Making a Difference at Your Firm: A Checklist from Two Law Firm Chief Marketing Officers

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It is a fact that none of us majored in legal marketing in college.  While some of us did receive a formal education in general marketing or business, it only takes a few months before you realize that working with lawyers is a whole different ballgame.  How lucky we are as LMA members, then, that veterans are eager and willing to share their wealth of knowledge with not just legal marketing rookies, but also other veterans, and everyone else in-between.

Anne Schuster chief marketing officer at Thompson Coburn LLP, and Lou Ann Wilcox, chief marketing officer at Armstrong Teasdale LLP, recently collaborated to create a checklist on how other legal marketers can make a difference at their firms, which they kindly shared with their colleagues in St. Louis.

 1)  Understand the Big Picture

Clearly, marketing is not carried out in a vacuum.  Our speakers encouraged everyone to know what the firm’s management is trying to accomplish (both short term and long term) along with their overall vision for their firm  and how marketing fits in.  In fact, understanding what the firm’s goals are will often guide you in developing your marketing plan.

 2)  Focus on What Matters

Anne and Lou Anne explained that there are two types of activities that legal marketers carry out:

  • Business development activities that affect the bottom line
  • Reputation enhancement activities that do just that – enhance the brand

This was further illustrated by the “Marketing Continuum” chart which divided activities into “Sales” (big seminars, networking events, face-to-face business meetings, etc.) and “Reputation Enhancement” (tables at events, PR, articles, golf hole sponsorships, etc.).  Lou Ann expressed that we should be pushing our lawyers towards the sales activities while teaching younger lawyers how to become more involved in reputation enhancement activities.

 3)  Know How Your Law Firm Works

In addition to knowing the basics of how your firm works, our speakers also recommended knowing how influence happens in your firm.  One specific way to determine who is an “influencer” at your firm is to look for the person your managing partner bounces ideas off of.

Furthermore, you should know your firm’s financials, or at least understand the six levers of law firm profitability:

  • Leverage
  • Demand
  • Rates
  • Productivity
  • Realization
  • Expense

Once you understand how the firm works, go forth and teach your lawyers!

4) Manage to the Numbers

Anne showed how analyzing your client base can reveal new opportunities in untapped practice areas.  Specifically, she illustrated the green-space chart that she attributed to Altman Weil.  In it, practice areas are plotted on the x-axis with top clients on the y-axis; dollar amounts are filled in the cell where the points meet.  Empty cells on the chart represent opportunities for client teams to market additional services to those existing clients

5) Create Opportunities to Listen to Your Clients

Lou Ann recommended a formal client feedback program consisting of annual client meetings, frequent visits and post-matter surveys.  If a problem comes up during the client feedback process, it should be fixed immediately and then the client needs to be notified that the problem has been fixed.  What’s more, Lou Ann discussed how during an annual client meeting outlining expectations, her firm also asks the client marketing-related questions such as, “How do you like to be entertained?” (what type of events?  What time of the day?) and “What are your expectations regarding how the firm donates to your favorite charity?”  Asking these types of questions not only opens up the lines of communication with the client, but also eliminates wasted effort on behalf of the marketing department and the client team.  In the end, we should be asking itself, “Are we doing everything we can for the client?”

Lou Ann also revealed that her marketing department frequently asks the firm’s lawyers how they are doing, as well.  This simple act shows that the department values the firm’s client feedback process while also putting the lawyer in the client’s shoes.

6)  Educate and Communicate

Anne and Lou Ann both illustrated a few ways that their firms have facilitated educating their lawyers on the practices and clients of other lawyers within their firm.  Methods included a deck of cards with facts on different attorneys, a splashy video highlighting opportunities for cross-selling and an innovative passport program that encourages lawyers to simply get to know each other.

The second component, communication, is necessary in order to keep the firm’s lawyers aware of the successes of their colleagues.  Lou Ann shared a newsletter her firm’s managing partner sends out that simply lists recent successes and awards.  This simple act builds trust among the practice groups and reduces the perceived risk of cross-selling another practice.

7)  Push Lawyers Out the Door

As marketers, we should be encouraging our lawyers to talk to their clients along with visiting them at their place of business.  This tends to take lawyers out of their comfort zone, so the panelists discussed ways we can make it easier for them, such as preparing talking points.

8)  Push Back on Bad Ideas

Anne and Lou Ann provided some great tactics on how to deal with lawyers presenting bad marketing ideas.  Overall, they both advised re-directing ideas that you know won’t work.  Instead of saying “No,” offer two or three alternative ideas to the individual.

9)  Know Your Strengths

Lou Ann recommended the book, “Strengths Finder 2.0” which helps individuals discover their strengths.  When you discover what you naturally excel at, operate within that strength at let others operate within theirs; this is what makes a truly effective team.

10)  Market Yourself

Anne began by stating that this item is the one we most frequently forget.  In order for marketing to stay relevant within the law firm, we need to tell our story ,since no one else will.  Additionally, we should be documenting our activities and results.  Lou Ann explained that her marketing department records their activities through a shared document which lists tasks and objectives stated for the year.  In it, marketing staff members enter when tasks are completed; the document then serves as a report on what the marketing department completed in that year.

This unambiguous checklist created and shared by Anne and Lou Ann provided a fantastic set of guidelines on how marketing professionals can make sure they are making a difference at his/her firm.  Moreover, the real-world examples and case studies our speakers presented further illustrated how these items can be carried out at any firm, simply and successfully.

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Using Technological Innovation to Enhance Law Department Management

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In today’s law firm environment, legal marketing professionals hold the dual role of preserving value as well as creating value. One of the best ways of accomplishing both goals is to take full advantage of technological innovation while minding the inevitable limitations that exist in law firms, such as budget constraints and reluctance to accept technological advancement. From website development to social networking, the right technological tools can steer law firms to align their system capabilities with their clientele needs. By taking advantage of such tools as analytics and systems of engagement that raise the level of awareness, legal marketers can justify technology budgets and get shareholders and partners on board with the tech express.

Steps Legal Marketers Must Take Before Investing in Technology

Analytics: Measuring Data Integrity Holistically to Determine Performance Impact

Legal marketers must ensure that vendors provide detailed, structured analytics for marketing optimization purposes. Analytics deliver the data while metrics and dimensions can be queried together to measure performance. Analytics as a system allow legal marketers to analyze data and determine whether the technology garners a return on investment. In addition, the description of performance guides legal marketers in the decision-making process to predict outcomes and drive efficiency. It remains up to legal marketers to ensure that analytics are providing valuable knowledge and being used to improve business performance as well to justify investment into technology.

Analytics only fulfill their purpose when providing holistic and accurate data. They must present a clear understanding of a complex structure, likened to looking at the world through a keyhole. No one metric will account for all of the data in totality so the goal is to view the data holistically to get the full story. Moreover, data integrity remains essential to the equation as far as the quantification, quality and presentation of analytics.

Analytics are comprised of a two-prong system: how comprehensive the data serves as only the start—the challenging part is for the legal marketer to use context to asses and model the data. Because the function of marketing metrics is ultimately to gauge performance impact, every metric should remained nuanced enough from which to derive a take-away point. For instance, a metric may show that one legal project took two months to close while another similar project took two years to close. Because no two matters are the same, the metric and dimension should be nuanced enough to present variables accounting for the disparity. In its barest terms, the legal marketer wants to determine that she spent x time and resources for a y amount of value.

Business Intelligence and Systems of Engagement

Legal marketers must also select technologies that commoditize knowledge work, which serves as among the most strategic activities taking place within the law firm. IT systems in the past, known as systems of record, have focused heavily on technological features and processes rather than users. These systems are used in everyday business operations to compile, automate and store data and, while important, are not conducive to collaborative work amongst attorneys or interaction with clients.

In contrast, emerging IT systems called systems of engagement, which are the future of technology-led business innovation, raise capability to a higher order and allow for immediate and streamlined communication. As such, systems of record host processes while systems of engagement touch people and drive more interaction among colleagues on top of just maintaining data. This is not to say that systems of records are rendered obsolete—in fact, by using both systems of record and engagement to monitor transaction and interact with the data respectively, the full value of technology is tapped. Hence, legal marketers can take all of the data coming from the interactions mixed with the meaning derived from translating the data into insights to product true innovation.

 

The information in the this article was gathered from the Inside Counsel’s 2013 SuperConference from presentations by:  David Cambria, Senior Director, Enterprise Information Management, CDW; Mike McGuire, Corporate In-House Counsel, Axiom; and Pamela Woldow, Partner & General Counsel, Edge International.

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When Persuading, Body Language Beats Words Re: Persuasion and Negotiation in the Practice of Law

In any law firm, there is a lot of persuasion going on.  Persuasion and negotiation are, after all, essential skills in the practice of law. But they are also important in other tasks performed at law firms.  In the human resources area, you must persuade someone to hire you, pay you more money and advance you in your career.  In the operations area, you must persuade your colleagues to work with you.

And of course, a lot of law firm persuasion takes place in the realm of business development.  You must persuade clients in your marketplace that you are expert in your field of practice.  You must persuade influencers to refer to you to others and potential clients to meet with you.  You must persuade current clients to stay with you and give you more work.

Wouldn’t it be much easier to persuade others if you knew what they were thinking?  The ability to read body language provides this valuable information.

Wouldn’t it be much easier to persuade others if they liked you and trusted you?  The ability to modify your own body language makes it much more likely that this will happen.

The ability to read and respond to body language was discussed by Traci Brown at the June 11 program of the Rocky Mountain Chapter of the Legal Marketing Association, held at Sullivan’s Steakhouse in LoDo Denver.  Brown is a Boulder-based persuasion expert who teaches lawyers how to use body language to pick and persuade members of a jury.  She is author of Mastering Magical Persuasion and Body Language Confidential.

Importance of body language

Lawyers tend to be word people.  As such, they put too much emphasis on what they are communicating.  They will spend hours researching and writing a presentation, and then simply read it. They place far too little emphasis on how they are communicating.  This can be a huge mistake.

“Research shows that people form first impressions about the likeability and trustworthiness of another person very quickly,” said Brown.  “This determination of ‘OK’ or ‘not OK’ happens instantaneously in the deep unconscious.  Once this impression is made, it is almost impossible to change.”

According to a widely cited study by UCLA professor Albert Mehrabian, body language accounts for an overwhelming 55 percent of that impression.  By comparison, 38 percent of a first impression comes from the tone of your voice and a mere seven percent from your actual words.

Body language includes how we position our bodies (including how close we stand or sit to someone), how we use our hands (including shaking hands), how people perceive our facial expressions (especially our eyes), how we touch ourselves and others, and how our bodies connect with items like pens, eyeglasses, jewelry or even the change in our pockets.  It can include breathing rate and perspiration.

“If the person you are meeting is somber and guarded,” said Brown, “you will never persuade them by being cheerful and demonstrative.  That will only set off their alarms.

“If you want to get different results from your efforts to persuade others, you need to do things differently,” said Brown.  “To get better results in the area of business development, one of the most effective things you can do is to change your body language.  With an understanding of how body language works, you can talk just about anyone into anything.”

Reading and responding to body language

An effective persuader will pay close attention to the body language of the person he or she is trying to persuade, and then mimic that body language.  “People like and trust people whom they perceive to be similar to themselves,” said Brown.  “The more you can be like the person you are dealing with, the more you will be able to establish essential rapport.”

Good friends and romantic partners, for example, tend to do this naturally.

Is the person you are sitting across from soft-spoken? Does he speak slowly, smile and laugh a lot? Is his notepad on the desk or his lap, does he take copious notes, are his legs crossed, is he leaning forward or backward?  These are important things to notice and reflect in your own body language.

Two terms often heard in the field of neurolinguistics are mirroring and matching. “Mirroring occurs when you copy a person’s body language as if you were that person’s reflection in a mirror,” said Brown.  “If the person you are facing leans to the left, for example, you lean to the right.  In other words, you might both lean towards the door.

“Precisely mirroring another person at exactly the same time can be too intense,” said Brown.  “It can actually backfire by making the person too uncomfortable.  The only time mirroring works well is when you are sitting across from someone who is very stiff and symmetrical.”

Almost always, you want to match rather than mirror the person you are speaking with.  “When you match, you copy the person more loosely,” said Brown.  “If the person you are facing leans to the left, you lean to your left – the other way from a mirror image.  If the other person leans towards the door, you would lean away from the door.

“You don’t want to do this immediately after the other person moves,” said Brown, “but perhaps five or ten seconds later, or when it is your turn to speak.

“When having a conversation, it is a good idea to stand or sit at a 45-degree angle to the person on whom you want to make a positive impression,” said Brown.  “Standing or sitting right across from someone and staring them straight in the eye can be seen as confrontational and put that person on his or her guard, rather than creating rapport.”

How to interpret a handshake

Brown discussed a number of circumstances where it can be useful to understand and correctly respond to another person’s body language.

The handshake, for example, is the standard greeting in business situations. The ideal handshake is the “equal shake,” where the clasp is vertical and the grasp is firm.  It says that you are meeting on common ground and want a nice, even interaction.

When the other person shakes your hand and turns their palm down, they want to dominate the interaction.  The same holds true for a ‘bone crusher.’ When the person turns their palm up, they are welcoming and likely to do what you want.  A limp ‘dead fish’ handshake indicates a lack of backbone.   A person who shakes hand with just the fingertips is unlikely to want to do business with you.

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Impact of Trademark Trial and Appeal Board (TTAB) Rulings in Court Decisions

Katten Muchin

The US Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) provides, among other things, a forum for trademark owners to oppose the issuance of a certificate of registration for a mark filed by a third party which it believes is confusingly similar to its registered mark. Although the TTAB can issue a decision as to whether two marks are confusingly similar such that one of them should not be entitled to registration, the issue of whether one mark infringes another is beyond the scope of a TTAB proceeding and is instead left to the courts.

Therefore, when a trade mark owner is formulating its enforcement strategy, a common question that arises is whether a TTAB decision holding that two marks are confusingly similar would be dispositive when the same two marks are the subject of a trademark infringement claim before the courts. This issue was recently addressed by the Eighth Circuit in the case of B&B Hardware, Inc v Hargis Industries, Inc and the conclusion reached in this case can be helpful to brand owners contemplating their approach to brand enforcement.

B&B Hardware, the owner of a trade mark registration for the mark Sealtight covering a fastener product that is used predominantly in the aerospace industry, had successfully opposed a trade mark application filed by Hargis for the mark Sealtite covering a line of self-drilling and self-taping screws that are commonly used in the construction of metal buildings. Subsequently, B&B Hardware sued Hargis, making claims of trade mark infringement and unfair competition. The District Court rejected B&B Hardware’s claims and in doing so decided not give preclusive effect to the TTAB decision (that is, the Court did not allow the decision to preclude the issue from being re-litigated) which held that there was a likelihood of confusion between the two marks.

B&B Hardware appealed the decision to the Eighth Circuit arguing that the TTAB’s determination that there is a likelihood of confusion between the two marks should have been given preclusive effect by the District Court on the claim of trade mark infringement which, in turn, would have necessitated a finding by the District Court in B&B Hardware’s favour. The Eighth Circuit, however, affirmed the District Court’s decision, holding that regardless of whether the TTAB is an agency whose decisions are entitled to preclusive effect, the decision rendered in the opposition proceedings was not so entitled. Specifically, the Eighth Circuit ruled that preclusive effect should not be given to the TTAB decision at issue because the likelihood of confusion test applied by the TTAB when considering B&B Hardware’s opposition to Hargis’ attempt to register the Sealtite mark did not equate to a determination of likelihood of confusion for purposes of analysing a claim for trade mark infringement.

The decision issued by the Eighth Circuit was not without dissent, however. The dissent took the position that when an administrative agency is acting in a judicial capacity and resolves disputed issues of fact which the parties had the opportunity to litigate, the courts should give the decision issued preclusive effect. In short, the dissent believed that Hargis should not have had the opportunity to re-litigate the dispute at the District Court level after already having done so before the TTAB.

This case, therefore, stands for the proposition that a ruling by the TTAB may not be serve as the final decision on the existence of a likelihood of confusion between two marks. However, as indicated by the dissent, the holding in this case may not be universally applied so careful consideration should be given by a trade mark owner when pursuing a claim of trade mark infringement when the marks at issue were already the subject of a TTAB decision.

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Recent Consumer Financial Protection Bureau (CFPB) Developments

Rules Creating Exemptions to the ATR Rule Finalized

The Consumer Financial Protection Bureau (CFPB) recently finalized rules that modified and created specific exemptions to the CFPB’s Ability-to-Repay Rule. The rules have three main effects.

  1. They exempt certain community development lenders and nonprofits—specifically those that lend only to low- and moderate-income consumers, and make 200 or fewer such loans per year—from the ATR Rule.
  2. They facilitate lending by community banks and credit unions that have less than $2 billion in assets, and make 500 or fewer first lien mortgages per year.
  3. They no longer require that compensation paid by a broker or lender to a loan originator counts towards the Dodd-Frank points and fees limits.

These changes to the ATR Rule will take effect on January 10, 2014.

Effective Date of Prohibitions on Financing Credit Insurance Premiums Delayed

The CFPB has delayed the effective date of a regulation prohibiting creditors from financing credit insurance premiums secured by a dwelling. The regulation, previously effective June 1, 2013, has been delayed until January 10, 2014. The CFPB wanted to clarify how the rule applied to transactions other than those where a lump-sum premium was added to the loan amount at closing.

CFBP Seeking Comments on Possible Revisions to the Civil Penalty Rule

The CFPB is seeking comments on possible revisions to the Consumer Financial Civil Penalty Fund Rule. The CFBP uses this fund, established by the Dodd-Frank Act, to deposit civil penalties obtained in judicial or administrative actions under federal consumer financial laws. The fund can be used to pay victims of violations of federal consumer financial laws, or, if victims cannot be found, to educate consumers and provide financial literacy programs. The rule articulates the CFPB’s interpretations of what kind of victim payments are appropriate and how to otherwise allocate the funds. Comments are due on July 8, 2013.

White Paper Concerning Overdraft Practice Concerns Published

The CFPB published a white paper concerning overdraft practice concerns and institutional practices. The paper finds that a large portion of consumer checking account revenue continues to come from overdraft fees. Furthermore, those consumers who choose, let alone use, overdraft coverage have higher costs and a higher chance of having their checking accounts involuntary closed. No action, other than further research, is currently planned.

CFPB Launches New Mortgage Rule Implementation Page

The new mortgage rule implementation page is part of an effort to help lenders comply with the Dodd-Frank Act reforms and CFPB rules. Debtors and potential debtors can find potentially useful information, including quick reference charts, video guides, manuals, etc.—related to the new 2013 mortgage rules. While the CFPB’s intention for the site is to help understand the rules, the materials are not a substitute for the rules themselves.

Ryan C. Fairchild, summer law clerk at Poyner Spruill, co-authored this article.

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A Short-Lived Victory for Generic Drug Manufacturers?

Sheppard Mullin 2012

On June 24, 2012, the U.S. Supreme Court handed down its decision in Mutual Pharmaceutical Co. Inc. v. Bartlett, 570 U.S. ____ (2013), finding that design-defect claims against generic drug companies are pre-empted where federal law prohibits an action required by state law. The Supreme Court had previously held in Pliva v. Mensing, 564 U.S. ____ (2011) that failure to warn claims against generic drug manufacturers are pre-empted by the Federal Food Drug and Cosmetic Act since generic drug makers must copy innovator drug labeling precisely in order to obtain approval of their products by the U.S. Food and Drug Administration (“FDA”). The Court in Mutual rejected the argument of lower courts that the generic manufacturer could comply with both federal and state law by choosing not to make and distribute the product at all.

The case in question involved the drug sulindac, a non-steroidal anti-inflammatory drug product marketed by the innovator as Clinoril®. The plaintiff in the case had been prescribed sulindac for treatment of shoulder pain. She subsequently developed a case of toxic epidermal necrolysis following taking an FDA approved generic product equivalent to Clinoril®, which resulted in significant and permanent disability (including blindness) and disfigurement. Subsequent to the event, the FDA required a more specific warning as to this possible side effect on sulindac products. A jury found the generic manufacturer liable under a theory that there was a design defect with the product, and the First Circuit affirmed, holding that the generic manufacturer could have complied with both federal and state law by not manufacturing and distributing the product. This was the method by which the lower courts overcame prior precedent that a state law may be impliedly pre-empted when it is not possible to comply with both federal and state law.

The Supreme Court in Mutual noted that the generic manufacturer could not comply with the state law, since federal law requires that the active ingredient, the amount of the active ingredient, the dosage form, and the labeling had to be identical to the innovator product. In this case, it was not possible to redesign the product, and the only way, under New Hampshire law, to remedy the design defect would have been to strengthen the product’s warnings. That too could not be done, as FDA rules require the labeling of the generic to be identical to that of the innovator. The Court ruled that in such a case the state law is without effect, and relevant New Hampshire warning-based design defect cause of action was pre-empted with respect to FDA-approved generic drugs sold in interstate commerce.

The scope of the Mutual decision may be limited to those states where design-defect claims allow for a risk-utility approach such as that the New Hampshire requires. The New Hampshire standard requires, among other things in determining whether there is a valid cause of action for a design defect, a determination as to whether there is a possible warning to avoid unreasonable risk of harm from the design defect and the efficacy of such warning. So not every design-defect claim may be pre-empted, depending on each state’s laws are interpreted. But given the Court’s reasoning, even state laws that do not take into effect the presence of and efficacy of a warning, may be pre-empted, as the generic must copy the formula of the innovator in all respects, except for the inactive ingredients in the product. (It should be noted that generics of some dosage forms – ophthalmic products and injectable products – must, in most cases, contain the same inactive ingredients as in the innovator product in the same amounts).

Furthermore, the FDA may amend its rules to permit ANDA holders to make changes in labeling. See “FDA Rule Could Open Generic Drug Makers to Suits,” The New York Times, Business, July 4, 2013, at B2. As stated in the posting on the OMB website (RIN 0910-A694):

Abstract: This proposed rule would amend the regulations regarding new drug applications (NDAs), abbreviated new drug applications (NDAs), abbreviated new drug applications (ANDAs), and biologics license applications (BLAs) to revise and clarify procedures for changes to the labeling of an approved drug to reflect certain types of newly acquired information in advance of FDA’s review of such change. The proposed rule would describe the process by which information regarding a “changes being effected” (CBE) labeling supplement submitted by an NDA or ANDA holder would be made publicly available during FDA’s review of the labeling change. The proposed rule also would clarify requirements for the NDA holder for the reference listed drug and all ANDA holders to submit conforming labeling revisions after FDA has taken an action on the NDA and/or ANDA holder’s CBE labeling supplement. These proposed revisions to FDA’s regulations would create parity between NDA holders and ANDA holders with respect to submission of CBE labeling supplements.

The expected date for a Notice of Proposed Rulemaking is September 2013. It could, of course, take FDA quite some time to propose a rule, and put it into effect, given the requirements of the Administrative Procedure Act. And Congressional action is also a possibility.

For the present, however, generic drug manufacturers appear to be shielded from liability under the doctrine of pre-emption from most, if not all, failure to warn and design defect claims under state law. Whether that victory is short-lived or not remains to be seen.

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Women, Influence & Power in Law – October 2-4, 2013

The National Law Review is pleased to bring you information about the upcoming Women, Influence & Power in Law Conference:

 

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When:

The Only National Forum Facilitating Women-to-Women Exchange on Current Legal Issues

Women, Influence & Power in Law Conference is presented by Summit Business Media’s Legal Suite – InsideCounsel magazine, InsideCounsel.com (website), producers of the 13th annual IC SuperConference, the prestigious Transformative Leadership Awards, and creators of Project 5/165.

Presented by InsideCounsel Magazine, the pioneering monthly magazine exclusively serving general counsel and other top in-house legal professionals, the first annual Women, Influence & Power in Law Conference offers an opportunity for unprecedented exchange with women outside counsel. This unique event was created with the assistance of an unheralded advisory board comprised of highly placed women attorneys who are all direct reports to the general counsel and were drawn from across the country. These attorneys have the highest levels of expertise and experience in key practice areas.

The Women, Influence & Power in Law Conference is not a forum for lawyers to discuss so-called “women’s issues.” It is a conference for women in-house and outside counsel to discuss current legal topics, bringing their individual experience and perspectives on issues of:

  • Governance & Compliance
  • Litigation & Investigations
  • Intellectual Property
  • Government Relations & Public Policy
  • Global Litigation & Transactions
  • Labor & Employment
  • Executive Leadership Skills Development

Defense of Marriage Act’s Demise (DOMA) – What it Means for Canadian Residents with U.S. Ties

Altro Levy LogoLast week, the US Supreme Court issued an historic and landmark ruling in the case of US v. Windsor. It has been hailed in the media as the demise of the Defense Of Marriage Act (“DOMA”), and celebrated as an extension of more than 1,000 federal benefits to same-sex couples.

In US v. Windsor, Edith Windsor brought suit against the US government after she was ordered to pay $363,000 in US estate tax upon the death of her wife Thea Spyer. Edith and Thea were legally married in Canada in 2007, but the US federal government did not recognize their marriage when Thea passed away in 2009. Under DOMA gay marriage was not recognized, even if it was legal in the jurisdiction where it was performed. This lack of recognition meant that Edith could not take advantage of the marital deduction that would have allowed her to inherit from her wife without paying US estate tax.

In its ruling on June 26th, the US Supreme Court ruled that the US federal government could not discriminate against same-sex married couples in the administration of its federal laws and benefits as previously dictated by DOMA. Same-sex couples, who are legally married in one of the 13 states that recognize gay marriage, or a country like Canada, now have access to the same federal protections and benefits as a heterosexual married couple.

Tax Benefits

The demise of DOMA will bring with it a multitude of changes under US tax law. We will not attempt to enumerate all of them here, though we will provide a brief overview of key changes for our Canadian and American clients.

i. US Estate Tax

The case of US v. Windsor was based on the US estate tax, which is imposed by the US federal government on both US citizens and residents, as well as non-residents who own US assets worth more than $60,000 USD. Currently US citizens and residents with less than $5.25 Million USD in worldwide assets do not owe US estate tax on death. Canadians with worldwide assets of $5.25 Million USD or less receive a unified credit under the Canada-US Tax Treaty that works to eliminate any US estate tax owed on their US property.

Under federal law a US citizen may pass his entire estate to his US citizen spouse tax-free upon death. Up until last week this rollover was unavailable to same-sex couples.

Canadian same-sex couples should now benefit from the Canada-US Tax Treaty provisions that provide a marital credit to the surviving spouse. This allows for a doubling up of credit against any potential US estate tax due on US property. Now a Canadian same-sex spouse can inherit a worldwide estate worth up to $10.5 Million USD and should see little to no tax on US assets due upon the death of the first spouse.

ii. Gift Tax

The US imposes a tax on gifts if they exceed $14,000 USD per recipient per year. There is an exemption for gifts between spouses, which are generally not taxable.

Gifts made in the US between non-US citizen non-resident spouses are taxable, but the annual exemption is $139,000 USD instead of $14,000 USD. Canadian spouses who gift each other US property, US corporate stocks, etc. may gift up to $139,000 USD per year without incurring US gift tax.

These exemptions have now been extended to same-sex couples, expanding their ability to use gifting for tax and estate planning.

iii. US Income Tax

Many Canadians move to the US each year, in part because of the lower personal tax rates. In the US spouses are allowed to engage in a form of income splitting by filing a joint income tax return. By filing jointly, married couples are also generally able to take advantage of further credits and deductions not afforded to individual or single filers. Being able to file jointly can be highly tax advantageous.

Previously, same-sex couples had to file either separately or as head of household. Now they have the option of filing jointly as spouses, and gaining access to the aforementioned income splitting, credits and deductions.

Couples may file up to three years of amended US Income Tax returns if they believe that they would have been entitled to a larger tax return by filing jointly in those years.

iv. Other Tax Benefits

In the US most individuals receive health insurance through their employer at least up until they qualify for US Medicare at age 65. Previously, if the employer sponsored health insurance plan covered the same-sex spouse as well, then it was considered a taxable benefit. Such coverage will now also be tax-free for same-sex couples.

Retirement Benefits

Among the many benefits now extended to same-sex couples are a variety of “Retirement Benefits.”

i. Social Security and Medicare Benefits

With the end of DOMA, same-sex couples may now qualify for retirement, death, and disability Social Security benefits based on their spouse’s qualifying US employment history. For example, same-sex couples that do not have the required US employment history to qualify for US Social Security benefits on their own may now qualify for spousal Social Security benefits based on their spouse’s qualifying employment history. These spousal Social Security benefits are typically equal to 50% of the Social Security benefits received by the spouse with the qualifying employment history.

Additionally, spouses can qualify for US Medicare based on only one spouse’s qualifying US employment. This allows access to premium-free, or reduced-premium, health coverage in retirement.

Previously these important retirement benefits were not available to same-sex spouses.

ii. Individual Retirement Accounts

Important changes to the rights and recognition of spouses under US retirement savings plans result from the end of DOMA. Same-sex couples will now be recognized under 401(k), 403(b), IRA, Roth IRA, and similar plans. Spouses will be required to give their consent for any non-spouse beneficiary designations for these accounts. They will be treated as spouses for purposes of determining required distributions. For example, an inheriting same-sex spouse will not have to begin IRA distributions until age 70 ½, whereas previously he would have had to begin required distributions immediately as would any non-spouse beneficiary.

Immigration

One of the biggest questions after the US Supreme Court’s ruling on DOMA was whether there would be immediate changes to US immigration policy. Previously the US government did not recognize same-sex couples for immigration purposes. This meant that a US citizen spouse could not sponsor his husband for immigration to the US as a permanent resident (a.k.a. green card holder).

Last week, shortly after the ruling on DOMA, Alejandro Mayorkas, the director of US Citizenship and Immigration Services (“USCIS”) announced at the American Immigration Lawyers Association annual conference that the USCIS would begin issuing green cards to qualifying same-sex couples.

As of Friday, June 29, 2013, USCIS began issuing green cards to same-sex spouses. USCIS has stated that it has been keeping a record of spousal green card petitions denied only due to a same-sex marriage for the past two years. It is expected to reopen and reconsider these spousal sponsorship petitions that were previously denied due to same-sex marriage.

Conclusion

The demise of DOMA is exciting news for Americans, and Canadians with US ties. It provides same sex couples a wealth of new tax and estate planning opportunities, not to mention new opportunities for retirement and immigration planning. It is not too early to review your current planning, and take advantage of these changes.

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The “Dot-Brand” Explosion: What You Need To Do Now

Dickinson Wright LogoEarlier this year the company that manages the global internet address system (the Internet Corporation for Assigned Names and Numbers, or ICANN) accepted the first round of applications for new “generic top level domains,” or gTLDs – the part of an address that goes to the right of the dot. Most businesses register domain names that use the familiar “.com” suffix or one of a handful of other available options such as “.org” or “.biz.” The new program makes it possible to register a business name, a trademark – indeed, virtually any word in any language – as a TLD in its own right. Depending on whose crystal ball you consult, this Dot-Brand initiative could revolutionize the way the internet works, or hopelessly complicate it, or both.

The initial application window recently closed. The list of applications offered a few surprises, a number of omens for the future – and some important action items for brand owners who did not apply for a gTLD this time around.

  • One surprise was the sheer number of applications. Originally, ICANN was anticipating 500 or so. In the end there were almost 2,000 (at $185,000 apiece!) The unexpected volume slowed down the application process, and will surely slow the review and approval process even more.
  • Many of the applications were for famous brand names (.chevy, .nikon, .walmart) and several were for geographic locations (.paris, .nyc, .amersterdam). The most interesting ones were for generic terms like .art, .tech, and .store, which will be of interest to a great many people. Lots of brand owners in the auto industry, forexample, may want to be part of the “.cars” domain.
  • Not surprisingly, many of these generic domains are the subject of multiple applications: thirteen for .app; seven each for .mail and .news; nine for .shop. There will be a lengthy dispute-resolution process, probably culminating in an old-fashioned auction to the highest bidder, to see who ultimately gains control of these domains.

A recent survey of attorneys responsible for protecting trademarks found that while 91 percent were aware of the new gTLD program, only 36 percent had read the Applicant Guidebook, which explains how the process work. That Guidebook, and the initial application list, suggests some important steps you should take now to protect your brand:

1. Make sure no one has applied for a domain that incorporates one of your trademarks. A formal objection period for addressing such issues is now open and will run until January 2013.

2. Identify “generic” domains of interest, and investigate the applicants and their business plans. If you’re in the financial services sector, for example, you’ll want to know who’s behind the applications for .bank, .broker, .finance, .fund, .insurance, .investsments, .lifeinsurance, .loans, .money, .mutualfunds, and others. A 60-day comment period, open to anyone, runs through August 12; if there is something ICANN ought to know about one or more of the applicants or proposed domains, now is the time to tell them.

3. Start planning for defensive domain-name registrations in appropriate generic and geographic domains. Depending on the business you’re in, you may want to make sure you are the first to register your company name and key trademarks within appropriate domain names – before someone else does. The “someone else” could be a competitor, or just an old-fashioned cyber-squatter of the sort brand owners have been dealing with in the .com sphere for years. And don’t forget about domains like “.sucks,” where having someone else register your brand could be embarrassing.

The best defense is a good offense. Starting in October 2012, for a small fee you will be able to list your brand names in ICANN’s Trademark Clearinghouse; anyone that tries to register your brand as a domain name will be advised of your rights.

Consumer Financial Services Basics 2013 – September 30 – October 01, 2013

The National Law Review is pleased to bring you information about the upcoming  Consumer Financial Services Basics 2013.

CFSB Sept 30 2013

When

September 30 – October 01, 2013

Where

  • University of Maryland
  • Francis King Carey School of Law
  • 500 W Baltimore St
  • Baltimore, MD 21201-1701
  • United States of America

Facing the most comprehensive revision of federal consumer financial services (CFS) law in 75 years, even experienced consumer finance lawyers might feel it is time to get back in the classroom. This live meeting is designed to expose practitioners to key areas of consumer financial services law, whether you need a primer or a refresher.

It is time to take a step back and think through some of these complex issues with a faculty that combines decades of practical experience with law school analysis. The classroom approach is used to review the background, assess the current policy factors, step into the shoes of regulators, and develop an approach that can be used to interpret and evaluate the scores of laws and regulations that affect your clients.

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