Telehealth Update: DEA/HHS Temporary Rule, Medicare Coverage of Telehealth Services, Potential for Increased Oversight, and What to Watch For in 2025

Telehealth companies and other industry stakeholders have had a watchful eye towards the end of 2024 and the impending “telehealth cliff” as COVID-era Drug Enforcement Agency (DEA) flexibilities and Medicare expanded telehealth coverage are set to expire. Although a recent temporary joint rule from the DEA and the Department of Health and Human Services (HHS) along with the 2025 Medicare Physician Fee Schedule final rule has provided some hope, questions regarding telehealth access in 2025 and under a new Administration remain unclear. Further, calls continue for increased oversight of telehealth services. Below, we breakdown recent updates for the telehealth industry.

DEA Telehealth Flexibilities

Providing some good news, late last month the DEA and HHS jointly issued a temporary rule (the Temporary Rule) extending the COVID-era flexibilities for prescribing controlled substances via telehealth through the end of 2025. The flexibilities, which previously were twice extended and set to expire December 31, 2024, temporarily waive the in-person requirements for prescribing under the Controlled Substances Act.

The DEA and HHS issued the Temporary Rule to ensure that providers and patients who have come to rely on telehealth services are able to smoothly transition to the new requirements, which as previously covered, are likely to significantly limit providers’ ability to prescribe controlled substances without an in-person interaction. The Temporary Rule also acknowledges that the DEA and HHS continue to work with relevant stakeholders and will use the additional time to promulgate proposed and final regulations that “effectively expand access to telemedicine” in a manner that is consistent with public health and safety, while mitigating the risk of diversion. The agencies also note that the limited time period of the extension is aimed at avoiding investment in new telemedicine companies that may encourage or enable problematic prescribing practices.

The Temporary Rule effectively allows all DEA-registered providers to prescribe Schedule II-V controlled substances via telehealth through the end of 2025, regardless of when the provider-patient relationship was formed. Consistent with the prior temporary rules, the following requirements continue to apply:

  • The prescription must be issued for a legitimate medical purpose by a practitioner acting in the usual course of professional practice.
  • The prescription must be issued pursuant to a telehealth interaction using two-way, real-time audio-visual technology, or for prescriptions to treat a mental health disorder, a two-way, real-time audio-only communication if the patient is not capable of, or does not consent to, the use of video technology.
  • The practitioner must be authorized under their DEA registration to prescribe the basic class of controlled medication specified on the prescription or be exempt from obtaining a registration to dispense controlled substances.
  • The prescription must meet all other requirements of the DEA regulations.

Providers should also be cognizant of applicable state laws that may place additional restrictions on the ability to prescribe certain medications or otherwise provide treatment via telehealth.

Medicare Coverage of Telehealth Services 

Unlike the DEA flexibilities, many of the COVID-era flexibilities for traditional Medicare coverage of telehealth services will end on December 31, 2024. Despite bipartisan support, congressional action is required to extend broad coverage for certain telehealth services existing since March 2020. Most notably, unless Congress acts, beginning January 1, 2025 expiring flexibilities include waiving the originating site requirements to allow beneficiaries to receive services in their homes and expanding the list of Medicare-enrolled providers who can furnish telehealth services.

Further, beginning January 1, 2025, Medicare coverage of telehealth services for beneficiaries outside of rural health care settings will be limited to:

  • Monthly End-Stage Renal Disease visits for home dialysis;
  • Services for diagnosis, evaluation, or treatment of symptoms of an acute stroke;
  • Treatment of substance use disorder or a co-occurring mental health disorder, or for the diagnosis, evaluation or treatment of a mental health disorder;
  • Behavioral health services;
  • Diabetes self-management training; and
  • Nutrition therapy.

For its part, the Centers for Medicare & Medicaid Services (CMS) recently issued its 2025 Medicare Physician Fee Schedule Final Rule (the MPFS Final Rule) extending and making permanent certain telehealth flexibilities within its authority. In particular, through December 31, 2025, practitioners may continue to utilize live video to meet certain Medicare direct supervision requirements and reference their currently enrolled practice when providing telehealth services from their home. The MPFS Final Rule continues to remove frequency limitations for certain hospital inpatient/observation care, skilled nursing facility visits, and critical care consultation services furnished via telehealth. Additionally, the MPFS Final Rule makes permanent the utilization of audio-only telehealth for any Medicare-covered telehealth service.

Increased Telehealth Oversight 

Recent months also have seen renewed calls for increased oversight of telehealth services. In September, the HHS Office for Inspector General (OIG) issued a report (the OIG Report) recommending increased oversight of Medicare coverage of remote patient monitoring. As a basis for its findings, the OIG Report cites the dramatic increased utilization of and payments for remote patient monitoring from 2019 to 2022, the fact that over 40% of Medicare beneficiaries receiving remote patient monitoring did not receive all three components of the service (i.e., education and setup, device supply, and treatment management), and the observation that Medicare lacks key information regarding the data being collected and the types of monitoring devices utilized. Notably, OIG conducted its review in part because of the potential for significant expansion of remote patient monitoring in the Medicare population.

Given these factors, the OIG Report recommends that CMS:

  1. Implement additional safeguards to ensure that remote patient monitoring is used and billed appropriately in Medicare.
  2. Require that remote patient monitoring be ordered and that information about the ordering provider be included on claims and encounter data for remote patient monitoring.
  3. Develop methods to identify what health data are being monitored.
  4. Conduct provider education about billing of remote patient monitoring.
  5. Identify and monitor companies that bill for remote patient monitoring.

Separately, concerns also have been raised regarding the recent emergence of direct-to-consumer telehealth platforms sponsored by pharmaceutical companies. In this model, patients seeking specific medications are linked to a health care provider who can virtually prescribe the requested medication. In October, U.S. Senate Majority Whip Dick Durbin (D-IL), joined by Senators Bernie Sanders (I-VT), Peter Welch (D-VT), and Elizabeth Warren (D-MA) sent letters to several pharmaceutical companies requesting written response to questions regarding these platforms including the cost of direct-to-consumer advertising, the arrangements between the telehealth providers and the pharmaceutical companies, and whether the virtual consultation comply with the standard of care.

Conclusion

Despite attempts to preserve and expand telehealth access and affordability, effective January 1, 2025, many Medicare beneficiaries will be cut off from certain telehealth services unless one of the bills currently pending in Congress is passed. Crucially, bipartisan support for increased access to telehealth services is likely to continue in both chambers of Congress. Although the incoming Administration has not detailed its plans regarding telehealth access on a permanent, or even temporary basis, telehealth will continue to play an important role in the United States health care system through 2025 and beyond. As telehealth continues to play an important role in increasing access to care, increased oversight and enforcement is almost certain, even if future oversight priorities are unclear. As always, we will continue to monitor and report on important telehealth developments.

©1994-2024 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more on Telehealth, visit the NLR Health Law Managed Care section

BREAKING: Federal Court Enjoins Government from Enforcing Corporate Transparency Act

On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction that enjoins the federal government from enforcing the Corporate Transparency Act (the CTA).

The CTA, which went into effect January 1, 2024, requires “reporting companies” in the United States to disclose information about their beneficial owners — the individuals who ultimately own or control a company — to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

A group of six plaintiffs filed a lawsuit in May 2024 claiming that Congress exceeded its authority under the Constitution in passing the CTA. In a 79-page order issued by United States District Judge Amos L. Mazzant, the Court found that the plaintiffs were likely to succeed on the merits of their claims and, although the plaintiffs sought a preliminary injunction on behalf of only themselves and their members, the Court issued a nationwide injunction instead.

The Court’s order states that neither the CTA nor the implementing rules adopted by FinCEN may be enforced and that reporting companies need not comply with the CTA’s upcoming January 1, 2025 deadline for filing beneficial ownership reports.

The Court’s order is a preliminary injunction only and not a final decision. The Court’s order temporarily pauses enforcement of the CTA on a nationwide basis, but enforcement could resume if the Court’s order is overturned on appeal or the Government ultimately prevails on the merits.

© 2024 Foley & Lardner LLP
For more on the CTA, visit the NLR Corporate Business Organizations section

USCIS Reaches FY 2025 H-1B Visa Cap

U.S. Citizenship and Immigration Services (USCIS) has announced that it has received enough petitions to meet the congressionally mandated caps for H-1B visas for fiscal year (FY) 2025. This includes the 65,000 regular cap and the 20,000 U.S. advanced degree exemption, commonly known as the master’s cap.

Quick Hits

  • USCIS has reached the FY 2025 H-1B visa cap, including the 65,000 regular cap and the 20,000 U.S. advanced degree exemption (master’s cap).
  • Nonselection notices will be sent to registrants soon.

In the coming days, USCIS will send nonselection notices to registrants through their online accounts. Once all nonselection notifications have been sent, the status for properly submitted registrations that were not selected for the FY 2025 H-1B numerical allocations will be updated to: “Not Selected: Not selected – not eligible to file an H-1B cap petition based on this registration.”

USCIS will continue to accept and process petitions that are exempt from the cap. This includes petitions filed for current H-1B workers who have been previously counted against the cap and still retain their cap number.

Registration for the H-1B cap lottery for FY 2026 is expected to open in March 2025.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more on USCIS, visit the NLR Immigration section

Year-End Estate Planning Update: Strategies for 2025

The 2025 transfer tax exemption will remain at a historically high level before being reduced by 50% on January 1, 2026 under current law. As it remains uncertain whether the new Congress will enact legislation to maintain the current exemption amount, taxpayers should continue planning with the current law in mind. There are a variety of strategies available to take advantage of current exemption levels.

Current Transfer Tax Laws

The federal gift/estate and generation-skipping transfer (GST) tax exemptions (i.e., the amount an individual can transfer free of such taxes) were $13.61 million per person in 2024 and will increase to an unprecedented $13.99 million in 2025. However, under current law these exemptions will be reduced by 50% on January 1, 2026 (but still inflation adjusted each year). While Congress may do nothing and maintain the current transfer tax laws (allowing the exemptions to be cut in half), or repeal the transfer taxes altogether, due to budgetary constraints, it is more likely that Congress will simply extend the timeframe for when the exemptions will be reduced, perhaps by two, four, or 10 years. The federal transfer tax exemptions can be used either during lifetime or at death. Using exemption during lifetime is generally more efficient for transfer tax purposes, as any appreciation on the gifted assets escapes estate taxation. The Illinois estate tax exemption remains at $4 million per person, as this exemption does not receive an annual inflationary increase.

For individuals concerned about estate taxation upon death, there are estate planning strategies available to utilize the current historically high exemptions. However, these strategies must also address the potential loss of a basis change on death. Estate taxes are imposed at a 40% federal rate on a decedent’s “taxable estate” not qualifying for a marital or charitable deduction, plus potential state estate taxes. In Illinois, the effective marginal tax rate ranges from 8% to approximately 29%. As with income taxes, state estate taxes are deductible for federal estate tax purposes, resulting in a cumulative federal and Illinois estate tax rate (for estates above both the federal and Illinois exemptions), taking deductions into account, of approximately 48%. The trade-off is the loss of the basis change at death (discussed below), which can result in an income tax cost on any “built in” gains aggregating 28.75% (a federal 20% capital gains tax, plus the 3.8% federal net investment income tax, plus state capital gains taxes of 4.95% in Illinois).

In 2025, a married couple can transfer up to $27.98 million free of federal transfer tax, but as discussed above, under current federal law, the estate/gift and GST tax exemptions are to be reduced by 50% in 2026. The Treasury Department has confirmed that the additional transfer tax exemption granted under current law until 2026 is a “use it or lose it” benefit, and that if a taxpayer uses the “extra” exemption before it expires (i.e., by making lifetime gifts), it will not be “clawed back” causing additional tax if the taxpayer dies after the exemption is reduced in 2026. This means that a taxpayer who has made $6.995 million or less (adjusted for inflation) of lifetime gifts before 2026 will not “lock in” any benefit of the extra exemption, while a taxpayer who makes use of the additional exemption before 2026 (e.g., by making gifts of $13.99 million before 2026) will “lock in” the benefit of the extra exemption.

Lifetime Transfer Strategies

In addition to making such annual exclusion gifts, taxpayers should strongly consider lifetime gifting strategies in 2025 in excess of those amounts. Taxpayers who have not used the “extra” exemption before January 2026 may lose it forever. Furthermore, any post-appreciation transfer on gifted assets accrues outside of the taxpayer’s estate. This is especially salient for younger individuals and for transfers of assets with high potential for appreciation. For taxpayers who live in states with a state estate tax but no state gift tax (such as Illinois), lifetime gifting will also have the effect of reducing the state estate tax liability.

New Rules for Required Minimum Distributions from Certain Inherited IRAs

The IRS issued new Final Regulations in 2024 that Required Minimum Distributions from certain retirement plans that beneficiaries must take to avoid penalties (hereinafter referred to as “inherited IRAs” even though they encompass all retirement plans). Congress enacted the SECURE Act in 2019, which set the current law for Required Minimum Distributions from inherited IRAs and other retirement plans. In general, other than a spouse, minor child of the decedent, or disabled child of the decedent for whom special “stretch rules” may apply, beneficiaries have a 10-year period within which all of the IRA funds have to be withdrawn to avoid penalties (no distributions until December 31 of the year in which the 10th anniversary of death falls). Based upon this rule, many beneficiaries intentionally planned to not withdraw IRA funds until the end of the 10-year period in order to let the funds grow income tax deferred (unless earlier distributions could be made at a lower income tax rate based upon their individual situation year by year). Effective for taxable years beginning on or after January 1, 2025, the IRS’s new Regulations change this 10-year rule for beneficiaries that inherited an IRA from a decedent that was passed his or her “required beginning date” (age 72 if the decedent was born in 1950 or before, age 73 if born 1951-1959, and age 75 if born 1960 or later). For such beneficiaries (the decedent dying past his or her required beginning date), the beneficiary is required to take annual distributions during the 10-year period based upon the beneficiary’s life expectancy and must drain whatever is left by December 31 of the 10th year after death. Failure to take the Required Minimum Distribution can result in significant penalties. This annual Required Minimum Distribution amount does not apply to spousal rollover IRAs, to IRAs for which the beneficiary qualified and was using a special life expectancy rule, to IRAs when the participant died before his or her required beginning date, or to IRAs inherited before 2020.

Planning for Basis Change

Good estate planning incorporates income tax and other considerations rather than focusing myopically on estate, gift, and GST taxes. In general, upon an individual’s death, the cost basis of any assets that are included in his or her gross estate for estate tax purposes receive an adjustment to their fair market value at the date of death. For appreciated assets, this can result in substantial income tax savings. Assets that are not included in the gross estate, however, do not receive a basis adjustment. Therefore, there is often a trade-off between making lifetime gifts (to reduce estate taxes, but with the donee receiving the donor’s “carry-over” basis) and keeping assets in the gross estate (to obtain the basis adjustment and reduce income taxes).

Fortunately, there are a number of techniques to help plan for possible change in basis while still retaining estate tax benefits. Irrevocable trusts that receive lifetime gifts can be structured to allow for a possible basis change. One way to do so is by including a broad distribution standard in the trust agreement by which an independent trustee can make distributions out of the trust to the beneficiary. Additionally, a trust can be structured to grant an independent trustee the power to grant (or not grant) the beneficiary a “general power of appointment,” which would cause the trust assets to be includible in the beneficiary’s estate for estate tax purposes and therefore receive the basis adjustment. Finally, if an irrevocable trust is structured as a grantor trust, the grantor can retain a “swap power” that can be used to transfer high-basis assets to the trust and take back low-basis assets, in order to obtain the largest possible “step up” in basis.

The Corporate Transparency Act

As of January 1, 2024, domestic and foreign entities created by filing with a Secretary of State or foreign entities registered to do business with a Secretary of State (i.e., corporations, LLCs, and limited partnerships), are required to report beneficial ownership information to the Financial Crimes Enforcement Network, subject to limited exemptions. “Reporting Companies” are required to report the full legal name, birthdate, residential address, and a unique identifying number from a passport or driver’s license (along with a copy of the passport or driver’s license) for any owner who directly or indirectly (i) owns at least 25% of the ownership interests or (ii) directly or indirectly exercises “substantial control” over the entity.

Entities in existence before January 1, 2024 have until December 31, 2024 to comply with the reporting requirement. Entities formed in 2024 have 90 days from the date of formation to comply with the reporting requirement. New entities formed on or after January 1, 2025 will have 30 days from formation to comply with the reporting requirement. There is also a supplemental filing requirement every time any information on the filed Report changes, due 30 days after each such change.

© 2024 Much Shelist, P.C.
For more on Estate Planning, visit the NLR Estates Trusts section

OFCCP Requiring Construction Companies to Submit Monthly Data Reports starting April 2025

OFCCP announced it is reinstating a monthly reporting requirement (CC-257 Report) for federal construction contractors, nearly 30 years after discontinuing it. Beginning April 15, 2025, covered construction contractors must submit a report to OFCCP by the 15th of each month, with detailed data on its number of employees and work hours by race/ethnicity and gender.

In its announcement, the Agency explained it will use the monthly report to further its “mission of protecting workers in the construction trades, as employment discrimination continues to be a problem in the construction industry.” OFCCP says the report will allow the Agency to strengthen both enforcement and compliance assistance.

OFCCP proposed reinstating CC-257 in February 2024, and in its Supporting Statement, indicated that the report would allow the Agency to “better identify if there are potential hiring or job assignment issues that warrant further investigation during a compliance evaluation.”

The new reporting requirement will include data on number of employees and trade employees’ hours worked by race and gender within each Standard Metropolitan Statistical Area (SMSA) or Economic Area (EA) each month. For contractors with employees working on multiple projects, either within a SMSA/EA or across several areas, gathering and preparing the relevant data each month may prove challenging. Contractors must also include whether the work performed is designated by OFCCP as a Megaproject. Other requirements include the contractor’s unique entity identifier (UEI) or Data Universal Numbering System (DUNS) number, both of which OFCCP uses to identify entities doing business with the federal government, and a list of the federal agencies funding their projects.

The Agency published Frequently Asked Questions on its CC-257 Report landing page and intends to provide additional compliance assistance, including a webinar, in early 2025.

Jackson Lewis P.C. © 2024
For more on the OFCCP, visit the NLR Government Contracts Maritime Military section

November 2024 Legal News: Law Firm News and Mergers, Industry Awards and Recognition, DEI and Women in Law

Thank you for reading the National Law Review’s legal news roundup, highlighting the latest law firm news! As the country enters inches towards the end of the year, legal industry news continues in large strides. Please read below for the latest in law firm news and industry expansion, legal industry awards and recognition, and DEI and women in the legal field.

Law Firm News and Mergers

Polsinelli PC announced the addition of Rachel Adams to the firm’s health care practice as a shareholder in the firm’s Chicago office. She brings more than a decade of helping guide health systems through regulatory requirements.

Ms. Adams focuses her practice on general corporate matters and complex transactions in the healthcare industry such as Stark Law, the Anti-Kickback Statute and state corporate practice of medicine laws. She is a member of the American Health Law Association, regularly presenting on health care transaction topics.

“I am very excited to join Polsinelli and its nationally known health care practice. I was drawn to Polsinelli’s dedication to the health care industry and its breadth of expertise in supporting health care clients,” said Ms. Adams. “I look forward to collaborating with the Polsinelli team to provide well-rounded, practical advice to help clients achieve their business objectives.”

John Goldfinch joined Proskauer Rose LLP as a partner in the firm’s global finance practice. He brings with him over 20 years of experience in structured finance, focusing on collateralized loan obligations (CLO).

Mr. Goldfinch advises managers on all aspects of the life cycle of a CLO issuance. This includes new issue deals, platform structuring and set up and reissues and refinancings. In addition, he advises on restructurings and other asset workouts.

“I am delighted to join Proskauer and build on my work in the structured finance space as part of the Firm’s broader Global Finance strategy. As demand in the sector inexorably grows, clients who look to innovate and differentiate themselves need a firm with deep experience across the full spectrum of asset management practice areas, including CLOs,” said Mr. Goldfinch. “Proskauer is a global leader in fund formation, private credit and global finance. This is an exciting and compelling opportunity to join a firm whose strategy and focus in these areas is unmatched. I am very much looking forward to contributing to and strengthening their platform as we support clients continued success.”

Kramer Levin announced plans to combine with preeminent global firm Herbert Smith Freehills (HSF). The combined firm will be known as Herbert Smith Freehills Kramer, HSF Kramer in the U.S.

The firm will strengthen and balance in transactional practices and litigation. It will better allow them to better serve their elite client base with more than 2,700 lawyers, including 600+ partners, working across 25 offices.

The move is driven by a shared commitment to servicing clients and puting them at the center of everything the firms do.

Legal Industry Awards and Recognition

Katten announced that private wealth partners Kevin T. Keen and Nicholas J. Heuer were honored in the Future Leaders Awards 2024 by Citywealth.

Mr. Keen was namedas the Outstanding Individual of the Year, while Mr. Heuer was recognized with a silver award in the Private Investment/Family Office Individual of the Year category.

The awards program aims to support future leaders excelling in their work while making important contributions to society. Mr. Keen and Mr. Heuer were chosen by online voting and a judges’ panel.

Kyle Konwinski, a litigation attorney at Varnum LLP, was voted chair-elect of the Environmental Law Section of the State Bar of Michigan. He will continue as Chair of the Litigation and Administrative Law Committee within the section as well.

Mr. Konwinski will support leadership initiatives, such as educating the Bar’s members on environmental law and promoting the understanding and appreciation of the state’s laws, as well as organizing events for section members and the community.

Recognized by Top Lawyers, Mr. Konwinski focuses his practice on representing clients in compliance and litigation including under the state Natural Resources and Environmental Protection Act.

Kate Cole, co-head of intellectual property at Moore & Van Allen, was recognized in IAM Strategy 300: The World’s Leading IP Strategists 2025 alongside intellectual property counsel Sam Merritt.

The IAM Strategy 300 recognizes leaders in development and implementation of strategies that maximize intellectual property portfolios, as well for their skill sets and insights into patent matters by market sources.

DEI and Women in Law

Jackson Lewis P.C. announced that Kirsten A. Milton will succeed Nadine C. Abrahams as the Chicago office managing principal. Alison B. Crane will assume the role of office litigation manager, with Neil H. Dishman being reappointed as office business development liaison.

Ms. Milton focuses her practice on representing management in labor and employment issues. She defends employers in litigation under state wage-and-hour laws, as well as the Fair Labor Standards Act. In addition, she has experience with the Age Discrimination in Employment Act and the Americans with Disabilities Act.

“I am honored to take the reins in Chicago,” said Ms. Milton. “Nadine’s tenure saw the office through a global pandemic and a transition to a hybrid work environment, all while achieving continued growth. Her contributions have been instrumental to our presence in the region, and we plan to build upon the solid foundation she has laid. I am eager to work with our team to continue strengthening our standing as an industry leader in employment law.”

Winston & Strawn LLP announced that Kathi Vidal is rejoining the firm’s litigation department as a partner in the Silicon Valley and Washington, D.C. offices. She is returning after stepping down as the Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).

During her stint, Ms. Vidal made progress in reshaping the USPTO to benefit citizens, serving as an advisor to the presidential administration on intellectual property regarding artificial intelligence innovation and technological standards.

“It has been the honor of a lifetime to serve the American public by working alongside my incredible colleagues across government and leading the thousands of talented and dedicated employees at the U.S. Patent and Trademark Office,” said Ms. Vidal. “I made the decision to rejoin Winston because of its incredible team and culture which is well-positioned to handle the issues of the future. I look forward to supporting the firm’s clients with the same passion and advocacy I brought to government service.”

Ms. Vidal has gained recognition as one of the country’s leading patent litigators. She will focus her practice assisting clients in maintaining a leading edge in critical innovations, such as next-generation semiconductors.

Copyright ©2024 National Law Forum, LLC
For more Law Firm News, visit the NLR Law Office Management section

Checklist for Transitioning Founder-Owned Law Firms

When transitioning from a founder-owned law firm, it’s essential to establish a clear plan to ensure the firm’s continued growth and stability. A successful transition depends on strategic priorities that enhance operational efficiency, improve client satisfaction, and secure long-term success.

Below, we outline the key areas to analyze and implement for a seamless shift in leadership and operations.

  1. Work-Life Timelines 

Work-life timelines act as a roadmap for planning the future of the firm. They provide a structured planning horizon that helps leadership forecast and prepare for critical milestones, such as retirements or leadership transitions. For instance, mapping out partner retirement dates allows the firm to identify when leadership gaps may occur and develop succession plans proactively.

  1. Marketing Effectiveness 

Effective marketing strategies are the backbone of a firm’s revenue growth. Assessing your marketing effectiveness involves analyzing the ability to meet revenue goals while considering the business risks associated with exiting partners. For example, if a founder has historically been a key rainmaker, your marketing plan must address how to replace their client development efforts with targeted campaigns and new initiatives, such as digital outreach or niche practice area marketing.

 

  1. Attorney Development 

Attorney development ensures that the firm maintains a continuous and adaptable skill set. As founders exit, having a pipeline of well-trained attorneys is critical to sustaining client relationships and maintaining institutional knowledge. Regular mentorship programs, skill-building workshops, and tailored career growth plans help prepare attorneys to take on leadership roles in the future.

 

  1. Recruiting Effectiveness 

Strong recruiting processes are essential for addressing capability and capacity gaps created by departing founders. Recruiting effectiveness goes beyond hiring; it involves attracting and retaining top legal talent who align with the firm’s culture and goals. Offering competitive benefits, a clear career trajectory, and a supportive environment can position the firm as a destination for top-tier candidates.

 

  1. Compensation and Incentives 

A well-designed compensation and incentive structure is vital to the firm’s profitability and transition success. Attracting high-profit lateral hires, ensuring partners are practicing profitably, and facilitating smooth transitions for senior partners require thoughtful compensation planning. For example, implementing performance-based bonuses tied to billable hours or collections can motivate both current attorneys and incoming talent.

 

  1. Policy Development 

Clear and consistent policies build trust and promote a culture of fairness among partners, associates, and staff. Whether it’s defining work-from-home expectations or delineating the decision-making process, policy development ensures that the firm operates smoothly during and after the leadership transition.

 

  1. Partnership or Operating Agreements 

A robust partnership or operating agreement ensures that decision-making processes are clear and actions carry appropriate weight. These agreements provide a framework for resolving disputes, allocating equity, and governing major decisions—such as onboarding new partners or adjusting compensation structures. This clarity helps reduce friction during transitional periods.

 

  1. Equity Transfer Processes 

Equity transfer is one of the most sensitive aspects of transitioning a founder-owned firm. Establishing clear processes for equity transfer ensures that the firm can perpetuate itself without unnecessary controversy. By structuring buyouts or equity redistribution in advance, the firm avoids disruptions that could harm operations or morale.

 

  1. Technology 

Investing in technology is critical for maintaining efficiency and gaining a competitive edge. Technology tools, such as practice management systems, client portals, and AI-driven analytics, streamline operations and strengthen client relationships. For instance, adopting cloud-based platforms allows for seamless collaboration among team members and improves data security during the transition.

 

  1. Supportive Platforms 

Creating a supportive platform that elevates the success of lawyers and staff is key to a smooth transition. This might include mentorship programs, robust professional development opportunities, and fostering a collaborative work culture. A supportive platform not only helps retain existing talent but also enhances the firm’s reputation as a desirable place to work.

 

  1. Trained and Motivated Staff 

A well-trained and motivated staff is essential for maintaining operational continuity during a leadership transition. Cross-training employees on various roles and responsibilities ensure that knowledge is retained and transferred effectively. For example, ensuring paralegals are familiar with new practice management systems or administrative protocols reduces the risk of disruption.

 

  1. Implementation 

Strategic planning is only as good as its implementation. Moving from the planning phase to actionable steps is vital for securing the firm’s long-term interests. By setting clear timelines, assigning responsibilities, and tracking progress, the firm can ensure that the transition plans lead to tangible outcomes.

Conclusion

By focusing on these critical areas, your firm can develop a comprehensive, thoroughly analyzed, and ready-to-implement set of priorities. These steps will help your firm thrive in the post-founder era while ensuring smooth transitions, client retention, and operational excellence. Transitioning a founder-owned law firm may seem daunting, but with careful planning and execution, your firm can secure a prosperous future.

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©2024 PerformLaw
For more on Law Firms, visit the NLR Law Office Management section

FDA Affirms Its Decision to Remove 25 Plasticizers From the Food Additive Regulations

In a continuation of the US Food and Drug Administration‘s efforts to conduct post-market reviews evaluating the continued use and safety of chemicals authorized in its regulations, the agency is removing decades-old clearances for food-contact materials based on evolving toxicology concerns. Specialty chemical companies should take note of the development as an example of the way FDA may respond when safety concerns evolve for cleared substances.

Specifically, on October 2024, the Food and Drug Administration (FDA) responded to an objection to its 22 May 2022 final rule amending the food additive regulations (the Final Rule) and affirmed its decision to remove 25 ortho-phthalate plasticizers from 21 C.F.R. Parts 175, 176, 177, and 178. The FDA issued the Final Rule on 20 May 2022 in response to a food additive petition submitted by the Flexible Vinyl Alliance. Several non governmental organizations filed an objection to the FDA’s Final Rule, and in the FDA’s response, the FDA stated that the objection did not provide a basis for modifying the FDA’s Final Rule. While the FDA affirmed its decision, the FDA noted that it is working on an updated safety assessment that will include the remaining authorized uses for phthalates that were not removed from the food additive regulations. The FDA will consider, in part, information it received through its “Ortho-phthalates for Food Contact Use” Request for Information in its evaluation. The FDA’s response explained why the FDA’s action with respect to the Final Rule was reasonable.

The FDA also received objections to the agency’s denial of a separate food additive petition (food additive petition 6B4815) in which the National Resource Defense Council (NRDC) requested that the FDA revoke authorized food contact uses of 28 phthalates due to alleged safety concerns. The FDA concluded that the NRDC did not establish a basis for modifying or revoking the denial order as requested in their objections. According to the FDA, the NRDC failed to establish sufficient support to take the requested action of grouping the 28 phthalates as a class and revoking their authorizations for the 28 phthalates on the basis that they were unsafe as a class. The FDA took issue with reviewing all 28 phthalates together as a class by applying data from one chemical to the entire group as the NRDC suggested. The FDA found that available information did not support grouping the phthalate chemicals into a single-class assessment and noted that 23 of the 28 phthalates were no longer in use and had been revoked in the Final Rule issued at the same time as the denial of the safety-based petition.

The FDA’s forthcoming post-market assessment(s) of the ortho-phthalates whose uses remain the subject of applicable food additive clearances may be an example of the procedures that the FDA will utilize for its post-market assessment of chemicals in food that is currently under development. The proposed post-market assessment process was the subject of a recent public meeting, attended by our Senior Scientific Advisor, Dr. Peter Coneski, at the FDA’s White Oak Campus on 25 September 2024. The public comment period for the FDA’s proposal for an enhanced systematic process for the post-market assessment of chemicals in food remains open until 6 December 2024. We are monitoring these and other developments affecting the regulation of food contact materials in the United States and other jurisdictions.

Copyright 2024 K & L Gates
For more on the FDA, visit the NLR Biotech Food Drug section

Understanding the New FLSA Overtime Rule: Texas v. United States Department of Labor

This article is an update to “Understanding the New FLSA Overtime Rule: What Employers Need to Know.”

As you know, on April 23, 2024, the Department of Labor (DOL) issued a Final Rule modifying nationwide overtime rules under the Fair Labor Standards Act (FLSA). The Final Rule increased the salary thresholds in the salary level test for highly compensated and white-collar employees. Under the new Final Rule, salary thresholds for both highly compensated and white collar employees increased in two stages, with the first increase already occurring as of July 1, 2024, and the second increase set to occur on January 1, 2025.

On November 15, 2024, in State of Texas v. Dep’t of Labor, 24-cv-468-SDJ, the United States District Court for the Eastern District of Texas vacated the April 2024 Final Rule.

The district court’s ruling vacates the Final Rule in its entirety on a nationwide basis, including the portion of the rule that went into effect on July 1, 2024, as well as the further increase set for January 1, 2025. This effectively reverted the FLSA minimum threshold for white collar employees back to $35,568 and highly compensated employees back to $107,432.

In its decision, the district court recognized a two-month-old decision by the Fifth Circuit in Mayfield v. United States Department of Labor, 117 F.4th 611 (5th Cir. 2024), which upheld the 2019 increase. In Mayfield, the Fifth Circuit concluded that Congress had “explicitly delegated authority to define and delimit the terms of the [e]xemption.” However, while the Eastern District acknowledged Mayfield, it nevertheless concluded that, while the DOL has the power to impose some limitations on the scope of terms identified in the white collar exemption, it does not have the authority to “enact rules that replace or swallow the meaning those terms have.”

Significantly, the court also relied upon the recent U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo, stating that “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” 144 S.Ct. 2444, 2273 (2024). Loper Bright is the much-publicized case that overturned the Chevron doctrine, which required courts to defer to an agency’s interpretation of the law. As such, Texas may just be the tip of the iceberg when it comes to battles between courts and agencies.

The Texas court reasoned that while the DOL can use a minimum salary threshold, it cannot do so in a manner that disrupts the other factors considered for the above-described exemptions. Under the court’s interpretation, the April 2024 Final Rule disturbed the balance of other factors, effectively making “salary predominate over duties for millions of employees.”

While this decision may have national implications, it is unclear whether the DOL will appeal the decision. In the meantime, the April 2024 Final Rule sits in limbo. Now, the question on everyone’s mind is simple: “What do we do with employees whose salary we changed in order to comply with the July 1, 2024 increase?”

©2024 Strassburger McKenna Gutnick & Gefsky
For more on the FLSA Overtime Rule, visit the NLR Labor Employment section

Upcoming Telephone Consumer Protection Act (TCPA) Changes in 2025

The Telephone Consumer Protection Act (TCPA), enacted in 1991, protects consumers from unwanted telemarketing calls, robocalls, and texts.

New FCC Consent Rule

On January 27, 2025, the Federal Communications Commission’s (FCC) new consent rule for robocalls and robotexts will take effect. The FCC aims to close the “lead generator loophole” by requiring marketers to obtain “one-to-one” consumer consent to receive telemarketing texts and auto-dialed calls. While the rule primarily targets lead generators, it could affect any business that relies on consumer consent for such communications or purchases leads from third parties.

Under the rule, businesses must clearly and conspicuously request and obtain written consumer consent for robocalls and robotexts from each individual company. Companies can no longer rely on a single instance of consumer consent that links to a list of multiple sellers and partners. Instead, individual written consent will be required for each marketer. Additionally, any resulting communication must be “logically and topically related” to the website where the consent was obtained.

To meet this requirement, businesses may allow consumers to affirmatively select which sellers they consent to hear from or provide links to separate consent forms for each business requesting permission to contact them.

New Consent Revocation Rules

Another change takes effect on April 11, 2025, when the FCC’s new consent revocation rules for robocalls and robotexts are implemented. These rules allow consumers to revoke prior consent through any reasonable method, and marketers may not designate an exclusive means for revocation. Reasonable methods include replying “stop,” “quit” or similar terms to incoming texts, using automated voice or opt-out replies, or submitting a message through a website provided by the caller.

Marketers must honor revocation requests within a reasonable timeframe, not exceeding 10 business days. After that period, no further robocalls or robotexts requiring consent may be sent to the consumer.

Preparing for Compliance

To comply with the January 27, 2025, one-to-one consent rule and the April 11, 2025, consent revocation rule, lead generators and businesses that use or facilitate robocall and robotext communications should:

  • Review their current consent and revocation practices.
  • Ensure compliance by updating policies before the deadlines.
  • Examine where consumer leads are being obtained and adjust policies for using this information to meet the new requirements.

This advisory provides only a summary of the upcoming changes to the Telephone Consumer Protection Act.

© 2024 Varnum LLP
For more on the TCPA, visit the NLR Communications Media Internet section