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.

Copyright ©2021 National Law Forum, LLC

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.

© 2021 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.

Jackson Lewis P.C. © 2021

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.

© 2021 McDermott Will & Emery

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.

Copyright © 2021, 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.

Protections for Whistleblowers Who Share Company Documents

Frances Haugen, a former product manager at Facebook, recently revealed her identity as the whistleblower who reported Facebook to the U.S. Securities and Exchange Commission (SEC) and provided internal Facebook documents to Congress and to the press. Questions have arisen about what kinds of protections she and other whistleblowers have when it comes to sharing documents with government regulators, Congress, and news outlets. Whistleblowers have a number of protections that allow them to disclose documents, even those that may be deemed confidential; however, the availability of these protections depends on the nature of the documents, the scope of what the whistleblower takes from the company, and to whom she provides these documents.

Documents Related to Securities Violations

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and the Sarbanes-Oxley Act of 2002 (SOX) provide anti-retaliation protections for whistleblowers who share information with specific recipients to report possible securities violations. The SOX anti-retaliation provision, 18 U.S.C. § 1514A, protects employees who report fraud or securities violations to (1) federal regulatory or law enforcement agencies, like the SEC; (2) to a person in the company with supervisory authority over the employee; or (3) to any Congressperson or any committee of Congress. The Dodd-Frank Act’s anti-retaliation provision, 15 U.S.C. § 78u-6(h)(1)(A), prohibits retaliation by an employer against an employee who provides information to the SEC; initiates, testifies in, or assists any SEC action or investigation; or, makes required or protected disclosures regarding securities violations. Under both laws, an employer is prohibited from discharging, demoting, threatening, harassing, or in any way discriminating against whistleblowers as it relates to their employment.

If their employer retaliates against them, whistleblowers may pursue different avenues of relief. Under SOX, whistleblowers may file a complaint with the Secretary of Labor and seek “all relief necessary to make the employee whole,” including reinstatement, back pay, and compensation for any special damages. 18 U.S.C. § 1514A(c). If dissatisfied with the outcome, the whistleblower can seek further administrative and judicial review, but first must exhaust these administrative remedies. 18 U.S.C. § 1514A(b)(2)(A). Under Section 922 of the Dodd-Frank Act, whistleblowers have a private right of action. If an employer violates this provision, the whistleblower may sue directly in federal court. If the whistleblower is successful, she would be entitled to reinstatement, two times the amount of back pay otherwise owed to her, and compensation for litigation costs and attorneys’ fees.

Relevant SEC regulations, such as Commission Rule 21F-17, 17 C.F.R. § 240.21f-17, also protect whistleblowers. This regulation prohibits employers from impeding communications with the SEC about possible securities violations, including by enforcing or threatening to enforce confidentiality agreements. This rule permits an individual to share documents, even those that the company may consider to be confidential, with the Commission in order to report possible securities violations. In Ms. Haugen’s case, according to the Wall Street Journal, Facebook has a confidentiality agreement in place that generally prohibits her from sharing proprietary information, but it allows her to communicate with regulators, Congress, and law enforcement. Other companies may have confidentiality agreements that are written more broadly, which might violate SEC Rule 21F-17.

Only the SEC can enforce this Rule 21F-17, and it has enforced it against companies with confidentiality agreements that impede an employee’s communications with the SEC. In one instance, a company had a provision in its severance agreement that required the departing employee to notify the company about any third-party disclosures. The SEC determined that the agreement violated Rule 21F-17 because it did not exempt communications with the Commission, and therefore created an impediment to a potential whistleblower’s communications with the SEC. The SEC Division of Examinations has also affirmatively reviewed companies’ documents, including compliance manuals, employment agreements, and severance agreements, to ensure that these polices are consistent with the protections afforded to whistleblowers under Rule 21F-17. Therefore, even where there are contractual prohibitions against sharing information with third parties, whistleblowers are nonetheless protected when they share internal documents with the Commission to report possible securities violations.

In addition to anti-retaliation protections, the Dodd-Frank Act created the SEC Whistleblower Program, which incentivizes individuals to come forward with information about possible securities violations. The Program offers monetary awards to whistleblowers who provide the SEC with original information leading to an enforcement action that results in over $1 million in monetary sanctions. A whistleblower’s right to seek an award under the Program cannot be waived by contract, such as a severance agreement, as the Commission concluded in a past order, because the SEC views such a prohibition as an impediment to the whistleblower’s communications with the Commission and therefore a violation of Rule 21F-17.

Documents Related to Fraud on the Government

Government contractors working in the tech industry may also be protected by the False Claims Act (FCA), 31 U.S.C. § 3729, et seq., if they report fraud on the government. The FCA prohibits the intentional presentation of false claims to the government for payment, which can include providing false information in connection with any claim for payment, and it allows private citizens to file a lawsuit on behalf of the government, known as a qui tam action. The FCA also includes an anti-retaliation provision, which prohibits retaliation against individuals who undertake “lawful acts . . . in furtherance of” a qui tam action or “other efforts to stop one or more violations” of the FCA.

In pursuing claims under the FCA, whistleblowers, known as relators in the qui tam context, may disclose documents to the government that their employers consider confidential when these documents are reasonably necessary to support the fraud allegations. For example, a court dismissed counterclaims for breach of contract alleging that an employee-whistleblower violated the confidentiality agreement by disclosing documents to the government and noted the strong public policy that protects whistleblowers from retaliation for reporting allegations of fraud to the government.[1]  However, whistleblowers must be careful not to take documents beyond those that show fraud, and relators who have indiscriminately taken large quantities of documents have not been afforded protections from claims by the employer for breach of contract.[2]

Limitations and Potential Risks of Document Disclosures

While the FCA, SOX, and the Dodd-Frank Act provide robust protections to whistleblowers who report wrongdoing to government regulators, law enforcement agencies, or Congress, these laws do not provide absolute protection. The availability of protection for taking confidential documents depends on what the whistleblower takes, how much material she takes, and to whom she gives it.

If a whistleblower has information that may be deemed attorney-client privileged, for example, she should be careful not to disclose this information to any third party and should speak with a whistleblower attorney before making such a disclosure. Similarly, disclosures made to news outlets are not afforded the same protections as disclosures made to regulators, law enforcement agencies, or Congress. Nearly a decade ago, the Ninth Circuit held that disclosures to media outlets were not protected by SOX.[3]  Whistleblower protections for disclosures made to the press vary depending on the particular state or federal law, as well as the specific context and circumstances of the disclosure,[4] so it is important to proceed cautiously and to seek the advice of a whistleblower attorney before sharing information with media outlets.

Further, if a whistleblower takes information that constitutes an employer’s trade secrets, the employer could sue for misappropriation of trade secrets. Such whistleblowers may have protection under the Defend Trade Secrets Act (the “DTSA”), which includes a safe harbor provision for whistleblowers in certain circumstances. The DTSA provides immunity from civil or criminal liability under any federal or state trade secret law for disclosure of a trade secret that is made either: (1) in confidence to government officials or to an attorney “solely for the purpose of reporting or investigating a suspected violation of law” or (2) in a complaint or other document in a legal proceeding, if that document is filed under seal. Whistleblowers may invoke this immunity when faced with an employer’s claim for misappropriation of trade secrets, but only if they disclosed the documents in one of these two circumstances.[5]

Potential whistleblowers also should consider whether their actions might violate the Computer Fraud and Abuse Act (“CFAA”) if they use their computers to access their employer’s documents to provide support for their whistleblower claims. In general, whistleblowers should not fear prosecution under the CFAA so long as they access a computer with authorization and do not obtain information located in areas on the computer to which their access is prohibited. In Van Buren v. United States, 141 S.Ct. 1648 (2021), the Supreme Court held that an individual violates the law only when she accesses information that she is prohibited from accessing. This ruling protects whistleblowers, who prior to the Court’s opinion may have faced a CFAA claim by the employer for gathering documentary evidence for the purpose of supporting a whistleblower claim even though the whistleblower had not exceeded her authorized access on the employer’s computer. Even so, the interpretation of the CFAA under Van Buren means whistleblowers should be careful not to access areas of a computer that are off limits to them (i.e., specific folders with restricted access for only certain levels of employees to which the whistleblower does not belong), regardless of whether their purpose is to gather evidence to support their whistleblower claim.

Finally, employees should understand that the whistleblower laws discussed above do not protect disclosures to the press. In the case of Ms. Haugen, it is possible that Facebook could pursue an action against her for providing internal documents to media outlets, including claims for breach of contract or misappropriation of trade secrets. KMB partner Lisa Banks spoke with CNN about these potential risks in Ms. Haugen’s case.

Conclusion

Whistleblowers like Ms. Haugen are integral to holding companies accountable and assisting state and federal agencies in investigations against companies that may have engaged in serious misconduct. Strong public policy favors allowing whistleblowers to raise complaints without fear of retaliation from their employers. Whistleblowers have a number of protections available to them if they share documents with government regulators, law enforcement, or Congress, yet they should proceed cautiously and consult with an attorney before disclosing documents to the press. An experienced whistleblower lawyer can assist employees in understanding the scope of their rights and how to proceed in a manner that maximizes the protections and incentives available to them.

[1] See U.S. ex rel. Cieszynski Lifewatch Servs., Inc., 2016 WL 2771798, at *5 (N.D. Ill. May 13, 2016)

[2] See, e.g., U.S. ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1062 (9th Cir. 2011) (concluding that the relator’s “grabbing of tens of thousands of documents” was too overbroad and unreasonable to warrant protection from liability for breach of contract for violating the employer’s confidentiality agreement).

[3] Tides v. The Boeing Co., 644 F.3d 809 (9th Cir. 2011).

[4] Compare Pacheco v. Waldrop, 84 F. Supp. 3d 606, 609 (W.D. Ky. 2015) (holding that complaints made to newspapers did not qualify as protected disclosures for the purpose of protections under the Kentucky Whistleblower Act) with Dep’t of Homeland Sec. v. MacLean, 574 U.S. 383, 398-99 (2015) (holding that the federal employee-whistleblower’s public disclosures made to media were not “specifically prohibited by law” and were therefore entitled to protections under the Whistleblower Protection Act); Chambers v. Dep’t of Interior, 602 F.3d 1370, 1378-79 (Fed. Cir. 2010) (concluding that statements made by a federal government employee to a newspaper about a substantial and specific danger to public health or safety were protected disclosures under the Whistleblower Protection Act).

[5] See FirstEnergy Corp. v. Pircio, — F. Supp. 3d —, 2021 WL 857107, at*4-5 (N.D. Ohio Mar. 8, 2021) (concluding that the defendant-employee who shared documents with his attorney, who then provided documents to the government, was protected by the immunity provision of the DTSA because he provided these documents solely for the purpose of reporting a violation of the law).

Copyright Katz, Marshall & Banks, LLP

Article By Alia Al-Khatib of Katz, Marshall & Banks, LLP

For more articles on whistleblowers, visit the NLR Criminal Law / Business Crimes section.

GovCon Fraud Grounded: Whistleblower Receives Reward for Reporting Aviation Equipment Government Contracting Fraud

The United States Department of Justice settled a case against aviation equipment defense contractor Airbus Defense and Space Inc. (ADSI) for charging improper fees on government contracts. Under the terms of the settlement, the defense contractor paid $1,043,475 to resolve False Claims Act allegations. A former employee of the government contractor reported these improper fees and will receive $157,220 of the government’s recovery.

According to the allegations, the contractor included an unapproved cost rate on contracts, did not accurately disclose fees, and worked out a storage overbilling scheme with a third-party contractor, causing the government to pay more for storage than necessary. To disguise an additional and sometimes undisclosed indirect cost rate, the contractor added what they called an “Orlando Factor” to various price proposals for 62 contracts. Indirect cost rates are a complex portion of government contracting arrangements whereby a contractor attempts to obtain reimbursement for their company’s operational costs. From 2016-2017, this aviation equipment contractor’s “Orlando Factor” was applied in addition to their indirect cost rate approved by the federal agencies with which they were contracting.

The allegations further describe additional fees the contractor tacked onto equipment acquisitions in violation of federal acquisition regulations. Moreover, the contractor listed an unverified affiliate fee on its proposals. Finally, the contractor inflated storage costs by a factor of 10, resulting in General Dynamics passing on $80,000 in storage fees to the U.S. Navy instead of $8,000 in fees.

Defense contracting fraud harms taxpayers; inflating the cost of obtaining equipment can make defense budgets spiral out of control. This particular contractor seems to have found multiple ways to hide costs and pad proposals so as to turn a profit above and beyond their cost of doing business.

A former employee of ASDI reported these fraudulent practices and is being rewarded for speaking up, including receiving funds to pay for their expenses, attorneys’ fees, and costs. The Department of Justice needs whistleblowers to report government contracts fraud. Last year, only 35 defense fraud cases were filed by whistleblowers. With $720 billion spent, more fraud is out there.

© 2021 by Tycko & Zavareei LLP
For more articles on Government Contracts, visit the NLR

Government Contracts, Maritime & Military Law type of law section.

How to Improve Cities After COVID-19: What to Know About the Revitalizing Downtowns Act

In July, Democratic Senators Gary Peters and Debbie Stabenow (along with Democratic  Representatives Dan Kildee, John Larson, and Jimmy Gomez) introduced the Revitalizing Downtowns Act (“The Act”) to Congress. With the goal of reviving urban districts and downtown commerce, the Act would establish a new federal tax credit that encourages property developers to convert unused office space into residential or mixed-use space.

The Act defines an obsolete office structure as a building at least 25 years old, and at least 20 percent of the residential conversion must be dedicated to affordable housing. If these criteria are met, 20 percent of the conversion expenses will be covered by the tax credit. The Act has  growing support from economic development organizations across the country, including the International Downtown Association and the Federal City Council. Together, 37 organizations formed the Revitalize Our Cities coalition, committed to reenergizing downtown spaces and strengthening the U.S. economy.

The Act presents a substantial opportunity to improve American cities of all sizes. Justin P. Weinberg, Partner in Charge at Taft Stettinius & Hollister’s Minneapolis office, said of the Act, “It’s an opportunity to revitalize and reenergize existing spaces. Giving new purpose – and attracting new tenants – to buildings that would otherwise be vacant means more people, customers, and workers to build and sustain a strong community and business district where there wasn’t one before.”

How Can Federal Tax Credits Help Unused Office Space Redevelopment?

With employees still working from home and a permanent return to the office for countless businesses seeming more uncertain as the COVID-19 pandemic continues, many office buildings may remain vacant and unused, leaving downtowns with fewer opportunities for investment and revenue generation.

“This Act would be huge in encouraging all types of business to invest in downtown markets. It would be most helpful though if the tax credit provided could be used in conjunction with other credits, such as historic tax credits, Low-Income Housing Tax Credits (“LIHTCs”) and/or new markets and also incentivized business owners to open. Residential development works best if it is in conjunction with other retail, services and other amenities and, of course, plenty of parking,” said Kelly Rushin Lewis, partner in Jones Walker’s tax practice and leader of the firm’s tax credit finance team.

For buildings needing a lot of work, tax credits are essential to ensuring the project has the necessary financing. Without them, many projects requiring a lot of renovations and updates may not be able to move forward, Ms. Lewis said.

“Tax incentives are a key tool in attracting private capital in neighborhoods or towns in need of revitalization. These conversions can be much more challenging than building from the ground up, especially if dealing with vacant buildings that may have environmental, zoning, code compliance, or other latent issues that may be expensive to correct. The projects often are just not financially feasible and will not get done without those incentives,” she said. “A credit or some other incentive for potential tenants in the commercial spaces would be helpful – many business owners may be reluctant to be the first or one of few to open in what may be an otherwise quiet downtown. Tax incentives would encourage them to come and hopefully give them a cushion while the neighborhood is being revitalized.”

Another potential impact of the bill would be the increased investment in affordable housing. With many cities large and small struggling to provide enough affordable housing, the Act would create an opportunity to develop vacant buildings into much-needed affordable housing developments.

“Now more than ever, investment in affordable housing is critical.  Housing costs are at an all-time high with demand outpacing supply. The costs of acquiring housing is high and the cost of building it is as well,” Ms. Lewis said. “Affordable housing developments do so much more than create housing – they create jobs and careers in everything from construction, accounting, legal work, property management, and more.”

In addition to creating jobs, the creation of affordable housing has the potential to slow down the gentrification affecting many large cities, said Lacy Clay, a former congressman from Missouri and a Senior Policy Advisor at Pillsbury Winthrop Shaw Pittman LLP.

“If you can convert these older buildings into affordable housing units, then you will slow down the gentrification process taking place in quite a few of these urban centers. You can look at any major city now and see that low to moderate income families and people of color are being pushed out of those cities, and then to further into the suburbs,” he said. “This would help reverse those trends.”

How Investing in Affordable Housing Actually Can Help with the Current Labor Shortage.

The Revitalizing Downtowns Act is a timely piece of legislation for investing in urban centers during the COVID-19 pandemic. For many industries, it appears that widespread remote work is here to stay, and it is critical that American cities reflect that new reality. By providing incentives for developers and property owners, the Act makes these necessary overhauls far more viable. “Tax incentives reduce investors’ financial risk,” explained Mr. Weinberg. “[This makes] taking on such a project highly attractive.”

The bill’s emphasis on affordable housing is especially notable. Through this provision, legislators hope to provide equal footing for renters and thereby attract young talent to fill employment needs.

“I want to compliment Senator Stabenow and Gary Peters and Dan Kildee for coming up with this innovative way to be able to bring populations back in a way that does not exclude communities of color, but will include communities of color,” Mr. Clay said. “If you build enough affordable housing units, according to the legislation, at least 20 percent of any of those redevelopments have to be dedicated to affordable housing.”

Through investing in affordable housing, downtowns would benefit from an increased flow of commerce, as well as a buffer against the ongoing U.S. labor shortage and or talent mismatch.

“The trick is to prioritize affordable housing without eliminating or displacing families in market-rate housing that do not otherwise qualify for affordable housing,” said Mr. Weinberg. “But if done well, a city that strikes the right balance of available affordable housing benefits from additional economic stability and makes itself a sustainable destination for business, families, and communities.”

Copyright ©2021 National Law Forum, LLC
For More Articles on Real Estate, visit the NLR Construction & Real Estate section.

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