Author: National Law Forum

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Knock Your Socks Off: A Conversation with EEOC Leaders

Mandatory vaccinations, harassment and retaliation charges, and guidance and enforcement priorities are just some of the important issues U.S. Equal Employment Opportunity Commission (EEOC) officials addressed at Ward and Smith’s Fall Employment Law Update.

I moderated the discussion that was led by Tom Colclough, Deputy District Director of the EEOC Charlotte District Office, and Glory Gervacio Suare, Director of the EEOC Raleigh Area Office.

Over his 25 years with the EEOC, Colclough has investigated charges and complaints of discrimination, led high-performing teams, and served in various leadership positions. Currently, he plays a key role in fulfilling the agency’s mission through strategic enforcement, management, and planning.

Gervacio’s background includes serving as the director of the EEOC’s Honolulu office. Her career with the Commission began as an enforcement investigator in 2001, and she continually provides outreach and educational assistance to various committees in her jurisdiction.

The conversation began with an analysis of how many charges the EEOC handles in an average year, and of those charges, how many go through mediation, conciliation, or litigation. “We normally receive between 65,000 and 100,000 charges per year,” said Colclough. “This year, it was around 65,000. In our district, we received about 5,500 charges this year.”

Of that amount, Colclough explained that the EEOC:

Resolved 17.8% of cases through the negotiated settlement process;
Completed approximately 500 successful mediations;
Issued a ‘no cause’ determination for 65% of cases; and
Dismissed around 29% for untimely filing or because a summary review of the Charge allowed the investigator to determine that a violation did not occur.

The leading types of charges last year included retaliation, followed by disability and race. “This is interesting because, in the previous year, race was the second type of charge that was filed,” commented Gervacio. “So I think we’re seeing a trend because of COVID, and with reasonable accommodation requests and vaccination mandates, we’re probably going to see more disability charges in the near future.”

Enforcement Priorities

The local EEOC district office focuses their efforts in part on supporting six national strategic enforcement priorities, says Colclough. These enforcement priorities include:

Eliminating barriers in recruitment and hiring;
Protecting immigrants, migrants, and other vulnerable workers;
Addressing emerging and developing issues;
Enforcing equal pay laws;
Preserving access to the legal system; and
Preventing harassment through systemic enforcement and targeted outreach.

Colclough indicated his district has developed a complement plan to address issues that are important to the local community: “For the most part, we’re looking at vulnerable workers, also emerging issues dealing with the ADA. As you know, COVID is an emerging issue that continues to develop every single day. And retaliation is the number one priority.”

Retaliation goes beyond someone receiving an adverse result after objecting to a form of harassment or discrimination. “There’s more to retaliation than just the mirror opposition or exercising a right to complain,” noted Gervacio. “Disability is on the rise, and there’s a component of retaliation when somebody requests a reasonable accommodation due to their disability.”

COVID Vaccinations

The subject of mask mandates and vaccination requirements is still on employers’ minds and continually evolving. Generally, officials at the EEOC expect to see a substantial increase in COVID-related charges and inquiries pertaining to reasonable accommodations.

For those who watch the news every day, it’s clear that vaccination mandates remain a hot button issue, explained Colclough. “One thing I’d like to folks to know is that, on our website, we clearly state that federal laws do not prevent an employer from requiring all employees physically entering the workplace to be vaccinated for COVID-19.”

Gervacio illuminated the subject with an analysis of a recent case involving United Airlines, in which a court order placed a temporary stay on the company’s vaccination mandate. Basically, the judge ordered that placing employees on unpaid leave for requesting an exception to the airline’s vaccination mandate due to a disability or religious exemption is not a reasonable accommodation.

“We are still waiting on guidance from our headquarters on how to address that,” said Gervacio, “so it is unfolding as we speak.”

In light of this development, employers should understand that it is doubtful that placing an individual who requests an exemption to a vaccine mandate on unpaid leave is a reasonable accommodation. Until the EEOC provides updated technical guidance, a potential best practice for employers is to go through an interactive process for all disability and religious-related exemption requests.

Is Long COVID a Disability?

Recently, the EEOC stated that it would be adopting the Department of Health and Human Services position on “long COVID” is to classify it as an ADA disability. The determination ultimately turns on whether or not it substantially limits one or more daily activities.

Employers should educate themselves on what “long COVID” is and its symptoms and understand that since it could potentially be classified as an ADA disability, they should be prepared to engage in an interactive discussion with the employee.

Working from Home

At the pandemic’s start, many employers suddenly had to transition the majority of their workforce to a remote or a virtual environment. With that in mind, the question of which positions are appropriate for telework remains relevant.

Given a choice, many employees would choose to work from home, but that may not be in the employer’s best interest. “Telework as a reasonable accommodation “might be the gold Cadillac standard of what an individual wants,” explained Colclough, “but that’s not necessarily what the employer has to provide.” Employers only need to consider whether an accommodation allows the individual to perform the essential job functions.

“Telework is just one of many tools of accommodation an employer has in their toolkit,” adds Colclough. Employers may sometimes feel that the employee is driving the interactive process and that they have to comply with the employee’s preferred accommodation.

Ultimately, however, it is up to the employer to decide what accommodations are reasonable based on the needs of the business and what will allow the employee to perform the essential job functions. Employers have various options for those who are averse to getting the vaccine, whether their request for an exception is ADA-related or due to a religious exemption. As far as reasonable accommodations, the following are listed on the EEOC’s website as technical guidance on potential reasonable accommodations to vaccine mandates:

Social distancing, e., placing an individual in their own office;
Modifying shifts to limit interactions with other employees and customers;
Periodic testing; and
Reassignment.

Gervacio pointed out that “[t]here are many examples of reasonable accommodation listed on the Job Accommodation Network. This service provided by the U.S. Department of Labor’s Office of Disability Employment Policy offers technical guidance on various types of accommodations for certain disabilities, including specific COVID-related issues from telework.”

An unexpected outcome the EEOC has seen after the rise of telework is an increased number of sexual harassment complaints over the past 18 months. These complaints have originated from Zoom meetings, Facebook, and other forms of social media.

Employers should consider developing standards for how employees are expected to behave in a virtual environment, advised Colclough. “We’ve got to convince people to get back to being as professional as they were in person,” he said. “And perhaps that will help some harassment complaints go down.”

Gervacio recommended that employers train their managers and supervisors. “A lot of the charges we get, it seems the manager or supervisor is not aware of their roles and responsibilities, and whether or not they need to take action,” commented Gervacio. “This training should be tailored to the workforce because you want them to be engaged.”

Another update the EEOC leaders mentioned included a change to the notice of right to sue. When the EEOC decides to close an investigation, it issues what is commonly referred to as a notice of right to sue, which allows the charging party to file a federal lawsuit if they want to pursue the claim further.

Finally, the EEOC leaders shared that recently, the regulations were amended to make digital service an acceptable form of communication for this notice. “Doing it digitally is much, much faster,” added Colclough, “and we get an almost instantaneous notice when parties take a look at it. This helps us ensure the right to sue got into the right hands.”

Article By Hayley R. Wells of Ward and Smith, P.A.

For more articles on the EEOC, visit the NLR Labor & Employment section.

How COVID-19 is Impacting Global Supply Chains & How Companies Can Cope

Despite the positive impacts of ongoing safety measures and the development of effective vaccines, global supply chains are continuing to face unprecedented logistical challenges because of the COVID-19 pandemic. Since the emergence of the coronavirus in early 2020, supply chains across the world drastically slowed down for a variety of reasons, including but not limited to disrupted shipping lanes, labor and material shortages and fluctuating demand. Every sector of the economy is affected to some degree, most notably the automotive, tech and medical supply industries.

Global markets face many unknowns as the supply chain returns to normal. The impacts of COVID-19 are far reaching, and it is difficult to determine precisely how long the disruptions will last. Further, late deliveries or no supplies of materials or labor presents a number of legal implications, and many companies affected by the disruptions are looking for guidance on how to proceed.

How Has COVID-19 Impacted the Global Supply Chain?

According to the Bureau of Labor Statistics (BLS), 4.3 million U.S. workers left their jobs as of August 2021. This 3 percent decrease in the U.S. work force is especially impacting the supply of truckers and warehouse workers which particularly impacts the supply chain. As variants of COVID-19 continue to spread throughout the globe, vaccine mandates and required coronavirus testing leaves employers scrambling to stay compliant amidst being short staffed. These actions are also occurring after a year-long closure of major manufacturers all over the world.

Even with President Biden’s Executive Order 14005, which aims to strengthen domestic supply chains, issues with cybersecurity and labor resignations continue to cause bottlenecks at U.S. ports. Without the necessary workforce to transport goods across the U.S., some ports are facing an 80 percent increase in congestion. As the global supply chain grows more chaotic, President Biden met with officials last Wednesday to discuss the nationwide supply chain bottlenecks, announcing that the Port of Los Angeles will begin operating 24 hours a day, seven days a week to help deal with the bottlenecks. Additionally, major retailers such as Walmart and Target committed to increasing shipping operations during off-hours, with logistics companies FedEx & UPS making a similar pledge.

“In my 40 years of living and working in Southern California, I have never seen container ships off the coast of Malibu, and yet there they are, because there is no more room for them in the parking lots that are the ports of LA and Long Beach,” said Brad Hughes, Member of the Transportation & Logistics Practice at Clark Hill PLC.

How Long Will COVID-19 Supply Chain Disruptions Last?

It remains to be seen precisely how long the effects of COVID-19 will be felt on supply chains. In many cases, the answer is industry-specific since different industries rely on the global supply chain in different ways. However, in general, it does appear that the problem is unlikely to be resolved before the end of 2021.

“Unfortunately, the supply chain problem is not likely to be resolved before Christmas,” said Mark Andrews, Senior Counsel and member of the Transportation & Logistics Practice at Clark Hill PLC. “There are many grinches involved, from port bottlenecks, driver and truck shortages, to high freight costs and tariffs. These are compounding problems that need simultaneous attention but will take different times to resolve.”

Industries reliant on highly specific, specialized goods, such as semiconductors or rare earth metals, face a particularly long return to normal. Over 60 percent of businesses in the manufacturing industry reported domestic supplier shortages, followed closely by construction companies at just under 60 percent.

“While many project with cautious optimism a mid-2022 chip supply recovery, we do anticipate other supply chain woes well into late-2022,” said Scott Hill, Executive Partner and member of the Corporate Practice Team at Varnum LLP. “Supplies of raw materials such as resin, aluminum, and steel have become unreliable in this volatile market. Long lead times and increased prices for raw materials, especially in the auto space, are projected which will cause significant disruption when a full restart is demanded. Those who have the ability to order materials now will be better positioned to sell to the market.”

How Can Companies Handle COVID-19 Supply Chain Disruptions?

The supply chain disruptions brought on by the COVID-19 pandemic have wide reaching legal implications, specifically the web of state and federal laws surrounding transportation.

“I would identify uniformity of federal and state transportation law as a badly needed element of ‘legal infrastructure’ to reduce transportation costs and delays,” Mr. Andrews said. “Examples include driver hours, worker classification and up-supply-chain liability for ‘negligent selection’ of motor carriers involved in traffic accidents.”

With there being no signs of the supply chain disruptions ending anytime soon, companies can take steps to manage their supply chain operations. Potential solutions include moving from a sole-source supply chain to a multi-source supply chain, according to Varnum’s Mr. Hill.

“Since the onset of the pandemic, we have worked closely with our clients to optimize their supply chain, whether they were operating under sole-source or multi-sourcing strategies. As you may imagine, multi-sourcing and on-shoring to the extent possible has been particularly important with bottlenecks in the chain across the globe,” he said.

Another consideration for companies experiencing supply chain disruptions is handling claims of delayed delivery, specifically for those in the automotive supplier industry. Mr. Hill said his clients are working daily to remedy automotive industry supply chain issues to ensure expectations are met.

“Many of our clients are in the automotive supplier space and the semiconductor shortage continues to warrant attention and necessitates daily if not hourly conversations up and down the chain to reflect good faith efforts to deliver under the terms of supply agreements,” he said.

Currently, federal agencies and the Biden Administration are responding to supply chain issues, specifically through President Biden’s executive order. The order addresses many of the issues facing supply chains right now, including directing heads of federal agencies to conduct a one-year review on supply chain vulnerabilities.

Conclusion

Even though many of the challenges presented by the supply chain disruptions are ongoing, the announcement from the Biden Administration that ports and retailers are committing to increasing operations to deal with supply chain issues may help ease some of the strain. Additionally, companies can expect more regulatory actions to come later in the year from other agencies.

“Federal agencies are actively undertaking a range of actions in response to recent executive orders and other presidential direction on the nation’s supply chain issues,” said Anthony Campau, Counsel and Director of Government Regulation for Clark Hill.

“Some of those measures are already public, but more detail will likely become visible this fall when the Office of Information and Regulatory Affairs (OIRA) releases the Fall 2021 Unified Agenda of Federal Regulatory and Deregulatory Actions, which will list all regulatory actions currently under development at federal agencies. That publication should offer a helpful window into planned regulatory responses to the nation’s supply chain woes,” he said.

Article By Chandler Ford, Jessica Scheck and Rachel Popa of The National Law Review / The National Law Forum LLC

For more articles on supply chain, visit the NLR Antitrust & Trade Regulation section.

Why Legal Teams Need Digital Contracting for Modern Business

Legal teams have always had the arduous task of analyzing legal documents, which is not only time-consuming but also requires close attention to detail and years of education and training. On top of that, because this is traditionally done manually, the critical data buried within contracts has remained lost.

While manually analyzing contracts might have worked in the past, it simply won’t cut it in the fast-paced reality of today. It’s time for legal teams to join the digital transformation. Over the last decade and a half, every other facet of business has undergone digitization…except contracts. And with digital transformation investments projected to hit a total of $7.8 trillion from 2020 to 2024, it’s legal’s turn to get on board.

Businesses rely on contracts to survive. Think sales contracts, employment and partnership agreements, NDAs, licensing agreements and more. But as they exist today, contracts are a workflow impediment and the data they hold isn’t being used to its full potential.

Data is currently trapped in contracts

There is all kinds of information-rich, operational data hidden in contracts critical to a company’s success. As much as 90% of company spend and investments are determined by contract terms. At the same time, suboptimal terms and inefficient contract management can result in a whopping 9% loss of annual revenue. While the specific information businesses choose to focus on will vary, some common points hidden in contracts include:

Total contract value – the total value of the contract once it’s active, its recurring revenue and charges.
Auto-renewal opt-out notification period – the amount of time auto-renewal can be opted out of.
Personally identifiable information (PII) exchange – data identifying an individual.
Counterparty address region – the party on the other end of the contract.
Ability to terminate for convenience – the power to terminate a contract if it becomes unsatisfactory.
Exclusivity – a type of agreement where one party agrees to work exclusively with the other.

This critical data isn’t readily available and there’s no good way of tracking it unless we adopt a new way of doing things. Once unearthed, contracts will help businesses become efficient, effective and more accurate.

Contract data allows legal teams to operationalize and reduce risk

Legal teams need to be able to keep up in a world that runs on increasingly larger numbers and more complex scenarios. To do so, they need to be equipped with resources enabling them to be data-driven. For example, today, legal teams may lack the answers to simple questions about the contract pipeline simply because these insights aren’t stored, compiled and updated in real time. Without this, legal teams are unable to operationalize their processes, making it impossible to put the systems in place that allow for more efficient work. After all, inefficient contracts can cause losses ranging from five to 40% of deal value. It also exposes the company to danger because, without tracking, contracts are ripe with risk.

Contracts hold the operational and substantive information legal teams need to operationalize, set goals, mitigate risk and prove their value to the company. Operational data includes the number of workflows launched and completed as well as turnaround and response times. Substantive data, such as governing tax law, contract amount, data protection and implementation obligations, exposes risk and obligation.

With the right tools and a centralized system, legal teams can have access to all the details they need to prove their team’s value, work more efficiently and protect their companies.

A new standard: digital contracting

A new standard for companies and legal teams to keep up with a fast-paced, data-driven world: digital contracting, a standardized system for business contracting to connect people to systems and data. Once digitized, contracts will become living, collaborative documents to easily find and track the once-hidden goldmine of data within. The result is resilient teams.

Legal tech is leading the way in developing the software needed to support digital contracting. Next-generation contract management software makes metadata searchable and readily accessible. This will enable entire businesses to have the information they need to make well-informed decisions at their fingertips.

Soon, the days of in-house lawyers having to paper chase will be long gone. Instead, lawyers will be able to create agreements instantly, collaborate and get approval with ease, while having access to version history and the metadata needed to operationalize and reduce risk.

It’s time for legal teams to get the tools they need to thrive in today’s fast-paced work environment by getting on board with a better, faster, more sustainable way of work through digital contracting.

Article By Chris Young of Ironclad

For more articles on the legal industry, visit the NLR Law Office Management section.

How to Be More Inclusive with Your Legal Marketing

If your law firm isn’t focusing on inclusivity and diversity in its marketing, you may be missing out on opportunities to grow your business and provide legal help to those who need it.

Being inclusive with your law firm marketing might be difficult when you have no idea where to start. But you will need to figure out how to show people from all different types of backgrounds that you’re the law firm for them with your advertising and marketing efforts.

Audit Your Law Firm’s Current Marketing Strategies

In order to be more inclusive, you first need to get really honest with yourself about where your law firm is currently at in terms of diversity and inclusion, and which systems you might have in place that have prevented your firm from becoming more inclusive in your marketing approach.

Start off by auditing the content your law firm has already released. You should be looking for any unintentional messages about who your law firm is, what matters to you, and who you will or will not work with. For example, does the content on your website use terminology such as “his or her”, or “he or she”? To be more inclusive, your content should always address your target client as “they” to be most inclusive.

Comb through your social media profiles, your attorney bio, and every piece of media you’ve created and analyze them. Are there ways that you could have been more inclusive to ensure that people from more diverse backgrounds recognize that you’re the law firm that can help them?

What Photos Does Your Law Firm Use?

One of the first things you should go through when you’re reviewing your law firm’s marketing materials are the photos you have used. Any images on physical materials, and more importantly, online, should be carefully considered. Do all of your photos and images have people of the same nationality, gender, or race? What about individuals who have disabilities? There are a few different ways you can go about being more inclusive when it comes to your photos.

First, you should start hiring with inclusivity and diversity in mind. This means hiring people from varying backgrounds to work with you and your law firm. It is the most natural and authentic way to be more inclusive with your marketing, because your law firm is living it.

Another way to be more inclusive in your marketing photos is by engaging with and participating in your community. Volunteer with organizations that care about inclusivity and diversity. Host fundraising events where possible. These are just a couple of options, but ultimately you want to immerse your law firm in the community that you want to be representing.

Have You Thought About Accessibility?

Another way to be more inclusive in your marketing is to take accessibility into consideration. Is your current website accessible for those with visual, neurological, cognitive, or auditory impairments?

Are there ways that you could make it easier for clients to find you and interact with the current materials your firm has already created? Some easy upgrades to make your website more accessible could include adding keyboard navigation capabilities, adding ALT Text to your images, and descriptive URLs.

Consider Language Barriers

When you live in a particularly diverse area, and when you want to take steps to be more inclusive, you should take into consideration the fact that not all of your prospective clients are going to speak English as their first language. Some clients may not speak English at all. By having lawyers in your team who can speak multiple languages, you may be able to uniquely bridge a language barrier gap that your competitors may not be taking into consideration.

Make sure you let your future clients know that a language barrier won’t be a problem with your law firm, because you have people on staff who speak their native language. This is not only a great marketing benefit, but provides your client with an overall better experience with your law firm.

Establish a Solid and Ongoing Review Process

Most attorneys know that getting a bad review online can have a significant impact on your law firm. One of the best ways you can be more inclusive and diverse in your marketing is by establishing an ongoing review-getting process.

If successful, you could be seen as a law firm with a solid reputation. If your reviewers leave open and honest feedback on their experience with your firm, those searching for an attorney could resonate with your client’s experience and view you as the best option for their legal representation.

You should also be sure to respond to any negative feedback or reviews you might receive. And be sure to utilize constructive criticism that may be holding your law firm back from achieving optimal inclusivity.

This article was written by Meranda M. Vieyra of Denver Legal Marketing. For more articles about Legal Marketing, please visit here.

The Attorney-Client Relationship Post-Pandemic with Baker Donelson [PODCAST]

Rachel and Jessica discuss law firm management and attorney-client relationship-building in the third episode of the Legal News Reach podcast with Jennifer Keller and Adam Severson with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.

Read on below for a transcript of our discussion, transcribed by artifical intelligence:

Rachel

Hello, and welcome to Legal News Reach, the official podcast for the National Law Review. Stay tuned for discussion on the latest trends in legal marketing, SEO law firm best practices and more.

Rachel
I’m Rachel

Jess

And I’m Jess. We’re the hosts for legal news reach and web content specialists here at the National Law Review.

Rachel

In this episode, we’re excited to talk to Jennifer Keller and Adam Severson with Baker Donelson. So Jennifer and Adam, would you like to introduce yourself to our listeners?

Jennifer
Sure, sure. And thanks so much for having us. Again, I’m Jennifer Keller, the president and chief operating officer of Baker Donelson. In that role I manage the provision of legal services through our departments and practice groups. I also manage our firm’s professional development, recruiting and marketing and business development functions. And I’ve been with the firm and since I got out of law school.

Adam Severson

And I’m Adam Severson, I’m the firm’s chief marketing and business development officer. I’m in Nashville, Tennessee, and I’ve been with the firm 10 years coming up in January and prior to that held similar leadership roles at a couple other Amlaw 100 firms

Rachel
We’re excited to have you both on today, I’ll just jump into a topic that’s been weighing pretty heavily on everyone’s minds for the past year, has your office found any silver linings of the pandemic? How has your office adjusted to that?

Jennifer
Well, I’ll start we have 21 offices and about 650 lawyers. So certainly the pandemic has been a very interesting time for us. And I think all law firms, no matter what their size, or location, I think there have actually been a few silver linings coming out of the pandemic, I would say probably the one you would hear from most law firm leaders as the predominant one is that it has expedited the acceptance of change in a lot of areas, you know, the use of technology, remote work, or alternative work arrangements, collaboration in new and different ways, both with each other inside of firm and with our clients. So I just think in those circumstances, we were forced to pivot and didn’t really have a choice. And so that acceptance of change was sped up a good bit.

Adam
Just to build on that acceptance of change. You know, I think we found ourselves, you know, in the marketing and business development team forced to think more creatively about how we position the firm, and how we collaborate and sort of a superspeed way, with our attorneys, we were one of the first firms to launch a Coronavirus Resource Center. And so to sort of launch that, and then be in a place where we did more client alerts in 45 days than we did in the prior 12 months. So the way that we had to rise to the occasion was a silver lining really, because it forced us to think creatively, but also sort of led to this kind of element of teamwork and collaboration that was really inspiring, I think, in some respects, and also exhausting.

Rachel

To sort of build off of that exhausting feeling, we sort of faced that. A lot of our clients started producing way more content than they had just recently. So we had to do a lot of work just to keep up with everything. Can you like talk a little bit more about the challenges that the firm faced and you know, creating that Coronavirus, Resource Center, getting everyone to do all those client alerts? You know, what was that process like?

Adam
Well, I think fortunately, it was helpful to demonstrate the strong infrastructure that we had in place in the firm. And so from the Resource Center perspective, you know, our web platform technology is really strong and allowed us to adapt almost real time. Some elements of the page were I don’t want to say self sufficient, but like, the content was fast and furious, because the marketplace demanded so many new elements of content and changes, you know, happening pretty rapidly, people that were evaluating whether or not they should close their offices, they were, you know, trying to determine, you know, is we have a large healthcare practice. And so looking at all the considerations that they were having around their hospital systems in the life, and so our healthcare attorneys were getting asked all these questions and being peppered and so we need to then sort of share that horizon scanning in those issues, you know, with a broader client base. And so it was, you know, in many ways out of necessity to meet client demand that we were, you know, putting ourselves in that position.

Jennifer
Some of our most busy groups during that time that people whose practices really were dramatically influenced by the pandemic, Labor and Employment health care tax. Once the relief money started flowing, you know, we’re meeting in many instances that eight or nine at night on Team calls pretty perpetually throughout, and some still are meeting really regularly now. And they were just doing a lot of things on those calls and producing a lot of content without even really knowing that it’s content. And so part of what you really are training people to do during that interesting time is to to sort of capture the work they’re already doing as content and getting that out on the platform.

Rachel
So one of the things that we’re wondering now that we’ve sort of gone through a year of this pandemic, and law firms have made all these changes, how do you think law firm management law firm marketing, will change moving forward? Like, will these changes stick? Will they continue to change? Or how do you see that going?

Adam
Well, there’s a lot to unpack first and foremost, you know, there’s one constant, and that is change. And so I think that we are, you know, well aware that change will continue to occur. And I think trying to figure out and try to be a step or two ahead of some of those changes, is something that we aim to do, the way in which those take place, you know, for our clients, I think is, you know, we’re a little bit derivative of those changes. So whatever change happens in the marketplace, we’re then selected, hopefully, as counsel in some form or fashion after a bank decides to buy another bank, or, you know, any rollout of a new piece of legislation then leads to potentially like Health Corps, right, but the healthcare regulatory issues that our clients might be facing. And so, you know, we’re trying to, you know, figure out ways to be ahead of, you know, whatever those changes are, you know, in fact, just this morning, I was talking with one of my colleagues about some of the value added programs that exist for hospital systems. And you know, that we’ve seen a significant uptick in how we’re being called upon to look at that from a variety of different angles. And so we’re now trying to proactively reach out to our clients to talk about those issues. And so we do that, in a number of ways, whether it’s a virtual cup of coffee to sort of check in with somebody could be a more robust CLE program for, you know, a hospital system with a host of hospitals, where we’re sort of presenting as the subject matter expert doing almost a client specific webinar. And then we’re also doing, you know, programs more broadly, you know, for anybody who either happens upon Baker Donelson.com or gets an invite from, you know, our invite list for for one of those programs.

Jennifer
And I think from the law firm management perspective, there’s a lot of interesting work going on right now, in analyzing the changes in law firm management that the last 18 months have brought us. I think that we definitely know that focuses on things like inclusion and mental health, and different work arrangements, different use of real estate kind of collaboration, remotely, just handling that pace of change, that’s all gonna stick, you know, that’s going to be with us for days to come, we’re just going to have to continue to figure out how to take steps ahead in those areas. And so I think what you’re gonna see looking 5 to 10 years ahead is younger, more diverse teams of leadership in firms a lot more input from what we have come to see right now is kind of non traditional leadership in firms. And they’re calling it holistic law firm leadership. And so it’s looking at law firm leadership is instead of just focused in on, let me look at this practice group, or this department or this silo of ours looking at how do we bring someone in, nurture them through their entire career, retain them all along the way, having that client focus in mind, certainly, as well as the firm focus in mind. And really, we know that we’ve got to get a lot of different viewpoints, and you know, making sure that we’re able to do that. So I think we’re gonna see a lot of change in law firm leadership in the days to come. And we are definitely going to need to keep the focus on the things that became really important during the pandemic.

Jess
What transitions besides the CLE offer, or your guys’ webinars have you experienced in your journey to become more digital as far as like day to day tasks that you guys have?

Jennifer
You know, I would say, you know, one of the things that was so interesting, and now that I look back on it, I mean, it seems like it was a blur, but we were in one of the first areas to be really hit by the pandemic, going back into March of 2020. And we took our entire law firm from being largely office space with very few people who were working remotely more than about 20 percent of their time to working solely remotely and about 24 hours. Amazing to think about, I think it was just a miracle actually, at this point in time, but a lot of preparation and work went into being able to do that. But I would say that, you know, it was a huge transition to get really a couple of things. One is our folks to rely on a paperless system of document retention and file keeping, some of them had dipped their toes into it, and we’re using it less than we would like. But we went to a scenario where they had to largely rely much more on those kinds of things. And knowing that they might not be able to get back in the office for an extended period of time, took away that safety net, that they had the big file full of 25 boxes. And so you know, we also experienced, I think, another huge change, which is our legal assistant, working remotely, and tapping into that data in the same way, and then figuring out besides just the file itself, what are all the tools that we have at our disposal to make things operate remotely. And it’s not just a document retention system, it’s the signature systems, it’s the filing systems, it’s the research systems, it’s all of those things that have to come together, we have right now four to five generations of lawyers working together, one or two generations of which are extremely nimble with the technology and the rest of us had a lot to learn. And we continue to learn. So I think we are still in that transition, and are still working toward that transition. And now we’re in this awkward spot where, you know, we’re we we have returned to the offices, but we have a lot of remote work still going on. And so kind of figuring out the happy place where we’re all going to be both from a technology and just presence standpoint, I think is a really interesting thing. But lots of transitions still to come.

Adam
You can see I’m working from my home. I find myself in the office in person, Tuesday, Wednesday, Thursday, if you would have asked us a couple years ago, like oh, are we going to be working remotely a couple days a week? I think we all would have scoffed at the notion.

Jess
I know they started the virtual hearings, you were just talking earlier about a WebEx, these different softwares for your remote workers, probably scanning all your paperwork. And if you had paper files before, would you say that this technology has benefited the notoriously paper, book heavy law firm industry?

Jennifer

Oh, sure. I mean, you know, I think sometimes I think this has allowed us to see the benefits that can be wrought with it. You know, I shudder to think what would have happened had we had a pandemic 1015 years ago, without the luxury of the technology that we have now, without the ability to scan and DocuSign and have the the variety of platforms for the video technology that we have that allow us to do the hearings and the breakout rooms and all those things. I mean, what in the world would we have done without that. But I think also, you know, surprisingly, there’s been benefit to growing the trust and interface relationships with your clients, you know, them feeling like they, they can be sure that you’re going to be there no matter what the circumstance and that you’re going to be able to pivot to service them, that gives them a real sense of comfort and peace about the relationship.

Adam
You know, and one thing too Jessica, that I think is important to think about – I’m always encouraging our lawyers to stay in front of their clients. And, you know, the the days of old, I mean, I remember a couple September’s ago, like I flew to Chicago for a lunch meeting. And I coordinated schedules with three of my colleagues and we all flew to Chicago. And you know, we all got in a cab together and we went down to the loop and we had our meeting and we and we came back to the airport and back to our offices and in some ways kind of killed the day to go have a lunch meeting and they’re benefits, certainly, you know, to that approach. But but to think now that with in some instances, like 20 minutes notice, I’m able to pull colleagues from four different offices together and be at a platform like we are right now to address whatever issues might be facing a client and brainstorm with them on how we might be able to hopefully meet and exceed you know, their expectations and help solve the problem that they’re facing. Instead of the the sort of, I wouldn’t say colossal waste of time, but a lot of dead time to just scheduling that lunch meeting. You know in and of itself and then coordinating travel calendar. You know, and everything else and to know that, you know, we can we can help you and service you in some ways more easily. And I don’t think there’s a replacement for, you know, in person contact and relationship development, but, but I think we’re certainly much more mindful of, kind of everybody’s like their personal time and their personal space, but also like the ability to kind of bring teams of people together, maybe more quickly than we would have thought, you know, we would have thought initially in the sort of the older way of doing things.

Jess
I’m so glad you mentioned all those points, because I know attorneys, law office staff, they’re expected to be ready for clients pretty much 24 seven, I think attorneys actually work 24 seven, it’s good that, you know, we can use technology to better serve clients needs, whether it’s a law firm, or you know, a site like ours publishing legal news, I can see a lot of benefits as well.

Rachel

So we’ve talked a lot about the attorney client relationship in regards to how that has changed post COVID. And how important that is to law firm success. And I was wondering if you could just speak a little bit about what new tactics have had the biggest impact on your client relationships since the pandemic broke out?

Adam
In some respects, the tactics are exactly the same, you know, we want to be in front of our clients, you know, we created a deliverable in the marketing and business development team called the virtual client development playbook. So that playbook looked at a lot of the content that we had created for some of our clients development workshops, and try to figure out like, how can we do that better in an environment that we’re in because many clients, as much as we might want to go see them for lunch, they don’t want to see us to make sure that we think about that relationship one being empathetic to where our clients at, right? And so are you comfortable having lunch or coffee, and if you’re not, you know, having a meeting like this is exactly something that that we want to use that playbook is really, if you didn’t have lunch, then you would never see your client as sort of a ridiculous way to think about the world. And so I think we’ve thought differently, about, you know, how we do that and trying to be, you know, mindful, you know, we distributed Starbucks cards to a number of our attorneys to then share with their clients as a means to sort of trigger a virtual cup of coffee to talk about what they’re seeing on their desk, and the way in which, you know, they’re working on projects. We’ve, had a number of client happy hours, nobody would, you know, bat an eye for a second to sort of take a client out to happy hour to talk about what’s going on with them. But it almost seemed a little awkward, you know, to have a virtual happy hour where you’d raise a glass with, you know, a client contact or a friend.

And now I think I’ve probably been on more than a dozen virtual happy hours, and, you know, to have conversations to see what people are are dealing with, and one of the things I think that I’ve really encouraged people to think about so much of client development is about in relationship development is about finding commonality. And so whether you like to read books, or you like to travel, or you like sports, or a particular sports, and if it’s football, or whatever that is, and in this pandemic, has really given us, you know, one thing that we’ve all experienced, and we’ve experienced it in different ways, and sort of how it’s impacted us, it’s certainly been different, but that’s an element of commonality. It’s like a easy conversation starter to, you know, sort of break the ice, like, oh, are, you know, are you guys back to the office? Or not? Are you working remotely a couple days a week? Or are you there the entire time, are you guys enforcing masks at your office right now or not. All that is asy sort of coffee fodder for you to sort of see like how you’re dealing with that. For good or bad, like, people got a lot of opinions about that. And so you can then hear what those opinions are and kind of build off of that and have a conversation to sort of develop some report and then sort of lead into some of the challenges that they’re facing in the workplace. And hopefully, Baker Donelson can help them solve some of the challenges that they’re facing.

Jennifer
I think one really interesting thing that we’ve seen is that there’s a whole group of folks who are more comfortable in this environment, to go to Chicago on a whim sort of thing and there’s a whole group of folks who love this and are making their way through this. We’ve also seen that there’s there’s a lot of folks who find that this environment is easier or more convenient. Introducing their colleagues. And so instead of having a colleague feel like they’re taking a day to get to Chicago to see someone, why don’t you get on quickly with me, I’ll introduce you to Adam will talk through his practice and kind of how I’m thinking he might be able to help you. And that’s a very seamless thing for folks to do. And so not so much a fancy tactic as it is just we found new things that people find as their way of doing things.

Rachel
Yeah, I think the thing that I find really interesting, just listening to your guys’s experience is just things have changed a lot. But some things haven’t changed. Like, I think one of the big sort of things people were worried about being in the pandemic was Are we going to be able to do like make remote work actually work. And I think you know that giving out Starbucks cards and still being able to get the interaction like with the, with the virtual happy hours and the coffee, you can still do all those things, but we’ll do it in a more efficient way. You know, you might not fly halfway across the country to do it. So I think, yeah, that’s gonna be a pretty big positive change moving forward, that we can actually make remote work actually happen. We are wondering if you could speak a little bit about how your firm has typically used D&I efforts to engage with clients. And you know what exactly D&I efforts are and how you’ve made that work.

Jennifer
That was actually you know, a little bit of fortuitous timing, I suppose on our part, we have a new CEO who has been in place for a couple of years now. And one of his main initiatives was to take our prior D&I efforts which were which were very solid in the industry, but she ramp those up with some very significant commitments on our firm’s part. So we rolled out a D&I compact, which sort of projects our firm’s goals through 2025 with respect to D&I and we set out some really very clear numerical expectations for ourselves to have at least 20% diverse attorney’s in our firm, 10% diverse shareholders, 8% diverse equity shareholders and 10% diverse management team. And we have been methodically working toward incremental parts of those goals, we actually have a very significant document that we have shared both on our website and with many of our clients proactively, to show them what we’re doing. We have a lot of clients who have a lot of diversity commitments of their own, and we want to be able to help them meet those, you know, some of the things that make diverse attorneys successful, certainly includes good work.

Adam
Jennifer alluded to some of the goals that we have, but it’s difficult to hit those goals if you don’t know where you are. And so part of what we’ve done, you know, in that is a client specific dashboard that we can roll out and then that we share with our clients. D&I is one of those areas that I think we all recognize that we can all be better in that space. And so to have some of those metrics, as well as some of the more specific and concrete things that we can do, you know, to do that, coupled with data, I think, is been something that our clients have been appreciative of, because it is an area that I think has been important for everybody. I mean, who’s gonna say diversity isn’t important, but without sort of a clear roadmap and some specificity to it, I think, you know, we’re not going to get to where we need to be as a firm and candidly, as an industry.

Rachel
So we also have sort of a Q&A section here. So if you guys have any questions for us, we’d be happy to dive into those as well.

Adam
Well, you know, you mentioned before that the, you know, attorney client relationship is sort of paramount in any law firm success. And given that y’all are talking to other law firms and other industries, you know, maybe give us an example of how you’ve heard firms wowing their clients.

Jess
Giving them valuable content, valuable information. That’s always number one. I have prior experience working in a law firm, I think there’s this general distrust for attorney offices. And when you give them that invaluable information that can help them I mean, that just creates an instant bond, so to speak, that they’re more comfortable working with attorneys, and the fact that you guys take that extra initiative to do like the coffees or you know, the quick virtual meeting that can help them right away. I mean, that is gonna completely solidify that client with your firm moving forward. You know, they’ll refer anybody to your office, once you show them that you’re there to help them and help them understand things that are pretty complex to understand. Another tactic we’ve seen Law Offices use are the webinars – we have a legal events calendar on the site. I feel like we’ve been cranking out tons of events on there so that people can learn something new in a specific area of interest and get that information from the professionals that really know their way around that topic. I think those are the two biggest ways that clients will definitely always keep coming back because they’re wowed by that effort.

Jennifer
So what are you hearing from in House Counsel about changes in their buying patterns?

Rachel
Recently, we did an article on some of the takeaways from the Thomson Reuters marketing partner forum, a lot of information was shared just on, you know, legal spend after COVID, or during COVID, or how it’s going to change moving forward. And some of the big takeaways from some of the attendees included just like pivoting and adopting new technologies. So as we discussed, the shift from in person events to virtual ones, basically gave law firms the opportunity to sort of try these new strategies without making much of a financial investment. And then also one of the things that sort of came out of it was the chance for legal marketers and law firms really show their value to clients and sort of plan for more sustainable growth moving forward. So that basically includes, you know, like an increased focus on analytics, sharing readership data with people. We have a pretty robust analytics system here on our website that our clients can use to really show what articles are doing well, like, what are the trends? Where are people reading these articles? How are they accessing them? Are they sharing them on social media? And from what we heard at the event was attournies are really looking for more of that data of how you know we’re doing all these articles. We’re doing these webinars, but what is the payoff of this stuff? So that’s really the two big takeaways that we’ve seen in terms of that.

Adam

How do you think firms can really set themselves apart from other firms in the marketplace to differentiate themselves?

Jess
So that’s certainly a good question. When you have either very large law firms where you’re spread out across the country, you really get in that competitive market of how do I look different, you know, how do I come up on a search may be better, a lot of that is SEO tactics. I think it’s also the way the content is shared with the clients, usually you can tailor your marketing and your social media presence to what your identity is, as a law firm, sometimes having a more personal edge to it can be helpful. Especially with COVID, or work life balance, working from home or partial flexibility in a law office environment. You know, if you share working from home, it’s nice to be in touch with clients at any time, you know, that shows that you’re more willing, you’re right there to support them, when you’re more personable in that attorney client relationship that also builds that trust that we kind of went over earlier, just because they’re not talking to a robot attorney, they’re talking to somebody who understands where they’re coming from, and sharing a lot of that on social media with a professional spin can really draw them in and then keep following you makes that client come back over and over and looks at the content that you’re taking the time to put out there, identifying your business values and creating a brand identity, it’s going to be the best way to stand out compared to other law firms who maybe are doing a more generic post here and there. And also just continuing that attorney client relationship, you know, a follow up after a webinar, something that’s recurring, that people can keep seeing, and they feel like they’re still in touch with you no matter what, it’s not a once and done Oh, the attorney, you know, worked with me on this and that’s it, you know, they want to keep coming back. And that also benefits the law firm to have these clients return as well.

Jennifer
You know, I think one of the biggest challenges for firms at this point is the transitory nature of the industry. And it’s it’s attempting to you to get and retain the best talent. And so what are some some things that you’re hearing that firms are doing to attract and retain top talent?

Rachel
Yeah, that’s a great question. And I think it’s one that we’re also paying attention to here at the NLR. Jess and I and one of our other colleagues, we recently did an article on changes law firms are adopting amid the covid 19 pandemic. And that includes trends and remote work and litigation. And I think one of the big things that I just keep hearing is that remote work is definitely here to stay. I think, even if attorneys are only coming in the office a couple days a week. I think a lot of attorneys want to keep at least some part of that remote setup. Because I think what the pandemic has showed us that remote work can actually work and that that’s something that attorneys like and not even just attorneys, a lot of other people in other industries want to keep working remotely. And one of the things that we’ve seen is that some attorneys will consider either leaving their firm or finding a new job that will allow them to have that flexability.

Jess
I know we’ve talked to a law firm before and that was one of the managing partners big changes that she had to implement was the flexibility. Some law firms may not be comfortable working completely from home, but having some type of flexible work schedule. It’s very attractive to most people at this point. Remote work was probably pretty close to being unheard of unless you had a very particular type of job. I feel like that’s completely flipped on its head now because the pandemic.

Rachel
Jennifer and Adam, thank you again for joining us.

Adam

Absolutely.

Jennifer
We’re very appreciative for your having us and sharing your information and ideas with us.

Rachel
Thank you for listening to the National Law Review Legal News Reach podcast. Be sure to follow us on Apple podcasts, Spotify, or wherever you get your podcasts for more episodes. For the latest legal news, or if you’re interested in publishing and advertising with us visit www.natlawreview.com. We’ll be back soon with our next episode.

Article By Rachel Popa and Jessica Scheck of
The National Law Review / The National Law Forum LLC

For more on legal marketing, visit the NLR Law Office Management section.

SEC Awards $40M to Two Whistleblowers: Lessons for Prospective SEC Whistleblowers

On October 14, 2021, the SEC announced that it awarded $40M to two whistleblowers. According to the order, both whistleblowers provided original information to the SEC that led to a successful enforcement action and provided extensive assistance during the SEC’s investigation. The first whistleblower received an ward of approximately $32 million and the second received an award of approximately $8 million. Why did one whistleblower receive an award that is four times greater than the award provided to the second whistleblower? And what can prospective whistleblowers learn from this award determination?

Although the SEC’s order is appropriately sparse (to protect the confidentiality of whistleblowers), it offers some important reasons for the disparity in the two awards:

The first whistleblower reported promptly and provided a tip that caused the SEC to open an investigation.
The second whistleblower provided important new information during the course of the investigation and was a valuable first-hand witness, but waited several years to report to the SEC. Due to the unreasonable delay in reporting the violations, the SEC reduced the second whistleblowers’ award percentage.
Both whistleblowers provided extensive, ongoing cooperation that helped the SEC to stop the wrongdoing, but the first whistleblower provided the information that enabled the SEC to devise an investigative plan and craft its initial document requests. The first whistleblower also “made persistent efforts to remedy the issues, while suffering hardships.”

Lessons for Prospective SEC Whistleblowers

Early Bird Gets the Worm

To be eligible for an award, a whistleblower must first submit “original information.” Original information can be derived from independent knowledge (facts known to the whistleblower that are not derived from publicly available sources) or independent analysis (evaluation of information that may be publicly available but which reveals information that is not generally known). A prospective whistleblower who delays reporting a violation risks becoming ineligible for an award (another whistleblower may come forward first).

And an unreasonable delay in reporting a violation may cause the SEC to reduce an award. In making this determination, the SEC considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct;
whether the violations identified by the whistleblower were continuing during the period of delay;
whether investors were being harmed during that time; and
whether the whistleblower might profit from the delay by ultimately obtaining a larger award because the failure to report permitted the misconduct to continue, resulting in larger monetary sanctions.

According to OWB Guidance for Whistleblower Award Determinations, one or more of these circumstances, in the absence of significant mitigating factors, would likely cause the SEC to recommend a substantially lower award amount.

Common reasons that weigh against determining that a delay was unreasonable include:

the whistleblower engaging for a reasonable period of time in an internal reporting process;
the delay being reasonably attributable to an illness or other personal or family circumstance; and
the whistleblower spending a reasonable amount of time attempting to ascertain relevant facts or obtain an attorney in order to remain anonymous.

The significant disparity between the two awards announced on October 14th underscores why whistleblowers should report promptly.

A Whistleblower Can Qualify for an Award for Assisting with an Open investigation

Even though the second whistleblower delayed a few years reporting the violation to the SEC and came forward when the SEC already commenced an investigation, the whistleblower received an award for providing information and documents, participating in staff interviews, and providing the staff a more complete picture of how events from an earlier period impacted the company’s practices. That result underscores how the SEC’s whistleblower rules permit the SEC to pay awards to whistleblowers that provide information in an existing investigation. In other words, the fact that the SEC has already commenced an investigation should not cause a prospective whistleblower to forego providing a tip to the SEC.

A whistleblower can qualify for an award if their tip “significantly contributes” to the success of an SEC enforcement action, including where the information causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current SEC examination or investigation, and the SEC brings a successful judicial or administrative action based in whole or in part on conduct that was the subject of the individual’s original information.

In determining whether an individual’s information significantly contributed to an enforcement action, the SEC considers factors such as whether the information allowed the SEC to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities.

Whistleblowers are Welcome at the SEC

The SEC issued this $40M award shortly after announcing that it reached a milestone of paying $1B in awards to whistleblowers under the Dodd-Frank SEC whistleblower program. As of October 14, 2021, the SEC has awarded approximately $1.1B to 218 individuals.

Since assuming the position of SEC Chair earlier this year, Gary Gensler has made several public statements and taken specific actions that suggest that he is a strong proponent of the SEC whistleblower program and is determined to utilize the program to detect, investigate, and prosecute violations of the securities laws. When the SEC announced that it paid $1B in awards, Chair Gensler stated, “The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”

And in remarks for the National Whistleblower Day Celebration, Chair Gensler stated:

The tips, complaints, and referrals that whistleblowers provide are crucial to the Securities and Exchange Commission as we enforce the rules of the road for our capital markets . . . the whistleblower program helps us to be better cops on the beat, execute our mission, and protect investors from misconduct . . . Investors in our capital markets have benefited from the critical information provided by whistleblowers. . . . We must ensure that whistleblowers are empowered to come forward when they see misbehavior; that they are appropriately compensated according to the framework established by Congress; and that those who report wrongdoing are protected from retaliation.

Chair Gensler has also taken action to carry out his commitment to encouraging whistleblowers to come forward. On August 2, 2021, Chair Gensler suspended the implementation of two recent amendments to the SEC whistleblower rules because these amendments could discourage whistleblowers from coming forward. He directed the staff to prepare for the Commission’s consideration potential revisions to these two rules.

Article By Jason Zuckerman and Matthew Stock with Zuckerman Law.

For more on SEC and whistleblowing, visit the NLR financial Securities & Banking section.

United States to Open Borders with Canada and Mexico for Vaccinated Nationals Beginning November

The United States will open its northern and southern land borders to fully vaccinated foreign nationals sometime in November 2021. When this happens, it will be the first time since March 2020 that these individuals will be able to enter the United States from Canada and Mexico for “non-essential” purposes, such as tourism, shopping, and family gatherings.

The reopening is expected to occur in two phases. During the first phase, fully vaccinated foreign nationals will be able to enter for non-essential purposes. Unvaccinated individuals will still be able to enter for essential purposes, including for work. During the second phase, scheduled to go into effect in early January 2022, all foreign nationals, whether entering for essential purposes or not, will have to be fully vaccinated. The expectation is that there will be limited exceptions, for example for children.

The “essential travel” restrictions applied only to land and sea borders. Foreign nationals have been able to fly into the United States from Canada or Mexico if they met the COVID-19 testing requirements. In November, however, new COVID-19 vaccination and testing requirements will be in place for all air travel. All foreign nationals seeking to enter the United States from anywhere, with limited exceptions, will have to be fully vaccinated, as well as show proof of a negative COVID-19 test taken within three days of departure. Unvaccinated U.S. citizens and legal permanent residents will need to provide evidence of a negative COVID-19 test taken within 24 hours of boarding a flight to the United States and undergo testing upon arrival.

The United States is a little late to the border game. Canada reopened its border to fully vaccinated Americans on August 9, 2021, and to other fully vaccinated foreign nationals on September 7, 2021. It is still not clear exactly when the new U.S. rules will become effective. The United States already announced that the 14-day travel restrictions on China, Iran, the UK and Ireland, the 26 Schengen Zone countries, Brazil, South Africa, and India are scheduled to be lifted sometime in “early” November. The northern and southern border restrictions will be lifted at the same time. We are still awaiting official guidance on documentation requirements and the implementation date.

Article By Sheila T. Minihane of Jackson Lewis P.C.

For more articles on travel, visit the NLR Utilities & Transport section.

Oh the Horror: No Work for Hire in Friday the 13th Screenplay

The US Court of Appeals for the Second Circuit affirmed a summary judgment grant, ruling that an author was an independent contractor when writing the screenplay for a horror film and entitled to authorship rights, and therefore entitled to exercise his copyright § 203 termination right. Horror Inc. v. Miller, Case No. 18-3123 (2d Cir. Sept. 30, 2021) (Carney, J.)

Victor Miller is an author who has written numerous novels, screenplays and teleplays. Sean Cunningham is a producer, director and writer of feature films and is the general partner of Manny Company. Miller and Cunningham were close friends who began working together around 1976 and collaborated on five motion pictures in their first five years working together. Miller was a member of the Writers Guild of America, East (WGA) and was a signatory of their Minimum Basic Agreement (MBA), which was the collective bargaining agreement at the time.

In 1979, the success of the horror film Halloween inspired Cunningham to produce a horror film. Cunningham reached out to Miller and they orally agreed that Miller would write the screenplay for their upcoming project. The two came to an agreement using the WGA standard form. Miller then began developing the screenplay and the two worked closely together in discussing ideas for the film. Miller picked his working hours but was responsible for completing drafts based on the production schedule of the film. Cunningham had no right to assign additional works to Miller beyond the screenplay.

The dispute concerns whether, for Copyright Act purposes, Miller was an employee or independent contractor of Manny Company, of which Cunningham was the general partner. Cunningham argued that he taught Miller the key elements of a successful horror film, that he gave significant contributions and that he had final authority over what ended up in the screenplay. Miller agreed that Cunningham gave notes but stated that Cunningham never dictated what he wrote. The parties agreed that Cunningham did provide the ideas for making the movie killings “personal,” that the killer remain masked and that they kill a major character early. Miller received “sole ‘written by’ credit” as the screenwriter.

Horror Inc. (successor to Georgetown Horror) financed the project and was given complete control over the screenplay and film. Manny assigned its rights in the film and screenplay to Horror, which registered the copyrights. In the registration, Horror was listed as the film’s work made for hire author with a credit given to Miller for the screenplay. The initial film was a huge hit and has spawned 11 sequels.

In 2016, Miller attempted to reclaim his copyright ownership by invoking his termination rights under 17 U.S.C. § 203 and served notices of termination to Manny and Horror. The two responded by suing Miller and seeking a declaration that the screenplay was a “work for hire,” and therefore Miller could not give a valid termination notice. The district court granted summary judgment to Miller, stating that Miller was the author as he did not prepare the screenplay as a work for hire and that Miller’s termination notice was not untimely. Manny and Horror appealed.

In its de novo review, the Second Circuit considered the district court’s determination as to whether Miller was an employee or an independent contractor based on its balancing of the 13 factors established by the Supreme Court in its 1987 ruling in Community for Creative Non-Violence v. Reid. Because a “work made for hire” is a statutory exception to the general rule of author ownership of a copyright, the party claiming the exception bears the burden of proving that the exception applies.

Manny and Horror argued that the screenplay was a work for hire as Miller was an employee under his WGA membership, that the district court erred for not considering the WGA collective bargaining agreement within the Reid factors and that the court incorrectly balanced the Reid factors by not giving more weight to Miller’s membership in the WGA or his collective bargaining agreement.

The Second Circuit found that Miller was not an employee, explaining that a finding of employment status for copyright claims is determined under copyright law and not labor law. The Court determined that Miller’s employment status under the National Labor Relations Act (NLRA) and the terms of his membership in the WGA do not remove the determination of employment status under the Copyright Act and principles of agency. The Court found that the district court correctly declined to consider NLRA arguments and was correct to focus on common law principles and the Reid factors.

After finding that the WGA membership was not dispositive, the Second Circuit determined that the WGA collective bargaining agreement should not be considered as an additional Reid factor. The Court found that although Miller’s WGA membership could play a role in how the relationship between the parties played out, membership itself would not alter the Reid factors analysis.

The Second Circuit approved the district court’s application of the Reid factors and its refusal to accord “great weight” to Miller’s union membership. Rather, the Court rejected the proposition that the WGA membership should be given “great weight,” explaining that the membership was not to be treated as a separate factor and that union membership was relevant only to the extent it played into the analysis of the Reid factors. Ultimately, the Court concluded that Miller was an independent contractor and had sufficiently rebutted the statutory presumption given to Georgetown’s copyright registration listing the work as for hire.

Article By Joshua Revilla of McDermott Will & Emery

For more articles on IP law, visit the NLR Intellectual Property section.

Captain’s Blog: Fly Me To The Moon

On October 13, 2021, William Shatner (aka, Captain Kirk from Star Trek) flew where few have gone before, taking a ten minute jaunt to the edge of outer space. The successful flight comes on the heels of other highly-publicized, successful commercial space flights, including the September 15, 2021, SpaceX mission dubbed “Inspiration4” that made history as the first orbital spaceflight with no professional astronauts onboard. As the era of commercial spaceflight draws ever closer, the space industry is building toward expanded commercial opportunities in space, including private space stations, space hotels, and colonies on the moon and Mars. So now, as we stand on the precipice of the commercial space revolution, it is important to reflect on the regulatory “learning period” that enabled U.S. commercial space flight to reach this juncture and consider the timing and substance of the regulatory framework necessary to spur our next great leap forward.

In 2004, Congress passed the Commercial Space Launch Amendments Act (CSLAA) regulating commercial spaceflight activities. Chief among the bill’s significant achievements was (i) the decision to locate all regulatory authority for commercial human spaceflight in the FAA’s Office of Commercial Space Transportation (AST); (ii) the adoption of a regulatory regime for commercial human spaceflight that limited safety requirements for non-crew passengers—now known as “spaceflight participants”—to their informed, written consent to undertake the risks associated with participation; and (iii) the creation of a “learning period” for commercial spaceflight. Under the “learning period,” the Secretary of Transportation was prohibited from issuing safety regulations beyond the informed consent regime established in the CSLAA. The “learning period,” originally intended to sunset on September 30, 2015, was extended to October 1, 2023, by the U.S. Commercial Space Launch Competitiveness Act of 2015 (CSLCA).

The CSLCA directed the FAA to release periodic reports on the progress of the commercial space transportation industry towards developing voluntary industry consensus standards that “promote best practices to improve industry safety.” The reports are intended to provide key industry metrics that might indicate the readiness of both the industry and the Department of Transportation to transition to a safety framework that would include regulations for occupant safety. As the FAA explained in its first report, these metrics include the industry’s readiness for a formal safety framework (such as the reasons people are traveling in space, the size and complexity of the industry, and the safety of the industry), the industry’s progress in developing a safety framework, and the FAA’s expertise in human space flight safety and its ability to regulate it effectively. As of the most recent report, issued on February 26, 2019, the FAA concluded the industry was not yet ready for regulation, noting the lack of commercial space flights that had taken place.

That all changed in 2021. With Blue Origin having completed its second commercial human space flight, we can expect the FAA’s next report in 2022 will look a little different.

The level of government involvement, however, will depend in part on whether a successful industry-led safety framework emerges over the next year.

If the FAA concludes the commercial spaceflight industry has progressed beyond its “learning period,” Congress will likely begin to hold hearings and draft formal legislation to instruct the FAA to begin the process of developing unified safety standards, licensing procedures, and reporting requirements for commercial spaceflight participants. Among the likely considerations will be whether to continue the informed consent regime or to adopt a more stringent regulatory regime for spaceflight participants more akin to that which is in place for professional astronauts and crew. We expect Congress and the FAA will explore:

Informed consent: whether the definition of “informed consent” is static or should evolve with science’s understanding of the risks to human exposure to spaceflight. Currently, the informed consent regime requires that operators disclose the known hazards of space travel to prospective spaceflight participants and receive their written consent. Some hazards are not yet known or are continually evolving as we gain more experience with time in space, including how exposure to G forces or microgravity could affect spaceflight participants. To manage liability risk exposure and tailor training guidelines, the industry will have to come to a consensus regarding what a sufficient disclosure to obtain “informed consent” really means. As the FAA learns more about the risks of spaceflight, we can expect that it may require more detailed disclosures under its regulatory authority to protect human spaceflight participants.

Training guidelines: what level of pre-flight preparation is necessary to ensure the safety of human spaceflight participants. Congress and the FAA are likely to look at the training regimes companies such as Virgin Galactic, Blue Origin, and SpaceX have voluntarily adopted to prepare their participants for suborbital and orbital flight. For example, the crew of the Inspiration4 underwent months of training, such as mountain climbing, zero-G and altitude chamber training, and 60-hour week long sessions at SpaceX’s headquarters that included emergency simulations and classroom instruction.

Medical screening: whether there should be baseline health requirements for persons seeking to participate in spaceflight activities. While there is much uncertainty regarding the medical consequences of space flight, in 2012 the FAA, NASA, and certain medical experts teamed up to draft recommendations for medical screening practices space tourism operators could voluntarily employ. The resulting “Flight Crew Medical Standards and Spaceflight Participant Medical Acceptance Guidelines for Commercial Space Flight” suggests different screening procedures and risk mitigation techniques for different types of space flights. This is the kind of report Congress may use to establish policies and regulations related to informed consent, training, and flight guidelines.

Commercial liability: whether and when the liability regime should be amended towards more of an airline liability regime. The liability regime for accidents that occur during a spaceflight is not fully developed. Assuming an operator complies with informed consent regulations, spaceflight participants generally cannot hold an operator liable for injuries or deaths that occur during the flight. But these regulations may not apply to other parties, including the families of any injured party. Additionally, the initial liability to a launch or reentry licensee for third-party death, bodily injury, or property damage is capped at $500 million. The Government indemnifies the licensee, spaceflight participant, and other related parties against third party claims above this amount, up to roughly $3 billion. If liability exceeds $3 billion it reverts back to the licensee. The statutory requirement that a licensee maintain an insurance policy applicable to space flight participants to cover its first tier of liability is set to expire in 2025.

Accident investigation jurisdiction: whether to assign jurisdiction to investigate accidents that may occur on both private and Federal ranges to the National Transportation Safety Board (NTSB). There is no clear delineation of jurisdiction for investigating an accident involving spaceflight participants. The FAA, NTSB, and U.S. Air Force informally agreed the FAA and NTSB will investigate commercial space launch accidents, but that agreement is not binding.

The FAA’s next report is due March 31, 2022. Given the success and publicity surrounding recent commercial human spaceflights, the industry should anticipate renewed interest in spaceflight legislation from Congress and the FAA and the potential final sunset of the “learning period.” The commercial spaceflight industry should carefully monitor and track these developments, as new laws and regulations will have a significant impact on how companies operate in the coming years.

Article By Brian D. Weimer and Hannah J. Wigger of Sheppard, Mullin, Richter & Hampton LLP

For more articles on space flight, visit the NLRUtilities & Transport section.

Crypto Laundering: Bitcoin + Money Laundering

Bitcoin was a massive innovation to the world that allows transactions to be processed faster, makes them easier to use, lack third parties and intermediaries, and have stronger security. The technology underlying Bitcoin is the blockchain, which is the decentralized ledger where all Bitcoin transactions are stored.

At the same time, criminals are increasingly seeking to exploit the latest technology to their financial benefit. Bitcoin transactions actually have the ability to make money laundering easier for criminals because cryptocurrencies are conducted, transferred, and stored online and allow cybercriminals to move their funds instantly across borders.

This article explains the interconnection between Bitcoin and money laundering, warning signs, and how a lawyer can help you with your crypto issue.

Bitcoin as an Attractive Option for Laundering

One of the first questions many ask is why is Bitcoin such an attractive option for criminals seeking to launder money?

The most important answer is that laundering cryptocurrencies via online exchanges and then converting them to cash is much simpler than laundering bags of cash often across borders. Online transactions have no borders, and it obviates the need to physically move illegal money from place to place. Therefore, it is easy and practical.

Second, there is a certain degree of anonymity associated with Bitcoin transactions. While not 100% anonymous, these transactions are in fact pseudonymous. This means that the public Bitcoin addresses used for transactions are not registered in the names of individuals.

The transactions are stored publicly on the blockchain (the public decentralized ledger where all transactions are stored), but only the individual making the transaction has access to the account and Bitcoin wallet. Therefore, federal agencies will have a challenging time linking a particular Bitcoin transaction back to any one individual or entity. However, detection is not impossible.

To overcome this obstacle, criminals will use Bitcoin mixing services, which allow the individual to “mix” their Bitcoins with other users and jumble the connections between individuals’ addresses.

The goal is to make it practically impossible for anyone to detect the origin and destination addresses of those illegal Bitcoin transactions. This allows criminals to cash out without fear of ever being identified. In addition, many wallet providers and online crypto exchanges have few if not no anti-money laundering (“AML”) or Know Your Customer (“KYC”) regulations, which represents a very attractive option for cybercriminals.

Third, the lack of regulation or inconsistent regulation of the crypto sphere makes detection of large Bitcoin transactions more unlikely—both the initial Bitcoin transaction and when the criminals seek to “cash-out” and convert their Bitcoins to cash.

Traditional financial and banking options are very regulated both at the state and federal levels. On the other hand, cryptocurrencies are loosely regulated. This makes the use of cryptocurrencies attractive to criminals who believe they can evade regulation and scrutiny of various law enforcement agencies within the nation and abroad.

Warning Signs of Crypto Laundering

Crypto laundering is a crime. Despite the lack of federal guidance on this issue, many law enforcement agencies are relying on existing laws and traditional investigative tools to uncover instances of crypto laundering. Below are some warning signs of crypto laundering:

Transfer of crypto funds to wallets in unregulated or less regulated jurisdictions;
Multiple high-value transactions occurring within a short period of time;
Bitcoin or other transactions totaling amounts that are just under the amount that would trigger reporting requirements;
Immediately withdrawing cryptocurrency deposits;
New accounts funded with an amount that is immediately withdrawn;
Transactions with multiple cryptocurrencies on many accounts;
Deposits from unregulated jurisdictions or jurisdictions with poor AML and KYC regulations; and
One wallet that is linked to multiple credit card accounts under different individuals’ names or one wallet linked to multiple bank accounts.

The above warning signs should be considered by individuals seeking to do business with a firm dealing with cryptocurrencies, by law enforcement agencies investigating certain individuals and entities, and during AML reviews within crypto service providers.

In addition, in 2020, the Financial Action Task Force (“FATF”) released a report about red flag indicators for money laundering that is intended to assist crypto wallet and exchange companies as well as financial authorities.

How An Attorney Can Help Defend You Against Crypto Laundering Allegations

Federal agencies including the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) have been especially eager to investigate alleged instances of crypto laundering fraud. On June 29, 2021, in a DOJ investigation, “Doctor Bitcoin ” pleaded guilty to operating an illegal cash-to-cryptocurrency conversion business. This underscores the importance of retaining counsel experienced in defending against allegations of crypto laundering. Below are some examples of how an attorney can help you with your crypto issue:

Conducting fraud investigations involving cryptocurrencies;
Advising on Security Token Offerings (“STOs”) and Initial Coin Offerings (“ICOs”);
Valuing of cryptocurrencies and assets;
Assisting with purchasing property or other assets with cryptos;
Advising on AML and KYC regulations;
Checking on internal and external compliance;
Advising on wills, trusts, and inheritances of crypto assets and cryptocurrencies;
Drafting compliance documents or documents regarding coin issuances;
Advising on due diligence of customers;
Advising on identification and verification procedures involving crypto transactions; and
Advising on monitoring crypto transactions for compliance with applicable regulations, for suspicious activity, and for certain money laundering warning signs.

“The use of cryptocurrencies such as Bitcoin to facilitate online transactions has both advantages and disadvantages. While crypto transactions offer speed, ease in use, and low transaction costs, they can also facilitate elaborate money laundering schemes, illegal purchases, and ransomware attacks. Specifically, Bitcoin laundering is becoming a cost-effective and highly appealing option for cyber criminals aiming to convert illegally obtained cryptocurrencies into legitimate cash. While there are few laws regulating cryptocurrencies, many federal agencies will go after companies and individuals alleged to have engaged in fraudulent crypto transactions under already-existing statutes. Therefore, the consequences can be just as severe—fines and penalties, disgorgement orders, injunctions, and possibly jail time.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

Conclusion

Crypto laundering is becoming a serious problem for law enforcement agencies as cybercriminals continue to exploit new and emerging technologies for financial gain. Criminals are attracted to the cryptocurrency, Bitcoin, because it is easy and practical to move digitized money, because these transactions are very difficult to trace, and because there is a lack of consistent regulation regarding cryptocurrencies.

Identifying red flags are important safeguards for individuals, businesses, and law enforcement agencies to consider. In fact, law enforcement agencies have been especially zealous in investigating alleged instances of crypto laundering based on certain red flags.

This article was written by Dr. Nick Oberheiden of Oberheiden PC. For more articles relating to crypto laundering, please visit our finance page.

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