What Is Messner Reeves?

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This is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On this episode:

Vendor name:

Messner Reeves

Vendor category:

Legal

Episode host:

Brad Wales

Episode guest:

Kimberley Cronin

Vendor contact info:

Website

Full Transcript:

Brad Wales – Hi, I’m Brad Wales with Transition To RIA and this is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On today’s episode we’re answering the question, “What is Messner Reeves?” To help us with that is Kimberley Cronin. Kimberley, thanks for joining us.

Kimberley Cronin – Absolutely.

Brad – Well, I’m excited. Kimberley and I were talking offline before we hit record. I’ve “known” Kimberley for many, many years now, but we’ve actually have never met in person. So this is certainly not our first conversation, but happy to have you on and helping us with this.

This is an important episode because for all the episodes I do talking about perhaps how great the RIA model is or why it might be a fit for your practice and all the decisions that have to go into making that transition successful, none of that matters if you can’t successfully navigate the departure from your current firm.

There’s a lot of variables that go into that and that’s a big part of what we’re going to be talking about today and how Kimberley can help with that. So with that preface, Kimberley, if you could start by giving us a general quick overview of Messner Reeves so folks understand and then more specifically your part of that.

Kimberley – Absolutely, Brad, and thanks for having me on today. It’s my pleasure to be here. I’m really excited to be able to have this conversation and chat with you today.

So Messner Reeves is a large law firm. We are probably 150 lawyers and maybe half of that in staff as well, so probably over 300 total. We are in 11 different offices over seven different states and we have all of your typical departments. We can do all of the work that our clients demand. I am in the corporate department in the securities division, and I work full-time with advisors in transition.

Brad – So that’s your main specialty. Let’s look at someone that’s never left the wirehouse world for example, which is not the only type of person that would need your services, that doesn’t necessarily even know when do they need an attorney or a lawyer for transition service.

Please break down what you’re helping folks with both from that initial review of their situation, maybe agreement up until the actual playbook to make in that day of departure. What all goes into that kind of service?

Kimberley – Right. So there’s a lot that goes into the service package depending upon where the advisors are coming from. I think it’s important for them to really get a sense of what they can and cannot do early on in the process. Advisors ask me all the time what’s a good time to reach out to you? When should I connect with you?

My answer is always whenever you really are starting to think about making that transition and certainly when you’ve decided that you are going to make the transition. There are things that you can do to prepare for a transition from a legal perspective. There are certainly things you don’t want to be doing in terms of that transition. So understanding what those things are in advance of a move is going to be really, really important.

Then also there’s just that comfort level, Brad, to be honest. Once you know what you can and cannot do, these advisors really start to feel a lot more comfortable with their transition. The nerves start to subside and the excitement really starts to come into play.

Brad – Yeah, fair enough, the legal part is not the most exciting part of it, but you can’t get to those exciting parts unless you first have cleared that hurdle.

Who is that clientele? I’ll preface it so it doesn’t seem like you’re, to use an analogy, asking a barber if you need a haircut because the answer’s always yes. I’ll tee this up so it doesn’t look like you’re the one saying everyone needs help. But clearly the advisor that’s at a more captive environment that potentially has non-solicit language or other language in their agreement is needing the advice.

But then I often will hear advisors at maybe an independent broker-dealer and they say, well, I’m already independent. I say, yeah, maybe you don’t have to worry about a non-solicit, but that doesn’t mean there’s not maybe privacy issues that you need to worry about or what client information you can or can’t take.

So maybe if you could tell us, how do you typically describe it? Should everyone leaving no matter what their circumstances probably have that kind of conversation with you? Obviously some are going to need more help than others but arguably everyone needs some level of guidance.

Kimberley – Well, that’s exactly right, Brad. I do think that everybody needs some level of guidance. It could be a whole range of guidance in terms of reviewing the contract, you know, talking about privacy, talking about data, talking about when to talk to clients, right?

If we’re talking about somebody who’s on the more independent side versus somebody who is leaving a more captive environment, somebody who’s independent is likely going to need less guidance. However, there are still going to be rules, regulations, policies, and privacy issues to be considered in that kind of a move. So yes, if you don’t need a lot, great, but it’s always a best practice to talk with a lawyer.

Brad – We’ll get into it in a moment kind of what that process is when they first reach out to you. But I think back to your point, it’s never too early to begin that because everything that follows is a moot point if it can’t be overcome.

Let’s start with your experience. I’m a big believer across all the resources that a transition-advisor team should, when possible, use industry-specific resources and experts that know this industry. Occasionally I’ll hear when I bring up this topic about how you should have your agreement looked at, the worst-case scenario is “My old college roommate is a contract attorney and he or she’s going to look at it.”

Well, okay, that’s probably better than nothing, but that doesn’t mean that person understands our industry and has that kind of historical database of how firms typically respond or how the process plays out. If you could just speak to that of your experience and why you’re not just that random contract attorney, you have that proverbial database of what can be expected.

Kimberley – Absolutely. Yeah, so I think that, worst-case scenario, great, you’ve got your college roommate who’s a lawyer looking at it, but you know, that really just isn’t going to do it. This is a very highly regulated industry. I think it’s very important for advisors to understand that with any move that you make it’s going to be very important to have the right resources around you. It’s important to understand what it’s going to look like moving from a legal perspective, just like other vendors, right?

I’ve been doing this for almost 20 years. I transition somewhere between 500 and 600 advisors a year, whether they’re individuals or a part of a team. I’ve transitioned 100 people at once, right? Moving under a singular OSJ. And having done all of these moves over all of these years, I understand the intricacies of the different firms that people are moving from.

I know things that they might not know. For example, some firms may have their own privacy policy versus one that you could find out on Google or something. In terms of compliance from that firm on the way out the door. And so it’s just important to have somebody with the specific industry knowledge.

We can all look at a contract, you know, as lawyers, and we understand what that contract says. But I think it’s really important to focus on the specifics of the industry and the specifics of the firm and the specifics of the individual or team that you’re moving.

Brad – And when there’s a team involved, that’s a whole other dynamic that has to be considered as well. It’s kind of related to looking at agreements or contracts. To take the pressure off anyone that might be watching this and saying, okay, I need this advice, but I have no idea where some agreement is that I signed years ago. Shame on me, I probably should have kept that in safekeeping. There’s no way I could probably ask for a copy now without causing a red flag to go up.

So one, I assume you have folks that come to you with that and you help them as best as possible. But I think that also comes back to with the hundreds of these you do a year, you can at least hope to kind of look back and say, okay, based on where you’re at and when you might have signed something, our experience is that you likely signed something along these lines. If you could kind of talk about how you help folks that unfortunately don’t know where that agreement is, but they know they probably did sign something.

Kimberley – Sure, yeah, that happens frequently. Because we’ve worked with so many advisors on a yearly basis for so many years, we typically have a contract that’s either similar to the one that they signed or from right around the same time that they would have signed it.

We have so many contracts that we’ve seen the changes, right? So if somebody says, hey, I’m moving from X firm and I don’t have my contract, we’ll look in our files to see if we have something and we usually do. So advisors, they don’t have to be afraid to ask and afraid of what may happen if they do ask.

In some cases where it’s a very small firm or it’s a firm that we don’t see all the time, we will talk to the advisors about ways to get their contract that don’t indicate that they’re moving or don’t raise a red flag, and advisors have been successful in that way as well.

Brad – I think that’s just from your experience of knowing when it’s appropriate to ask or maybe how it’s appropriate to ask and that depends on the firm. So that’s just repetition, right? Hundreds of transitions a year times 20 years-ish, that’s going to be that institutional knowledge, which I think is great.

You probably could share some horror stories where you’ve been brought in after the fact where there is kind of the mentality of the do-it-yourself approach and hey, maybe I can save a little money here. I have eyes, I can read a contract. But there’s just so much more to it.

As I say, this is just a cost of doing business. If you’re going to be serious about making a transition, there’s a lot of things you’re going to have to spend money on. This is a no-brainer. It has to be kind of spent along those lines. So not to give up a hard sell for your services, but that’s how I position it. This is just one of the must-haves.

So for folks that are okay saying, hey, I get it, I need to do this, how does that timeline of assistance play out? So we talked about it’s kind of never too early to have that initial conversation. We’ll get into kind of what they can expect on that first call in a second to start looking at the agreement to make sure there’s at least no insurmountable hurdles.

Then, okay, I might not actually be transitioning for six months from now or even longer. and you’re going to help me with that part. So what does a typical engagement look like for you? Is this, hey, we do some work on the front end, and then come back at this point in the process, or how does that typically play out?

Kimberley – So once we engage with the advisor, we typically stay involved and stay engaged because questions are always coming up. So we will initially bring the advisors on board. We’ll review the contracts. We’ll have an initial call about what the contracts say, about what the do’s and don’ts are around the contracts. And if an advisor is not ready to leave at that time, we’ll stay in touch. We’ll answer whatever questions come up in the meantime. Then we’ll get back to our discussions when they are ready to leave.

But I think there’s that comfort level that advisors can get early on in the process. Even if they haven’t chosen a firm that they’re going to move to yet or the RIA platform or what have you, it’s really just nice to get that engagement going and have that legal team as a resource for you.

Brad – Yeah, and the confidence I think is key. There’s a lot of moving parts here. This is folks’ livelihood. This is their career. Yes, people like me will help guide advisors through the whole process. Yes, you still want that confidence. I think that’s where it’s important that you can apply that part of it towards your part of the legal side. I entirely agree with you on the confidence level.

I always like to set expectations so, and in a moment we’ll get to how people can contact you, but for folks that do reach out, they do want to start this process with you, they’ve got to hear you out directly, not just maybe from this podcast. They reach out to you.

What exactly happens at that point? Are you setting up kind of an intro call and then what exactly happens in that intro call? Then when does it kind of pivot towards a more formal engagement?

Kimberley – Right. So when people reach out, I am happy to talk with them for 20 minutes, for 30 minutes, at no cost at all. I want to learn about them. I want to learn about their business. I want to learn about their firms. Who else do they have in there? Do they have other advisors? Do they have staff? So I like to learn a lot about the advisors when they call me.

Sometimes they’ll send me their contracts and we’ll take just sort of an overview of it. We’ll talk generally about some things that might be very important to them at that time, hot topics and things like that. And then if they decide that they want to engage our firm, we’ll do a deeper dive into that contract.

Then we’ll schedule an initial call with the advisors. Usually those calls last about an hour. We go through everything, sort of A to Z. The advisors may go away with a little bit of homework, but they’ll go away with a lot of knowledge about their circumstances and the transition that they’re looking forward to.

Brad – Knowing these are all different scenarios, this could be a solo advisor, smallish, mid-size practice, or this could be multiple team members, bigger firm they’re leaving, whatever the circumstance, so there’s no singular way to kind of price this sort of thing out. So how do you, after you’ve had that initial conversation to understand their situation, what they’re going to need, how do you price something like that out?

Kimberley – Yeah, so we try to be really reasonable with our pricing and we try to give advisors a fair estimate of what it’s going to look like to move them. Do they need transition work only? Do they need real estate assistance with maybe their space? Are they looking at intellectual property questions on the entity that they’ve chosen?

So we will do an evaluation and then let them know based on what they’re looking for from the firm what our retainer is going to be. We have several different lawyers within the firm that work with advisors on these transitions. We don’t do any overlap. We don’t have two lawyers on every call. It’s that lawyer that has that specialty that’s going to be on the call with that advisor.

And so we price that out based on what they’re needing and give them an estimate, which becomes sort of the retainer and we bill from that. Everybody has their own hourly rates within the firm, but we bill from the retainer. If there’s something left, and in many cases there is, we return it. If they go above the retainer, we simply bill them on a monthly basis.

Brad – I think this comes back to how many of these you’ve done. You probably have a pretty good idea on any new engagement roughly what that’s going to be short of something coming out of left field that’s not anticipated. So it at least helps give a general ballpark there going into it what this sort of thing might cost.

I think you also hit a good point. Your people, advisors understandably because if they’ve never engaged this kind of transition process, part of it is they don’t know what they don’t know. They don’t know the questions to be asking. So the good news is you reach out to Kimberley, Kimberley will guide that conversation.

You just need to say, I’m considering leaving this firm and going to this path and she’ll know the things to be asking you about that you might not even be realizing you should be asking about or topics you should be bringing up. So I think that goes into the whole equation.

This is the last question, then we’ll get into contact info. For folks to give them some perspective, are there any scenarios where you do have a conversation and unfortunately that hurdle probably is too high and it’s probably not going to be possible to leave.

I guess what I’m trying to get at is for folks that have never dealt with this, they might be thinking, wow, is this like, I got a 50-50 shot. If I talk to Kimberley, that a 50% chance that she’s going to tell me, man, that this is a no-go or that it is a go. I suspect it’s significantly higher odds that these things can typically be navigated. But I realize it’s not necessarily a hundred percent.

So to set folks’ expectations from your experience, how often is there typically a path which of course is important and folks need to follow the path, not just learn about it? What is that rate of, I don’t want say success, but where there is a likely path of making a good transition?

Kimberley – So I will say that I have done this for so long, I have seen everything you could possibly imagine. In most cases, I want to say 99% of the time, there is going to be a path to leaving.

Every path is not going to be completely painless. But part of what we do is work with the advisor to create a strategy that works for them. Are they going to be able to move? Yes. Will they have to maybe buy out some of these clients that they’re taking with them? Maybe, right? So we look at every piece and part of the transition from the perspective of what the advisor wants to do.

We realistically talk with them about their options. Can you move? Yes. Will there be a little bit of something going on that we have to strategize over? Possibly. That’s not the majority of the advisors and the teams that we move, but we have moved a lot of people successfully where they have thought, boy, I can’t do this.

Brad – I think that’s just where that conversation comes back in is you’re only going to know if you take the time to dive in and get into those weeds. If unfortunately you are the 1%, well it’s better that you found out you’re the 1% before you learned in a much more expensive and perhaps catastrophic way. Thanks for that perspective on that.

For folks that are listening to this and say, wow, I do need to be talking to someone like this and wow, Kimberley with her experience sounds like a great person to have that conversation. What is the best way for people to reach out to begin the conversation?

Kimberley – So you can email me at the law firm or you can call me. I’m happy to just pick up the phone and have a conversation. Either way is going to be great. My direct line is 303-623-1800. I say direct even though that’s the main line because they will find me. And then my email is kcronin@messner.com.

Brad – Perfect, and I will put that in the show notes. So for those that are watching or listening along and didn’t scribble it down, just look in the show notes and we’ll have that contact info as well.

So Kimberley, I’ve always got wonderful feedback about you. That makes my job easier. Your experience speaks for itself, but it’s not just having experience. It’s meeting the expectations of your clients from responsiveness and how valuable your services are.

I always get great feedback. So I appreciate you making me look good when I suggest you to folks. I think that speaks for itself that you’ve earned that reputation. So thank you for what you do for the industry and thank you for coming on to help us understand all that you do with your practice.

Kimberley – Thank you, Brad, for having me on today. It’s just been great talking with you and working with your clients. It’s been great.

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