IP Transfer and Pricing Considerations for Financial Service Firms
February 01, 2006
Financial service companies make their money primarily through two core intellectual assets. The first is their expert knowledge of ways to create, expose, tranche and protect asset value. The second is their ability to project their expertise as embodied in their brand. Aside from the specialized intellectual asset merchant banks, financial service companies do not know how to value their knowledge nor their brand. Furthermore, historically they have not paid much attention to which of their global affiliates created the intellectual asset nor which of their affiliates deployed the asset — an activity that creates the accounting and financing phenomenon of "transfer pricing." The importance, more specifically the urgency, in rectifying this informational vacuum arises from recent changes in international tax law pertaining to the pricing of intangible assets that are transferred among Multinational Entity ("MNE") affiliates. This article, targeting the financial service industry, briefly summarizes the fears of the industry concerning transfer pricing and intellectual property ("IP"); cites an example of a recent innovation that has led to a revolution in the way bonds are priced identifying possible IP transfer pricing red flags; and concludes with suggestions for process improvements.
Advising a Private Equity Fund
January 26, 2006
As anyone who has advised a private equity fund in connection with the potential insolvency of one of its portfolio companies knows, reconciling the duty of the fund's designated directors sitting on the portfolio company's board with the fund's duties to its investors can feel like a high wire act at times. As fiduciaries for its investors, the fund's managers must act in a manner consistent with maximizing the return on invested funds. Yet, these same managers are often directors of the fund's portfolio companies. While a portfolio company is thriving, the duties to the fund's investors and the fund manager's duties as a director of the portfolio company are typically in harmony. However, when the portfolio company's business turns sour, and it approaches insolvency or is insolvent, the shifting of the directors' fiduciary duties to the company's creditors can cause irreconcilable conflicts of interest along with consternation on how to fund ongoing operations. This article discusses possible structural mechanisms to address and potentially avoid these irreconcilable conflicts while still maintaining the ability to manage the fund's investment and fund the portfolio company's ongoing business.
In The Marketplace
January 06, 2006
Highlights of the latest equipment leasing news from around the country.
Is Your Computer Leasing Company Responsible for Data Security?
January 06, 2006
Picture this scenario: You are the owner of a small to mid-sized business and have decided that it is in your best interest to lease your company's computer equipment. This may be because prudent financial planning dictates a lease versus buy decision; or you may want to be able to run the most current, up-to-date applications and the short time span of a computer lease allows you to do so. Whatever the case, when you make this decision, you have just assumed a very important responsibility — one that should not be taken lightly. You have just become personally responsible for the security of your own and your clients' personal data. It is your responsibility to personally safeguard the social security numbers, banking information, healthcare data, credit information, or anything else that could lead to catastrophic consequences if found in the wrong hands.
e-Commerce Up Again, Census Bureau Says
January 03, 2006
The estimated total net value of retail e-commerce sales in the third quarter was $22.3 billion, according to the U.S. Census Bureau. That figure, which accounts for 2.3% of all retail sales, is about $1 billion more than the estimated retail e-commerce activity in the second quarter.
Mismeasuring the Profitability of Associates and Practice Groups
January 03, 2006
Last month A&FP examined the dangers of considering profitability metrics in isolation ("Matter Profitability: When Metrics Mislead" by Steve Campbell). Board member Ed Wesemann now provides a similarly fresh look at the pitfalls of using "business-like" industrial cost accounting to make managerial judgments in a law firm. Ed's most recent book ' Creating Dominance: Strategies for Law Firms ' was featured in our June 2005 edition.
Costs and Credits: Contrasting Views
January 03, 2006
A&FP reviewers rated Ed Wesemann's feature article from "much to agree with" to "excellent" to "super," but three Board members had differing views on specific points. The following exchange between Ed, John Alber and Jim Davidson is followed by a comment received later from Ed Poll. Yet another perspective on the question of associate profitability is being formulated by another discussant as an upcoming article.
NY Firms Pledge Lawyers to 50 Pro Bono Hours Annually
January 03, 2006
Thirty of the 55 large Manhattan law firms asked by the New York City Bar Association to endorse its aspirational "Statement of Pro Bono Principles" have pledged their lawyers will perform 50 or more hours per year.
