Tax Law Services Portfolio Evaluation

4. Key Findings

This section combines information from all lines of evidence and presents the findings according to the broad evaluation issues of relevance and performance.

4.1. Relevance

The evaluation considered the relevance of the TLS Portfolio's legal services with respect to the rationale for the provision of tax law services by Justice Canada, the continued need for its services given the increased demand and complexity of the legal services provided, the responsiveness of the TLS Portfolio to government priorities, and the TLS Portfolio's support of Justice Canada's statutory obligations and strategic outcomes.

4.1.1. Continued Need

The case for Justice providing legal services to the CRA stems back to the 1962 Royal Commission on Government Organization (the Glassco Commission). The Commission was established in 1960 to report on the organization and operation of federal departments and agencies. Despite being written more than 50 years ago, the Glassco Commission's report is still relevant today in terms of the nature of the relationship between the taxing authority (then the Department of National Revenue, now the CRA) and its counsel.

The Glassco Commission observed that the relationship between the taxing authority and legal counsel is defined by two aspects: on the one hand, independent, impartial legal advice (where legal counsel are not involved in policy-making activities) is important for the integrity of the tax system, while, on the other hand, a close relationship between the taxing authority and counsel is important given the inherently legal nature of tax assessment (Glassco, 1962). Thus, the relationship between the taxing authority and its legal counsel has a dual nature. The evaluation found that this observation is still valid, and that the dual nature is still important. The close relationship between the CRA and the TLS Portfolio and the TLS Portfolio's in-depth understanding of the policies and practices of the CRA were considered by most key informants to be key elements contributing to the quality of legal services provided. At the same time, the need for fair, impartial treatment of taxpayers was emphasized by key informants as essential to maintaining the integrity of the federal tax system.

Increasing demand for TLS Portfolio legal services

The continued need for TLS Portfolio legal services is also demonstrated by the increasing demand for legal services over the past five years. As iCase data presented in Figure 2 illustrates, the TLS Portfolio experienced a 30% increase in the number of actively managed files since 2007/08. Footnote 9 The increase in advisory files is especially pronounced; the number of actively managed advisory files increased 81% between 2007/08 and 2011/12, compared to a 19% increase for litigation files over the same period. The increase in advisory files is in part due to the change in the LSU's case management system in 2010/11. Consequently, the LSU began to create a file for each advisory request, therefore increasing significantly the number of files, but not the hours spent on advisory work. The rise in demand may have plateaued, as the number of actively managed files increased by only 1% between 2010/11 and 2011/12.

Correspondingly, according to iCase data, the number of hours spent by TLS Portfolio counsel on providing legal services has risen, with the increase becoming more pronounced beginning in 2008/09 (see Figure 3). This increase occurred for both advisory and litigation files; between 2007/08 and 2011/12, the total hours spent on legal services increased by 17% for advisory files and by 34% for litigation files. As with the number of files, the larger rate of increase between 2008/09 and 2009/10 slowed in the last year, as Figure 3 shows.

Figure 2: Number of Actively Managed Files by Type of Service - 2007/08 to 2011/12
Figure 2: Number of Actively Managed Files by Type of Service - 2007/08 to 2011/12
Source: iCase Footnote 10

Figure 2 - Text equivalent

For Advisory files:

  • In 2007-08, advisory files shown graphically at approximately 2,000
  • In 2008-09 approximately the same, 2,000
  • In 2009-10 a slight increase to approximately 2,200
  • In 2010-11 an increase to approximately 4,000
  • In 2011-12 approximately the same at about 4,000

For Litigation files:

  • In 2007-08 litigation files shown graphically at approximately 11,000
  • In 2008-09 approximately the same, 11,000
  • In 2009-10 a slight increase to approximately 12,000
  • In 2010-11 an increase to approximately 13,000
  • In 2011-12 about the same at approximately 13,500

For total of both types of files:

  • In 2007-08 files shown graphically at approximately 13,000
  • In 2008-09 approximately the same, 13,000
  • In 2009-10 a slight increase to approximately 14,000
  • In 2010-11 an increase to approximately 17,000
  • In 2011-12 about the same at approximately 17,500

Figure 3: Total Hours of Legal Services by Type of Service - 2007/08 to 2011/12
Figure 3: Total Hours of Legal Services by Type of Service - 2007/08 to 2011/12
Source: iCase Footnote 11

Figure 3 - Text equivalent

For Advisory files:

  • In 2007-08, total hours on advisory files shown graphically at approximately 80,000
  • In 2008-09 approximately the same, 80,000
  • In 2009-10 a slight increase to approximately 90,000
  • In 2010-11 an increase to approximately 100,000
  • In 2011-12 approximately the same at about 100,000

For Litigation files:

  • In 2007-08 total hours on litigation files shown graphically at approximately 320,000
  • In 2008-09 increase to approximately 360,000
  • In 2009-10 a slight increase to approximately 390,000
  • In 2010-11 an increase to approximately 420,000
  • In 2011-12 a slight increase to approximately 450,000

For total hours on both types of files:

  • In 2007-08 total hours shown graphically at approximately 410,000
  • In 2008-09 a slight increase to approximately 420,00
  • In 2009-10 an increase to approximately 480,000
  • In 2010-11 an increase to approximately 510,000
  • In 2011-12 a slight increase to approximately 520,000

Key informants offered several reasons why the demand for services has increased. In particular, they reported that taxpayers are becoming more willing to incur legal fees and appeal to the Tax Court of Canada. Taxpayers are also more willing to challenge CRA's requests for documents, which has increased the need for legal advice and assistance with compliance orders to compel the production of documents. The number of strategic bankruptcies and other transactions to evade tax collection has also increased. Changes in legislation have affected certain areas of practice by requiring court hearings or other procedures that increase counsel's time in court. Footnote 12 In addition, the government and CRA commitments to address aggressive tax planning and avoidance schemes have created greater demand for TLS Portfolio legal services. Some of the tax avoidance schemes targeted by CRA can potentially involve thousands of taxpayers (e.g., Registered Retirement Savings Plan strip schemes, charity tax shelters). Counsel are also becoming more involved in giving advice at the audit stage for complex large business audits involving aggressive tax planning and international tax, complex tax shelter cases, international compliance issues, tax treaty abuses, and residency determinations.

Increasing complexity and legal risk

In addition to the increasing demand, key informants report that the nature of legal services has changed as the complexity and legal risk of the files has increased. Footnote 13 Most commonly identified factors contributing to the increased complexity and legal risk include the federal government's increased emphasis on complex tax issues (such as international tax avoidance, transfer pricing), the increased sophistication of transactions made by taxpayers, and the increase in files where the CRA has assessed multiple taxpayers involved in similar tax avoidance schemes (also noted under reasons for increased demand for legal services).

4.1.2. Alignment with Government Priorities

The TLS Portfolio's work responds directly to the government priorities for its tax regime. This alignment is demonstrated by comparing federal budget reports and Speeches from the Throne with the TLS Portfolio activities listed in departmental annual reports.

  • The TLS Portfolio provided advice on a variety of social, tax and financial sector policies and programs, including the GST reduction. The GST cut was identified as a federal priority in the Speech from the Throne 2007 (Department of Justice, 2007a; Speech from the Throne, 2007).
  • The TLS Portfolio provided legal support for the implementation of government initiatives, such as the Universal Child Care Benefit, the Working Income Tax Benefit, and the registered disability savings plan — all identified priorities in Throne and/or Budget speeches (Department of Justice, 2007a; Government of Canada, 2007; Speech from the Throne, 2007).
  • The TLS Portfolio also has provided legal support to the CRA in provincial tax reform initiatives, such as implementing the harmonized sales tax (HST) in Ontario and British Columbia. Harmonization of taxes was first announced as a government priority in the 2011 Speech from the Throne (Speech from the Throne, 2011).
  • The 2007, 2008 and 2012 budgets and the Speech from the Throne 2010 identify the government's commitments to address issues of tax avoidance and abusive tax schemes, and to close tax loopholes. The TLS Portfolio has provided legal support for the CRA's Aggressive International Tax Initiative, with the goal of protecting Canada's tax base (Government of Canada, 2007, 2008a; Speech from the Throne, 2010)
  • The 2011 Speech from the Throne and 2012 federal Budget identified government plans for HST initiatives. The TLS Portfolio has supported the CRA in provincial tax reform initiatives, including the implementation of the HST in Ontario and British Columbia. The TLS Portfolio has also supported other tax-administration agreements with provincial, territorial and Aboriginal governments (Department of Justice, 2012; Government of Canada, 2011a, 2012; Speech from the Throne, 2011).
The structure of the TLS Portfolio also demonstrates its responsiveness to both CRA and federal government priorities. The CRA adjusts its priorities every year based on the federal budget (Canada Revenue Agency, 2011, 2012). As the ADAG, TLS Portfolio sits on the CRA's management committee, the TLS Portfolio is aware of how the CRA's priorities are aligned with federal government priorities. This is just one example of the close working relationship between the CRA and the TLS Portfolio, which enables the Portfolio to react in a way that supports both CRA and government priorities.

Another example of the TLS Portfolio's responsiveness to the CRA is the organization of the LSU's work around 20 different areas of the law identified to be the most important to support the CRA's priorities and mandate. These specialized groups focus on CRA's priorities and adapt in response to priority changes within the CRA.

The TLS Portfolio's work also supports the Department of Justice in achieving its strategic outcomes — in particular, the Department's second outcome, "a federal government that is supported by effective and responsive legal services". This outcome is supported by the TLS Portfolio's responsiveness to government and CRA priorities (discussed above) and by the Portfolio's provision of high quality legal services. These will be discussed further in the following section on performance.

4.1.3. Alignment with Federal Roles and Responsibilities

Under the Department of Justice Act, Justice Canada has a mandate to support the roles of the Minister of Justice and Attorney General of Canada. By providing legal advice and assisting the CRA in drafting legislation and developing new services and policies to support government priorities, the TLS Portfolio helps to fulfill Justice Canada's mandate to advise federal department heads on all matters of law connected to their departments (s. 5(b)). By representing the CRA in litigation involving tax and other issues, the Portfolio fulfills the responsibilities under the Department of Justice Act to "conduct all litigation for or against the Crown or any department" (s. 5(d)). As TLS Portfolio counsel have a responsibility to ensure that the CRA's actions and legislative and policy initiatives align with federal legislation (such as the Canadian Human Rights Act and the Canadian Bill of Rights), the Portfolio also assists the Minister in ensuring "that the administration of public affairs is in accordance with the law" (thus fulfilling requirements outlined in Section 4 of the Department of Justice Act).

4.2. Performance — Achievement of Expected Outcomes

According to the 2009 Treasury Board Policy on Evaluation, evaluating performance involves assessing effectiveness, as well as efficiency and economy. The subsections below discuss the effectiveness of the TLS Portfolio — in other words, the extent to which the Portfolio is achieving its expected outcomes.

4.2.1. Quality, Timeliness and Responsiveness of Litigation Services and Legal Advice

The evaluation found a high level of satisfaction with TLS Portfolio services. Observations regarding the high quality, timeliness, and responsiveness of Portfolio services are supported by multiple lines of evidence and from the perspectives of both counsel and the CRA.

In providing legal services, the TLS Portfolio is guided by a set of service standards intended to set service delivery expectations for both Portfolio counsel and the client. These standards are designed to ensure that services provided are clear, practical, timely, courteous and respectful, responsive to client needs, and appropriate to the CRA's policy and program objectives. Footnote 14 Multiple lines of evidence indicate that the TLS Portfolio service standards are being met.

According to the results of the 2005 Public Service Employee Survey, most Portfolio counsel believe that the service standards are clearly defined and regularly applied by counsel (Government of Canada, 2005). Footnote 15 Although more recent Public Service Employee Surveys (i.e., those conducted in 2008 and 2011) did not ask specifically about service standards, other lines of evidence indicate that service standards continue to be met. Almost all key informants representing both Justice Canada and the CRA believe that the TLS Portfolio complies with its service standards. Audit reports confirm that the service standards are monitored by the Portfolio Office.

In addition to findings about the Portfolio service standards, which address the quality, timeliness and responsiveness of legal services, the evaluation provides further evidence of positive results with regard to these three aspects.

Quality

Almost all lines of evidence indicate that TLS Portfolio services are perceived (by both the CRA and Justice counsel) to be of high quality. The results of Client Feedback Surveys conducted by Justice Canada in 2008 and 2011 were generally positive regarding TLS Portfolio services; in 2008 and 2011, the TLS Portfolio scored above 8 out of 10 with regard to the overall satisfaction level or overall quality of legal advisory and litigation services, Footnote 16 indicating a high level of satisfaction among CRA employees (Department of Justice, 2008, 2011). Similarly, in the 2008 Public Service Employee Survey, almost all TLS Portfolio respondents agreed or strongly agreed that the Portfolio provides high-quality services to its clients (Government of Canada, 2008b). The findings from the key informant interviews, case studies and focus groups provide further confirmation that the TLS Portfolio continues to provide high-quality litigation and legal advice, as the vast majority of those representing the CRA expressed general satisfaction with TLS Portfolio legal services.

The long-term relationship between the CRA and TLS Portfolio counsel, in particular, was highlighted as a major factor contributing to these high levels of satisfaction and perceptions of high quality. This positive, ongoing relationship means that TLS Portfolio counsel have a good knowledge of the CRA's requirements, policies and practices, and as a result, can better assist the CRA in developing appropriate solutions and approaches. The assignment of Portfolio lawyers in the TLS Portfolio's regional offices to provide advice to the International and Large Business Directorate (ILBD) was also noted as exemplifying the positive, close working relationship between TLS Portfolio counsel and the CRA.

Timeliness

In general, both CRA and TLS Portfolio employees believe that the Portfolio provides timely service. Approximately three quarters of TLS Portfolio counsel surveyed believe that the Portfolio is above average or excellent in responding to legal requests in a timely manner (73%), in meeting CRA deadlines (79%), and in meeting internal department deadlines (75%). According to the results from the 2008 and 2011 Client Feedback Surveys, CRA employees also agree that TLS Portfolio services are timely; in both years, the TLS Portfolio received scores above the departmental target of 8 out of 10 overall for both litigation and advisory services (see Table 4) (Department of Justice, 2008, 2011). In addition, the majority of those interviewed as key informants or as part of the case studies (representing both the CRA and TLS Portfolio counsel) agreed that the Portfolio generally meets time deadlines.

Table 4: CRA Ratings of the Timeliness of TLS Portfolio Services
Service Type 2008
(score out of 10)
2011
(score out of 10)
Overall 8.2 8.3
Litigation services 8.6 8.2
Advisory services 8.1 8.3

Source: Department of Justice Client Feedback Surveys from 2008 and 2011

These findings were confirmed by the file review, which revealed that most client requests were addressed within 10 days, and none of the files reviewed had missed any client-imposed deadlines. Footnote 17 Of the litigation files reviewed, one court deadline was missed due to an administrative oversight, which was corrected through an additional court procedure.

Responsiveness

The evaluation generally found that the CRA considers the legal services it receives from the TLS Portfolio to be responsive to their needs. Footnote 18 Just as the long-term relationship between the Portfolio and the CRA was found to contribute to the Portfolio's ability to provide high-quality services, this relationship was also credited by both Justice Canada and CRA key informants as a key factor contributing to the TLS Portfolio's responsiveness to the needs of the CRA.

The responsiveness of the TLS Portfolio to strategic CRA priorities is demonstrated through its participation on the CRA management committee and regional committees, through its support of CRA initiatives such as the Aggressive International Tax Initiative, and by assigning lawyers to work with the ILBD at the audit stage.

The TLS Portfolio also demonstrates its responsiveness to the needs of CRA through its work with CRA officers on individual files. According to key informant and case study interviews, TLS Portfolio counsel have a good knowledge of CRA's requirements, policies and practices — knowledge which allows the Portfolio to better assist the CRA in developing appropriate solutions. The Client Feedback Survey results confirm this, as in 2011, the Portfolio scored 8.5 out of 10 for both legal and advisory services with regard to its "understanding of the nature of the issue for which assistance was sought" (surpassing the departmental target of 8.0) (Department of Justice, 2011).

Some of the findings indicate that there may be a difference in perspective on some aspects of responsiveness between TLS Portfolio counsel and CRA personnel, namely providing updates and involving CRA in developing legal strategies. Based on the Client Feedback Survey, CRA respondents report lower satisfaction in these two areas of responsiveness, which, in 2011, are at or just below benchmarks established by the Portfolio for itself (see Table 5) (Department of Justice, 2008, 2011).

Table 5: CRA Perspectives on Indicators of Responsiveness

Responsiveness Indicators
2008
(score out of 10)
2011
(score out of 10)
Advisory Litigation Advisory Litigation
Regularly provided informative progress reports or ongoing feedback on the status of requests 7.8 8.2 7.7 7.9
Involved departments/agencies in the development of legal strategy and positions 8.1 8.3 7.8 7.8

Source: Department of Justice Client Feedback Surveys from 2008 and 2011

However, other lines of evidence support the interpretation that this survey finding may not reflect a need to provide more updates or to involve the CRA more in the development of legal strategies. Rather, they point to a need to improve communication between the Portfolio and the CRA and to articulate more clearly expectations about the level of involvement in certain types of files. Key informant interviews, case studies and focus groups all indicate that for higher-profile files (high-risk, higher complexity, project files), the consultation with CRA, provision of updates and involvement of CRA in the development of legal strategies is considered appropriate, and CRA representatives expressed satisfaction with Portfolio services. Counsel surveyed (see Table 6) report that regular updates/progress reports are being provided, and a smaller proportion, but still a majority, of counsel report that on the majority of their files in the last two years, they have involved the CRA in the development of legal strategies and positions. Audit reports confirm that the Portfolio maintains appropriate, continuous and ongoing communication with the CRA.

Table 6: Consultations and Collaboration with the CRA (n =159)
Thinking of files you have been involved with over the last two years, how often have you or a member of the legal team...
  Frequently (80%-100%) Regularly (50%-79%) Occasionally (25%-49%) Rarely
(1%-24%)
Never
(0%)
NA DK NR
Provided CRA with regular updates /progress reports? 56% 28% 8% 4% 1% 3% 0% 0%
Consulted with CRA to understand the nature of the legal problem? 40% 31% 13% 13% 1% 3% 0% 0%
Involved CRA in the development of legal strategy and positions? 34% 31% 20% 11% 2% 3% 0% 1%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.

The difference in perception may be based on a different opinion on the appropriate involvement of CRA litigation officers on files where counsel are using the resolution process. Some CRA evaluation participants involved on these files identified a desire for more involvement and updates. As discussed in more detail in Section 4.3.2, the resolution process is intended to reduce interactions with the CRA in an effort to contain legal costs. Additional communication to litigation officers on the respective roles of counsel and litigation officers in these files could be beneficial, as the resolution process represents a significant change in the way files are managed.

4.2.2. Legal Risk Identification and Management

LRM is "the process of making and carrying out decisions that reduce the frequency and severity of legal problems that prejudice the government's ability to meet its objectives successfully" (Department of Justice, 2007b). It includes the identification and assessment of potential legal risks whereby the CRA, with the assistance of the TLS Portfolio, monitors its activities for potential legal risks and assesses the risk. Upon identification and assessment of legal risks, the CRA and the Portfolio work together to mitigate legal risks to the extent possible by addressing policy and legal issues, such as through changes to practices or policies, or by proposing amendments to legislation and/or regulations. Once legal risk has materialized, the Portfolio undertakes measures to manage and reduce the potential costs (monetary and otherwise) that could result (Department of Justice, 2007b).

Legal risk identification and assessment

Evaluation results indicate that the TLS Portfolio has practices in place to support timely identification of legal risks. For example, the involvement of Portfolio lawyers at the audit stage through the ILBD means that legal risks can be identified and addressed earlier than if counsel were brought in at later stages (e.g., at the litigation stage). Documents and key informant interviews identify that the TLS Portfolio's involvement on CRA national and regional risk management committees allows the Portfolio and the CRA to collaborate on identifying legal risk, which, in turn, supports timely identification of legal risk by the Portfolio. In addition, the key informant interviews and case study results provide evidence that the ongoing relationship and regular interaction between the TLS Portfolio and the CRA supports timely risk identification. According to some key informants, the TLS Portfolio involvement in CRA risk management committees keeps the Portfolio up to date on upcoming files, allowing it to pay extra attention to significant files. The CRA also works closely with the TLS Portfolio to keep the Agency's important issues list up to date. Footnote 19

Data from iCase provide evidence that the TLS Portfolio is effective in assessing legal risks in a timely manner after the opening of a file. Most (93%) of the Portfolio's litigation files were assessed for legal risk in the first 30 days after they were opened. Of the approximately 50% of advisory files that were assessed for legal risk, most (91%) were also assessed within 30 days.

Although iCase data reveal that half of the advisory files were not formally assessed for legal risk, this does not mean that the Portfolio did not discuss legal risk with the CRA. Key informants and focus group participants noted that the Portfolio often provides the CRA with informal, more narrative accounts of risk levels rather than specific risk levels. This is particularly the case for advisory files, given that Justice Canada's legal risk assessment process is less standardized for advisory files. Justice Canada's LRM grid does not apply as readily to advisory files as it does to litigation files. Footnote 20

Timely communication of initial legal risk assessment

Evaluation results indicate that, in general, the Portfolio achieves timely communication of legal risks to the CRA. Almost all key informants representing the CRA agreed that the TLS Portfolio identifies legal risks and communicates them to the CRA proactively and in a timely manner. The results of the legal counsel survey support this. Of the 133 counsel surveyed who offered an opinion, almost three quarters (74%) said that the TLS Portfolio is excellent or above average in providing timely assessments of legal risk, so that it can be factored into decision making. Footnote 21

The evaluation did find some discrepancies in the level of communication about legal risk on files that the TLS Portfolio settles under the resolution process. Some CRA participants revealed that Portfolio counsel have different practices when it comes to discussing legal risk with the CRA on these files; some counsel tend to contact the CRA about legal risks and some do not. In addition, CRA employees differ in their opinions on whether it is necessary for the Portfolio to discuss legal risk with them on these files. These observations may indicate an opportunity for clarifying the communication of risk assessments on files subject to the resolution process.

Reassessment of legal risk

Counsel are expected to reassess legal risk to ensure that the client and managers within Justice are kept apprised of any significant changes to the file that would affect legal risk. In fact, the TLS Portfolio has a policy of mandatory risk assessments at pleading and post-discovery for litigation files.

Evidence indicates that risk reassessment is practiced particularly with regard to litigation files (as one would expect, given the inherent challenges associated with assessing risk on advisory files). According to iCase data, for files opened between 2007/08 and 2011/12, legal risk was reassessed at least once on half of litigation files, and the data confirmed that files continued to be monitored, as 13% of files were assessed twice, 9% were assessed three times, and 27% were assessed four times or more. These data under-report reassessments, as only changes in legal risk are recorded.

Whether reassessments of legal risk are occurring when they should be, based on the TLS Portfolio policy, could not be confirmed. Information on when the reassessment occurs during the life of the file is not entered into iCase, and a reassessment is not indicated if the risk level did not change. The available evidence is from the file review; of the litigation files whose risk had been reassessed, it was most commonly reassessed after the appeal was filed or after a court decision, which is later than the mandatory pleading and post-discovery reassessments.

Although not providing information on the precise timing of reassessment, other lines of evidence indicate that the TLS Portfolio is reassessing legal risk on files responsibly. Of the 139 respondents who provided an opinion, almost three quarters (73%) said that the TLS Portfolio is above average or excellent at reassessing legal risk when factors change that affect the level of risk. Footnote 22 Key informants and case study results provide further evidence that the Portfolio manages legal risk assessment on an ongoing basis. Changes are made to legal risk levels when necessary. Key informants mentioned that, if the profile of an issue covered by a file increases, the legal risk level may be increased to reflect any added risk. Case studies showed that legal risk was reassessed and raised at key points — such as when litigation cases progressed through the courts.

Clear and consistent communication of legal risk

The evaluation results were generally positive regarding the TLS Portfolio's communication of legal risk to the CRA. Overall, most key informants said that the Portfolio uses clear, consistent language to describe legal risk, and key informants representing the Agency generally agreed that the Portfolio keeps them well informed about legal risk. Two out of three case studies revealed that the Portfolio described legal risk clearly and consistently, and that opinions describing legal risk included a discussion of the factors contributing to the risk. In addition, of the 110 survey respondents who offered an opinion, a majority (59%) indicated that the TLS Portfolio is above average or excellent at using consistent legal risk ratings across Portfolio files. Footnote 23 Similarly, a majority (60%) believes that the Portfolio uses consistent language to communicate legal risk so that the CRA can understand the comparative legal risks across files. Footnote 24

Structures, tools and processes for assessing and communicating legal risk

The TLS Portfolio uses a number of structures, tools and processes available to assist in the assessment and communication of legal risk. For example:

  • Early Warning Notes are a briefing tool used by counsel to alert senior officials of activities or developments in high-impact cases; by completing a brief (one-page) Early Warning Notes template, counsel inform senior officials of important events, such as upcoming hearings, anticipated or rendered decisions, etc.
  • The Portfolio's Adverse Reporting Procedure is another briefing process. The Procedure sets out a course of action, timelines and reporting structure to be followed in reporting on an adverse decision from the Tax Court of Canada and other courts.
  • Risk management committees are structures to facilitate communication related to risk impact and management for existing and upcoming files. Members of the TLS Portfolio sit on a number of risk committees, including the CRA's regional risk management committees, and the tri-departmental Risk Management Committee, which involves representatives from the departments of Justice, Finance and the CRA.
  • The LRM grid is a tool developed for the assessment of legal risks as part of the Department of Justice's 1999 LRM Initiative. The grid operates on two dimensions: the likelihood of an adverse outcome and the impact on the client department or agency or the government as a whole. Using the grid, legal risks are assigned a number ranging from 1 (low likelihood and minor impact) to 9 (high likelihood and significant impact).

The evaluation found that the Adverse Reporting Procedure and Early Warning Notes are effective tools/processes for communicating legal risk within the Portfolio. According to legal counsel survey results, the majority of litigation respondents agreed that the Adverse Reporting Procedure is clear in terms of when to brief/report (69%); effective in notifying senior management about significant files (68%); clear in terms of what to include in briefs/reports (65%); and clear in terms of to whom to brief/report (62%) (see Table 7). Although litigation survey respondents were substantially less familiar with the Early Warning Notes than with the Adverse Reporting Procedure, among those who were aware, approximately twice as many agreed than disagreed that the Early Warning Notes process is clear and that it is effective in notifying senior management about significant files (see Table 8). The key informant interviews support the usefulness of these tools. Key informants highlighted the Portfolio's adverse decisions procedure as a useful risk management tool, and many key informants said that the Early Warning Notes are an effective tool for communicating legal risks to the CRA and the TLS Portfolio.

Evaluation evidence also indicates that the TLS Portfolio's involvement on risk committees is useful with regard to communicating with the CRA about legal risks. According to most key informants representing both Justice Canada and the CRA, these committees, whose members meet to discuss upcoming files, provide an opportunity for the Portfolio and the Agency to engage in discussions on risk impact and management. Key informants noted that, through involvement on CRA committees, the Portfolio informs the Agency of risks, which assists it in considering risk in decision making.

Evaluation results are more divided concerning the usefulness of the LRM grid. About one third (34%) of the counsel survey respondents found the LRM assessment grid/matrix useful, while a quarter (25%) of the respondents indicated they were neutral and about another quarter (26%) said that the tool was not useful. Similarly, although some key informants said that the grid is useful, others identified that its limited application and lack of applicability to advisory files make it less useful. However, it is recognized that the LRM grid is currently under review. The The Early Warning Report, which provides a short overview of significant anticipated hearings and decisions on the Adverse Reporting Procedure is another effective tool for communicating legal risks.

Table 7: Adverse Reporting Procedure (Litigation only — n=130)
To what extent do you agree with the following statements about the Adverse Reporting Procedure?
  Strongly agree Agree Neutral Disagree Strongly disagree NA DK NR
The process is effective in notifying senior management about significant files. 16% 52% 15% 3% 1% 2% 11% 1%
The process is clear in terms of when to brief/report. 15% 54% 18% 7% 2% 2% 3% 0%
The process is clear in terms of whom to brief/report. 15% 47% 22% 9% 2% 2% 4% 1%
The process is clear in terms of what to include in briefs/reports. 12% 53% 19% 9% 2% 2% 4% 0%
The process is too onerous. 9% 19% 35% 27% 4% 2% 5% 0%
The process creates delays in handling the file. 8% 23% 30% 28% 5% 2% 5% 0%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.

 

Table 8: Early Warning Notes (Litigation only — n=130)
To what extent do you agree with the following statements about Early Warning Notes?
  Strongly agree Agree Neutral Disagree Strongly disagree NA DK NR
The process is effective in notifying senior management about significant files. 5% 38% 13% 3% 0% 3% 37% 1%
The process is too onerous. 5% 16% 28% 22% 1% 3% 25% 1%
The process is clear in terms of whom to brief/report. 4% 32% 19% 15% 1% 2% 26% 2%
The process is clear in terms of what to include in briefs/reports. 2% 32% 22% 14% 1% 3% 25% 2%
The process is clear in terms of when to brief/report. 2% 28% 19% 19% 2% 3% 26% 1%
The process creates delays in handling the file. 2% 12% 28% 25% 2% 3% 28% 1%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.

Management and mitigation of legal risk

Evaluation results are generally positive regarding the TLS Portfolio's contributions to risk management and mitigation. Audit reports have concluded that the Portfolio has appropriate risk management practices — which include continuous communication with the CRA and continuous monitoring of legal risk (Internal Audit Branch, 2011a, 2011b). Client Feedback Survey results from 2008 and 2011 indicate that the Portfolio plays a key role in providing the Agency with advice and assistance to identify and mitigate key legal risks, and show that CRA clients are satisfied with the degree to which the Portfolio involves them in the review or development of mitigation options (see Table 9) (Department of Justice, 2008, 2011).

Table 9: CRA Ratings of the TLS Portfolio's Services Regarding Legal Risk

Indicators Related to Legal Risk Identification, Management and Mitigation
2008
(scored out of 10)
2011
(scored out of 10)
Overall Litigation Advisory Overall Litigation Advisory
Legal risk management 8.2 8.6 8.1 8.3 8.3 8.1
Worked with client to identify legal risks   8.4 8.3   8.2 8.3
Involved client in review/development of legal options to mitigate identified legal risks   8.5 8.3   7.9 8.1

Source: Department of Justice Client Feedback Surveys from 2008 and 2011
Note: Shaded cells indicate data not available in the survey reports.

Several lines of evidence (key informant interviews, file review, legal counsel survey and case studies) indicate that the CRA considers the TLS Portfolio legal advice in strategies to prevent, mitigate and/or manage risk. Evidence indicates that the Portfolio legal advice and legal risk, in general, are considered by the CRA in decision making. However, the CRA may choose to accept legal risk for a variety of reasons. For example, case studies revealed that the CRA may prefer not to settle in certain situations (such as when dealing with judicial review applications on remission orders) based on policies or principle, despite suggestions from the Portfolio to settle based on the assessment of the likelihood of success.

The evaluation found that the Portfolio considers legal risk and complexity in deciding which counsel to assign to files — a practice that, in turn, helps in managing risk. Documents indicate that the Portfolio's risk identification and assessment processes are used to assign files to appropriate legal counsel, based on their knowledge, skills, experience level and capacity. Footnote 25 According to key informants, the Portfolio's practice of matching the expertise of legal counsel with the complexity or risk level of files is a key way to manage legal risk by ensuring that the work on files is carried out by qualified, appropriate counsel. Evidence from internal documents, key informant interviews, and the file review supports this observation.

4.2.3. Enhanced Understanding of Legal Issues, their Implications and Potential Risks within the CRA

Although the CRA is considered a legally astute client, with two thirds of legal counsel surveyed reporting that the CRA's understanding of its legal issues is above average or excellent, the TLS Portfolio is still thought to have enhanced this understanding. Legal counsel survey respondents (81%) and most key informants representing both Justice Canada and the CRA agreed that the TLS Portfolio has helped to improve the Agency's understanding of legal issues and their implications. The role that the Portfolio plays in supporting the CRA's understanding of its legal issues, their implications, and potential risks comes from a variety of activities.

  • The close working relationship between the CRA and the TLS Portfolio is evidenced in the Portfolio's involvement on the committees that are led by, or also involve members of, the CRA (including the CRA Management Committee, CRA risk committees, the CRA's Oversight for Procurement Strategy Committee, the General Anti-Avoidance Rule Committee, the Adverse Decision Committee, the Bankruptcy/Insolvency – Dissolved Corporation Committee, the Commercial Taxation Committee, the Aboriginal Issues Committee, the Policy Committee, the National Joint Implementation Committee, the Fairness Committee, etc.). According to key informants, these committees allow the Portfolio the opportunity to share their legal expertise with the CRA on certain issues, raise legal risk issues, and offer suggestions for approaching the risk — all of which enhance the Portfolio's understanding of the issues and associated risks.

    In addition, the consultations between Portfolio counsel and the CRA on individual files were cited by key informants and case study interviewees as contributing to the Agency's understanding of legal issues and their implications. In particular, case study interviewees (both Justice and CRA) thought that the consultations between the Agency and the Portfolio were effective. Contact was described as being "constant", and it was considered helpful in identifying issues and making other involved departments aware of these issues. Based on the description of the working relationship between the CRA and the Portfolio on these case study files, the Agency was heavily involved in terms of reviewing submissions, preparing for discovery, and discussing strategy. The enhanced understanding worked in both directions, as the CRA explained its procedures to counsel and counsel described legal issues to the CRA.

  • The timely, clear communication of legal risks to the CRA by TLS Portfolio counsel helps build this knowledge of legal issues and their potential implications, as does the Portfolio's involvement on CRA national and regional risk committees (discussed in more detail in Section 4.2.2).

  • Key informants pointed to the joint CRA and TLS Portfolio training sessions, shared learning events and practice groups as key factors contributing to this improved understanding. Audit reports (2011) and internal documents provide further confirmation that the TLS Portfolio is striving to fulfill commitments to training CRA officials made through the Memorandum of Understanding Respecting a Professional Development Partnership between the Canada Revenue Agency and the Department of Justice Canada. Records show that between 2009 and 2012, multiple training sessions were offered to the Agency by Portfolio counsel through headquarters, the CRA LSU, and the regions (including the British Columbia, Alberta, Manitoba/Saskatchewan, Ontario, Quebec and Atlantic regions). Lists published by the CRA's Compliance Programs Branch confirm that the CRA provides a number of training sessions (on topics ranging from corporate reorganizations to international transactions) and reserves a limited number of seats at each session for Justice counsel. Footnote 26

Even with a legally astute client like the CRA, misunderstandings are possible. In particular, the legal counsel survey results indicate some potential issues in terms of knowing when to engage the Portfolio, the importance of identifying legal risks, and the potential impacts of legal risks. In all three areas, only about half or less of respondents rated CRA officials' understanding as above average or excellent, even when considering only those counsel who offered an opinion. Footnote 27 Counsel in LSUs and at headquarters were more likely to assess the understanding as above average or excellent than were counsel in regional offices (see Table 10). In interviews, a few Agency participants appeared to misunderstand counsel's responsibility to communicate legal risk, considering it overly pessimistic on occasion. Based on these results, communicating the role of the CRA and counsel in identifying and assessing legal risk may be useful for increasing understanding.

Table 10: Perspectives of TLS Portfolio on the Level of Understanding of CRA Officials, by Location of Work
Based on your experience over the past two years, how would you assess the level of understanding of CRA officials with whom you have worked, with respect to the following?

When to Engage the Portfolio
  Above average/ Excellent Average Below average/ Poor N/A or no response
Headquarters
(n = 19)
53% 37% 0% 11%
LSU
(n = 21)
57% 24% 14% 0%
Regional office
(n = 119)
41% 30% 12% 16%
Overall
(n =159)
45% 30% 11% 15%

The Importance of Identifying Legal Risks*
  Above average/ Excellent Average Below average/ Poor N/A or no response
Headquarters
(n = 19)
58% 32% 11% 0%
LSU
(n = 21)
62% 24% 10% 5%
Regional office
(n = 119)
37% 38% 19% 6%
Overall
(n =159)
43% 36% 16% 5%

The Potential Impacts of Legal Risks*
  Above average/ Excellent Average Below average/ Poor N/A or no response
Headquarters
(n = 19)
47% 48% 0% 5%
LSU
(n = 21)
62% 19% 14% 5%
Regional office
(n = 119)
32% 40% 23% 7%
Overall
(n =159)
38% 38% 18% 6%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.
* Results are statistically significant at the p=.000 level using Chi-square.

Case studies and key informant interviews confirm these results. In a few interviews, clients sometimes appear to have misinterpreted counsel's discussion of legal risk as being pessimistic and may not have recognized the role of counsel in informing clients of potential legal risks to ensure "no surprises". Given that focus group discussions with CRA litigation officers in the regions demonstrated an understanding of counsel's role in discussing legal risk, the level of understanding may be very dependent on individual factors such as years of experience. These results indicate that there may be a difference in the level of understanding within CRA and point to potential training needs within the Agency with which the Portfolio might be able to assist. Footnote 28

4.2.4. Supports (Competencies, Tools, Structures and Resources) for TLS Portfolio Counsel

The evaluation found that, generally, counsel believe that they have the appropriate supports in order to meet the service standards set for the TLS Portfolio and provide timely, responsive, high-quality legal services. However, there are areas for potential improvement in terms of tools, structures and training.

Tools

Evaluation results indicate that, overall, TLS Portfolio counsel are satisfied with available tools to support them in their work. In the 2005, 2008 and 2011 Public Service Employee Surveys, the majority of Portfolio counsel (as many as 99% in 2005 and 90% in 2008) reported that they have the materials and equipment to do their job (see Table 11) (Government of Canada, 2005, 2008b, 2011b). However, other lines of evidence (key informant interviews and the legal counsel survey, in particular) reveal some potential issues with specific tools, as discussed below.

Table 11: TLS Portfolio Respondents' Opinions on the Availability of Materials and Equipment to do their Work
I have the materials and equipment I need to do my job.
Survey Year Agree Neither agree nor disagree Disagree Don't know or N/A
2005 99%   2% 0%
2008 90% 1% 10% 0%
2011 86% 4% 10% 0%

Source: Public Service Employee Surveys for 2005, 2008 and 2011
Note: Summation of percent values for rows may not equal 100% due to rounding.
Shaded cells indicate data not available in the survey reports.

Fiscal Path and Justipedia.

The Fiscal Path is part of the Department's intranet that supports the TLS Portfolio with internal distribution of Portfolio-related information. For most of the evaluation period, software updates were implemented within the Fiscal Path and the Knowledge Management database which allowed users to contribute legal precedents (legal opinions, pleadings, facta, case law, statutes and other legal content) and to perform full-text searches in the database. This database platform was used by the TLS Portfolio, as well as other areas within the Department, and was one of several such internal databases being used by Department counsel.

Since data were collected for the evaluation, the Fiscal Path has changed, particularly with respect to its interface with Justipedia, the new, unified departmental database for legal precedents that was launched in early 2012. Given the relatively recent development of Justipedia and the changes made to the Fiscal Path, the evaluation findings are directed at systems that are now different. However, the findings are useful as a baseline for later studies of satisfaction with these knowledge management tools.

Although a few key informants noted that the Fiscal Path contains a lot of useful information, the evaluation found some issues with the usability of the Fiscal Path prior to the changes in late 2012. Portfolio audit reports in 2011 revealed that personnel in both the Prairie Region and Ottawa Section did not consider the Fiscal Path to be user-friendly (Internal Audit Branch, 2011a, 2011c). In addition, less than half of legal counsel survey respondents (42%) found the Fiscal Path useful, and among those who did not use it, a relatively high percentage (27%) said they did not do so because they did not know how.

As with the Fiscal Path, the evaluation found evidence of some issues with the usability of Justipedia. Less than half of legal counsel survey respondents (42%) found Justipedia useful in managing their work, and among those who did not use Justipedia, the two most common reasons given were simply that there was no occasion to use it in their work and that they did not know how to use it. Footnote 29 In addition, a few key informants noted that work is needed on Justipedia to improve ease of access. However, key informants also noted that Justipedia was still under development and that it would later contain an extensive database of legal opinions, which will be useful.

Litigation Support Software (E-discovery software).

E-discovery software uses digitized data to enable organizing, searching and coding documents. According to internal documents, a national e-discovery practice group created by the TLS Portfolio provides the CRA as well as TLS Portfolio counsel with expertise on e-discovery issues, and helps the CRA to meet related production obligations. Based on interviews with key informants, the use of e-discovery software is not widespread within the Portfolio. The evaluation found several potential reasons for this. Many files may not involve the volume of material that would necessitate the use of e-discovery software, and the reciprocal review and provision of e-discovery data could be very expensive for the taxpayer. The need for administrative support to scan and input documents into e-discovery software is also considered a barrier to its greater use within the Portfolio. A few key informants also noted that the current e-discovery software is outdated, which has resulted in their being unable to read the e-discovery data provided by opposing counsel. These key informants reported that more up-to-date and better systems are available.

Technology generally.

Some key informants noted that the Portfolio is behind in technology. This appeared to possibly depend on the region, with some regions commenting on this more than others. For example, key informants noted that computers have limited capability to support webinars; an insufficient number of working screens are available to support videoconferencing; and software in some regional offices is out of date, which makes transferring documents difficult. They also expressed general concern about falling behind the private sector in terms of available technology. Departmental policies created some issues, such as not allowing counsel to load the Income Tax Act on mobile devices so that they could access it easily in court or while travelling. In addition, contracts for mobile devices mean that coverage is not always optimal; mobile device providers do not provide coverage evenly across the country, which creates difficulties for counsel who are going to court locations not covered as well by selected providers.

Structures

The TLS Portfolio has a number of structures in place to assist Portfolio counsel in providing high-quality, coordinated, "whole-of-government" services. As mentioned in Section 2.1, the National Coordination Committees (12 in total) coordinate specific areas of the law to enhance the quality of tax law services and ensure their effective delivery. Many of these committees involve members of both Justice Canada and the CRA, who meet to discuss files, trends and legal risk. As part of their role, these committees conduct structured review and approval of important facta and provide updates on legal developments to improve the consistency of legal positions nationally. As identified in Section 4.2.2, the Portfolio has a process in place to assign appropriate counsel to files; files are assigned to counsel considering the experience and skills of individual counsel as well as the complexity, risk level and significance of the files.

Although the TLS Portfolio does not have a formal mentoring program where senior counsel are assigned to oversee specific junior counsel, it does practice a more informal form of mentoring. Mentoring occurs within the Portfolio in a couple of different ways. As part of its fast-tracking initiative to develop junior counsel, the Portfolio assigns senior counsel to files to oversee junior counsel, or to lead teams that include junior counsel. The senior counsel often act as mentors or coaches to the junior lawyers on these specific files. The Portfolio also has an "open door" policy, where junior counsel are encouraged to approach senior counsel for assistance and advice.

Evaluation results show that, in general, these structures are working well and are viewed positively by Portfolio counsel. More than two thirds (68%) of legal counsel survey respondents agreed that the National Coordination Committees are useful in managing their work, and 65% of survey respondents who work most frequently on litigation files said that structured reviews or approvals of facta are useful. A few key informants provided added support for these results by indicating that the National Coordination Committees are helpful tools for sharing expertise.

Evaluation results are also positive with respect to the TLS Portfolio's mentoring process. The Portfolio's internal mentoring practices were identified by survey respondents as useful in managing their work, and about three quarters (74%) of the survey respondents agreed that, at least half the time, appropriate mentoring and/or supervision has taken place in the files in which they have been involved over the last two years. Focus group participants also mentioned the Portfolio's informal mentoring practices (noting the benefits of training sessions that have taken place on how to coach junior lawyers), as well as Justice Canada's national mentoring program. A few key informants noted the importance of assigning senior counsel, at times, to more low-risk files so they can act as mentors to junior Portfolio counsel.

According to the legal counsel survey results, the majority (69%) of senior managers said that they found the file assignment process useful in managing their work (see Table 12). Footnote 30 In addition, a few key informants expressed particular satisfaction with the process, noting that it allows for a more equitable distribution of the workload, and improves awareness of the legal opinion requests being made.

Table 12: Percentage of TLS Portfolio Counsel who Find the File Assignment Process Useful, by Level of Experience
How useful have you found the [file assignment process] in managing your work?
  Useful Neutral Not useful Have not used No response
LA (%) n = 146 43% 36% 13% 8% 1%
Manager – LC (%) n = 13 69% 15% 8% 8% 0%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.
* Results are statistically significant at the p=.000 level using Chi-square.

Although the evaluation found these structures useful overall, it revealed some notable differences in the perceptions of national and regional Portfolio counsel on these structures that are worth highlighting. The assessment of these structures appears to depend on the location of counsel within the Portfolio; those located at headquarters were generally more positive about them. A higher proportion of counsel at headquarters found structures and tools such as the National Coordination Committees, practice directives and file assignment process more useful in managing their work than did counsel in regional offices or LSU lawyers (see Table 13). Similarly, lawyers at headquarters (84%) were more likely than lawyers in regional offices (73%) and the LSU (71%) to indicate that, at least half of the time, appropriate mentoring and/or supervision was included in managing files.

Table 13: Percentage of TLS Portfolio Counsel who Find Portfolio Structures Useful in Managing their Work, by Location of Work
How useful have you found the following TLS Portfolio tools or structures in managing your work?

TLS Portfolio National Coordination Committees
  Useful Neutral Not useful Have not used No response
Headquarters (%) n=19 84% 11% 5% 0% 0%
LSU (%) n=21 48% 14% 14% 24% 0%
Regional office (%) n=119 69% 8% 15% 8% 0%
Overall (n=159) 68% 9% 14% 9% 0%

Practice Directives*
  Useful Neutral Not useful Have not used No response
Headquarters (%) n = 19 95% 5% 0% 0% 0%
LSU (%) n = 21 29% 29% 19% 24% 0%
Regional office (%) n = 119 76% 14% 5% 3% 2%
Overall (n=159) 72% 15% 6% 6% 1%

File Assignment Process*
  Useful Neutral Not useful Have not used No response
Headquarters (%) n = 19 68% 26% 0% 5% 0%
LSU (%) n = 21 57% 0% 29% 14% 0%
Regional office (%) n = 119 39% 41% 12% 8% 1%
Overall (n=159) 45% 34% 13% 8% 1%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.
* Results are statistically significant at the p=.000 level using Chi-square.

Training

TLS Portfolio employees seem satisfied with the training opportunities available to them. Results from the 2005, 2008 and 2011 Public Service Employee Surveys indicate that the majority of Portfolio respondents feel that they receive the training that they need (Government of Canada, 2005, 2008b, 2011b). Footnote 31 In addition, in all three surveys, the majority of TLS Portfolio respondents agreed that the training they need is available in their preferred official language; that they have opportunities to receive on-the-job coaching and improve and apply skills; and that they receive support from their supervisor or department regarding career development.

Other lines of evidence provide added support for the adequacy of training within the Portfolio and for the generally high level of satisfaction with available training opportunities. The 2011 audit reports confirm that TLS personnel in the Prairie Region and Ottawa Section complete individual learning plans annually, and are fulfilling Justice Canada's requirements under the Learning Policy for completing a minimum of five days of training (Internal Audit Branch, 2011a, 2011b, 2011c). Overall, the majority (70%) of respondents to the legal counsel survey conducted for this evaluation said that TLS Portfolio training opportunities were useful. Key informants representing Justice Canada expressed a high level of satisfaction with training opportunities provided to Portfolio counsel, indicating that training needs are being met and that high-quality training is provided at both the national Portfolio and regional level. Footnote 32

As identified in Section 4.2.1, in adherence to the Memorandum of Understanding respecting a professional development partnership between the CRA (Compliance Programs Branch) and the Department of Justice, the CRA reserves spaces for Justice counsel in the training sessions it offers. These training sessions, offered in a number of different cities around the country, cover a variety of tax-related issues and topics (including current year losses and losses carried over, shareholder's debt and loans, amalgamations and wind-ups, transactions between corporations and shareholders, provincial income allocation, rollovers under s. 85 (1), related persons and associated corporations, international transactions, corporate reorganizations, etc.). Footnote 33 The TLS Portfolio has recently begun tracking participation in training, and more detailed results will be available for the next evaluation of the Portfolio.

During data collection, it was revealed that the Portfolio was in the process of updating its national training program (the TLS Portfolio Professional Development Program), which has now been completed. The purpose of this program is to ensure that Portfolio employees have access to continuous learning opportunities, which, in turn, helps to ensure that high-quality legal services are provided to the CRA. The 2012-14 TLS Portfolio Professional Development Program encompasses the In-House Continuing Education Program for Legal Counsel, the National Training and Development Program for TLS Portfolio Paralegals, and the Portfolio's National Tax Training event Footnote 34, as well as training provided by the CRA and other external training opportunities Footnote 35. The In-House Continuing Education Program for Legal Counsel is organized into four streams: substantive law, skills, corporate issues, and orientation. Documents describing the training program provide a basic overview of the type, number, level, delivery method, frequency and cost of courses to be provided under each of these streams.

Although perspectives of Portfolio training were generally positive, the evaluation findings do point to some issues, described in the paragraphs below, which might be useful to consider including in the current or future training programs.

The evaluation found evidence of some possible issues regarding career development opportunities. The results of the 2008 and 2011 Public Service Employee Surveys indicate a decline in perceptions about career development opportunities among Portfolio counsel; although three quarters of Portfolio respondents agreed that they have the opportunities to develop and apply the skills needed to enhance their career in 2008, only about a third of respondents agreed in 2011 (Government of Canada, 2008b, 2011b).

In addition, the results of the legal counsel survey conducted for this evaluation suggest a potential gap in intermediate and advanced-level training. The majority of counsel find training useful; however, survey results indicate that counsel who have been with Justice Canada for five years or less find training more useful than more senior counsel. As Table 14 shows, the percentage of counsel who find the Portfolio training opportunities useful in managing their work drops with the years of experience. Although this finding should not be overstated Footnote 36, it is worth mentioning because training initiatives designed to enhance career development could be affected by this potential training gap.

Table 14: Percentage of TLS Portfolio Counsel who Find Training Opportunities Useful in Managing their Work, by Years Employed by Justice Canada
How useful have you found [TLS Portfolio training opportunities] in managing your work?
Years Employed by Justice Canada Useful Neutral Not useful Have not used
Between 1 and 5 years ago (%) (n=50) 80% 10% 4% 6%
Between 6 and 10 years ago (%) (n=24) 58% 29% 13% 0%
More than 10 years ago (%) (n=85) 67% 11% 17% 6%
Overall (n=159) 70% 13% 12% 5%

Source: Survey of legal counsel
Note: Summation of percent values for rows may not equal 100% due to rounding.

Suggested areas for training (stemming mainly from focus groups) that could be most relevant to mid-career or later-career counsel include the following:

  • more training on specific sections of the Income Tax Act;
  • more opportunities to attend training from third-party service providers on business practices of particular types of industry that are often the subject of litigation (e.g., transfer pricing practices used by insurance firms and pharmaceutical companies);
  • more opportunities to attend other sector-specific training, such as training on charities or banking.

Currently, a travel cap is in place that limits counsel's ability to attend tax conferences or off-site training. In light of travel limitations, technological tools (webinars, videos, etc.) were highlighted as especially important in providing training opportunities; as travel budgets are reduced, more online or remote training opportunities (in-house and external) will need to be used. The planned 2012 - 2014 training program indicates provisions for some training to be delivered via WebEx. However, the evaluation found some limitations in the effectiveness of the Portfolio's use of these technologies in training. As mentioned in Section 4.2.4, evaluation results indicate some dissatisfaction with technology used by the Portfolio/Department (a feeling among some Portfolio employees of being behind the private sector in terms of technological capacity). During key informant interviews, Portfolio counsel in some regions noted limited capability for supporting webinars and video conferencing. A few key informants also mentioned that the TLS Portfolio could improve the format of its webinars, as some webinars currently available are short and not as conducive to learning as they could be.

It should be noted that in 2012, the TLS Portfolio began tracking information on training opportunities provided by and available to Portfolio counsel. Therefore, statistics on specific aspects of training (such as the number and types of sessions available, the number of counsel attending each session, etc.) were not available to this evaluation. In addition, the Portfolio does not collect information on the number and types of CRA employees taking part in Portfolio training events but can gather this information from the Agency. This type of tracking of training provided to Portfolio counsel and CRA employees will be useful — both for future evaluations (providing more support for an assessment of the Portfolio's fulfillment of training commitments and obligations) and for the ongoing development of the Portfolio training program.

4.2.5. Strategic Management of Legal Issues and Protecting Crown Interests

For the TLS Portfolio, strategic management of legal issues involves pursuing a national approach to legal issues, providing a consistent approach in addressing and advising on legal issues, and protecting the interests of the Crown in decisions regarding legal issues and strategies. On assessing the Portfolio's strategic management of legal issues, the evaluation considered both the importance of the above-mentioned factors, as well as the degree to which the Portfolio is achieving them.

Evaluation evidence confirms the importance of a national approach to legal advice concerning tax law. Key informants generally agreed that it is essential for Justice to have a national, coordinated approach to tax law. According to documents and key informants, a national approach yields three primary benefits.

  1. It supports the integrity of tax law across the country by ensuring that tax law is consistently applied across the country.
  2. It ensures fairness to taxpayers by ensuring equal treatment. This is very much related to the first point, as a consistent approach is necessary for equal treatment to occur, and perceptions of fairness are essential to the integrity of the system.
  3. It reduces legal risk by reducing inconsistency, which, in turn, reduces the risk of litigation.

Ultimately, the national approach is also seen as protecting the interests of the Crown in the proper administration of justice by ensuring that the positions taken by the TLS Portfolio do not conflict with other positions taken by government; by treating taxpayers consistently and fairly; and by protecting the rule of law.

The TLS Portfolio must act to ensure that the interests of the Crown in the proper administration of justice are protected through its conduct of litigation and in the legal advice given. As with all areas of Justice, the Portfolio is responsible for taking an integrated, whole-of-government approach where its legal advice and litigation positions are consistent across government. This measure is accomplished by consulting within Justice and, where appropriate, with other federal departments/agencies. When conflicting positions arise, the TLS Portfolio will try to resolve the conflict and, when necessary, the ADAG office will provide appropriate briefing within Justice to ensure that senior management is aware of the issue.

Evaluation findings indicate that the TLS Portfolio is achieving its goal of providing a national, whole-of-government approach to legal issues. Most of legal counsel surveyed for the evaluation agreed (or strongly agreed) that the Portfolio provides the Government of Canada and the CRA with a whole-of-government approach to legal issues (62%, rising to 75% when only those respondents who offered an opinion are considered) with very few disagreeing (see Table 15). In addition, the case studies demonstrated a national approach, as both Portfolio counsel and the CRA were well aware of the broader implications of files. Case studies provided examples of measures implemented by the Portfolio and the Agency to ensure that the positions taken were consistent with past positions and less vulnerable to future legal challenges.

Table 15: Percentage of TLS Portfolio Counsel who Believe that the Portfolio Provides the Government of Canada and the CRA with a Whole-of-government Approach to Legal Issues
Please provide your level of agreement with the following statements…
  Agree Neutral Disagree NA NR
The TLS Portfolio provides the Government of Canada and CRA with a whole-of-government approach to legal issues (n=159) 62% 17% 3% 1% 17%

Source: Survey of legal counsel
Note: Summation of percent values for the row may not equal 100% due to rounding.

Similarly, evaluation findings indicate that, in general, the TLS Portfolio provides a consistent and coordinated approach to legal issues. The majority (81%) of legal counsel survey respondents agreed or strongly agreed that the Portfolio takes a consistent approach to legal issues, and most key informants agreed that the Portfolio does a good job at coordinating its functions and positions. Documents (in particular the 2011 audit reports and the 2005, 2008 and 2011 Public Services Employee Surveys) Footnote 37 and key informants cited the Portfolio's good internal communication practices as a factor contributing to a coordinated approach. In addition, internal documents indicate that Portfolio structures and processes (such as the National Coordination Committees Footnote 38 and bi-weekly Portfolio management of the law meetings) help to ensure a coordinated approach across the Portfolio. Its practice of assigning the most experienced counsel to deal with the most complicated, high-risk, high-profile files (discussed in Sections 4.2.4 and 4.3.2) was considered to help reduce inconsistency in the treatment of files and the quality of work.

Although some lines of evidence point to good communication practices within the Portfolio, evaluation findings — particularly from the legal counsel survey — indicate some room for improvement in the Portfolio's communication and collaboration with the CRA LSU. Of the counsel who responded to survey questions on this issue (n =109), 52% considered the Portfolio to be excellent or above average with respect to communication between the Portfolio and CRA LSU, and 18% considered the Portfolio to be below average or poor in involving the CRA LSU.

Similarly, evaluation results indicate that the TLS Portfolio may be able to improve its communications with other specialized sections within Justice Canada. Although the majority (59%) of counsel who offered an opinion considered the Portfolio to be above average or excellent at involving and consulting specialized sections within Justice Canada when appropriate, over one quarter (27%) of legal counsel survey respondents did not offer an opinion. This is worth noting, as counsel could indicate that consultations with specialized sections are not appropriate to their work, and few did. Other lines of evidence indicate the potential for greater involvement of the Public Law Sector (PLS). The file review and key informant interviews provided evidence of little collaboration with the PLS. Although key informants considered the Portfolio's working relationship with the PLS to be good, the documented increase in files with constitutional and Aboriginal law issues may mean that consultations with specialized sections, including the PLS, will become increasingly important. A few key informants noted that, at times, the CRA and the Portfolio could engage the PLS earlier to provide guidance at the policy development stage.

4.2.6. Consideration of TLS Portfolio Legal Advice

The evaluation results regarding the degree to which the CRA considers TLS Portfolio advice in decision making are somewhat mixed. Although some lines of evidence (mainly key informant interviews and case studies) strongly suggest that the Portfolio's advice is considered in most cases, others (the legal counsel survey, in particular) indicate that the degree to which advice is considered may be affected by the file type (advisory versus litigation).

Almost all key informants agreed that the CRA seriously considers the advice given by the TLS Portfolio in decision making. Many key informants mentioned that the fact that the Portfolio's advice is clear, well-reasoned, high-quality, and grounded in solid analysis contributes to its consideration by the Agency. In addition, some key informants noted that disagreements between the CRA's and the Portfolio's opinions are rare; generally, the advice given by the Portfolio supports the direction that the CRA was thinking of taking. Similarly, all case study interviewees agreed that the advice provided by the Portfolio was considered during the case study files. The case studies also provided concrete examples of the Agency's consideration and use of Portfolio advice, as legal advice on these files led to changes in CRA practice and policy, as well as amendments to the Income Tax Act. However, the legal counsel survey results only partially support these findings. According to survey results, advisory counsel are more likely than litigation counsel to think that the CRA considered their legal advice. Most advisory counsel who offered an opinion reported that in at least half of their files, Portfolio advice was considered, whereas litigation counsel were evenly divided between whether Portfolio advice was frequently/regularly or occasionally/rarely considered regarding litigation strategies (see Table 16).

Table 16: CRA's Consideration of Legal Advice/Legal Risk
Thinking of files you have been involved with in the last two years, how often did CRA consider the legal advice/legal risk...
  Frequently
(80%-100%)
(%)
Regularly
(50%-79%)
(%)
Occasionally
(25%-49%)
(%)
Rarely
(24% or less)
(%)
NA
(%)
DK
(%)
In the development or implementation of CRA policies or programs?* (n=29) 35% 31% 10% 3% 7% 14%
To take steps to prevent, mitigate, or manage legal risk? (n=159) 21% 26% 24% 10% 3% 16%
In its discussions with the Portfolio regarding litigation strategies?^ (n=130) 12% 25% 25% 12% 3% 22%

Source: Survey of legal counsel
Note: Summation of percent values may not equal 100% due to rounding.
*Question only asked of those that most frequently work on advisory files (n=29)
^Question only asked of those that most frequently work on litigation files (n=130)

The evaluation focused on the consideration of TLS Portfolio advice, rather than the degree to which the CRA makes decisions that match the advice. This is in recognition of the fact that Portfolio advice is not the only factor that affects CRA decision making. Although many key informants (representing both Justice Canada and the CRA) expressed the opinion that the Portfolio's advice is not just considered but also followed by the CRA most of the time, key informants identified the following factors that may make the CRA more or less likely to consider the Portfolio's advice:

  • If the CRA thinks an issue is factual more so than legal, it may make the final judgement; the Agency tends to accept Justice Canada's advice with regard to legal issues.
  • When legal issues arise, CRA personnel know that they should consult Justice Canada.
  • Some longstanding CRA policies may override TLS Portfolio advice in some cases; where CRA policies differ from Portfolio advice, the CRA will be less likely to accept the advice.
  • The CRA is more likely to consider the Portfolio's advice regarding international tax law or foreign commercial law (areas in which the CRA does not have expertise) than advice related to issues such as gross negligence, capital versus income, employment income versus business income, etc. (areas that the CRA is more capable of dealing with internally)
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