Flag risky holdings as the chart is drawn

Some holdings always need a second look: a subsidiary in a low-tax jurisdiction, shares pledged to a lender, a chain of holdings that crosses a border. In a large group chart they are easy to miss. A red flag describes the pattern once, with the warning your practice group wants to give, and Structure then raises it on the group's structures wherever the pattern appears, while the associate is still drawing.

The work splits in two. A knowledge lawyer or senior associate who administers the group sets up the scenarios and red flags once. Everyone who draws structures in the group then sees them.

Two questions decide what you set up. What exactly is the pattern, in elements, relationships and attributes? And what should the associate do when it turns up?

Before you start

• Red flags are kept in the group's library, and only the group's administrators can create them. See set up a group for a client.
• A scenario can only compare what is on the chart. If the pattern depends on an attribute such as Country, the elements must have that attribute filled in, or the scenario will not find them. See set up the group's elements and relationship types.

Describe the pattern as a scenario

1. Open the group and click Library. Under Blocks in the group's name, click Scenarios.

   

2. Click Create new. The scenario opens on its own canvas with the Your Scenario panel. Give it a Name that says what it finds, such as "Subsidiary in a low-tax jurisdiction", add a Description, and click Save.

3. Drag the elements the pattern involves from the Elements panel onto the canvas: for this example, two companies.

4. Draw a line from the owner to the subsidiary, as you would on a structure. In the line's panel, choose the relationship, then a comparison and a value: for example Ownership greater than 50.

5. Select the subsidiary and click Add attribute. Choose the Attribute, a comparison and the Value: for example Country equal to the jurisdiction you are concerned with. Add one row for each attribute that matters.

   

6. Read the Conditions panel. It states the scenario in words, so you can check that it says what you meant before you build a red flag on it.

Attach the warning as a red flag

1. Go back to the group's Library and click Red flags, then Create new.

2. Give the red flag a Title. This is what the associate sees on the chart, so make it short and specific.

3. Under Choose scenarios, pick your scenario in the Scenario field. Add a row for each further scenario that should raise the same warning; the red flag is raised wherever any of them matches.

   

4. Write the warning in the text field below: what the pattern means for the matter and what to do about it.

5. Click Save Red Flag.

Work with red flags on a structure

1. Open a structure in the group and click Red flags in the toolbar. The panel lists every match on the structure, with the slide it is on and when it was found.

   

2. Click the lightning icon on a match, Highlight, to make the elements and lines involved pulse on the canvas. Click it again, Stop highlight, to end it.

3. To see every match of one red flag at once, open the sort menu and choose Type. The matches are grouped by red flag, and Highlight all highlights them together.

4. Click the eye icon, Show red flag, to read the warning text, or the arrow icon, Go to red flag, to open the red flag itself.

While you draw, a new match appears as a warning in the bottom right corner of the canvas. Open it from there to read the warning text, or close it and come back to it in the panel.

What to set up for whom

Tips from practice

• Write the warning as advice. "Low-tax jurisdiction" tells the associate what they already see. "Check the controlled foreign company rules, and speak to the tax team before the step plan is settled" tells them what to do.
• Fill in the attributes. A red flag on Country only works if Country is filled in on the elements. Make it part of how the group draws structures, or the red flag stays silent when it should not.
• Test number comparisons. A comparison such as Ownership greater than 50 reads whole percentages such as 60% reliably. If the lines use decimals or bands, draw a small test structure and check that the red flag fires where you expect.
• One pattern per scenario. Small scenarios are easier to check, and one red flag can use several of them.
• If the button is greyed out. If Red flags is greyed out in the toolbar and hovering over it shows You do not have access to this resource, red flags are not part of your firm's subscription; ask the person who administers Juristic at your firm, and see add a product to the firm's subscription.

Red flags work on the chart as drawn. To check the ownership figures behind a flag, see trace ownership through the group.