Category: Uncategorized

Legal Alert: National Labor Relations Board Modifies Obama-Era Quickie Election Rules for Fairer Process

On December 18, 2019, The National Labor Relations Board (the “NLRB”) published a final rule in the Federal Register that rolls back some landmark Obama-era regulations. In early 2015, the NLRB adopted the “quickie election” rules. The 2015 regulations made it easier for unions to organize unrepresented employees by shortening the time between a union’s filing of a representation petition and holding an election, and allowed for an election petition in as little as 23 days. The newly published rule modifies and extends that period substantially, to no less than 78 days.

Effective on April 16, 2020, the modifications provide employers and unrepresented employees “additional time to comply with various pre-election requirements instituted in 2015,” while simultaneously ensuring an adequate and fair “opportunity for litigation and resolution of unit scope and voter eligibility issues prior to an election.”1 In other words, employers will have a better opportunity to protect their business interests, educate employees about union representation, and reduce the threat of unionization.

Key takeaways and changes include:

Pre-Election Hearing

Under the current, quickie election rules, the Pre-Election Hearing is generally scheduled to begin eight calendar days from the Notice of Hearing. The new changes extend this to 14 business days. This will add over a week and a half to the current timeline, allowing employers a greater opportunity to prepare an adequate response to the union’s organization efforts. The new rules also allow employers and unions to litigate voter eligibility, including supervisory status, at the Pre-Election Hearing, which should help clarify and resolve which employees are eligible to vote before an election occurs. Moreover, employers will now have five business days, instead of just two, to post and distribute the Notice of Petition for Election.

Statement of Position

The Board retained the Statement of Position requirements for employers while easing the burden and requiring unions to file a written response before the Pre-Election Hearing. Under the current rules, an employer has to provide its Statement of Position by noon the day before the hearing was to begin, i.e., within seven days after service of the Notice of Hearing. Now, employers will have a minimum of eight calendar days to research, prepare, file, and serve a Statement of Position. Additionally, the union will be required to file a written response to the employer’s Statement of Position within three days before the hearing, as opposed to the oral response that is allowed under the current rules. Another slight change to the Statement of Position requirements is that the Statement can now be amended by the employer upon a showing of good cause. Under the current rules, any issue not raised in the Statement of Position is waived by the employer.

Post-Hearing Briefs

The Board also restored the right of parties to file a post-hearing brief. Parties will no longer be required to get special permission to file a post-hearing brief but may do so as a matter of regular practice within five business days of the close of the hearing. Additionally, hearing officers may grant an extension of up to 10 business days for good cause.

Election Timing

Upon getting direction from the NLRB to hold an election, the rules require an election be held as soon as practicable. But under the new rules, there will be a normal waiting period of 20 days before that election can be held. This will allow employers, employees, and unions a greater opportunity to express their views during the campaign.

Voter List

Under the new rules, the NLRB will ease the burden on compiling voter lists and take steps to protect employee information. An employer will now have five business days to furnish a voter list, instead of only two business days. But for the time being, despite acknowledging that the 2014 amendments contained “controversial aspects…including the contents of the voter list,” the Board deferred on making changes to the content requirements until future proceedings.2

Requests for Review

While a Request for Review can be filed at any time, including after an election, if an employer files a Request for Review within 10 days of the direction of election, the ballots will be impounded and held pending Board review. Moreover, regional directors will no longer certify election results if a request for review is pending, even if filed after the election. So the entire election process may run its course before an employer is obligated to bargain; this is a significant improvement over the quickie election rules that often led employers to bargain with a union despite pending appeals.

Conclusion

These rule changes will give employers a better chance to address unionization activities and will go a long way to restoring an employer’s ability to react and respond in an appropriate manner to an election. However, there is a caveat: because the rules do not go into effect until mid-April 2020, there may be increases in organizing activity as unions scramble to organize unrepresented employees under the current quickie election rules. Nonetheless, upon implementation, employers will be better situated to fully consider and litigate issues relating to the proposed bargaining unit, and ultimately help restore an equal playing field between employers and unrepresented employees.

Copyright © 2019 Ryley Carlock & Applewhite. A Professional Association. All Rights Reserved.

For more NLRB regulations see the National Law Review Labor & Employment law page.

2020 Inflation Adjustments Impacting Individual Taxpayers

Last month, the IRS released the 2020 inflation adjustments for several tax provisions in Rev. Proc. 2019-44. The adjustments apply to tax years beginning in 2020 and transactions or events occurring during the 2020 calendar year.  A select group of key provisions relative to trusts and estates are identified below.

Income Tax of Trusts and Estates

The taxable income thresholds on trusts and estates under Section 1(e) are:

If Taxable Income is: The Tax is:
Not over $2,600 10% of the taxable income
Over $2,600 but not over $9,450 $260 plus 24% of excess over $2,600
Over $9,450 but not over $12,950 $1,904 plus 35% of excess over $9,450
Over $12,950 $3,129 plus 37% of excess over $12,950

The alternative minimum tax exemption amount for estates and trusts under Section 55(d)(1)(D) is:

Filing Status Exemption Amount
Estates and Trusts ((§55(d)(1)(D)) $25,400

The phase-out amounts of alternative minimum tax for estates and trusts under Section 55(d)(3)(C) are:

Filing Status Threshold Phase-out
Estates and Trusts ((§55(d)(3)(C)) $84,800

Estate and Gift Tax

For an estate of a decedent dying in 2020, the basic exclusion amount, for purposes of determining the Section 2010 credit against estate tax, is $11,580,000.

The Section 2503(b) annual gift tax exclusion for gifts made in 2020 is $15,000 per donee.

For an estate of a decedent dying in 2020 that elected to use the Section 2032A special valuation method for qualified property, the aggregate decrease in value must not exceed $1,180,000.

For gifts made to a non-citizen spouse in 2020, the annual gift tax exclusion under Section 2523(i)(2) is $157,000.

Additionally, recipients of gifts from certain foreign persons may be required to report these gifts under Section 6039F if the aggregate value of the gifts received in 2020 exceeds $16,649.

For an estate of a decedent dying in 2020 that elect to extend the payment of estate tax under Section 6166, the 2% portion for determining the interest rate under Section 6601(j) is $1,570,000.

2020 Penalty Amounts

In the case of failure to file a return, the addition to tax under Section 6651(a)(1) is not less than the lesser of $215 or 100% of the amount required to be shown on the return.

The penalties under Section 6652(c) for certain exempt organizations and trusts failing to file returns, disclosures, etc., which are required to be filed in calendar year 2020, are:

Returns Under §6033(a)(1) (Exempt Organizations) or §6012(a)(6) (Political Organizations)
Scenario Daily Penalty Maximum Penalty
Penalty on Organization (§6652(c)(1)(A))  $20 Lesser of (i) $10,500 or (ii) 5% of gross receipts for year
Penalty on Organization with Gross Receipts Greater than $1,049,000(§6652(c)(1)(A))  $105 $54,000
Penalty on Managers (§6652(c)(1)(B)(ii))  $10 $5,000
Public Inspection of Annual Returns and Reports (§6652(c)(1)(C))  $20 $10,500
Public Inspection of Applications for Exemption and Notice of Status (§6652(c)(1)(D))  $20 No limits
Returns Under §6034 (Certain Trust) or §6043(b) (Terminations, etc., of exempt organizations)
Scenario Daily Penalty Maximum Penalty
Penalty on Organization or Trust (§6652(c)(1)(A)) $10 $5,000
Penalty on Managers (§6652(c)(2)(B)) $10 $5,000
Penalty on Split Interest Trust (§6652(c)(2)(C)) $20 $10,500
Split Interest Trust with Gross Income Greater than $262,000 (§6652(c)(2)(C)(ii)) $105 $54,000
Disclosure Under §6033(a)(2)
Scenario Daily Penalty Maximum Penalty
Penalty on Tax-Exempt Entity (§6652(c)(3)(A)) $105 $54,000
Failure to Comply with Demand (6652(c)(3)(B)(ii)) $105 $10,500

 

© 2019 Davis|Kuelthau, s.c. All Rights Reserved

ARTICLE BY Mark G. Kmiecik of Davis Kuelthau.
For more IRS Regulation, see the National Law Review Tax Law section.

U.S./China Trade “Deal” Short on IP/Trade Secret Specifics

With the announcement last week of a tentative partial trade agreement with China, the U.S. appears to be headed to a somewhat easing of tensions between the two superpowers.  Terms of the agreement are vague, with references to a reduction in tariffs, increase in agricultural purchases by China, and agreements to return to the bargaining table.

What is missing, though, are references to increases in protection of U.S. intellectual property: trade secrets, patents, copyrights, and trademarks, long espoused by the U.S.  This silence is in stark contrast to the stated goal of the U.S. that protection of U.S. intellectual property in China is among the key components to a successful and permanent trade deal.

The importance of such protection has been made manifest in several recent events.  The National Association of Manufacturers was hacked over the summer and blame was placed by investigators on Chinese nationals.  Earlier in the year, a former employee of a U.S. cast iron plant was sentenced to one year in prison after being arrested at the airport, en route to China with files of confidential information of his former employer.  Furthermore, China’s trademark register is full of foreign trademarks registered in China by its citizens.

China apparently has verbally committed as a part of an overall trade package to tighten up enforcement efforts in the IP arena.  But how does China quantify that commitment?  Such requires a change in the Chinese government’s mindset, its enforcement policies, and its recognition of the protectability of foreign trade secrets and other IP rights.  None of these can be reduced to tariff percentages, bushels or other common trade terms.  What can China offer in the way of a concrete plan to bolster protection of foreign confidential information?  Indeed, the silence of the parties as to this important issue is probably an indication of the difficulty the parties are having in reaching a verifiable agreement on IP.  With trust levels between the nations at their nadir, one can easily see how resolution of the IP protection issue may be a major stumbling block to a lasting trade agreement.  Will it become prohibitive?  Time will tell.

© 2019 Jones Walker LLP

More on IP agreements on the National Law Review Intellectual Property law page.

British Member of “The Dark Overlord” Hacking Organization Extradited to Face Conspiracy and Identify Theft Charges in the United States

Beginning in 2016, the computer hacking organization known as “The Dark Overlord,” began to target victims in the St. Louis, Missouri area, including various health care providers, several accounting firms, and a medical records company.  By remotely accessing these victims’ computer networks without authorization, The Dark Overlord was able to obtain sensitive records and information, which it then threatened to release unless the companies paid a ransom in bitcoin.

Following a lengthy investigation conducted by the Federal Bureau of Investigation and British authorities, United Kingdom national Nathan Wyatt was extradited to the United States and appeared before a federal district court in eastern Missouri on Wednesday, December 18, 2019, to face charges of aggravated identity theft, threatening damage to a protected computer, and conspiracy.  While Wyatt is the first member of The Dark Overlord to face prosecution, government officials have expressed a hope that this will signal to other cyber hackers targeting American companies that they will not be able to use territorial borders to evade justice and prosecution by the United States.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.

Congress (Finally) Passes the SECURE Act

After a delay of several months, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, clearing the way for one of the most substantial pieces of retirement plan legislation in years to become law.

The House of Representatives initially passed the SECURE Act in May by an overwhelming 417−3 vote. Although the Act was set for easy bipartisan passage, it foundered in the Senate. The bill found new life at the eleventh hour of the 2019 legislative session as an attachment to the must-pass $1.4 trillion spending bill, which passed by significant margins.

The SECURE Act brings quite a few changes that will affect both plan sponsors and participants. It is intended to incentivize employers (particularly small businesses) to offer retirement plans, promote additional retirement savings, and enhance retiree financial security, including several provisions that will impact current plan administration. The changes brought by the Act are generally positive in our view, but certain ones will create some new administrative challenges and questions.

Key changes include:

Open Multiple Employer Plans (MEPs)

Among several other MEP-related provisions, the Act provides for the establishment of defined contribution Open MEPs – referred to as “Pooled Plans” – which will be treated as single ERISA plans. Under current law, where a plan is sponsored by a group of employers that are not under common control, the employers must have certain “commonality” of interests, or the arrangement may be treated as multiple component plans for ERISA purposes. Even though the recent Department of Labor regulation on “Association Retirement Plans” relaxed the commonality requirement significantly, a limited commonality requirement nonetheless remained. As a result, Open MEPs (which are generally offered by service providers and open to any employer who wishes to adopt them) remained subject to potential treatment as multiple ERISA plans. In a move largely cheered by the industry, the SECURE Act goes further by abolishing the commonality requirement entirely.

Part-Time Employee Eligibility for 401(k) Plans

Sponsors of 401(k) plans will be required to allow employees who work at least 500 hours during each of three consecutive 12-month periods to make deferral contributions ─ in addition to employees who have satisfied the general “one year of service” requirement by working at least 1,000 hours during one 12-month period. Long-term part-time employees eligible under this provision may be excluded from eligibility for employer contributions, and the Act provides very significant nondiscrimination testing relief with respect to this group. Nonetheless, this is an example of a provision that – while positive in the sense of encouraging additional retirement plan coverage – will nonetheless create new recordkeeping and administrative challenges.

Required Minimum Distributions (RMDs)

The age at which required minimum distributions must commence will be increased to 72 from 70 1/2. This is another example of a helpful change that will nonetheless lead to additional compliance questions.

Increased Tax Credits

The cap on start-up tax credits for establishing a retirement plan will increase to up to $5,000 (depending on certain factors) from $500. Small employers who add automatic enrollment to their plans also may be eligible for an additional $500 tax credit per year for up to three years.

Safe Harbor 401(k) Enhancements

Employers will have more flexibility to add non-elective safe harbor contributions mid-year. Additionally, the Act eliminates the notice requirement for safe harbor plans that make non-elective contributions to employees. The automatic deferral cap for plans that rely on the automatic enrollment safe harbor model (known as the “qualified automatic contribution arrangement” or “QACA” safe harbor) also will increase to 15% from 10%.

Other Retirement Plan Highlights

  • Penalty-free (but of course, not tax-free) retirement plan withdrawals for a birth or adoption.
  • An objective fiduciary safe harbor for the selection of a lifetime income provider is being added to encourage employers to offer in-plan annuity options. The Act also provides for tax-advantaged portability for a lifetime income product from one plan to another or between plans and IRAs to help avoid surrender charges and penalties where the lifetime income product is removed from a particular plan.
  • A separate provision also requires participant lifetime income disclosures illustrating the monthly payments if the participant’s account balance was used to provide lifetime income in an annuity.
  • Nondiscrimination testing relief for some closed defined benefit plans.
  • Certain clarifications relating to the termination of 403(b) custodial accounts and 403(b) retirement income accounts within church-sponsored plans.
  • Increase in penalties for failing to file plan returns on time.

While it is not related directly to employer-sponsored plans, readers may be interested to know that the Act also repeals the maximum age for IRA contributions and eliminates the stretch IRA. As to the latter, non-spouse beneficiaries of inherited IRAs will be required to take their benefits in income on an accelerated basis (as compared with current law) – this will have estate planning implications for individuals and families that should be understood and reviewed.

The SECURE Act is one of the most comprehensive retirement plan reforms in a decade and brings many changes for consideration. Plan sponsors should consider how the SECURE Act will impact the administration of their plans. Employers that do not currently sponsor retirement plans may wish to consider (or reconsider) doing so given the Act’s additional incentives ─ or may consider joining a MEP.

Most provisions of the Act will go into effect on January 1, 2020. In the coming months, it will be necessary to consider its practical effects on plan design and administration, including the interplay between certain of the Act’s provisions and existing regulatory guidance where there is subject-matter overlap.

©2019 Drinker Biddle & Reath LLP. All Rights Reserved

More on retirement regulation on the National Law Review Labor & Employment law page.

Sexual Harassment Training Becomes Mandatory for All Professionals Licensed by IDFPR

All professionals licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) whose licenses come up for renewal after January 1, 2020 and who must satisfy continuing education requirements need to complete one hour of sexual harassment and prevention training under a law that Governor J.B. Pritzker recently signed.

Health care companies that employ registered nurses, pharmacists, doctors and other health care professionals licensed by IDFPR should start making plans to conduct sexual harassment training to help their employees avoid license renewal issues next year.

Most large and medium-sized corporations have conducted in-house harassment and discrimination training for years. More than 20 years ago, the U.S. Supreme Court ruled that companies may have an affirmative defense against lawsuits alleging that a supervisor sexually harassed a subordinate if the employer adopted and annually trained its employees on policies that:

  • define the different forms of sexual harassment,

  • detail to whom to report harassment complaints,

  • detail how the company will investigate such complaints, and

  • prohibit retaliation for good-faith reporting of such complaints

After those Supreme Court decisions, the Equal Employment Opportunity Commission adopted a similar standard for all forms of illegal discrimination.

The new Illinois law, an outgrowth of the #MeToo movement, governs only sexual harassment, not other forms of discrimination. But smart employers will protect their employees and themselves by combining sexual harassment training with training on other types of discrimination. That approach allows employees to obtain the needed continuing education credits under the new law while simultaneously ensuring that employees understand what constitutes harassment and discrimination, to whom employees can report complaints and how their employers will investigate such complaints.

The new state statute is short on details. It simply says that all professionals who have continuing education requirements and are renewing their licenses after January 1, 2020 need one hour of continuing education credits on sexual harassment. The statute authorizes IDFPR to provide detailed regulations on such training, which IDFPR has not yet done.

© 2019 Much Shelist, P.C.

For more states requiring sexual harassment training, see the National Law Review Labor & Employment law page.

Facing Facts: Do We Sacrifice Security Out of Fear?

Long before the dawn of time, humans displayed physical characteristics as identification tools. Animals do the same to distinguish each other. Crows use facial recognition on humans.  Even plants can tell their siblings from unrelated plants of the same species.

We present our physical forms to the world, and different traits identify us to anyone who is paying attention. So why, now that identity theft is rampant and security is challenged, do we place limits on the easiest and best ID system available? Are we sacrificing future security due to fear of an unlikely dystopia?

In one of the latest cases rolling out of Illinois’ private right of action under the state’s Biometric Information Privacy Act (BIPA), Rogers v. BNSF Railway Company[1], the court ruled that a railroad hauling hazardous chemicals through major urban areas needed to change, and probably diminish, its security procedures for who it allows into restricted space. Why? Because the railroad used biometric security to identify authorized entrants, BIPA forces the railroad to receive the consent of each person authorized to enter restricted space, and because BIPA is not preempted by federal rail security regulations.

The court’s decision, based on the fact that federal rail security rules do not specifically regulate biometrics, is a reasonable reading of the law. However, with BIPA not providing exceptions for biometric security, BIPA will impede the adoption and effectiveness of biometric-based security systems, and force some businesses to settle for weaker security. This case illustrates how BIPA reduces security in our most vulnerable and dangerous places.

I can understand some of the reasons Illinois, Texas, Washington and others want to restrict the unchecked use of biometrics. Gathering physical traits – even public traits like faces and voices – into large searchable databases can lead to overreaching by businesses. The company holding the biometric database may run tests and make decisions based on physical properties.  If your voice shows signs of strain, maybe the price of your insurance should rise to cover risk that stress puts on your body. But this kind of concern can be addressed by regulating what can be done with biometric readings.

There are also some concerns that may not have the foundation they once had. Two decades ago, many biometric systems stored bio data as direct copies, so that if someone stole the file, that person would have your fingerprint, voiceprint or iris scan.  Now, nearly all of the better biometric systems store bio readings as algorithms that can’t be read by computers outside the system that took the sample. So some of the safety concerns are no longer valid.

I propose a more nuanced thinking about biometric readings. While requiring data subject consent is harmless in many situations, the consent regime is a problem for security systems that use biometric indications of identity. And these systems are generally the best for securing important spaces.  Despite what you see in the movies, 2019 biometric security systems can be nearly impossible to trick into false positive results. If we want to improve our security for critical infrastructure, we should be encouraging biometrics, not throwing hurdles in the path of people choosing to use it.

Illinois should, at the very least, provide an exception to BIPA for physical security systems, even if that exception is limited to critical facilities like nuclear, rail and hazardous shipping restricted spaces. The state can include limits on how the biometric samples are used by the companies taking them, so that only security needs are served.

The field of biometrics may scare some people, but it is a natural outgrowth of how humans have always told each other apart.  If limit its use for critical security, we are likely to suffer from the decision.

[1] 2019 WL 5699910 (N.D. Ill).

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

For more on biometric identifier privacy, see the National Law Review Communications, Media & Internet law page.

The Evolution of Legal Marketing

Reflections from the past and top tips for the future

The close of each year naturally encourages reflection, evaluation and fresh perspective. As 2019 draws to an end, it’s enlightening to look back on developments and innovation in legal marketing from not only the past year, but also over the past several decades.

After the 1977 decision in Bates v. State Bar of Arizona, in which the Supreme Court held that attorney advertising was a form of commercial speech protected by the First Amendment, restrictions on lawyer marketing diminished significantly. Today, according to the Legal Marketing Association (LMA) – Bloomberg Law Joint Survey Report, 62% of law firm respondents said their firms were increasing emphasis on business development and marketing initiatives. Further, 41% of attorneys reported hiring or increasing marketing staff as one of the top new investments over the past two years, and 63% said the continued investment showed not just in headcount but also in budgets that are projected to increase in the coming years.

I recently had the pleasure of hearing Sally J. Schmidt, an esteemed founder and first president of what is now the LMA (National Association of Law Firm Marketing Administrators, or NALFMA, at the time), speak about her legal marketing journey and about the organization’s very first meeting in 1985. The event drew 15 marketing directors from across the country. Schmidt’s audience laughed as she recalled that several of the early members were not permitted to disclose the firms they represented because, at the time, law firm partners felt legal marketing carried a stigma and was somehow frowned upon. Some were worried that firm secrets would be shared and others thought that a firm conducting proactive marketing might earn a scarlet badge of shame in the industry.

My, how times have changed! Today, the LMA has more than 4,000 members in 33 countries, and unites industry specialists from firms of every size. The community of consultants, vendors, lawyers, marketers from other professions and students encourages camaraderie, connectivity, support and sharing of knowledge.

Schmidt, who has published numerous books about legal business development and client relations, proceeded to guide her captivated audience through a variety of prompts that encouraged candid and even therapeutic dialogue about challenges, successes and epiphanies of individual legal marketers from their own professional journeys.

In her book Marketing the Law Firm: Business Development Techniques, Schmidt writes:

If you mention the word “marketing” to attorneys, it conjures up a wide and disparate range of reactions. Marketing is related to such positive aspects of the practice as client satisfaction, client retention and lawyer training. At the same time, it is associated with activities considered distasteful by many attorneys, such as selling, television advertising or direct mail … One of the great myths in the legal industry is that marketing is a new phenomenon. In its emerging formal and institutional state, perhaps so, but marketing activities have been performed in every successful law firm throughout the ages. Only the techniques and level of sophistication have changed. A close look reveals that the traditional marketing activities of corporate America are being performed in the law firm setting.

As the legal industry continues to evolve, so too must those who support the success of each law firm, both big and small. Here are some top tips that will ensure success and continued progress as you and your colleagues enter the new year.

  1. Listen and learn — Take the time to listen attentively and glean insights from those around you. Listen to your colleagues, to your attorney clients and to their clients. Many of the smartest minds work in the legal industry, and a fresh perspective is invaluable. No matter how many years of experience your résumé boasts, seeking the input and opinion of respected colleagues and acquaintances is always worthwhile. Accept feedback with an open mind and make an effort to get to know, and genuinely connect with, those around you. Even individuals who don’t work in your department will have something meaningful to share.
  2. Unlock your “Yes, and” — Second City Works, the professional services arm of the world-famous comedy theater and improvisation school Second City, teaches the practice of “Yes, And.” They challenge professionals to designate time specifically for exchanging ideas and brainstorming freely, without judgment and without rejection. This practice can lead to great discoveries and a whole new mindset when it comes to tackling workplace challenges and driving innovation — in legal marketing, in client service and in life.
  3. Set goals — Goals are truly the roadmap of your career. Getting lost is unavoidable if you don’t take the time to identify and chart short- and long-term goals for yourself, your team, your practice and your firm. Further, it’s affirming to look back and celebrate goals that you achieved and to renew or adjust goals that are still in progress.
  4. Ask “why?” — All too often, we do what we do because it’s what we’ve always been doing. The best legal professionals have the wherewithal to ask “why?” It’s helpful to question your own habits and your routine. Why are you doing what you’re doing? Where can you make changes that would be beneficial?
  5. Be positive — Every occupation has highs and lows, as well as pros and cons, but those who maintain an unwavering positive outlook prove to be resilient, successful and immune to burnout. Embrace challenges and growing pains, and reframe anything negative as positive every chance you get.
  6. Keep the big picture in mind — Sometimes we can get so bogged down in our day-to-day routines that it’s hard to step back for an accurate perspective. Today’s greatest legal visionaries strike a balance between the macro and micro components of this field. Preserve a big-picture outlook by using all resources available, delegating well and remaining abreast of trends.

The legal world is fast-paced, fascinating and ever-changing, and the story of legal marketing is sure to continue with twists, turns, innovations and new heights. Whether you’re a legal marketing veteran of 30 years or just stepping into your first legal marketing role, you are on a professional journey that’s entirely unique to you. Whatever your piece in the legal puzzle, now is the opportune time to plot your own strategy for blazing a trail in the legal marketing evolution.

© Copyright 2008-2019, Jaffe Associates

For more in Legal Marketing, see the National Law Review Law Office Management section.

The Impeachment Process: Politics, Procedure and Next Steps

The US House of Representatives is set to vote this week on impeaching President Donald Trump, and the impeachment vote is expected to pass.  This will set the stage for the next step in the impeachment process;  the third-ever Senate impeachment trial.

We thought this would be a good time to recap the steps in the impeachment process to better understand, procedurally, how the impeachment case against President Trump reached this point, and what is expected next.  Also, we wanted to dig into some of the issues which have been brought up as problematic by the Republican minority in the House related to the impeachment process and the structure of the House hearings.

Jeffrey S. Robbins, a litigation partner at the Boston offices of Saul Ewing Arnstein & Lehr LLP, served as Chief Counsel for the Minority (the Democrats) for the United States Senate Permanent Subcommittee on Investigations, and Deputy Chief Counsel for the Minority for the Senate Governmental Affairs Committee during its 1997 investigation into allegations of fundraising improprieties by the Clinton-Gore Administration during the 1996 presidential campaign.  Mr. Robbins was kind enough to share his expertise on past congressional investigations to help sort through some of the procedural issues raised and help us understand if the process, so far, has proceeded in a usual manner.

NLR: Impeachment is a three-step process, beginning with an investigation in the house and then a vote on articles of impeachment, then a trial in the Senate. What kind of evidence is the House looking for during the investigation stage prior to voting on articles of impeachment?

Robbins: The House committees are looking for the strongest quantum of evidence possible that the President engaged in conduct which amounts to an identifiable “crime,” since a conservative reading of the Constitution holds that some form of crime, at least, is necessary for impeachment.

House Republicans have complained about the limited access to closed-door House impeachment investigation and depositions leading up to the House’s impeachment vote should all be public and the transcripts should be released. Access to the House’s investigative hearings has been limited to members of the three House committees involved– Foreign Affairs, Intelligence and Oversight, and Reform which have a majority of Democratic House Members but Republican committee members can participate in the investigation and question the parties being deposed. Intelligence Committee Chairman Adam Schiff, D-Calif., said private sessions are needed to prevent witnesses from hearing each other, the same protocol used by prosecutors in criminal investigations.  House Minority Leader Kevin McCarthy, R-Calif., called Schiff a liar and a partisan leading a witch hunt and that the venerable Intelligence Committee has become the partisan Impeachment Committee.

NLR: How much of the House’s investigation needs to be in the form of public hearings?

Robbins: There is no Constitutional requirement that impeachment hearings be public or private, but as a practical and a political matter, it is obvious that impeachment hearings need to be conducted in public; after all, building public support for impeachment is a sine qua non (an essential condition) of a vote to impeach, let alone a vote to convict. On the other hand, there is nothing remotely nefarious about what the Minority refers to as “closed door” depositions; Congressional investigations routinely utilize depositions, by definition closed to the public, as a device to ascertain which witnesses have relevant evidence and what that relevant evidence is, in order to assess the strength of a “case” and to more effectively organize any public hearings associated with the investigation.

Intelligence Committee Chairman Adam Schiff said private sessions are needed to prevent witnesses from hearing each other. House and Minority Leader Kevin McCarthy said “I can’t even go down there and read the transcript,” alleging that Republicans have not been allowed to cross-examine the hearing witnesses, which is not accurate.

The reality is that Republicans have participated in each deposition, but their role is limited by the Democratic committee majority. Both Republicans and the Democrats get equal time to ask questions.  Forty-seven Republicans from the Intelligence, Foreign Affairs, and Oversight Committees have been allowed to attend and participate in the depositions.

NLR: What actually goes on in Congressional hearings? What is the timeline between the hearings and the public testimony?

Robbins: From personal experience, I can tell you that the preparation to question witnesses in a Congressional investigation is an intense process, made all the more intense by the volume of material that has to be consumed in order to question effectively and by the shortage of time within which to consume it. Here, for example, there is a steady drumbeat of witnesses being called for deposition on only a few days’ notice to all concerned, and then only a week or so between the deposition and the public hearing. The process is made more intense by the fact that there are other staff lawyers, and Members, and communications experts, all of whom quite properly want to weigh in on the thrust of the questioning, the messaging of the questioning, and the like.

In the hearings, according to the Wall Street Journal, Adam Schiff opens with remarks and then invites a Republican counterpart to do the same.  Each party receives a block of time to ask questions, and a timekeeper keeps track and moves the proceedings along.  Rep. Mark Meadows (R., N.C.), told the Wall Street Journal that each party gets equal time.  “There is a clock, with a timekeeper,” he said.  Other Republicans, including Reps. Jim Jordan of Ohio and Scott Perry of Pennsylvania have been attending the hearings regularly.  Besides Mr. Schiff, Reps. Jamie Raskin of Maryland, Sean Patrick Maloney of New York, Eric Swalwell of California and Gerry Connolly of Virginia have been attending for the Democrats.  Eventually, the committee voted down party lines to advance the impeachment proceedings.

Complicating the evidence-gathering process is the lack of cooperation from the White House, including Trump administration officials defying subpoenas.  Per Adam Schiff, the White House isn’t cooperating and is defying several subpoenas, which Schiff predicted would be considered obstruction and additional evidence “of the wrongfulness of the President’s underlying misconduct.”  When the House Leadership unveiled the articles of impeachment on December 10, 2019, they first focused on the Trump’s pressuring of Ukraine to investigate Joe Biden before the 2020 election by delaying a White House meeting and $400 million in US Security Aid, but the second focused on the obstruction related to the investigation into his misconduct.

NLR: What are the consequences if a witness refuses to testify at a hearing, or otherwise ignores a subpoena? 

Robbins: Under law, there are to be consequences to refusal to testify or disobedience of a subpoena to produce documents, in particular, contempt findings that are appropriately enforced by federal courts.

Mr. Schiff, accused by House minority Whip Steve Scalise of “…trying to impeach a president of the United States… behind closed doors,” pointed out that the president’s former attorney, Michael Cohen, pled guilty to lying to Congress out of loyalty to the president, and was recently sentenced to three years in prison as a result. Still, the White House has consistently refused to cooperate with the inquiry, citing executive privilege as justification to keep those subpoenaed from actually appearing under oath. Citing executive privilege is a not-uncommon tactic to prevent disclosure of goings-on at the top end of the executive branch, but it doesn’t always work well for those using it, and the privilege itself remains a cloudy legal concept.

NLR: What privileges, if any, can a witness assert?

Robbins: With respect to privileges, there are, of course, the “Big Three”: the attorney-client privilege, the Executive Privilege, and the Fifth Amendment. When those privileges are invoked, as a practical matter they are beyond being challenged, except in extreme circumstances, and for the purpose of this impeachment proceeding, where the time constraints are what they are, if they are invoked their invocation will effectively block disclosure of evidence.

There have been many examples of witnesses invoking their Fifth Amendment rights to avoid answering questions in Congressional hearings.  One prominent example is the case of Lt. Colonel Oliver North in the hearings around the Iran-Contra affair during Ronald Reagan’s presidency.

NLR: If the House votes to ratify the articles of impeachment, the Senate will hold a trial.  Who acts as a prosecutor in this instance, and who acts for the defense?  How is that determined?

Robbins: Since the House is the indicting authority, it will choose who presents the case for removal to the Senate. It will in all likelihood be one or more members of the House.

By way of reference, for President Andrew Johnson’s impeachment trial in 1868, an impeachment committee was made up of seven members of Congress, led by Thaddeus Stevens.  President Bill Clinton’s impeachment featured a team of thirteen House Republicans from the Judiciary Committee.

NLR: Why does the Supreme Court get involved in impeachment proceedings, and what is their role?

Robbins: As for the role of the Supreme Court, it is the Chief Justice who presides over the trial, per the Constitution, and it is he who will be involved in those proceedings, and not the full Court—at least this has not occurred in our limited experience with impeachment.

While it may seem plain that the Supreme Court would have a larger role in the impeachment proceedings, that’s not truly the case. The chief justice is, of course, given the power to preside of the Senate trial by the Constitution as a part of the doctrine of separation of powers – as Justice Joseph Story argued – removing the Vice President from Senate leadership to uphold the trial’s impartiality. Should there be a conviction in the Senate, and the convicted president were to try and engage the highest court, SCOTUS has already found that the Senate’s impeachment procedures are nonjusticiable, because of Article I’s designation of the Senate as the “sole power to try all impeachments” (Nixon v United States, 1993).

Many thanks to Mr. Robbins for his time and for helping break down these complex issues during a complicated time.

Copyright ©2019 National Law Forum, LLC

Cryptocurrency is At The Center of Multi-Million Dollar Investment Security and Commodities Fraud

The Criminal Division of the IRS arrested Swedish businessman Roger Nils-Jonas Karlsson, for allegedly operating a fraudulent pension plan using cryptocurrency. Karlsson allegedly used fake websites “registered to a fictitious person” to advertise shares of a “Pre-Funded Reversed Pension Plan” (PFRPP). The criminal complaint states that Karlsson allegedly invited potential investors to buy shares of this plan at $98 per share. In exchange, Karlsson promised to eventually return 1.15 kilograms of gold per share to the shareholder as return on investment. In early 2019, 1.15 kilograms of gold was worth $45,000, making investors in the plan a 460 percent return for each share owned. The plan’s investors made payments using virtual currencies, also known as cryptocurrency. Bitcoin, Ethereum, and Litecoin prominent cryptocurrencies and were allegedly used to pay Karlsson. With the assistance of his company, Eastern Metal Securities, Karlsson allegedly defrauded victims into losing more than $11 million.

The U.S. Securities and Exchange Commission does not regulate cryptocurrencies, which are considered risky. The lack of regulation makes it sometimes impossible to get cryptocurrency refunded from fraudulent transactions because banks or government organizations do not guarantee these currencies. In cases where a company or individual commits securities or commodities fraud against the government, private citizens often play an essential role by acting as whistleblowers.

© 2019 by Tycko & Zavareei LLP

More on cryptocurrency enforcement actions via the National Law Review Criminal Law & Business Crimes page.