Interview: Chaz Lavelle & Bailey Roese – An Outstanding Contribution

Captive Review honours Chaz Lavelle at US Awards for an incredible 45-year career, and looks to the next generation of talent tasked with filling his giant shoes, in Bailey Roese.

 

When it comes to US Captive tax law, there are a number of landmark moments that have helped shape the state of the industry.

And at almost every major victory for captives, there are the fingerprints of one Charles ‘Chaz’ Lavelle.

His contribution cannot be understated. In a 45-year career at Dentons he has devoted himself to fighting the IRS on behalf of captives; being behind two of the five major Court of Appeals victories for captives in the aftermath of the IRS’s 1977 ruling that captives do not provide insurance for tax purposes.

These feats alone would justify his being the recipient of our Outstanding Achievement Award at the 2022 US Captive Review Awards.

But it’s not just his legal mind why he’s picked up this award. It’s just as much for everything he puts back into the industry, from his avid support for CICA’s NextGen and Amplify Women initiatives, to his 15 years teaching at ICCIE, his continuous presence on panels educating the industry, and his lobbying efforts through SIIA.

And this is not to mention just being a genuinely nice guy, always willing sit down and offer up his time, as I found when I interviewed the man himself about his award win.

“I greatly appreciate Captive Review’s award, but I recognise that, one, I am representative of others who have done as much or more than I have, and, two, I am successful because I have a fantastic team behind me, including Bailey Roese, who is my successor.”

His modesty is such that to gauge his impact on the industry, it’s easier to talk to those who know him best and have witnessed his work first-hand, such as his 34-year-old former protégé Roese.

“Really this award just encapsulates Chaz’s contribution to the industry,” Roese says. “Because, yes, he is a brilliant legal mind who helped the captive industry really get off the ground and helped set these precedents that captive companies have relied on.

“But he’s also someone who will always give advice to anyone who calls him. He will take the time to explain if you are looking for information. Or if you’re just looking to bounce ideas off somebody, he’ll be there.”

With help and guidance from Lavelle along the way, Roese has in nine years herself become a highly respected tax partner at Dentons.

A young legal talent like Roese doubtless could have thrived in all manner of legal disciplines. That she was lured towards tax law, and in particular following Lavelle’s lead specialising in insurance law, must at least partly be credited to Lavelle’s infectious passion for a subject which on the surface could appear extremely dry.

An ‘infinite Rubik’s cube’

So what kept him ‘captivated’, so to speak, by captive insurance tax for 45 years and counting?

For Lavelle, it’s the ongoing puzzle of determining what is insurance for tax purposes, made more intriguing by the fact neither the Internal Revenue Code, nor the IRS, has ever fully defined what is insurance.

“There’s a whole lot of grey in the taxation of insurance,” Lavelle says. “Therefore, you end up with a series of cases that determine whether a particular arrangement is insurance or not. Over time tests develop, but they are all applied to a specific set of facts, and the facts involved in an insurance arrangement are as myriad as there are risks that all the businesses in the universe have.

“So, there are essentially an unlimited number of risks, an unlimited number of ways people can protect those risks. And then the question is, is protecting those risks insurance, or for federal income tax purposes. It’s an infinite Rubik’s cube.”

At 71, Lavelle continues to fight in the corner of captives and other insurance companies, albeit he has in recent years been taking a step back and preparing Roese to take the lead.

However, his passion for the industry, the deep bonds of friendship he has formed, and commitment to offering any help where he can, means Roese expects she and other colleagues will be staying in close contact with Lavelle long after he eventually retires.

“It would be really easy for someone like Chaz to say, ‘you know what, I’ve done this for decades and now it’s my time to go. I’m gonna spend time with my family. I’m gonna watch Turner Classic Movies to my heart’s content,’” Roese adds.

“But instead he is still taking the time to be sure that the torch is going to be passed. He’s taking the time to be sure that the industry is going to continue to thrive, and the next generation of captive insurance professionals are going to have that bridge of knowledge and experience.”

Next Gen

And this it seems is what Lavelle himself is most proud of when he looks back on his long career.

His enthusiasm to support the next generation of lawyers in building their skillset and knowledge about captives, in particular for women who have historically been an underrepresented demographic in this field, is clear for all to see.

The outcome? It makes the industry a more welcoming place for people like Bailey, and the many more young men and women who will follow in her footsteps.

“It must be said that Dan Towle at CICA has done an incredible job with two initiatives that I am a huge, huge proponent of – Next Gen and Amplify Women,” Lavelle says. “They aim to put young people and women into leadership roles, on committees, and on panels.

“I’ve done what I can to try to open doors for Bailey and she’s gone through those. She’s done a great job.”

Roese has already spoken on the tax panel at VCIA twice, as well as the World Captive Forum, CICA, and Western Regional. She will speak at the Cayman Captive Forum later this year.

“And she’s done just a super job. That’s not only my personal view, but that’s what everybody comes up to me and says,” he adds. “I had somebody at VCIA text me and just say it’s so inspirational to have a young female up there doing such a great job. That’s this industry, and I’m so proud to be part of it.

“I think it bodes extraordinarily well for the future that we have these talented young people, and initiatives that support them to thrive.”

Roese has been a beneficiary of these initiatives, but Lavelle points out she is also now a contributor, paving the way to welcome other young people and women into the industry.

While more progress is needed, she believes the captive sector already compares favourably on D&I against the wider insurance industry thanks to such initiatives and people like Lavelle so enthusiastically supporting them.

“It’s just really refreshing to be a young person, a woman, who’s newly involved in an industry, and to have people like Chaz not only welcoming you, but also giving you opportunities to really to grow, to learn, to be the person up on the stage,” she says.

Industry ‘legend’

As the new face for the future of captive tax law at Dentons, Roese admits she will have a tough act to follow in Lavelle, who she describes as an industry ‘legend’.

Having watched Lavelle in action, though, she has learned from the master, and wants to be able to bring plenty of his best traits to her work.

“Even 40 years from now I don’t think I can expect to be anywhere near as brilliant and successful as Chaz, but I’ve learned so much from him that I try to emulate,” she says. “I definitely hope to be able to be as generous with my time and knowledge as he has been.

“And I really like that he takes such a practical approach with his clients where he is really honest with them, and I think this industry really respects that about Chaz. They know that when they call him, he’s not going to try to sell them on anything. It very much is here’s how we view the law.”

In addition, it’s Lavelle’s ability to communicate complex subjects in an easy-to-understand way, which she says is one of his great strengths she will attempt to replicate.

But, while she has been mentored thoroughly by Lavelle, Roese is her own person with her own approach to solving complex problems.

Her interest in captives is derived from the great levels of innovation and creativity she sees in the space, and this is representative of a new generation emerging willing to push the boundaries of what captives can do and the benefits they can bring.

And if there was just one thing to take from Lavelle in this interview it’s his belief that Roese, and the next generation of young professionals, must be empowered to bring their own personality to the industry, and the challenges of the future.

“I would highly recommend Bailey to do things the way Bailey wants to do them,” he says. “She should take from me whatever she finds useful, and pair it with her own ideas, as well as those ideas of others, be they inside or outside the firm.

“She will have some attributes that are better than mine, and hopefully I’ve got some that she will think are pretty good, and she’ll try to incorporate them. But you can’t change somebody’s style.”

It’s this attitude to promoting the next generation that will make his industry contribution all the more outstanding long after he retires.

His legacy will live on in the successes of Roese and the successes of all the other young people that choose to enter the captive space thanks to his input.

It’s why he so richly deserves our 2022 Outstanding Achievement Award, and all the praise that comes his way for what he has done for the captive industry. Congratulations Chaz!

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