Thursday, March 31, 2016

Dallas, Texas Wind and Hailstorm Property Damage Lawsuit

Originally published by Jeff Raizner.

Our client, a local Dallas property owner, filed suit against American Economy Insurance Company and American States Insurance Company for grossly underestimating property damage claims caused by a wind and hailstorm and denying proper payment under Texas law.

May 2011 Texas Wind and Hailstorm

On May 24, 2011, a severe wind and hailstorm swept through Dallas County and caused significant property damage to the plaintiff’s roof systems, HVAC, windows, exterior, interior, ceilings, furnishings, and more. Upon discovering the damage, the plaintiff immediately filed an insurance claim for the damages sustained from wind and hail.

American Economy and American States assigned adjusters, consultants, and agents to assess the damage to the plaintiff’s property that were inadequately and improperly trained to handle this type of claim. The insurers assigned a local adjuster to the case that failed to engage consultants to objectively evaluate the damages to the property. The local adjuster refused to acknowledge obvious damages, and instead prepared two brief estimates of damages that: (1) grossly underestimated the extent and value of damages to the commercial property and (2) represented that there was no compensable hail damage to the properties. As a result, our client’s claim was denied and no payments were issued.

The Insurance Carriers Violated the Texas Insurance Code

Because the insurance carriers wrongfully denied our client’s claim, our client was forced to hire its own consultant to independently evaluate the property damage. The client’s consultant identified substantial damage far beyond what the insurance carriers acknowledged. Despite this, the insurance carriers still refused to pay for the necessary repairs to the property as required under the terms of the insurance policies and under Texas law.

Our client cites violations of the Texas Insurance Code, including failure to attempt to effectuate a prompt, fair and equitable settlement, failure to adopt and implement reasonable standards for prompt investigation of claims, and failure to provide a reasonable explanation for the denial of a claim, among others.

Wind and Hailstorm Commercial Property Damage Lawyers

If your commercial insurance carrier has denied, delayed, underpaid, or disputed a wind and hail damage claim, you need an experienced team of commercial property insurance lawyers to help you get the compensation you deserve. The lawyers at Raizner Slania have extensive experience helping policyholders obtain their rightful payments from insurance companies. Contact us today for a free consultation.

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Business Acquisitions: Understanding the Legal Aspects of Absorbing Another Company

Originally published by Bob Kraft.

Business Acquisitions Understanding the Legal Aspects of Absorbing another Company

Mergers and Acquisitions have become a specialized part of the business world since the takeover wars of the 1980s. The process of buying a company is one of the most complicated transactions there is precisely because a company’s property can be both varied and part of a complex ownership structure which may involve multiple levels of detail and legal ramifications.

Legal Details

When one company buys another, it assumes all the assets, liabilities and obligations of that company. This can be a source of potential problems if the company being acquired has significant debt, is entangled in some kind of dispute or has operational problems. Business attorneys like those in the Carter West firm will often advise their clients to take their time in due diligence. Once the transaction is complete, the acquiring company will have responsibility for those problems just as if they originated in their own offices.

Tax Advantages

A popular acquisition strategy for larger companies involves acquiring smaller companies if they have incurred heavy losses during recent fiscal years. This allows the larger company to accumulate something called “net operating losses” or NOLs. The strategy involves offsetting these losses against the larger company’s earnings. If the combination of the acquisition price and the tax advantages produce a higher net return, then it makes sense to acquire the smaller company just to get access to its net operating losses.

Subsidiary or Merger

There can be significant benefits to bringing an acquired company into an ownership structure instead of merging two companies together. For one thing, in the event of the purchased entity becoming a wholly-owned or partially-owned subsidiary, the acquired company’s operations won’t be disrupted, and neither will the acquiring company’s. Secondly, the contracts, business relationships and financial structure of the acquired company may be best left intact for tax purposes, easier (and less expensive) accounting and a variety of ownership reasons.

Third, and likely the most important reason, the acquired company’s stock may experience a dramatic price shift post-acquisition depending on how the purchasing transaction was structured. This may lead to tremendous gains for the acquiring company which may either offset or eliminate the entire expense of the transaction. This can be a common occurrence with merged companies and is part of the reason acquisitions are so popular.

Mergers and acquisitions remain a complex subject, but navigating the jungle of options often leads to operational, tax, valuation and legal advantages that would otherwise take many years and incredible capital to achieve independently.

This article is from Lizzie Weakley, a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. She enjoys the outdoors and long walks in the park with her four-year-old husky Snowball.

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Filing A Whistleblower Claim

Originally published by Bruce Roberts.

False Claims Act Cases

The definition of the false claim act explains that it is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. You may have heard it referred to as the Lincoln Law. In an effort to fight fraud against the government, this law states that those not affiliated with the government can file actions against those committing fraud and do so as a “relator” and this is the formal way of calling it “whistleblowing”. The term came from instances in which the fraudulent company employed the “relator” who was in effect blowing the whistle on their misconduct.

What It Means To Be A Whistleblower

Let’s say that you have information on a company or organization that is billing the government for products or services not rendered, or maybe they are using false certifications of compliance to sell medication outside of FDA approved uses. Or maybe the misconduct is accounting fraud or securities and commodities manipulation. Whatever evidence or information you posses concerning the misconduct, you can bet that it will mean that wading through the legalities will be difficult without the right attorney at your side. The difficulties of navigating through a whistleblower claim can be treacherous without an experienced lawyer who is able to utilize their resources, legal experience and expertise to conduct a thorough investigation.

If the whistleblower receives a favorable outcome, they can receive between 15 and 30 percent of what was recovered. This of course, can vary depending on many circumstances. An attorney can more accurately uncover what to expect from your claim.

The First To File Rule

Do you have information about a company that has been fraudulent in their actions? Has anyone made a claim against the company that concerns deceitful practices or fraud? Before deciding if you should come forward and make a claim, you should first contact an experienced whistleblower attorney. The attorney will be able to find out if you are the first to file, which is very important as there exists a rule that prevents a whistleblower from filing a claim should another have already filed. This means that if you have information about a company, you shouldn’t wait to speak with an attorney. You should call immediately as if someone else files before you, you could miss out.

There are joint claims should multiple whistleblowers come forward. There are separate claims that can be allowed if both claims are based on separate evidence, but these are rare and your first step is to call a whistleblower lawyer immediately.

Time Limits

Depending on the claim, the time in which you are allowed to file varies. A good rule of thumb for False Claim Act claims is generally six years from the date of the violation or misconduct.

However, some claims should be reported within 30 days and to know if you are within a suitable time from to bring your claim, contact an experienced whistleblower attorney immediately.

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Champions of Justice Gala to benefit legal services for Texas veterans

Originally published by Amy Starnes.

GalaThe Texas Access to Justice Commission will host its annual Champions of Justice Gala to benefit legal services for low-income veterans at 6 p.m. Wednesday at the AT&T Executive Education & Conference Center in Austin.


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Tarrant County Starts New Misdemeanor DWI Court Program

Originally published by Brandon Barnett.

Judge Deborah Nekhom to preside over Tarrant County’s new DWI Court Program for Misdemeanor DWI Cases Tarrant County has many specialty court programs for various types of criminal cases, but for…

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College Basketball and the Law: Tips for Understanding the Legal Madness!

Originally published by Tiffany Johnson.

With men’s and women’s college basketball tournaments well underway, it is important for bloggers, broadcasters, and business owners to be aware of the National Collegiate […]

The post College Basketball and the Law: Tips for Understanding the Legal Madness! appeared first on Klemchuk LLP.

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Tips for Concision 8: Edit for Wordiness

Originally published by Wayne.

Wordiness would cover most of the concision techniques discussed in this series, such as omit needless details, deflate compound prepositions, and remove redundancy, but now let’s focus on commonly used phrases you can almost always shorten:

  • prior to becomes before
  • subsequent to becomes after
  • adjacent to becomes next to

Want more?

  • a number of becomes many
  • at the present time becomes now
  • at such time as becomes when
  • despite the fact that becomes although
  • during such times as becomes while
  • for the purpose of becomes to
  • in excess of becomes more than or over
  • in the event that becomes if
  • notwithstanding the fact that becomes although
  • on a daily [monthly, yearly] basis becomes daily [monthly, yearly]

To achieve concision, edit for wordiness—and then reduce big words while you’re at it:

  • adequate number of becomes sufficient


  • sufficient becomes enough

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Senior Lawyers: Some thoughts…

Originally published by Cordell Parvin.

It’s interesting, over the last few years I’ve thought more about my age.

When I was first trying to attract clients, the owners of the construction companies were a minimum of 10 years older than me and in some cases were my father’s age.

I never once thought about being too young to attract them as clients. Many were my friends and remain so today. I wrote about some of them a year ago: Client Development: Sometimes You Need a Little Luck.

When I was in my 50s and still practicing law, I never thought about being “older.” I was at the peak of my career.

Now, I get reminders of my age. Let me give you a small example. Last week, Nancy and I bought bicycles to ride on the great trails we have at Windsong Ranch. Nancy put a photo of her new bike on Facebook.

Screen Shot 2016-03-29 at 8.42.19 AM

We’ve gone out riding with our third grade neighbor.

After a ride last week, our third grader’s mother told us her daughter was really impressed that Nancy and I kept up with her on our bikes. What she was really saying is: “Mom, they are really old. How can they keep up with  me?”

If I was still practicing law, some of my clients would be led by men or women younger than me. Many, if not all of the in-house lawyers would be younger than me.

Even though I never thought about age when I was a younger lawyer, I believe I would think about it now. How would I keep up with them?

If you are in that boat, I recommend you think about what the next generation values. Try to see the world from their perspective.

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Ken Adam and the Imagination of Reality – Corporate Governance

Originally published by tfoxlaw.

Ken Adam died earlier this month. If you are anything close to a James Bond aficionado, his name is well known to you for his creation of the fabulous sets on all the movies from Dr. No to Moonraker. I still marvel at the early sets from Dr. No, Goldfinger and most especially You Only […]

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On the Perils of Compensation, Pricing and Future Business Strategies

Originally published by Toby Brown.

Of all the adaptations law firms need to make to be successful, the biggest challenge going forward will be making changes to their partner compensation systems. Ben Weinberger of Prosperoware tackles the subject head-on in today’s guest post.

The earliest known written legal code, Ur-Nammu’s Code, has been attributed to have originated in 2050 B.C., though its authorship is still up for grabs (some attributing that to his son, Shugli).  Shortly after that, law firms were formed on a partner-based business model whereupon compensation was based largely upon hours originated and hours worked on behalf of the firm.

And so it went for a while.  This compensation model brought with it an obvious behavior incentive for lawyers or partners to bill as many hours as possible.  As the market slowly shifted, so did the clients’ sentiments regarding this particular form of incentivizing.

In remediation, firms first recognized that they had to look more carefully at billable hours and compensate their timekeepers on realization rather than billable rates.  This first foray into restructuring the compensation model ensured, at the least, the firm was actually compensated prior to the lawyer or partner.  As firms grew in size and complexity and management structures became more complex, however, compensation models evolved to incorporate numerous other metrics that brought with it a combination of some science–and some art.  Still, partners responsible for bringing in large books of business were always compensated for that volume, just as partners who brought in billable hours were compensated for billable hours.

The clients’ sentiments, however, have not been satisfied.

The shift in market–as driven by those shifts in sentiments–is accelerating. In fact, a legal talent/future business strategies report just released by Deloitte boldly forecasts a radical tipping point for the legal industry by 2020, a short four years–or less than one five year strategy plan–from now, stating:

“The transformation of the profession is likely to be profound…Indeed, by around 2020, we expect a tipping point for individual firms which will impact the competitive landscape [and the role of talent in law firms]. Businesses must prepare effectively now so they are not left behind by the end of the decade.”

Smart firms have started recognizing and evolving the way they do business to accommodate this change in market condition.  Specifically, they are starting to compute profitability of matters, using business intelligence, and empowering their professionals to understand cost of production and more modern performance metrics such as actual margin on matters.  The firms are providing their professionals with the appropriate tools to enable them to select appropriate resources and more accurately budget matters to ensure sustainable profitability for the firm.

Unfortunately, one issue remains at many firms that hinders their ability to modernize their business:  legacy compensation models.  In the firms which are getting ahead of the game and trying to evolve their culture to a more profit oriented focus, without also adjusting their compensation model, they’re battling themselves as they retain inefficient incentive structures to drive the right behavior.

If specific billable hour targets are still tied to partners’ compensation, they have less incentive to distribute billable work to the most cost-effective resource.

When I was at a firm a few years ago, the finance director and I went through an exercise to compute the relative profitability of each grade of our lawyers in the firm–newly qualified associates, senior associates, junior partners, etc.–all the way through to the senior partner level.  By correctly assessing a number of criteria that evaluated the true cost structure, we were able to calculate the cost of each billable hour per each different grade of lawyer.  Once identified, we shared the results with our firm partners:  and as it so happened, our most profitable hours were being worked by our senior associates. In various ensuing discussions I’ve had with colleagues and peers at other firms, it would seem that this result is a fairly standard occurrence.

As part of the exercise, we computed and readily shared with the firm’s partners during a retreat the true profitability metrics for each hour worked by our equity and senior equity partners. For senior equity, this equated to approximately negative USD $130/hour. This was not an easy statistic to share with the senior partners (it’s tricky to tell your collective ‘bosses’ that, to borrow a phrase from one of my favorite films, Mr. Mom, “you’re doing it wrong”); however, we took the exercise further and explained that their time was, in fact, best spent managing clients (client care), focusing on business development, and ensuring that work was appropriately distributed across the firm. Recast across these work functions, they more readily accepted and comprehended the validity of the financial results we were sharing.

The next logical step was for our firm to take a much closer look and carefully evaluate its compensation formula for partners.  We took a more holistic view of what types of behaviors we were seeking to drive and what we wanted to incentivize partners to do, and what clients wanted to incentivize partners to do—these three things are not mutually exclusive and, in fact, should be aligned.

In recognizing that the firm was in a competitive market and that a significant source of its revenue was being generated through alternative fees and fixed fee work, there was very quick recognition and acceptance of the need to ensure that work was being completed in the most efficient and economically viable manner.  We found that by providing our lawyers greater insight into firm resourcing, costs, and historical budgeting, and that by enabling our lawyers to see in real time how their engagements were progressing, they were better able to ensure that work was being completed efficiently, effectively, and appropriately.

To do so is at the core of a firm’s future success, according to Deloitte:

“Firms will want to continue to demonstrate that they can offer clients the best products, price and service. We believe that the most successful law firms will be those that are agile enough to flex resources in order to meet client needs at an efficient price.”

Firms today that are looking at ensuring sustainable business models need to look not only at how they are allocating work and pricing that work, but they also have to consider how they are incentivizing their professionals to complete that work. If their compensation models have not evolved in such a manner as to help encourage the most appropriate distribution of work, they are going to find it far more difficult to implement real positive change in both the behaviors and the long term profitability—ie longevity–of the firm. 2020 is less than four years away.

Where will your firm be then?

Ben Weinberger is the Vice President of Solutions for Prosperoware. Ben is an industry thought leader and a licensed attorney with more than 20 years of experience in the strategic development, transformation, and direction of operations and technology in a variety of public and private organizations.  He can be reached at

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Seat Belt Laws of Texas

Originally published by Paul Cannon.

Seat Belt Laws Historically Texas courts have barred the introduction of evidence that a particular individual in an automobile accident did not use his or her seat belt. The information could influence a jury or judge when apportioning liability and damages at a trial. Historical reluctance from some courts held even when the Texas legislature […]

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What Can I Do if Someone Crashes a Drone into My House – Or into Me?

Originally published by highrank.

Technology and law have always made a strange pair. This is certainly true for unmanned drones, which have legislators and lawyers perplexed about everything from insurance claims to personal injury disputes. These devices are incredibly innovative and valuable, poised to improve disaster response, construction, real estate, and dozens of other industries. Regulations are slowly catching up, but the technology is not slowing down; the market for unmanned aircraft is expected to explode over the next decade.

Current Laws Governing Drone Use

Drones have sparked plenty of debate about personal injury law, property damage, privacy concerns, and many other legal areas. In fact, these gadgets have been a major concern for the FAA since their inception. The organization is predicting over 30,000 of these devices will be in use within five years, and specialists are setting aside billions of dollars to ensure their safe operation in tightly regulated commercial air space. Pending laws will govern:

  • Increased drone use
  • National and global operations
  • Airspace control
  • Safety and environmental concerns

The FAA and federal government must also take steps to regulate:

  • How individuals can protect their land from drones
  • Stalking and harassment issues
  • Piracy infringements

These problems may seem straightforward, but putting laws into place on this scale requires extensive state, federal (including multiple departments), and international cooperation. Some laws have already been drafted, including the Drone Aircraft Privacy and Transparency Act. This bill set up restrictions on private drone use, specifically outlining privacy standards and data collection regulations, how individuals can protect their rights, and the actions law enforcers can take to control drones.

Personal Injury and Property Damage Caused by Drones

Personal injury and property damage are two of the most pressing concerns lawmakers currently face. Insurers and legislators must consider where these aircraft operate (such as whether or not they fly over populated areas), their altitude, and their purpose. If a drone crashes into an individual, it would be covered under liability insurance, which also addresses privacy issues and property damage. Again, coverage varies based on several factors. For those working with or around drones, for example, workers’ compensation will need to be extended to cover drones’ use.

Pursing compensation would thus be similar to other liability claims; the company’s insurance would contact a plaintiff with a settlement price (if any). An individual can choose to accept that amount, which may cover the extent of his or her damages. If this is suitable, the matter can be settled out of court. However, for issues involving extensive damage, ongoing medical bills, or matters like wrongful death, working with an attorney may be the only way to receive the full amount a person is owed following damage caused by a wayward drone.

These laws will continue to evolve and so will the insurance policies written for drones. For example, if wrongful death claims increase as the industry grows, insurers will have to change the rates they charge for liability and other coverage options.

Reach Out to an Experienced Texas Attorney for More Information

The only way to protect your rights in such a dynamic time is to contact an attorney who has followed these laws and will continue to do so as they develop. Though this is a new area, many of the requirements for personal injury suits and property damage settlements are familiar to experienced legal teams.

The Law Firm of Aaron A. Herbert, P.C. has extensive experience recovering the damages our clients are owed following a personal injury. We stay up-to-date on all relevant laws to safeguard their best interests; this includes personal injury and property damage caused by a crashing drone. Reach out for more information about these developing regulations, and schedule a consultation if your privacy or property has been threatened by one of these devices.

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Wednesday, March 30, 2016

How many people use the internet in the US? It’s a lot. 

Originally published by Rita Handrich.

internet_usage_statisticsWe work in venues from major metropolitan centers to counties with less than 20,000 people. Rural areas used to be where internet access and use was almost nonexistent in the past, but that is rarely the case any more. We’ve written about the reaction of our high-tech clients as they hear what rural mock jurors have to say about them, but we also think it’s important to remain aware of just how omnipresent the internet is among Americans. In truth, any case that may be influenced by internet issues needs to be examined carefully if the trial is set in rural America. The data on internet penetration and usage is changing so quickly that the profile changes dramatically from one year to the next.

“As part of the 2008 Broadband Data Improvement Act, the U.S. Census Bureau began asking about computer and Internet use in the 2013 American Community Survey (ACS). Federal agencies use these statistics to measure and monitor the nationwide development of broadband networks and to allocate resources intended to increase access to broadband technologies, particularly among groups with traditionally low levels of access. State and local governments can use these statistics for similar purposes.”

According to multiple sources (based on data that is at least a couple of years old), current computer ownership in the US is at 88.4% of all households. Internet use is at 78.1% across the US. They included this graphic in their report to illustrate the frequency of internet use by demographics.

Figure 2 internet use

Here are some narrative highlights from the most recent Census Bureau report on internet use in the US:

In 2013, 83.8 percent of U.S. households reported computer ownership, with 78.5 percent of all households having a desktop or laptop computer, and 63.6 percent having a handheld computer.

In 2013, 74.4 percent of all households reported Internet use, with 73.4 percent reporting a high-speed connection.

Household computer ownership and Internet use were most common in homes with relatively young householders, in households with Asian or White householders, in households with high incomes, in metropolitan areas, and in homes where house- holders reported relatively high levels of educational attainment.

Patterns for individuals were similar to those observed for households with computer ownership and Internet use tending to be highest among the young, Whites or Asians, the affluent, and the highly educated.

The Census Bureau report contains multiple facts and graphics on internet use and computer ownership across the country. This summary covers most of them but if you want additional information, look at the report itself.

Note:  The glaring omission in this study is cellular data. It is based on household computer use. For those under 30 (especially), smart phones and gaming consoles are major points of access for the internet. Some cable and satellite “television” providers are more accurately viewed as data streaming services, and offer direct access to the internet through their streaming platform.

From a litigation advocacy perspective, we think it’s important to always be aware of how different life (and the perspective of those living that life) is when the internet is not a daily part of your existence.

For attorneys presenting in those areas, the examples and analogies they use have to resonate with the lives of their audience and when you are an attorney representing a high-tech client—you don’t want to find out just how different those lives are when you are actually in the courtroom at trial.

Most of the time though, you will likely be presenting cases in venues where the internet ranges from commonplace to ubiquitous. Access to the internet is so widespread in the vast majority of trial venues that the question of internet access is often more a question of economics (with relatively poor people not having as much access to smart phones or computers) than age, gender, or race. Use this report to maintain awareness of how the internet is used differently by different people at different times.

Do not assume that all younger people are internet savvy or that all older people are not internet savvy. It is highly dependent on the individual (as well as their income and education) although, as seen in this report, the vast majority of Americans are internet users.



Related posts:

  1. Pew Research says 15% of Americans don’t use the internet and  asks “who are they”?
  2. More than half of your potential jurors have  smartphones now
  3. Oh the places you’ll go!

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Moving Your Company to Texas or Just Across the Street? Top 5 Considerations

Originally published by Cleve Clinton.

Moving to TexasFleeing the California minimum wage increase, N. O. Smelz, owner of Smelz Carpet Cleaning calls his friend and fellow entrepreneur Billy Brazos to announce that he’s moving to Texas and to ask for any advice. Having just completed an end of year checkup on his own business, Brazos offers his top five tips for any company new to Texas, relocating within the state or that just hasn’t had a corporate checkup in a bit.

#1 Think About Your Company Entity

You have 3 options when moving your business:

  1. Continue – You can continue your company in the old state and register as a foreign entity doing business in the new state (undertake foreign qualification in the new state). However, there are a couple of things to note:
    1. Ongoing State Fees. If you keep both entities, you will pay duplicative annual report and/or franchise taxes, and sometimes complicated tax filings for the entity and its owners
    2. Delaware or Nevada. If you incorporated in Delaware or Nevada, you were probably foreign qualified in your current state. You can eliminate your current state and register as a foreign entity in your new state.
  2. Liquidate – You can liquidate your company in the old state and form a new entity in the new state.
    1. This may result in federal tax issues if you have a C corporation, but not likely if you have a limited liability company.
    2. For any company entity, there are state mandated formalities if you dissolve your business, depending upon the state, often at least requiring document preparation (dissolution papers), filing and paying any outstanding taxes and dissolution fees.
  3. Reorganization – You can undergo a reorganization, forming an entity in the new state and merging the old company into the new.
    1. This can be entirely tax-free for a C corporation.

#2 Don’t Forget About Your  Legal Documents

  1. Contracts with Customers and Vendors – Obviously, your choice of law is now likely to be Texas, not California. It is also likely that Texas law will treat other contract provisions differently. Get a contract checkup.
  2. Employee Handbook – Even if you didn’t get your employee handbook off the internet, many aspects of the employment relationship are different in Texas from California. My partner Michael Kelsheimer offers free “Employer Handbook” with easy to understand Texas-specific answers to frequent employment questions.

#3 Update Your Address Change with the Government – Federal, State & Local Agencies

  1. The IRS requires no document change, like your employer ID number (EIN), but you must complete Form 8822-Change of Address (Part II) and designate if only changing mailing address or also changing notifications for business income, excise, employment, and other tax matters.
  2. The Texas Secretary of State requires company registration to do business in Texas perhaps necessitating amending organization documents (Articles of Incorporation for a corporation or Articles of Organization for a limited liability company) and notification of any address change. If you elect to be organized in one state and registered to do business in another, you must maintain registered agents in each state and complete each state’s filing and reporting requirements. California, for example, imposes a franchise tax on every corporation or LLC that is registered to do business there.

#4 Change Your Address Online

  1. Marketing Materials – You’ll want to update your website, email marketing templates, email signature, business cards and social media.
  2. Online – Make sure to your physical address on your website, Google Places, Yelp, Bing Places, Yahoo Local, Google Places, Google Map Maker tool, Bing Places, Yahoo Local, Mapquest, Apple Maps, OpenStreetMap tool, and any other search engines you’ve registered your business with.
  3. Automatic Payments  Any website that auto-charges your business credit card will not accept charges when your address changes at your credit card company or bank.

#5 Tips for Company Owners

  1. Wills and Estates
  2. Texas Driver’s License – You’ll want to update local address within 30 days of your move.
  3. Voter Registration –Whether you move into the state or into another Texas County, you should notify the county voter registrar.
  4. Texas Concealed Handgun License – If you move, you can change your address online.
  5. Insurance – Have you updated your insurance lately?
  6. Safety deposit box  Have you inventoried/ updated safety deposit documents lately?
  7. Personal Move List – This article gives you a pretty good start on a list of other personal items to be addressed in a move.

Tilting the Scales in Your Favor.

Whether your company is moving to Texas or just moving across the street, check out, among other things, your company structure, your contracts with your customers and your vendors, your internet presence and the last time you told your current and prospective customers and vendors who you are, where you are and what you do.

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No fueling, there’s personal jurisdiction.

Originally published by David Coale.

mine yours memeMalin Ship Repair sought to attach boat fuel (“bunkers” in admiralty parlance) of defendant OSA, and thus gain personal jurisdiction over OSA in a Texas federal court.  As of the attachment date, OSA had taken delivery of the boat and the fuel on it, but had not paid for the fuel or been invoiced for it.  Under the UCC, title would have passed under delivery.  Under the common law, the answer turns on the parties’ intent, and the Court concluded that “the parties contemplated a credit transaction.”  Thus, title had passed to OSA and the attachment was sufficient to confer personal jurisdiction under the applicable admiralty rule.  Malin Int’l Ship Repair & Drydock v. Oceanografia, S.A. de C.V., No. 15-40463 (March 23, 2016).

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TBLS certification applications available

Originally published by Patricia McConnico.

The Texas Board of Legal Specialization is accepting certification applications for 2016. For information on the specific requirements for each of the 22 specialty areas of law and the seven areas for paralegals, go to the “Get Certified” section of


The Texas Board of Legal Specialization is one of the largest board certification programs in the nation. Being board certified means that an attorney may publicly represent himself or herself as a legal specialist in an area of law. This year the Texas Supreme Court approved construction law as the newest specialty area. For specific requirements, go to “Construction Law Standards” at


To be eligible for certification, an attorney must have five years of experience practicing law, with a minimum of three years experience in the specialty area. Board certification is an ongoing commitment that requires continuing legal education.


Certification applications are available until April 25, 2016, and the exam is October 17, 2016, in Austin. For more information, go to, call (855) 277- 8257, or send an email to

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Texas Supreme Court Arguments (3/29/16)

Originally published by Rich Phillips.


Posted by Rich Phillips

On Tuesday, March 29, 2016, the Texas Supreme Court heard argument in one case: 

15-0049, Crosstex North Texas Pipeline v. Gardiner — There are numerous issues in this nuisance case arising from the operation of a gas compressor station. Both the plaintiffs and the defendant sought review in the Supreme Court. The primary issues raised by the defendant are: (1) whether the court of appeals erred in finding the evidence legally sufficient to support the jury’s nuisance finding; (2) whether the trial court erred in permitting the plaintiffs to make a trial amendment after the evidence was closed; and (3) whether the plaintiffs’ measure of damages was correct. The plaintiffs’ cross-petition argues that the court of appeals erred in finding that the evidence was not factually sufficient to support the verdict because the court did not follow Pool v. Ford Motor Co.

Video of the oral argument is available here.

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Tuesday, March 29, 2016

Does a Trademark Registration Ever Expire?

Originally published by Vethan Law Firm, P.C..

From small start-up companies to large corporations, business owners understand the value of a distinguishing mark. The mark will enhance various aspects of the marketing strategy to entice consumers to purchase the products. In many ways, trademarks embody the company’s values, mission and goals.

The trademark may be part of a specific phrase, words pertaining to the business, logo design, character and numerous other identifying marks. By using the US trademark registration, the company’s identifying trademark will be protected. The expiration of the protected trademark usually ends due to failure to monitor the mark or other preventable circumstances.


After completing the US trademark registration procedure, the specialized mark is secure for ten years. Filing a Section 8 Affidavit and a Section 9 Renewal application prior to the tenth year is vital for on-going protection. The documents and fees should be admitted six months in advance of the ten-year deadline to ensure proper renewal.

Delays in renewal may be the result of improper documentation. After the first filing, placing all documentation pertaining to the mark in a secure location or with the company’s attorney is critical. Failure to provide proper documentation of trademark’s official owner will result in cancelation.


The US trademark registration generally allows the trademark to be protected the trademark for ten years. During this timeframe, the mark must be continuously monitored by the owner or representative of the company. Prior to the sixth year of trademark protection, a document for continued use must be filed. Failure to register the Affidavit of Continued Use between the fifth and sixth year will result in cancelation of the trademark protection.


Over the years, the trademark may expire due to abandonment. Changes in marketing strategies or other unforeseeable circumstances from within the organization may result in the trademark’s abandonment. The owner may not need the specific trademark for the current business plan. A company’s closure is another reason for abandonment. When the owner does not take the necessary steps to protect the mark, the trademark will expire.

By understanding all aspects of the US trademark registration, a small business or solo entrepreneur will be able to protect the unique product’s mark for continuous use. As a company owner, contacting a business lawyer to help guide you through the necessary steps of US trademark registration should be a priority.

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Difference between Plaintiff’s breach of contract element and agency affirmative defense? It’s all in your head.

Originally published by John Guild.

it's all in your head

In Tour de Force, Ltd. v. Barr, the plaintiff, Tour de Force, was a Russian tour operator that entered into an agreement by email with Gordon Barr, CEO of Port Promotions. There wasn’t a separate written contract. When Tour de Force stopped receiving payments, it sued Barr individually. The trial court found after a bench trial that Tour de Force did not prove that a contract existed with Barr in his individual capacity. Tour de Force appealed, arguing that the trial court applied the wrong standard because agency is an affirmative defense. The Dallas Court of Appeals affirmed.

On the issue of whether it was the defendant’s burden to prove agency or the plaintiff’s burden to prove a contract with the defendant in his individual capacity, the Court noted that the defendant disclaimed any reliance on an agency defense during closing, meaning he had no burden to establish an affirmative defense. “Rather, the burden remained squarely with [Tour de Force] to prove a ‘meeting of the minds’ between it and Barr to enter into a contract.” The emails forming the contract included a signature line of Gordon Barr as CEO of Port Promotions, invoices were directed at Port Promotions, and payments were made from an account owned by Port Promotions. Thus, though the plaintiff testified that he believed he had contracted with Barr, there was no evidence of a “meeting of the minds” between Tour de Force and Barr in his individual capacity to enter into a contract.

Tour de Force, Ltd. v. Barr

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Texas Man Executed for Multiple Murder Convictions Claimed to be Mentally Impaired

Originally published by Qamar Zaman.

Texas criminal defense attorney reports on the case of a man recently executed after raising an appeal citing mental impairment. A Texas man was recently executed in connection with multiple murder convictions stemming from a 1997 shooting. Texas criminal defense attorney Mick Mickelsen, who has no direct connection to the case reports that the man, was convicted of killing the …
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Good advice from the FBI – 9 ways to avoid Ransomware

Originally published by Peter S. Vogel.

Ransomware is in the news every day, so it makes sense to follow the FBI’s warning to avoid paying a ransom of “hundreds to thousands of dollars” for “a type of malware that infects computers and restricts users’ access to their files or threatens the permanent destruction of their information…” The March 17, 2016 press release entitled “FBI Warns the Public About Ransomware Internet Scam” included these 9 way to protect your computer and cell devices:

  1. To prevent the loss of essential files due to a ransomware infection, it is recommended that individuals and businesses always conduct regular system back-ups and store the backed-up data offline. Ransomware will encrypt any drive that is visible to the computer, including back-ups.
  2. Filter out e-mails with .exe attachments and set your computer to show hidden file extensions. Ransomware is often delivered as a file with more than one file extension such as example.pdf.exe.
  3. Make sure you have updated antivirus software on your computer.
  4. Enable automated patches for your operating system and web browser.
  5. Have strong passwords and don’t use the same passwords for everything.
  6. Use a pop-up blocker.
  7. Only download software—especially free software—from sites you know and trust (malware can also come in downloadable games, file-sharing programs, and customized toolbars).
  8. Don’t open attachments in unsolicited e-mails, even if they come from people in your contact list, and never click on a URL contained in an unsolicited e-mail, even if you think it looks safe. Instead, close out the e-mail and go to the organization’s website directly.

Of course there is no substitute for training employees to avoid Ransomware problems.

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Opinions: What Makes a Division Just & Right?

Originally published by maknox.

The Fourteenth Court of Appeals released its memorandum opinion in Marin v. Marin, No. 14-13-00749-CV this morning. The key issue is the trial court’s division of a business owned by the parties.

Joel Marin petitioned for divorce, claiming insupportability and adultery on the part of Janell Marin. Janell counter-petitioned, alleging insupportability, cruel treatment, and adultery against Joel. Both filed an Inventory and Appraisement listing stock in Ameriwaste. Together they owned a controlling interest in Ameriwaste; Janell owned 51% and Joel owned 31%. Janell valued the entire 82% stock of Ameriwaste at $940,000 but Joel valued it at $2,096,000.

In her inventory, Janell also listed a loan for $380,000 from Ameriwaste as community debt. The loan was a portion of the total amount necessary to discharge a judgment of $502,000 against Janell personally. Because the judgment against Janell is in favor of IESI TX Corp., the parties and Court refer to it as the IESI judgment. IESI had sued Janell for breach of fiduciary duty, fraud, conversion, and forgery. Joel paid $122,000 towards satisfaction of the judgment while Janell borrowed the $380,000 from Ameriwaste to satisfy the balance. Janell executed two promissory notes to Ameriwaste.

In his inventory, Joel listed the IESI judgment as part of a waste claim against Janell and assigned a value of $502,000. He did not mention the $380,000 loan in his inventory.

The parties agreed to a trial by a special judge (“SJ”). The agreed order of referral did not include any limitation on the SJ’s authority of the divorce trial. After a four day trial, the SJ sent the parties an email detailing his division of the marital estate which included a spreadsheet, and several months later signed a final decree of divorce. On the spreadsheet, the SJ evidently wrote in the $380,000 loan and then crossed it out. He also adjusted the value of the Ameriwaste stock, finding the value was $1,770,000. He awarded all of the stock to Janell and granted Joel a money judgment against Janell.

At the hearing prior to the entry of the final decree, the SJ stated that he couldn’t specifically recall why he had written and then scratched out the $380,000 loan but figured it was because that loan was “subsumed within the values” he gave to Ameriwaste.

Janell filed a motion for new trial, alleging that the division of property “inadvertently omitted” the debt of $380,000 to Ameriwaste. The SJ denied the MNT, issued findings of fact and conclusions of law, and Janell appealed.

In her first issue, Janell challenged whether the SJ had authority to issue a final decree of divorce. This is actually the Marins’ second trip to the Court of Appeals. On the previous trip this issue was resolved.

In her second issue, Janell argued the trial court erred by not granting her motion for new trial because, according to her, the SJ did not timely submit the verdict within sixty days of the adjournment of trial as required by the TCPRC. Section 151.012 of the TCPRC states that if the SJ fails to submit the verdict within that 60 day window:

the trial court may grant a new trial if: (1) a party files a motion requesting the new trial; (2) notice is given to all parties stating the time and place that a hearing will be held on the motion; and (3) the hearing is held.

See Tex. Civ. P. & Rem. Code Ann.  § 151.012 (emphasis added). Janell argued that the statute mandates or requires the trial court to grant a new trial if the three elements of §151.012 are met. The Court of Appeals disagreed, finding the discretionary language permitted the trial court to decline to grant a new trial. “Janell cites no authority for her position that section 151.012 mandates a new trial, and we find none.”

Furthermore, the Court of Appeals noted the record did not establish that she met the three elements anyway.

Janell also argued that the motion for new trial could only have been denied by the presiding judge of the court, not the SJ. The order denying the MNT was signed by Thomas Stansbury as the “presiding judge.” The Court of Appeals found that Janell waived this complaint when she did not present it to the presiding judge. And even if Judge Stansbury lacked authority to sign the order, the MNT was denied by operation of law.

In her third and fourth issues, Janell challenged the property division. Specifically, she argued the trial court abused its discretion by “failing to award and account for” the $380,000 debt and requiring her to pay the $380,000 twice, as debt service to Ameriwaste and in the waste claim to Joel. Janell argues that after the trial concluded, the SJ sent the parties an email with his conclusions and a spreadsheet and after adjustments for waste claims, determined that a “50/50” division was appropriate. Janell argued that this spreadsheet assigning the division of property did not include the $380,000 loan to Janell from Ameriwaste.

Joel did not dispute the characterization or existence of the loan but he did dispute that Ameriwaste had a business purpose in loaning the money to Janell and whether Janell would be required to repay Ameriwaste (as she was the majority shareholder and could forgive the loan). Joel also argued that the SJ did not abuse his discretion by not specifically awarding the $380,000 loan because there was evidence to support the division. He also argued the finding of value of the 82% of the shares of Ameriwaste stock and the assignment to Janell of all of it demonstrated the court’s consideration of the debt.

The decree awarded all of the Ameriwaste stock but awarded Joel a money judgment of $341,297 against Janell as part of the division of community property. The Court of Appeals then excerpted a significant portion of the SJ’s findings, including:  Janell’s adultery and fault in the break up of the marriage; Janell’s fraud on the community and wasting of assets; reimbursement claims owed by Janell to the community, etc. It’s a pretty damning list against Janell.

Janell complained on appeal that the SJ had insufficient evidence on which to make his division but did not complain that the court failed to give due consideration to the Murff factors. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981) (The name Murff appears in the opinion 9 times; I’d like to think Justice Donovan just enjoys saying Murff). The Court of Appeals then listed a veritable laundry list of evidence in the record the SJ heard which supported the disproportionate division. The final decree and findings incorporated this evidence in making its disproportionate division of the parties’ estate.

The Court of Appeals noted that the SJ adjusted the value of the Ameriwaste stock by giving it a value of $1,770,000 (Janell had valued it at $940,000; Joel, at $2,096,000) and awarded it all to Janell, despite the fact Joel requested it be awarded to him. The COA also held that Janell did not complain that the debt was mischaracterized and that the mischaracterization was harmful “which would require us to remand the entire community estate for a just and right division.”


Finally, though the SJ expressed uncertainty at the hearing on the motion to enter judgment as to why he wrote in and then crossed out the $380,000 loan on the spreadsheet attached to his email rulings, the Court of Appeals found that “his subsequent actions indicate[d] that he considered the $380,000 debt and decided not to modify his rulings.” Because Janell’s argument  the $380,000 loan was “inadvertently omitted” was considered prior to final judgment, the court did not abuse its discretion by denying the MNT.

In conclusion, the Court of Appeals found there was sufficient evidence to support the findings of fact and division of property and that Janell did not meet her burden of demonstrating the division was so unjust and unfair as to constitute an abuse of discretion. The decree was affirmed.





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Copyright Troubles Continue to Hinder Buck Rogers Movie

Originally published by Ryan Jones.

Superhero blockbusters seem like the surest thing in movies these days with Batman v. Superman: Dawn of Justice taking in almost $450 million from the […]

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What is Jury Unanimity for Aggregate Theft Cases?

Originally published by Brandon Barnett.

Jury unanimity is required in every jury trial, whether it be felony or misdemeanor. This means that the jury must unanimously agree that the State has proven or failed to…

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Pair, Set and Match

Originally published by Chip Merlin.

A public adjuster recently asked me about a hotel that was under a specific brand and the contract to maintain the brand required the rooms and furniture to match. Following a loss, the insurance company has refused to pay for the portions of the physically undamaged property and the policyholder paid millions to match the old undamaged property with the new replacement property. Should an insurance company pay to match hotel property following a loss—especially if the policyholder has legal obligations to match all property which sometimes cannot be done because of age and obsolescence?
My first response after hearing that the insurer was an international commercial insurance company with thousands of hotel clients was to suggest a post and a website, warning hotel managers and risk managers that have insurance with this carrier that they have “cheap” insurance and will deal with a stingy claims department. Most brand hotels must match property following a casualty…


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Nine Employment Law Myths

Originally published by Thomas J. Crane.

There are a lot of myths out there about employment law. From time to time, I talk about a few of those myths.

At will
“At will” employment means an employee can be fired for anything.” Texas is an at-will state. An employee can indeed be fired for a lot of things, but not for sex, religion, race, national origin, disability, violation of laws, etc. So, yes, an employer can fire you for wearing a blue tie to work, but not because you are too old. The anti-discrimination statutes provide several exceptions to the at-will doctrine.

Probation period
“Probation periods means an employee can be fired for anything.” Not quite. A probation period means an employe can be fired for anything except sex, religion, race, national origin, disability, violation of laws, etc. See above paragraph.

Copy of file
“Employees have a right to a copy of his/her personnel file.” That depends on whether the employee is public sector or private. I have found no authority in Texas law saying that employees of private businesses can obtain a copy of their personnel file. As a public sector employee, an employe’s rights are governed by the Freedom of Information Act for federal employees and the Open Records Act for state employees. I can find no authority providing that a private sector employee has a right to a copy of his/her personnel file.

Rest breaks
“Employees get periodic breaks during the work day.” I was told as a young warehouseman that we had a right to a 10:00 o’clock break and another at 3:00 pm. The times could vary slightly. Since then, I have looked for the authority for those breaks. There is no such authority. Most likely, that is or was part of the influence of collective bargaining agreements (union agreements). CBA’s do often provide for such breaks. But, for non-union employees, there is no authority for a mid morning break and a mid-afternoon break. There is no state law or regulation on rest breaks or meal breaks. Federal regulations do not require a meal break. But, Federal regulations encourage work places to provide rest breaks, but such breaks are not required. See 29 CFR Sec. 758.18.

Non-compete agreements
Some folks outside and inside Texas believes non-compete agreements are not enforceable in Texas. Yes, they are and have always been enforceable. They became much more enforceable with the decision in Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2010). I previously wrote about that decision here.

Free speech
The right to free speech exists only for government workers. There is no general right to free speech in a private workplace. But, there is protection for employees who discuss “terms and conditions” of employment. Those sorts of discussions are protected by the National Labor Relations Act. I discussed those protections here. But, as far as discussing politics, football or cooking, there is no right to discuss whatever a worker wishes in the private workplace.

There is no general whistle blower protection in Texas. I think most people think of whistleblowing as reporting wrongdoing to some law enforcement type entity. Employees in the private sector do not have protection against whistleblowing. But, there is a protection against requiring employees from violating criminal statutes. This sort of lawsuit is known as a sabine Pilot type action. I discussed Sabine Pilot actions here. So, merely reporting administrative violations which do not have a criminal punishment, there are no such protections.

Not Written up before termination
People still ask me or tell me that the employer did not write them up before firing them. Well, employers do not have to do that. Yes, most large employers have nice looking employee manuals which state that employees must be wrritten up before termination. But, these manuals are not binding. They have not even been arguanbly binding since about the early 1990’s. This is one employment myth that may never go away. I wrote about employee manuals here.

Some folks still think they have some degree of privacy at work. Email is a frequent issue. Generally, email produced with use of the employer’s equipment and server belongs to the employer. The employer may review your email anytime. I wrote about workplace email here and here. The one exception appears to be when the employee accesses his/her private email server which is password protected.

There is no prohibition on private sector employers searching desks to my knowledge. But, the U.S. Constitution Bill of Rights applies to state governments. So, in the public sector, a worker has some protection from unreasonable searches if s/he has a reasonable expectation of privacy” that society is prepared to recognize as reasonable. See O’Connor v. Ortega, 480 U.S. 709 (1987), on remand, Ortega v. O’Connor, 817 F.2d 1408 (9th Cir. 1987). But, the “expectation of privacy” can be limited by office practices and by legitimate regulation. And, HIPAA does protect medical information in most work situations.

So, as I tell folks on occasion, if you want fairness at work, then form a union. Or, persuade your state legislature to make a few changes in the law, so all workers will benefit.

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Monday, March 28, 2016

Collaborative Pre-Nuptial Agreements

Originally published by Jonathan James.

This article was written by Hance | Wickham associate attorney Jonathan James.   In a prior blog article, I discussed how pre-nuptial agreements can help project couples from confusion and rancor in the case of a divorce. While pre-nuptial agreements only require the participation of the two people who are getting married, I strongly advise […]

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“What Could Have Been” … Not Sufficient Causation Testimony in Legal Malpractice Case

Originally published by Carrington Coleman.

Axcess International, Inc. v. Baker Botts, L.L.P.
Dallas Court of Appeals, No. 05-14-01151-CV (March 24, 2016)
Justices Lang-Miers, Evans, and Schenck (Opinion)
Kelli HinsonThe Dallas Court of Appeals affirmed a take-nothing judgment in favor of Baker Botts because the plaintiff failed to prove causation through its expert witness. Axcess International sued its former patent counsel, Baker Botts, alleging that while Baker Botts was representing Axcess in prosecuting its patent applications for certain active-radio-frequency-identification (“RFID”) technology, it was also representing Axcess’s chief competitor, Savi Technologies, in patenting arguably similar RFID technology. The conflict was discovered (by Baker Botts at least) when Savi forwarded to Baker Botts letters from Axcess alleging patent infringement.

Axcess ultimately sued Baker Botts, alleging the firm breached its fiduciary duty and was negligent. Axcess’s expert testified that, had Axcess known Baker Botts was prosecuting patents for Axcess’s competitor, Axcess would have hired other counsel; and, with conflict-free counsel, Axcess could have threatened to file or actually filed an interference proceeding with the USPTO and amended the claims of its existing patent applications. He further testified that had Axcess taken these actions, and had the interference proceeding been successful, Axcess would have been in a better position to negotiate a business solution with Savi and some unspecified business deal would have been reached.

The Court of Appeals held the expert’s testimony regarding (1) how the USPTO would have ruled in an interference proceeding and (2) how Savi would have reacted to Axcess’s hypothetical claims, was wholly speculative. In short, the Court found Axcess’s causation theory depended on how third parties would have reacted under hypothetical circumstances. But, “Axcess had to prove—not just suggest or theorize, but prove with competent, non-speculative evidence—that the third parties would have actually taken such action.” Axcess failed to provide evidence that similar interference claims have been successful in the USPTO or that Savi likely would have capitulated and entered into a better deal with Axcess given different facts. The causation testimony was, therefore, legally insufficient, and the Court affirmed the take-nothing judgment.

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Guest Blog: IRS FOIA Request Unveils Previously Undisclosed Estate Tax National Policy for Offshore Disclosures (3/28/16)

Originally published by Jack Townsend.

Pursuant to an IRS Freedom of Information Act (“FOIA”) request, my colleague at Anaford AG, James Gifford, discovered that the IRS for the past several years has had a “national” policy which selectively denies an estate tax deduction for the miscellaneous Title 26 offshore penalty (“MOP”) incurred in Offshore Voluntary Disclosure Program (“OVDP”) cases (see FOIA response from IRS dated March 17, 2016, here).
But first, some background on the issue.
In the OVDP, participants are required to pay in lieu of all other penalties that may apply to the previously undisclosed foreign assets and entities a miscellaneous Title 26 offshore penalty generally equal to 27.5%[1]of the highest aggregate value for those assets during the period covered by the voluntary disclosure.  Inevitably, some OVDP participants include estates.  Ordinarily, administration expenses are deductible from a decedent’s gross estate under I.R.C. § 2053 for purposes of determining the estate tax.  These include administration expenses incurred in the collection of assets, payment of debts, and distribution of property and normally would include the MOP.
However, it appears since at least 2013 and possibly since 2009, the IRS instituted an undisclosed nationwide policy that the MOP is not deductible as an administration expense by an estate except in the limited situation where only the decedent was “cognizant” of the foreign accounts or assets.[2]  According to internal IRS emails obtained under the FOIA request, the IRS national policy states:
If anyone other than the decedent (which would include a surviving spouse, children, siblings, accountant, attorney, or anyone else with a material interest) was cognizant of the existence of the offshore account, and the executor/personal representative failed to disclose the existence of the account (or, did not file a Form 706) by the due date of the return, then we will not allow a reduction to the gross estate for the related OVDI [OVDP] offshore penalty.
Even though the IRS issues voluminous rules and guidance each year, the IRS acknowledged in a Tax Notes article posted on March 28, 2016 (“IRS Inconsistent in Denying Estate Tax Deduction for OVDP Penalty”) that it has not previously published any guidance on this policy.  Thus, it appears the IRS has not followed any public procedures for creating this policy or informed applicants to the OVDP of this policy.  Nor has it issued any notice, bulletin, or any form of rulemaking for communicating and establishing this policy.The problems with this policy are many, but to summarize, the policy overtaxes and overreaches.
The policy overtaxes by denying a deduction for the MOP, which should be deductible in all circumstances not some limited exception created from whole cloth where only the decedent was cognizant of the foreign assets.  It is unambiguously the prerogative of Congress to decide how we are taxed and on what.  Deductions are “a matter of legislative grace,” not the whims of bureaucrats (New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934)). The IRS cannot deny a valid deduction simply because they would like to do so.
Moreover, the IRS policy for denying a deduction here overreaches.  The IRS is denying a deduction, which Congress says should be allowed, simply because a confidante of the deceased, such as an accountant or attorney, knew of the account.  Yet this policy punishes the heirs of the deceased, not the confidante. The executor who fails to report the account on time may or may not be an heir, and an heir may or may not be a confidante of the deceased.   The policy also treats family members in the OVDP disparately simply based on the timing of death.  It is troubling that the IRS has taken upon itself to punish the family members of the deceased in this illogical fashion. 
So, what is to be done for persons affected?  At the time of this writing, the IRS has been recalcitrant about resolving these cases fairly (hence our FOIA request).  Therefore, litigation may be an unfortunate necessity.  Dennis I. Leonard, here, from Ramsbacher Prokey Leonard LLP in San Jose, California, a boutique estate and tax litigation firm, shared with me that he had a docketed U.S. Tax Court case where the IRS ultimately conceded this issue.[3]   Dennis cleverly argued as an alternative to the deduction argument that the MOP reduces the value of the estate, which ended in the same result.  The theory being that the estate value under I.R.C. § 2033 is reduced by a valuation discount dollar-for-dollar for the penalty amount.  In that case, the IRS seemed reluctant to litigate the valuation discount issue and thus conceded the issue.  Hopefully, the IRS will reconsider its position, but until that time there appear to be some sustainable arguments against this policy.

Guest blogger Milan Patel and his colleague James Gifford are U.S. tax attorneys at Anaford AG, which is a law firm based in Zurich, Switzerland.  Milan and James represent clients from around the world in the various IRS offshore voluntary disclosure compliance programs with a particular emphasis on cross-border and international tax issues.  Comments may be made to this blog and, if desired, specific comments may be made directly to Milan via his email milan.patel@anaford.chor James via his email   Further contact information is available at Anaford’s web site

[1] In limited circumstances this penalty may be reduced to 12.5% or 5%, or actually increased to 50%.  See OVDP FAQs for further clarification.[2]Presumably this policy does not apply to Streamlined cases due to non-willfulness, although this is by no means certain.[3] I thank Leonard for sharing his idea and note that he is a former student of Jack Townsend.

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C is for Sales?

Originally published by Zena Applebaum.

Is Legal CI Sales Enablement

I’ve posted here before about CI as the new Client Intelligence and I still believe that. Clients more than ever – still – want to work with lawyers and law firms who understand their business, and that comes from, among other things, CI. But in giving a presentation recently to some new and interested parties at the firm it occurred to me that CI in law firms is turning out to be sale enablement or engagement. CI in law firms builds a pipeline, creates leads and informs winning RFP responses. At least the way I have being doing it…which made me think about all the conversations and discussions that have happened on this blog and elsewhere in the legal management world about sales people in law firms.  Are they a necessity? Maybe.  Can firms do well without them? Sure, though always better to have them. But what about CI people? 
I have seen a marked increase in CI people at firms – at all levels – from analyst to specialist, manager to director over the course of my dozen plus years of doing CI in law firms. Not only has the number of roles increased, but so too have the depth of those roles, the publications, continuing education opportunities, technology platforms and consultants in the space.  There has been a quiet building of the practice behind the scenes, not at the forefront as has been the case with pricing people or sales people.  These roles are seen as truly disruptive and borrowed from other disciplines. But CI people have kind of just evolved out of BD, KM, Library and other roles to fill a growing need in law firms.  That also means that CI people are often the bridges between these departments as well. 

I have been trying to articulate why it might be that CI professionals in firms are an accepted and growing domain. All I can come reasonably come up with, is that culture eats strategy for breakfast or whatever Peter Drucker really said.  If lawyers not administrators or law firm management types are talking to clients, then lawyers are de facto sales people and CI people, not actual sales people, become sales enablement folk – tasked with helping lawyers make one kind of sale or another. Most CI people in law firms started in Marketing, Business Development, the Library or research services and somewhere along the way learned about CI. Some people started doing CI and were then trained in the discipline, as was my path. Others, were thrust into the CI role and have been learning by doing along the way.  Regardless, many of CI people in law firms that I know, have been at their firms for a while, or at the very least, the people who created and established the CI function have been at the firms for a while. Generally speaking, the longer someone or some role exists at a firm, the more deeply entrenched in the firm culture and the firm DNA a person or role becomes. It follows then, that an evolved CI person or a newly hired one by an evolved other kind of manager, understands a firm’s unique selling points or differentiators. Good CI people understand their firm’s culture and how to find new clients, fill a pipeline or help grow existing client accounts in a way that is culturally relevant to the sales –non-sales-people, aka the lawyers.  Strategy such as that which would be brought to be bare by external consultants, or sales people may not jive as well with firm cultures.  Strategic plans on paper may be the ultimate in best practices but only when executed with institutional knowledge, cultural sensitivity and know-how, are these plans destined for success. Law firms are cultural places, you only have to look at the AmLaw 100 or 200 to see that. What other industry boasts a top 200 of its kind?  The accounting firms have managed to get it down to the Big 4, even the biggest sports franchises in the world with all of expansion teams don’t start the season with a top 200. The big differentiator for firms is often culture and culture can only be defined and sold on the grounds of intimate understanding. CI people, steeped in a firm’s culture can connect the internal and external dots to create a sales pipeline in a way that others may not be able to because of the inherit objectivity and collaborative nature of CI in law firms. 

The experience of CI professionals gives them a unique perspective on the attorneys client base, including insights into their training and thought processes.  This allows them to provide analysis that works to the strengths of the attorneys as problem solvers rather sales professionals.  In turn, this allows the attorneys to sell their services in a targeted manner by addressing client needs and how they are best suited to solving them rather than with a general sales pitch.  I think this approach allows firms to capitalize on what differentiates them from others in acquiring new business.  And may also speak to the large number of successful firms.  Law firms are not a fungible commodity and CI enables them to emphasize this.

It is only too bad sales doesn’t start with a C or I would have a new set of CI initials to expound.  Is CI legal sales enablement?  




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The Ins And Outs Of Applying For Social Security Disability

Originally published by Gerry W. Beyer.

Social Security is a program associated in the minds of many with old age and retirement. However, the SSA offers other programs including Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). The former program is one that gives…

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Improper joinder clarified, maybe.

Originally published by David Coale.

joinderAlleging that a toe joint implant did not work properly, Flagg sued “Manufacturing Defendants” (who built the implant) and “Medical Defendants” (who surgically installed it in Flagg’s foot.)  The Manufacturing Defendants were diverse from Flagg,  a Louisiana citizen, while the Medical Defendants were not.

Affirming the district court while reversing the panel, an 11-4 en banc opinion holds “the plaintiff had improperly joined the non-diverse defendants because [he] has not exhausted his claims against those parties as required by statute.”  That Louisiana statute requires review by a “medical review panel” before suit is filed against a health care provider; the Fifth Circuit concluded that pursuant to it, “there is no doubt that the state court would have been required to dismiss the Medical Defendants from the case,” as no such review had occurred at the time of removal.  A vigorous dissent raised questions about the Court’s standard for analyzing claims of improper joinder, as well as whether this kind of state statute (“a non-adjudicative, non-comprehensive, waivable process since concluded in this case”) was a proper foundation for an improper joinder claim.  Flagg v. Stryker Corp., No. 14-31169 (March 24, 2016) (en banc).

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Supreme Court of Texas Asked to Vacate Arbitrator’s $3M Legal Fees Award

Originally published by Beth Graham.

The Texas Supreme Court is currently considering a petition for review in a unique case involving arbitration.  Three years ago, a business filed a motion seeking to vacate an arbitral award of $3 million in legal fees issued to the company’s former law firm in Dallas County. 

A brief background on Parallel Networks, Inc. v. Jenner & Block, LLP is available in a prior Disputing blog post:

In the case, Jenner & Block represented Parallel Networks on a contingency fee basis in a lawsuit against Oracle. After losing a motion for summary judgment, the law firm reportedly determined that Parallel Networks was unlikely to win a large financial award and withdrew from representing the company. The parties’ representation agreement stated any disputes over attorney fees would be subject to arbitration.

With the assistance of new counsel, Parallel Networks later settled the disagreement with Oracle for $20 million. After the case settled, Jenner & Block sought in excess of $10 million in attorney fees from Parallel Networks for the work previously performed by the firm. Pursuant to the parties’ representation agreement, the fee dispute was arbitrated and Jenner & Block received a $3 million award.

According to the arbitrator, the parties’ fee agreement was not unconscionable and the law firm had cause to withdraw from representation due to a number of purportedly late payments made by the client.

In the company’s motion to vacate the award, Parallel Networks argued the arbitrator “exceeded his powers” and stated that Texas law prohibits a contingent fee attorney from seeking further compensation from a former client where the relationship ends based solely upon economic reasons.  The trial court confirmed the $3 million arbitral award and Parallel Networks filed an appeal with Texas’ Fifth District Court of Appeals in Dallas.  In October 2015, the appellate court affirmed the lower court’s order.

On March 17th, Parallel Networks filed a petition for review with the state’s high court.  According to the company’s petition, the issues presented in the case are:

  1. The FAA expressly authorizes courts to vacate arbitration awards “where the arbitrators exceeded their powers.” 9 U.S.C. § 10(a)(4). In Hall Street, the United States Supreme Court did not exclude public policy challenges from the scope of the statutory “exceeded their powers” ground, and the court expressly refused to hold that the statutory grounds bar judicial review based on extra-statutory authority. 552 U.S. at 585, 590. Prior case law from the United States Supreme Court and this Court, among others, confirms that arbitrators are not empowered to issue awards that violate public policy. The FAA does not preempt, and Hall Street does not overrule, this line of cases establishing public policy as a basis for judicial review and vacatur of arbitration awards. Are public policy challenges reviewable by Texas courts as a basis to vacate arbitration awards made under the FAA?
  2. The CFA’s termination provisions were unconscionable and against public policy. The arbitrator’s award of fees to Jenner after it walked away from representing Parallel violates carefully articulated, fundamental Texas public policies governing contingent fee agreements. Did the lower courts err by signing and affirming a judgment confirming an arbitration award that violates Texas public policy?

In addition, Parallel noted in its petition:

The court of appeals’ holding reflects the lingering confusion created by Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 590 (2008). The Hall Street Court held that the grounds in sections 10 and 11 “provide exclusive regimes for the [judicial] review provided by the statute….” Id. (emphasis added). The court did not address whether the statutory “exceeded their powers” ground encompasses “manifest disregard” and public policy challenges. Id., 552 U.S. at 585. The court also “d[id] not purport to say that [the statutory grounds] exclude more searching review based on authority outside the statute….” Id., 552 U.S. at 590. Yet, the court of appeals applied Hall Street as barring public policy as a basis for vacatur.

This Petition’s important and recurring issue already has caught the Court’s attention, albeit in a case where the question is not squarely presented. At the January 2016 oral argument in Hoskins v. Hoskins (No. 15-0046), the Court discussed with the respondents’ counsel whether a public policy challenge to an arbitration award falls within the ambit of the statutory ground that arbitrators exceeded their powers. Hoskins’ counsel correctly noted this issue was not raised and did not need to be decided in that case. This case does raise the issue the Court highlighted at oral argument and affords a valuable opportunity to decide it.

A copy of Parallel Network’s entire petition for review is available online.

Please stay tuned to Disputing for more information regarding future developments in this fascinating case!

Photo credit: 401(K) 2013 via / CC BY-SA

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