International tax specialist strengthens firm’s expertise
LOS ANGELES – May 5, 2009 – True Partners Consulting LLC today announced that Dinesh Kakwani has joined the Los Angeles office as a Managing Director.
“Our tremendous growth over the past three years largely has been fueled by clients that find themselves in need of counsel from experts with a thorough understanding of international tax issues,” said Cary McMillan, chief executive officer of True Partners. “Many of our U.S. clients are expanding, or considering possible expansion, within several different countries, which is why we continue to seek top talent like Dinesh, whose expertise will prove invaluable for both U.S.-based companies and multinational corporations that do business abroad.”
Kakwani specializes in providing international tax consulting services to a broad range of U.S., multinational and foreign-owned clients who do business as single entities or in joint venture. He has extensive experience with a wide range of complex tax matters relating to the electronics, solar, and telecommunication industries.
“I’m pleased to join the leadership team of this firm, as my experience in a wide range of tax planning and tax structuring advice has been welcomed by a number of diverse clients, and I look forward to serving an expanded set of clients in my new role,” said Kakwani. “It will be exciting to continue leveraging my background on behalf of clients, as well as my in-depth knowledge of debt financing techniques and international tax consulting.”
Prior to joining True Partners Consulting LLC, Kakwani was a Principal in KPMG LLP’s Phoenix office where he specialized in the area of International Corporate Services. He has more than 11 years of experience in tax planning and structuring of transactions for public and privately held clients. He started his career with Arthur Andersen LLP in the Long Island office in 1997. Kakwani has also taught U.S. and Europe debt financing techniques at internal KPMG training sessions.
A graduate of Hofstra University, Kakwani received a bachelor of business administration with highest honors in accounting.
About True Partners Consulting LLC
True Partners Consulting is a world-class tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley created conflicts inherent in offering both tax consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. The firm also conducts refund reviews, analyzes clients’ tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues.
The firm has offices in Chicago; New York; Los Angeles; San Jose, Calif.; Tampa Bay, Fla.; Boston; and London. There are also member firms in Paris; Turin, Italy; Barcelona, Spain; and Beijing, China; through the True Partners Consulting International network. Find additional information at www.tpctax.com
New approach for advice merchants
By Steven R. Strahler
March 16, 2009
True Partners Consulting LLC doesn’t wow clients with a wide range of services or whack them with non-negotiable hourly billing rates.
The Chicago-based firm sticks to corporate tax advice and will accept fees based on a client’s tax savings, even in the form of company stock.
“Being able to share some of the risk helps you get your foot in the door,” says Cary McMillan, 50, a former Andersen partner and Sara Lee Corp. executive who founded True Partners three years ago.
The firm reflects a new approach for consulting, legal and other professional services firms contending with the deepest recession in 25 years.
An era of runaway growth is ending and with it the big increases and hiring and compensation that drew a generation of young talent to these firms. In a maturing industry, clients are gaining new leverage to demand lower prices and better results.
Most vulnerable to market changes are large, diversified firms with high overhead. Many of the winners in the post-recession era will be specialized outfits with fewer but more-experienced employees.
Firms accustomed to charging high fixed fees will have to accept billing arrangements more closely tied to the outcomes they produce for clients. And an industry that hired thousands of highly degreed young professionals annually at ever-higher pay rates will pare back hiring and salaries.
The rapid growth of professional services firms over the past three decades reshaped Chicago’s economy, providing not only more jobs but higher-paying ones than most in the shrinking manufacturing base. But after rising 7.8% to $43.4 billion last year, the Chicago-area services sector will see growth slow to 2.2% this year before increasing to 4.9% in 2010, Moody’s Economy.com predicts.
Despite the recession, the share of local gross metropolitan product contributed by legal, accounting and other professional services firms will continue to grow — to nearly 11% by 2010, more than triple the 3.6% share in 1978, according to Pennsylvania-based Economy.com.
But the days of expanding at a healthy multiple of overall economic growth are over. Professional and business services firms in Illinois shed nearly 7,000 jobs in January, second only to the 11,000 lost in manufacturing, according to the Illinois Department of Employment Security.
“It’s hard to look through our client base and see anyone that’s not affected by the situation we’re in,” says Chuck Allen, CEO of Oakbrook Terrace-based accounting firm Crowe Horwath LLP, which shed 150 employees, or about 6% of its workforce, in November and December.
Wages for accountants, tax preparers and bookkeepers, which have increased 37% over the past five years, are projected to rise only 1.6% this year and less than 1% next year.
At True Partners, Mr. McMillan says partners make less than they might at the Big Four accounting firms, but they also supervise less work. The experience level of his veteran crew is a key selling point for corporate clients tired of underwriting the training of young auditors and consultants at the Big Four, he adds.
With revenue expected to climb as much as 35% this year, to $43 million, Mr. McMillan says the firm will add 50 more professionals to its staff of 225 consultants. On a recent assignment, True Partners was paid 20% to 30% of the first-year portion of millions of dollars it was able to knock off a client’s local multiyear tax bill. So far, the firm has not been offered stock in any client.
In some fields, demand will shift to independent contractors with less overhead, which are able to undercut large consulting firms burdened by employee costs.
“There’s huge pressure on pricing — 20% (discounts), maybe more,” says Peter Bendor-Samuel, CEO of Dallas-based outsourcing consultant Everest Group.
WORLD-WEARY
Global firms like information technology consultant Accenture and accounting giant KPMG LLP, whose geographic diversity is considered an asset, will be hurt by the worldwide slowdown — which could last longer than the U.S. recession — and stronger dollar. KPMG in January polled its 11,000 European workers to see who, if given the opportunity, would cut their hours or take time off. KPMG declines to comment.
Corporate clients are cutting technology budgets by 5% to 30%, killing the old staffing model of IT consultants working on-site for two or three times what inside employees cost, says Mark Jeffery, managing partner of Evanston-based consultant Agile Insights LLC.
“There’s a real opportunity for upstarts like myself,” he says.
With three-fourths of corporate chief legal officers planning to cut costs this year, Economy.com predicts that Chicago-area legal industry output will dip slightly to $7.51 billion, the first decline since 1995. Employment, meanwhile, is expected to fall 3% to 44,600.
“I think the demand for law services is going down, even without the recession. People are very conscious of the cost. They’re cutting, cutting, cutting,” says Roger Stelle of Meltzer Purtill & Stelle LLC, a 25-lawyer firm in Schaumburg with banking and developer clients. It laid off two attorneys last fall. “This is a very trying time.”
The recession, coupled with technology and outsourcing that has commoditized many legal services and pressured billing rates, has undermined the pyramid structure of many big law firms — where an average of three associate attorneys support each partner.
“The lowest part of the pyramid is being shed away,” says Hugh Totten, a Chicago lawyer hoping to capitalize on industry changes. “A lot of what we do now can be replicated by pressing a button, like a will. Don’t think that is not going to get into other areas of the law.”
Chicago’s mightiest legal names — Sidley Austin LLP, Kirkland & Ellis LLP, Mayer Brown LLP and Jenner & Block LLP — are dumping attorneys. Another large firm, DLA Piper LLP (US), is broadening its partnership base by requiring non-equity partners to pay up to become full-fledged partners, in effect reducing the firm’s credit risk.
“A lot of what we do now can be replicated by pressing a button, like a will,” says Chicago lawyer Hugh Totten. “Don’t think that is not going to get into other areas of the law.”
“Without question, firms are going to be smaller,” says New York-based legal consultant Bruce MacEwen. “There will be fewer ‘full-service’ national law firms.” Pressure will build on state bar associations, he adds, to allow law firms to attract outside investors.
‘YET-TO-BE DEFINED’
Leaders at Chicago’s major law firms say it’s too early to forecast exactly what will happen to their traditional operating and billing methods. “It is likely that law firms will change in some as-yet-to-be-defined fashion,” says Kirkland Senior Partner Kevin Evanich.
Jenner Managing Partner Susan Levy says, “Some clients have told us, ‘Here’s a matter, but this year let’s not try to spend money.’ A lot of clients are seeking discounts, more than before.”
To win business, more law firms will have to impress companies like FMC Technologies Inc. in Houston, which withholds up to a quarter of what it owes for legal services before deciding at yearend whether firms deserve full payment or even a bonus. FMC Technologies’ legal expenses have declined steadily as a percentage of revenue since 2001, says General Counsel Jeffrey Carr.
Meantime, law firms increasingly are agreeing to fixed fees, which allow clients to quantify costs. “We’ve been talking about this for years, but the rubber is meeting the road now,” says Baxter International Inc. General Counsel Susan Lichtenstein in Deerfield.
Mr. Totten’s Valorem Law Group LLP is adopting contingency-fee practices more commonly associated with personal injury attorneys. In one case, Valorem gets paid only if client Kayak.com collects unpaid bills from a major vendor, says Karen Klein, the travel site’s Chicago-based general counsel.
In another case, Valorem’s ultimate compensation is based on the outcome of a breach-of-contract suit in federal court here. If client RF Surgical Systems Inc. of Bellevue, Wash., loses, Valorem accepts a 50% discount. If Valorem’s defense succeeds, the law firm gets stock options in RF Surgical, which makes a product that tracks the location of surgical sponges in patients.
“They’re taking a gamble,” RF Surgical CEO Kevin Cosens says. “They’re truly a partner because they’ll have an equity position in our company.”
The professionals at TPC have over 1,000 years of combined experience helping manufacturers save hundreds of millions of dollars in operating and capital costs. Based upon our experience, these are the top five ways to reduce operating costs:
Now that Michael Phelps has won eight Olympic gold medals, it is time for Speedo to pay him the $1 million “prize” as promised. The burning question on my mind is who is going to tax it. China could argue that the money was earned while he was in Beijing, and thus he should pay tax on his winnings there. I am not sure if there are state and local taxes, but maybe Beijing will also want to tax the prize. The U.S. will want to impose a tax since Michael is a resident of the U.S. Likewise, Michael is a resident of Maryland, so I am sure that Maryland will want the piece of the action. Or is Michael a resident of Michigan – that is where he is enrolled in school. Does anyone have any insight?
During the past few months, Sam Zell, the new owner of the Chicago Tribune and the Chicago Cubs, has been working furiously to sell the Chicago Cubs for $1 billion. As a White Sox fan, it kills me to admit it, but the Cubs have a phenomenal national following. Now, anyone who has attended a baseball game at Wrigley Field has to admit that the aura and mystique of Wrigley Field are awesome. During the 2007 season, the attendance for Cubs home games was 3,252,462 (sold out!).
With ticket prices ranging from $18 to $80, the ticket revenues must have been around $130 million. The team had the eighth highest payroll in the league of $99 million. Adding in revenue from food and beverage, parking, broadcast rights, licensing, etc., makes the team appear to be a financial success.
On March 4, 2008, I purchased a Toyota Prius hybrid car, with a spacious interior, awesome fuel economy (45-50 mpg) at a manageable price (less than $30,000). The decision wasn’t easy, as I was leaving my Ford Expedition (very spacious, fairly expensive, and lousy fuel economy at 13 mpg). Although the large SUV was reliable, dependable, etc. I did not need it for my daily commute.
Funny thing is, I would have never considered this vehicle if I had not been forced to drive it as a rental car on my last trip to California . Thank you National Rental Car! Based upon my average annual driving distance, this car should save me $300 per month on gas, and will help me reduce my carbon footprint (1,000 fewer gallons of gasoline burned each year!)