Voting Laws – Do’s and Don’ts for Texas Employers

Originally published by Celina Joachim.

November 8 is shaping up to have one of the largest voter turnouts in history.  As such, Texas employers should ensure they comply with election voting laws as they relate to employees.  Chapter 276 of the Texas Election Code sets certain requirements for employers.  Below are some do’s and don’ts for employers with voting employees:

• DON’T PROHIBIT EMPLOYEES FROM VOTING.  Perhaps this one is obvious, but it is unlawful for employers to prohibit employees from voting or to threaten them for voting.  This includes denial of time off to vote as addressed below.
• DO ALLOW EMPLOYEES TWO HOURS TO VOTE.  If an employee does not have two consecutive hours outside working hours during which the polls are open, a Texas employer must allow the employee extra time off to vote.  Such time off is paid unless it is outside working hours.  That said, it does not apply if an employee has already voted during early voting procedures.
• DON’T RETALIATE AGAINST VOTERS.  Employers cannot retaliate against a voter who votes for or against a particular candidate or measure, or who refuses to tell you how they voted.  For instance, it is unlawful for an employer or manager to threaten loss or reduction of wages or other employment benefits in retaliation against a voter who votes a particular way or won’t reveal how they voted.
• DO EDUCATE MANAGERS ABOUT VOTING LAWS.  Employers should train managers, supervisors, HR, payroll and other personnel about their obligations under the Texas Election Code.
• DO RESEARCH OTHER STATE VOTING LAWS.  Remember, voting laws vary from state to state.  So, if you have employees in other states, make sure you look into the local requirements or consult with legal counsel.
• DO REVIEW LEAVE POLICIES.  Employers should also ensure that handbook, non-retaliation, leave and other policies and procedures comply with Texas and other local voting laws.

Offenses under the Chapter 276 of the Texas Election Code are Class C Misdemeanors and could subject employers and individuals to fines (as well as bad press).  With early voting in full swing and the election fast-approaching on November 8, it is important for employers to take a moment to ensure they are up to speed with voting laws.

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EI as much as AI

Originally published by Zena Applebaum.

Technology is cool. There is no disputing that fact. Last month, while travelling for work, I had a video conversation with my kid, while I was 3500 kms away in a relatively remote mountain resort, and he was in a moving vehicle. Last week, while doing some research I came across a data visualization of all of the spells used in all seven books of Harry Potter on a scatter chart, and when you hovered over the data points you learned when the spell was used, by whom and why. That’s cool, that’s technology. Whether we are looking at the vast amounts of data in the world and how we can use that data, make it visible, pretty and useful, or whether we are talking about “smart” technology, machine learning or artificial intelligence as it applies to daily work tasks that can be automated, made better and or make our work lives and products more efficient.

And yet, as I sit here at ARK KM 2016, in NYC, the themes I keep hearing coming out of every session, are around audience engagement, adoption, clarity of purpose, how do we encourage people to share, and clear or shared communication. Fundamentally “soft skills” that technology can’t really impact have been a part of every presentation. Like it or not, while some of us may prefer to engage with robots, as people working in law firms for legal clients, we are dealing with people, clients are people. Implementation of strategically sound KM programs, social for enterprise, efficiency in data visualization, noise reduction, cross firm collaboration, data integrity, whatever it is – people are at the centre and people are necessarily complex. When we talk about getting people to collaborate, share data, engage on client matters together and so forth, we are discussing changing cultures with in individual firms and within the legal industry as a whole. Changing legal and law firm culture, (and related initiatives such as KM – however you define it) start, in my opinion with putting clients first.

I have written here and else where about how clients are or should be at the centre of any significant initiative by firms. Putting clients first to my mind means using a design thinking approach to new initiatives. Design thinking as explained in a recent Lexpert article is “also known as “human-centred design” — an approach that, at its core, is about structured problem-solving with a design flair.” The first step in design thinking that runs through every stage of the process is empathy. Empathy is knowing how someone else feels, whether as a lawyer knowing how a client feels or as an allied professional in a firm knowing how your lawyers feel. Feelings are not always used in the same discussion as law firms or lawyers, but therein, lies the change that needs to happen. In order to successfully innovate and move culturally sensitive initiatives forward we need to think like our clients, we need to feel like our clients. We need to understand our clients pain – their difficulty in solving problems and then very quickly try various solutions in solving those problems or assuage any ill feelings.

Technology can be a tool in helping to achieve resolution, but the tech itself could never replace empathy. The ability to think like others, to feel what they feel and to really understand their challenges and how to address those challenges is really about people connecting with people regardless of roles or capabilities. This is the heart of design thinking – the human element. The EI or emotional intelligence that is required to make AI, KM, BD/Marketing and other projects a success. On the surface it seems simple, and maybe it is, but all too often we are distracted by the technology and the crazy capabilities they afford us. Blinded by the possibilities of the technology, we present solutions to problems people don’t have or we aggregate data sets and taxonomies that make sense to only a few and confuse everyone else. We then push these technology solutions on a varied group of people and expect them to be as excited and ready for the impact of the technology as we are. Who wouldn’t want to know every spell Harry and his friends ever used to defeat He-Who-Should-Not-Be-Named. But if those capabilities add nothing productive to my day, or solve no real world issues, then any real value the technology tools provide gets lost. Tie solutions back people. Start prototying solutions only after actually talking to people, all the people, with all the same problems. Use technology to aid in solving real world issues or frustrations and eliminate the pain that real people are feeling. To do that, we need to be sensitive to the human element every step of the way. Once you can do that, the prototyping and ideation gets far easier, but empathy especially in law firm processes can be a fickle friend.

Who wants to take on that session at ARK KM next year???

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Pro Bono Week Spotlight Day 4: René J. Mouledoux

Originally published by Amy Starnes.

René J. Mouledoux – retired senior counsel for Exxon-Mobil

René J. Mouledoux retired this year from Exxon-Mobil after a stellar career as a litigation lawyer. Mouledoux spent the last six years of his career based in Houston, where in his spare time he helped hopeful immigrants fill out the paperwork they needed to apply for U.S. citizenship at Catholic Charities’ citizenship workshops.

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Selling Your Business: Why Accurate Financials are Important

Originally published by Drew York.

This is the fourth installment of a series discussing potential pitfalls that JR and Sue Ellen Pawlenty, who own Pawlenty Energy, should be wary of when they are trying to sell their business. Recently, Tilting the Scales highlighted Successfully Selling Your Business: Top 6 Potential Pitfalls; So You Might Sell Your Business Someday: Do You Need a Broker?; and Successfully Selling Your Business: 4 Tips – No Matter the Buyer. Today, we’re going to discuss why it’s important for your business’s financial records to be in order.   

Avoid Losing the Sale

Many business sales begin with a letter of intent that gives the buyer a due diligence period to investigate and evaluate the business.  Inaccurate financial statements will send up a red flag for potential buyers and probably cause them to walk away from the sale.

Potentially Avoiding Litigation

When there’s a falling out between the buyer and seller after the sale, particularly where the business isn’t doing as well as it was before the sale, the buyer usually complains that the seller’s financials were inaccurate. Although you can’t control whether the buyer sues you, you can create a paper trail during the course of the sale that will make it easy to present your defense.  One way to do that is to pay your accountant to perform an audit of your financial statements before you put the business up for sale.

Boosting Your Business’s Market Value

Inaccurate financial statements might also lead to a below-value sale. For example, if your financial statements inadvertently omit the extra $100,000 in revenue you made last month, the business doesn’t look as valuable to a prospective buyer, meaning you will probably sell the business for less than it is actually worth.  You should also consider having the business appraised.

Other Important Records

If your business is regulated by the local, state or federal governments you want to make sure all of your required licenses are in good standing.  Potential buyers who discover that a business’s licensing is not in compliance will question whether the business’s financial records are also sloppy.

If you incorporated your business, you need to make sure that you have filed all necessary documents with the secretary of state.

You may also want to consider obtaining an environmental audit of the property where your business operates if you handle hazardous chemicals.

Tilting the Scales in Your Favor

Although getting your financial and other documents in order may take some time and cost some money, doing so before you put your business up for sale will save you from surprises later on. If a buyer finds flaws, it will delay the sale, may cost you the sale and may have cost you other potential buyers while you were trying to fix these problems.

 

The post Selling Your Business: Why Accurate Financials are Important appeared first on Tilting the Scales.

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Sidestepping Courts and Congress, IRS Proposes New Rules on Transfers of Closely Held Business Interests

Originally published by Axel Lindholm.

On August 2, 2016, sidestepping what it contends are a number of unfavorable court decisions and an unresponsive Congress, the Internal Revenue Service (IRS) released new proposed regulations that would essentially prevent taxpayers from applying most minority interest discounts for intra-family transfers of family-controlled businesses. With the proposed regulations, the IRS is trying to strengthen the existing intra-family transaction rules contained in Internal Revenue Code § 2704. IRS officials have indicated § 2704 has not been effective in preventing abuses in many cases. They believe that the IRS has the power to implement the new rules without Congressional action.

The IRS has scheduled a public hearing for December 1, 2016 to consider public responses to its proposed new regulations. Many tax experts say public criticism isn’t likely to change the Service’s mind; there likely will be no meaningful changes to the regulations as currently written.

Valuation Discounts: What Are They?

In true arm’s length negotiations, when it comes to valuing closely held businesses, the “whole is worth substantially more than the sum of the parts.” Phrased a different way, a prudent investor would never pay $1 million for a 20 percent interest in a closely held business valued at $5 million. He or she would not do so for at least three reasons:

•  The investor would have little, if any, actual control over the firm’s business operations
•  In a pinch, it would be difficult, perhaps impossible to liquidate the investment
•  There exists no ready market for the minority interest in the business, should the prudent investor desire to sell

Valuation Discounts Have Been Powerful Estate Planning Tools

For quite some time now, estate planners have applied this same sort of valuation discount concept for wealthy small business owners by structuring gifts of minority interests either directly to family members or to trusts created for their benefit. In essence, use of the discount rules allows one generation to transfer important family-owned assets to the next generation at a lower tax cost. The Service has pushed back, but has usually been defeated in court, based on current readings of § 2704.

Of particular concern for the IRS are so-called “deathbed” transfers of minority interests. The proposed regulations deal with these transfers with a clenched fist: Valuation discounts will not be applicable to any transfer of equity to family members that occurred within three years of a taxpayer’s death. Moreover, the value of the valuation discounts taken when the gift was made will be added back to the value of the estate.

Proposed Regulations Are Drawing Criticism

The proposed regs are drawing criticism, but most of that criticism is falling on deaf ears within the Treasury Department. IRS officials contend that it makes sense to treat intra-family transfers differently from those involving unrelated third parties. They say that even after the gift or transfer involving the minority interest, the family’s ownership and control essentially remains the same, since most families act cooperatively when it comes to running “the family business.”

What Should Closely Held Business Owners Do?

While the regulations will not become effective until at least January 1, 2017, the three-year-look-back provision mentioned above should cause many small business owners concern, particularly if they have made gifts of minority interests to family members in recent years. In many cases, a thorough review of one’s entire estate plan is in order.

Romano & Sumner: Skilled, Experienced Attorneys

The attorneys at Romano & Sumner, PLLC have more than 20 years of combined experience providing expert legal assistance to clients in all types of taxation, wealth management, and estate planning. We have expertise in the creation of all sorts of Texas trust documents and stand ready to assist you in managing your important assets, including interests in closely held businesses. Cookie cutters are for bakers – not wealth management and estate planning attorneys. At Romano & Sumner, we listen to you and offer multiple alternatives that will help you maneuver through the complicated tax and legal arena. We pride ourselves upon our professionalism and client service. We keep our clients informed, returning your calls within 24 hours. We’re ready to assist you as you make the important decisions that affect your family. Call us at 281-242-0995 or complete our online contact form.

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Will My Case Go to Trial?

Originally published by Brandee Bower.

This question is asked of me in every meeting with a potential client. Unfortunately, I do not have a crystal ball that permits me to definitively respond to that question. However, I have faith in statistics, and in Colorado the answer to the question is that a case will probably not proceed to trial. Approximately one percent (1%) of filed cases go to trial. However, someone must be that one percent, right?
I recently attended a scheduling conference in a federal court matter and the Judge asked the attorneys—namely me—what the likelihood was this particular case would be tried. I responded that based on statistics it was very unlikely that it would go to trial. He then told us about the statistics that the federal court keeps on this topic:

The Judge narrowed the statistics to the insurance cases tried in 2015. Of those, nine cases went to trial on breach of contract and bad faith causes of action. The average length of trial was 4-7 days. Of the nine cases in…

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Texas Courts Continue Their Romance With Arbitration

Originally published by Charles Sartain.

Posted by Charles Sartain

The lessons in Craddick Partners Ltd. v. EnerSciences Holdings, LLC are three: Parties who have not signed an agreement to arbitrate have standing to compel arbitration; artful pleading to avoid arbitration won’t work; and Texas courts remain eager to send cases to arbitration.

EnerSciences’ two subsidiaries sell products in the oil field. Tom Craddick approached EnerSciences to sell products to Craddick’s Permian Basin clients. EnerSciences created PB Ventures as a subsidiary through which Craddick would sell their products.

A sales agreement between Craddick Partners and PB Ventures compelled arbitration of all disputes, excluding claims “brought by either party seeking injunctive, declaratory or preliminary relief”.

Pardon me while I digress

Some parties agree to litigate some claims and arbitrate others. Why? Don’t do it. It only complicates matters, potentially increasing the cost of the dispute by fighting it in two different places. And injunctive relief is addressed by the courts and the rules of the arbitration bodies.

The dispute

Craddick Partners sued PB Ventures, EnerSciences, and its two subs, asserting negligent misrepresentation, negligence, and tortious interference (all of which are torts), and seeking a declaration that the sales agreement had terminated.

The defendants, no doubt seeking to avoid a generous portion of hometown justice, sought arbitration, alleging that Craddick artfully pleaded tort actions to avoid arbitration and that the claims were really for breach of contract. Craddick said the EnerSciences parties were non-signatories to the sales agreement and thus lacked standing.

“Direct-benefits estoppel”?

The doctrine permits a non-signatory to compel arbitration of a signatory’s claim “if liability arises solely from the contract and must be determined by reference to it”.  Said the court, a “meddlesome stranger” cannot compel arbitration by merely pleading a claim that quotes someone else’s contract. A party can’t have it both ways:  on one hand seek to hold the non-signatory liable for duties imposed by an agreement with an arbitration provision, but on the other hand deny arbitration because a defendant did not sign it.

The court denied Craddick’s argument that its claims arose from general obligations imposed by law (the tort claims). All of Craddick’s claims depended on the existence of the sales agreement. The claims not only made reference to or presumed the existence of the agreement but relied upon it for viability. EnerSciences had no obligations to Craddick other than those arising out of the contract.

A factor in the tortious interference claim was that the non-signatories were so close to the contract that they were an integral component of it; they were affiliates, and not strangers to the agreement.  Craddick could not avoid arbitration by recasting its claims as tortious interference. That claim also relied on the sales agreement for viability.  If PB Ventures had not breached the sales agreement there would be no tortious interference.

Fancy pleading doesn’t help

The court concluded that the declaratory judgment request was merely an artfully pleaded breach of contract claim. To render a declaratory judgment the court would have had to determine whether PB Ventures breached the sales agreement.

To appreciate today’s musical interludes, consider what early 1950’s  mainstream radio sounded like. Along came Chess Records with Chester Burnett, McKinley Morganfield and plenty of others.

So, Phil Chess RIP.

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