new MYOB/Xero data file.

This option is only suitable in situations where the old entity has been consolidated and organised so that there a clear line between the old and the new entities, or an agreement between both.

It is strongly suggested that you speak to your accountant before deciding to take this option. LEAP cannot be held liable for any trust, regulatory, tax or accounting consequences that may arise out of selecting this option and you will be required to acknowledge this.

Option 2 – Fresh (blank) Data File

A new data file is created in the new entity name. Should you require access to the Old Entity data file, you will need to select from the options available for access to the Old Entity data file (see above).

The new data file will be linked to your MYOB/Xero company file along with new letterhead and wordbills created.

Option 3 – Data Split (Beta Testing)

LEAP will export the following information from your current data file and import into your new data file in the new entity name. This option involves matter information only. Please refer to the below for information on importing documents to matters.

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It is also important to note that the tool used to split a data file is currently in testing, and results of the data split is dependent on many factors. If you are selecting this option, a further discussion will need to take place to provide additional information regarding the process. This option involves work completed by more than one LEAP Team and the timeline for delivering this work is dependent on several factors.

The data split can be done via Person Responsible and/or Instruction Date.

Matter Information

Items that are included in the split:

Matter Details:

Matter Number
Matter Type
Matter Description
Other Side
Other Parties
Status
Person Responsible
Person Acting
Person Credit
Instruction/Completion Date

Note: Only 1 Client Card is attached to a Matter according to the Matter Client Default type

Client Details: People

First Name
Surname
Salutation
Gender
Phone (Home, Work, Mobile, Fax)
Street Address
Suburb
State
Postcode
Email Address
Comments

Client Details: Company

Company Name (if organisation)
Phone (Home, Work, Mobile, Fax)
Street Address
Suburb
State
Postcode
Email Address
Comments

Staff Details

First Name
Surname
Initials
Rate per hour

Other

Archived Matters
Archived Number
Archived Comments

Items that are not included in the split:

Financial Information
Office Transactions
Trust Transactions
Matter Documents

Note: documents can be brought across via a Correspondence Export Service – Quote provided upon request

Precedents
Document Register Items

Documents – Correspondence Export/Import

Documents that are saved to matters can be exported from the current data file and imported into the new data file. If you would like to proceed with this service, a further discussion will need to take place to provide additional information regarding the process and provide a quote.

Option 4 – Excel Transition

LEAP will require you to complete Excel Spreadsheets (in a particular format) which we will use to import your clients and matters into your fresh (blank) data file.

Documents – Correspondence Export/Import

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If you are selecting this option, a further discussion will need to take place with our Transitions Team to provide additional information regarding the process and availability.

Summary of Items for Consideration

It is important that you seek independent financial advice from your accountant as LEAP is unable to provide any advice regarding structural set up.

Where a new entity is created, your current Agreement with LEAP may need to be revised. When a new entity is created with a new ABN, new bank accounts and there is a new MYOB or Xero company data file, LEAP strongly recommends a new LEAP data file is created for the new entity as this results in a clear line between the old entity and the new entity.

If your firm currently uses any of the following services, please contact them directly to advise of any changes required.
- InfoTrack
- File Republic
- Website (Lift Legal)
- WestLaw
- RapidPay

Last Modified Date

5/08/2024 4:27 pm

Title

Information Sheet on Change of Ownership, Including Partnership Splits and Change in Entity

URL Name

Information-Sheet-on-Change-of-Ownership-Including-Partnership-Splits-and-Change-in-Entity-AU

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