Tag: business

Client Alert: New Reporting Requirements Under the Corporate Transparency Act

On January 1, 2024, the Corporate Transparency Act (CTA) took effect. This new federal anti-money laundering law obligates many corporations, limited liability companies and other business entities to report to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), certain information about the entity, the entity’s beneficial owners and the individuals who created or registered the entity to do business. This client alert summarizes the CTA’s key requirements and deadlines. For more detailed information, please review the official “Beneficial Ownership Information Reporting FAQs” and the “Small Entity Compliance Guide” published by FinCEN.

Frequently Asked Questions

WHO MUST REPORT INFORMATION UNDER THE CTA?

The following “reporting companies” are subject to the CTA’s reporting requirements: (a) any U.S. corporation, limited liability company or other entity created by the filing of a document with a state or territorial government office; and (b) any non-U.S. entity that is registered to do business in any U.S. jurisdiction.

The CTA provides for 23 types of entities that are exempt from its reporting requirements, including companies that currently report to the U.S. Securities and Exchange Commission, insurance companies and tax-exempt entities, among others. Most notably, a company does not need to comply with the CTA if it has more than $5,000,000 in gross receipts for the previous year (as reflected in filed federal tax returns), at least one physical office in the U.S. and at least 20 employees in the U.S. For a full list of exemptions, including helpful checklists, please see Chapter 1.2, “Is my company exempt from the reporting requirements?”, of the Small Entity Compliance Guide.

A subsidiary of an exempt entity also will enjoy exempt status.

WHAT INFORMATION MUST BE REPORTED?

A reporting company is required to report the following information to FinCEN, and to keep the information current with FinCEN on an ongoing basis:

  1. The reporting company’s full legal name;
  2. Any trade name or “doing business as” (DBA) name of the reporting company;
  3. The reporting company’s principal place of business;
  4. The reporting company’s jurisdiction of formation (and, for non-U.S. reporting companies, the jurisdiction where the company first registered to do business in the U.S.); and
  5. The reporting company’s Employer Identification Number (EIN).

A reporting company also is required to identify its “beneficial owners” and “company applicant.” A beneficial owner is an individual who either: (a) exercises “substantial control” over the reporting company; or (b) owns or controls at least 25 percent of the ownership interests of the reporting company. A company applicant is an individual who directly files or is primarily responsible for filing the document that creates or registers the reporting company.

A reporting company must report and keep current the following information for each beneficial owner and company applicant:

  1. Full legal name;
  2. Date of birth;
  3. Complete current address;
  4. Unique identifying number and issuing jurisdiction from, and image of, one of the following non-expired documents:
    a. U.S. passport;
    b. State driver’s license; or
    c. Identification document issued by a state, local government or tribe.

WHEN ARE REPORTS DUE?

A reporting company that was first formed or registered to do business in the United States before January 1, 2024 will need to file its initial report with FinCEN no later than January 1, 2025.

A reporting company that is first formed or registered to do business in the United States between January 1, 2024 and January 1, 2025 will need to file its initial report with FinCEN within 90 calendar days after the effective date of its formation or registration to do business.

A reporting company that is first formed or registered to do business in the United States on or after January 1, 2025 will need to file its initial report with FinCEN within 30 calendar days after the effective date of its formation or registration to do business.

HOW DOES MY COMPANY FILE REPORTS WITH FINCEN?

Reports must be filed electronically through the BOI E-Filing System. For additional instructions and other technical guidance, please see the Help & Resources page.

WHAT HAPPENS IF MY COMPANY DOES NOT COMPLY WITH THE CTA?

At the time the filing is made, a reporting company is required to certify that its report or application is true, correct, and complete. Therefore, it is the reporting company’s responsibility to identify its beneficial owners and verify the accuracy of all reported information.

A person or reporting company who willfully violates the CTA’s reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues, plus criminal penalties of up to two years’ imprisonment and a fine of up to $10,000.

In the case of an accidental violation – for instance, if an initial report inadvertently contained a typo or outdated information – the CTA provides a safe harbor for reporting companies to correct the original report within 90 days after the deadline for the original report. If this safe harbor deadline is missed, the reporting company and individuals providing inaccurate information may be subject to the CTA’s civil and criminal penalties.

OTHER THAN FILING ACCURATE REPORTS, HOW CAN MY COMPANY STAY COMPLIANT?

A reporting company should consider taking the following actions to facilitate compliance with the CTA’s reporting requirements:

  • Amending existing governing documents, such as LLC or stockholder agreements, to require beneficial owners to promptly provide required information and otherwise cooperate in the company’s compliance with the CTA;
  • Designating an officer to oversee the company’s initial and ongoing CTA reporting;
  • Maintaining, reviewing and updating records on a regular cadence to reflect equity transfers, option grants and other transactions that affect ownership interest calculations; and
  • Developing a secure process for collecting and storing a beneficial owner’s photo identification and other sensitive information for CTA reporting purposes.
© Copyright 2024 Stubbs Alderton & Markiles, LLP
For more news on CTA Reporting Requirements, visit the NLR Financial Institutions & Banking section.

Employment Tip of the Month – February 2024

Q: Can my company treat employees adversely because of their personal political beliefs? If they wear a shirt of their favorite candidate? Or proselytize about their candidate?

A: The short answer: There exists no “First Amendment Right to freedom of expression” in a private workplace, and that extends to political expression. See Manhattan Community Access Corp. v. Halleck, 139 S.Ct. 1921 (2019) (Only “State actors subject to First Amendment constraints.”)

So, yes, legally a private employer can refuse to hire Democrats or Republicans, and can fire an employee for wearing a shirt of their candidate or vocalizing a particular political position.

On the other hand, other laws can apply, such as the right to “concerted action” under the National Labor Relations Act. Overt adverse action also could be ripe for allegations of selective enforcement, such as “you only selectively enforce this rule against me because I am ___________”, where Title VII covers race, sex, religion, color and national origin; ADA covers disability; ADEA age, etc. Some political positions could easily bleed over into religious beliefs.

Even if legally permissible for a private employer to discriminate against holders of one particular political belief, from a practical management perspective, it cannot be recommended, and would be loaded with risk. Also, it could simply make for bad optics and make it harder to attract and retain the best talent.

Finally, this answer changes entirely for public employers and government employers, where employees do possess First Amendment rights, so long as, in general, they are speaking (1) as a private citizen, (2) about a matter of public concern, and (3) their speech does not interfere with the job. There are exceptions for high-ranking individuals, political appointees or someone trying to release classified information, though in many instances they would still be protected from retaliation.

© 2024 Wilson Elser
For more news on Political Expression in the Workplace, visit the NLR Labor & Employment section.

Top Risks for Businesses in 2024

Just weeks into 2024, it is already clear that uncertainty will be the watchword. Will the economic soft landing of 2023 persist into 2024? Will labor unrest, strong in 2023, settle down as inflation cools? Will inflation remain tamed? Will the U.S. elections bring continuity or a new administration with very different views on the role of the U.S. in the world and in regulating business?

Uncertainty is also fueling a complex risk environment that will require monitoring global developments more so than in the past. As outlined below, geopolitical risks are present, multiple, interconnected and high impact. International relations have traditionally fallen outside the mandate of most C-Suites, but how the U.S. government responds to geopolitical challenges will impact business operations. Beyond additional disruptions to global trade, businesses in 2024 will face risks associated with expanding protectionist economic policies, climate change impacts, and AI-driven disruptors.

Geopolitical Tensions Disrupting Global Trade

The guardrails are coming off the international system that enshrines the ideals of preserving peace and security through diplomatic engagement, respecting international borders (not changing them through military might) and ensuring the free flow of global trade. In 2022, the world was shocked by Russia’s invasion of Ukraine, but it has taken time for the full impact to reverberate through the international system. While political analysts write on a “spillover of conflict,” the more insidious impact is that more leaders of countries and non-state groups are acting outside the guardrails because they are no longer deterred from using military force to achieve political goals, making 2024 ripe for new military conflicts disrupting global trade beyond the ongoing war in Europe.

In October 2023, Hamas launched a war from Gaza against Israel. Thus far, fighting has spread to the West Bank, between Israel and Lebanese Hezbollah in the north, and to the Red Sea, with Iranian-backed Houthis attacking shipping through the strategic Bab al Mandab strait. Container ships and oil tankers, to avoid the risks, are re-routing to the Cape of Good Hope, adding two weeks of extra sailing time, with the associated costs. Insurance premiums for cargo ships sailing in the eastern Mediterranean have skyrocketed, with some no longer servicing Israeli ports. Companies and retailers with tight delivery schedules are switching to airfreight, which is expected to drive up airfreight rates.

Iran, emboldened by its blossoming relationship with Russia as one of Moscow’s new arms suppliers, is activating its proxy armies in Yemen, Iraq, Syria and Lebanon to attack Western targets. In a two-day period in January 2024, the Iran Revolutionary Guards directly launched strikes in Syria, Iraq and Pakistan. Nuclear-armed Pakistan retaliated with a cross border strike in Iran. While there are many nuances to these incidents, it is evident that deterrence against cross-border military conflict is eroding in a region with deep, festering grievances among neighbors. Iran is in an escalatory mode and could resume harassing shipping in the Persian Gulf and the strategic Strait of Hormuz, where about a fifth of the volume of the world’s total oil consumption passes through on a daily basis.

In East Asia, North Korea is also emboldened by the changing geopolitical environment. Pyongyang, too, has become a major supplier of weaponry to Moscow for use in Ukraine. While Russia (and China) in the past have constructively contained North Korean predilection for aggression against its neighbors, Supreme Leader Kim Jong Un may believe the time is ripe to change the status quo. Ominously, in a Jan. 15 speech before the Supreme People’s Assembly (North Korea’s parliament), Kim rejected the policy of reunification with South Korea and proposed incorporating the country into North Korea “in the event of war.” While North Korean leaders frequently revert to brinksmanship and aggressive language, Kim’s speech reflects confidence of a nuclear power, aligned with Russia against a shared adversary – South Korea, which is firmly aligned with the G7 consensus on Russia. A war in the Korean peninsula would be felt around the world because East Asia is central to global shipping and manufacturing, disrupting supply chains, as well as the regional economy.

China is also waiting for the right moment to “unite” Taiwan with the mainland. Beijing has seen the impact of Western sanctions on Russia over Ukraine and has been deterred from aiding the Russian war effort. In many ways, China has benefited from these sanctions and the reorientation of global trade. Also, Russia, with its far weaker economy, has proven surprisingly resilient to sanctions, another lesson for China. Meanwhile, the Taiwanese people voted in January and returned for a third time the ruling party that strongly rejects Chinese territorial claims. Tensions are high, with the Chinese military once again harassing Taiwanese defenses. For Beijing, the “right moment” could fall this year should conflict break out on the Korean peninsula, which would tie the U.S. down because of the Mutual Defense Treaty.

The uncertainty here is not that there are global tensions, but how the U.S. will respond as they develop and how U.S. businesses can navigate external shocks. Will the U.S. be drawn into a new war in the Middle East? Can the U.S. manage multiple conflicts, already deeply involved in supporting Ukraine? Is the U.S. economy resilient enough to withstand trade disruptions? How can businesses strengthen their own resiliency?

Economic Protectionism Increasing Costs and Risks

Geopolitical tensions, the global pandemic and the unequal benefits of globalization are impacting economic policies of the U.S. and the political discourse around the merits of unrestrained free trade. Protectionist economic policies are creeping in, under the nomenclature of “secure supply chains,” “friend-shoring” and “home-shoring.” The U.S. has imposed tariffs on countries (even allies) accused of unfair trade practices and has foreclosed access to certain technologies by unfriendly countries, namely China.

While the response to some of these trade restrictions are new trade agreements with “friends” to regulate access under preferred terms, in essence creating multiple “friends” trade blocs for specific sectors, other responses are retaliatory, including counter tariffs and export restrictions or outright bans. In 2024, the U.S. economy will see the impact of these trade fragmentation policies in acute ways, with upside risks of new business opportunities and downside risks of supply chain disruptions, critical resource competition, increased input costs, compliance risks and increased reputational risks.

Trade with China, which remains significant and important to the stability of the U.S. economy, will pose new risks in 2024. While Washington and Beijing have agreed to some political and security guardrails to manage the relationship, economic competition is unrestrained and stability in the bilateral relations is not guaranteed. The December 2023 bipartisan report by the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, with its 150 recommendations on fundamentally resetting economic and technological competition with China, if even partially adopted, risks reigniting the trade war.

2024 is a presidential election year for the U.S. A change of control of the executive branch could result in many economic and regulatory policy reversals. The definition of “friend” could shift or narrow. Restrictions on trade with China could accelerate.

Impacts of Climate Change and Sustainability Policies

2023 was the hottest year on record, and El Niño conditions are expected to further boost the warming trend. Many regions experienced record-breaking wildfire activity in 2023, including Canada where 18 million hectares of land burned. Extreme storms caused life-threatening flooding in Europe, Asia and the Americas. 2024 is expected to bring even more climate hazards. The impacts will be physical and financial, including growing insurance losses and adverse impacts on operations and value chain. Analysts expect that in 2024, the economic and financial costs of adverse health impacts from climate change will increase, with risks related to the spread of infectious disease, insufficient access to clean water, and physical harm to the elderly and vulnerable. The direct economic effect will be on health systems, but also loss of productivity due to extreme weather incidents and effects of epidemics.

Energy transition to low-carbon emissions is underway in the U.S., but it is uneven and still uncertain. The financial market is investing in an impressive number of startups and large-scale projects revolving around cleantech. Still, there is hesitancy on the opportunity and risks of sustainability. Thus far, progress towards sustainability goals has been private sector-led and government-enabled. There is a risk that government incentive programs encouraging the transition to low-carbon energy could be reversed or curtailed under a new administration.

In 2024, some companies will face more climate disclosure compliance requirements. The Securities and Exchange Commission (SEC) is expected to release its final rule on climate change disclosures. The final action has been delayed several times because of pushback by public companies on some of the requirements, including Scope 3 greenhouse gas emission disclosures (those linked to supply chains and end users). California has not waited for the SEC’s final rule: In October 2023, Gov. Gavin Newsom signed into law legislation that will require large companies to disclose greenhouse gas emissions. The California climate laws go into effect in 2026, but companies will need to start much earlier to build the capabilities to plan, track and report their carbon footprint. For U.S. companies doing business in the European Union, they will need to comply with the EU Corporate Sustainability Reporting Directive, with the rules coming into force mid-2024.

Disruptive Technology

In 2023, generative AI was the talk of the town; in 2024, it will be the walk. Companies are popping up with new tools for every imaginable sector, to increase efficiency, task automation, customization, personalization and cost reduction. Business leaders are scrambling to integrate AI to gain a competitive edge, while navigating the everyday risks related to privacy, liability and security. While there are concerns that AI will displace humans, there is a growing consensus that while some jobs will disappear, people will focus on higher value work. That said, new rounds of labor disruptions linked to workforce transition are likely in 2024.

2024 will also bring AI-generated misinformation and disinformation. Bad actors will spread “synthetic” content, such as sophisticated voice cloning, doctored images and counterfeit websites, seeking to manipulate people, damage companies and economies, and foment dissent.

In 2024, around 2 billion people in more than 50 countries will vote in elections at risk of manipulation by misinformation and disinformation, which could destabilize the real and perceived legitimacy of newly elected governments, risking political unrest, violence, terrorism and erosion of democratic processes. Large democracies will hold elections in 2024, including the U.S., the EU, Mexico, South Korea, India, Pakistan, Indonesia and South Africa. Synthetic content can be very difficult to detect, while easy to produce with AI tools.

This is not a theoretical threat; synthetic content is already being disseminated in the U.S., targeting New Hampshire voters with robocalls that share fake recorded messages from President Biden encouraging people not to vote in the primary election. The U.S. is already polarized with citizens distrustful of the government and media, a ready vulnerability. Businesses are not immune. Notably, CEOs have stood apart, with higher ratings for trustworthiness and risk being called upon to vouch for “truth” (and becoming collateral damage in the fray).

AI-powered malware will make 2023 cyber risks look like child’s play. Attackers can use AI algorithms to find and exploit software vulnerabilities, making attacks precise and effective. AI can help hackers quickly identify security measures and evade them. AI-created phishing attacks will be more sophisticated and difficult to detect because the algorithms can assess larger amounts of piecemeal information and craft messages that mimic communication styles.

The role of states backing cyber armies to spread disinformation or steal information is growing and is part and parcel of the erosion of the existing international order. States face little deterrence from digital cross-border attacks because there are yet to be established mechanisms to impose real costs.

© 2024 Bradley Arant Boult Cummings LLP
For more on Business Risks, visit the NLR Corporate & Business Organizations section.

FTC Announces 2024 Increase in HSR Notification Thresholds and Filing Fees

The Federal Trade Commission (FTC) has announced the annual revisions to the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) thresholds and HSR filing fees, which will become effective on March 6, 2024. The revised thresholds will apply to any merger or acquisition closing on or after the effective date.

The FTC is required to adjust the HSR thresholds annually based upon the change in gross national product. This year, the change in the “size of transaction” threshold has increased from $111.4 million to $119.5 million.

Under the HSR Act, when a deal satisfies the “size of person” and “size of transaction” thresholds, and no exemption from reporting is available, the deal must be reported to the FTC and the US Department of Justice, and the parties must wait for a designated period of time before closing the transaction.

Size of Person. The revised size of person thresholds will generally be met if one party involved in the deal has assets or annual sales totaling $239 million or more and one other party involved in the deal has assets or annual sales of at least $23.9 million. Satisfaction of the size of person thresholds is not required, however, if the transaction is valued at more than $478 million.

Size of Transaction. The revised size of transaction threshold will be met if the buyer will hold an aggregate amount of stock, non-corporate interests and/or assets of the seller valued at more than $119.5 million as a result of the deal.

The notification thresholds applicable to purchases of voting securities will increase as follows:

February 1, 2001 Thresholds (Original) Current Thresholds as of February 27, 2023 New Thresholds Effective March 6, 2024
$50 million $111.4 million $119.5 million
$100 million $222.7 million $239 million
$500 million $1.1137 billion $1.195 billion
25% if worth more than
$1 billion		 25% if worth more than $2.2274 billion 25% if worth more than $2.39 billion
50% if worth more than
$50 million		 50% if worth more than $111.4 million 50% if worth more than $119.5 million

The thresholds applicable to many exemptions, including those governing foreign acquisitions, also will increase. However, the $500 million threshold applicable to acquisitions of producing oil and gas reserves and associated assets will not change.

The civil penalty for failing to comply with the notification and waiting period requirements of the HSR Act has also increased to up to $51,744 per day for each day a party is in violation.

HSR Filing Fees. Additionally, the HSR filing fee thresholds and filing fee amounts have increased as follows:

Original Filing Fee Original Applicable Size of Transaction 2024 Adjusted Filing Fee 2024 Adjusted Applicable Size of Transaction
$30,000 Less than $161.5 million $30,000 Less than $173.3 million
$100,000 Not less than $161.5 million but less than $500 million $105,000 Not less than $173.3 million but less than $536.5 million
$250,000 Not less than $500 million but less than $1 billion $260,000 Not less than $536.5 million but less than $1.073 billion
$400,000 Not less than $1 billion but less than $2 billion $415,000 Not less than $1.073 billion but less than $2.146 billion
$800,000 Not less than $2 billion but less than $5 billion $830,000 Not less than $2.146 billion but less than $5.365 billion
$2,250,000 $5 billion or more $2,335,000 $5.365 billion or more

The new fees also will become effective on March 6, 2024.

© 2024 Bracewell LLP
For more news on FTC Merger and Acquisition Regulations, visit the NLR Antitrust & Trade Regulation section.

Texas Supreme Court Rules to Foreclose Attorney’s Fees in First Party Appraisal Context

The Supreme Court of Texas has issued its much-anticipated opinion on an open attorney’s fees question in the area of First Party Property appraisals.

The issue came to the Texas Supreme Court on a certified question from the 5th Circuit and considers the practical effect of the Texas Legislature’s 2017 amendments to the Texas Prompt Payment of Claims Act, Chapter 542, Insurance Code. In short, Texas Insurance Code Chapter 542A, among other reforms, sets forth a statutory formula to determine the amount of an attorney’s fees awarded for a prevailing insured in a weather-related first party property case against an insurer. Under the statute, the amount of reasonable and necessary attorney’s fees a prevailing insured can recover is reduced when the “amount to be awarded in the judgment” is less than the amount the insured claims is owed. In the appraisal context, insurers have paid the appraisal award, along with an amount sufficient to cover any potential statutory interest under Chapter 542A, then made the argument there can be no “amount to be awarded in the judgment” such that there is no liability for attorney’s fees.

In the recent ruling, the Texas Supreme Court agreed with this argument, noting that when a carrier pays the appraisal amount plus any possible statutory interest, it has “complied with its obligations under the policy.” In doing so, there is no remaining “amount to be awarded in the judgment,” and attorney’s fees are not available.

Going forward, this ruling should return the appraisal process to its intended function – an inexpensive and prompt resolution of claims, without the need for litigation – and avoid late invocation of appraisal as gamesmanship.

© 2024 Dinsmore & Shohl LLP. All rights reserved.
by: Sarah R. Smith of Dinsmore & Shohl LLP
For more news on Attorneys’ Fees in Texas, visit the NLR Litigation / Trial Practice section.

As Foretold, California’s New Forced Speech Laws Are Being Challenged

Last year, I commented on the likely unconstitutionality of two California laws compelling forced speech:

The California legislature has of late adopted the tactic of driving behavior by compelling speech. SB 253 (Wiener), for example, compels disclosure of greenhouse gas emissions and SB 261 (Stern) requires disclosure of climate-related financial risks. Both of these requirements clearly compel speech arguably in contravention of the First Amendment to the U.S. Constitution. Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 61 (2006) (“Some of this Court’s leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what they must say.”).

I had previously noted that SB 253 was very similar to an earlier bill that did not make it into law.

Yesterday, the Chamber of Commerce of the United States of America and several others filed suit in the Central District Court challenging these laws. In its complaint, the plaintiffs allege that the “State’s plan for compelling speech to combat climate change is unconstitutional – twice over.” The plaintiffs urge the court to apply “strict scrutiny” to both laws because they compel speech about a controversial subject – climate change. If the court applies strict scrutiny, the bills would be presumptively unconstitutional and may be upheld only by proof that they are narrowly tailored to serve compelling state interests. That is an exceedingly high hill to climb.

Because both bills quite obviously violate basic free speech rights, the question arises whether the authors knew or were grossly negligent in not knowing of the constitutional infirmities of the legislation. In 2020, I wrote Senator Wiener, the author of SB 253, that SB 260, “abridges free speech rights guaranteed by the U.S. and California Constitutions”. At the time, I was distressed that the legislative analyses for SB 260 failed to mention the constitutional infirmities of the bill. See Legislators Again Kept In Dark About Constitutional Infirmities Of Climate Corporate Accountability Act and Legislators Again Kept In Dark About Constitutional Infirmities of Climate Corporate Accountability Act.

© 2010-2024 Allen Matkins Leck Gamble Mallory & Natsis LLP
by: Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP 
For more news on California Free Speech Laws regarding Climate Change, visit the NLR Environmental, Energy & Resources section.

Federal Court Directed to Rule on Challenge to WV Pooling Statute

A federal appeals court has instructed a lower court to resolve a pending suit challenging the constitutionality of West Virginia’s oil and gas pooling and unitization law. The federal district court previously declined to resolve certain constitutional issues presented in the suit on the grounds that those issues should be decided by a state court instead of a federal court.

In 2022, the West Virginia Legislature enacted Senate Bill 694 to revise West Virginia law governing the pooling and unitization of oil and gas formations associated with horizontal well development. Pooling and unitization essentially involves combining separately owned properties into a single “unit” through which one or more horizontal wells are drilled. The oil and gas produced from the horizontal well is then allocated among all the properties in the unit for purposes of calculating production royalties payable to the mineral owners.

Prior to Senate Bill 694 becoming effective on June 7, 2022, formation of a pooled unit for a horizontal well drilled through “shallow” oil and gas formations, which includes the Marcellus Shale, required consent of 100% of the mineral owners for all the properties to be included in the unit. This 100% consent requirement did not apply to horizontal wells drilled through “deep formations” such as the Utica Shale. One of the more significant changes made by SB 694 was to allow the West Virginia Oil and Gas Conservation Commission to approve units for shallow formations where at least 75% of the mineral owners consent, provided other requirements are also satisfied. This means that up to 25% of a unit could potentially include properties for which the mineral owner did not consent to being part of a unit.

Before Senate Bill 694 became effective, a pair of mineral owners (Scott Sonda and Brian Corwin) filed a lawsuit in the federal District Court for the Northern District of West Virginia seeking to preclude the law from taking effect. Governor Jim Justice was the only defendant named in the case. In their suit, Sonda and Corwin alleged that the law was illegal for several reasons, including the claim that the law authorizes the unconstitutional taking of private property without just compensation and deprives landowners of due process of law.

Federal Judge John Preston Bailey initially dismissed all of their claims for two reasons. First, Judge Bailey concluded that Sonda and Corwin lacked standing to bring the challenge because (a) their property had not been pooled into a unit without their consent and no operator had sought approval of a unit to include their property without their consent; and (b) the Commission, not the Governor, has the power to directly enforce Senate Bill 694.

Second, Judge Bailey ruled that, even if Sonda and Corwin established standing, Governor Justice had constitutional immunity from the suit because he had no direct authority to implement Senate Bill 694. Rather, the Commission has the authority to implement the law.

Instead of dismissing their suit entirely, Judge Bailey granted leave for Sonda and Corwin to amend their complaint to name the Commission as a defendant instead. Sonda and Corwin did so, and also named as defendants each person who serves on the Commission. The amended complaint still does not allege that mineral properties owned by Sonda or Corwin were pooled into a unit without their consent. Instead, the amended complaint attempts to address the standing issue by alleging that Senate Bill 694 effectively eliminates their ability to challenge whether they are being fairly compensated for oil and gas produced from their property that was pooled into a unit with their consent.

The Commission moved to dismiss the amended complaint for various reasons, including Sonda’s and Corwin’s lack of standing to bring the case. Judge Bailey did not address the standing issue, but agreed with the Commission with respect to three of the five claims asserted by Sonda and Corwin. Judge Bailey then abstained from addressing the Commission’s arguments for dismissal of the other two claims, which asserted constitutional violations, because he believed that those issues were more appropriate for resolution by a state court instead of a federal court.

The Commission appealed Judge Bailey’s decision to abstain from addressing the arguments for dismissal of the constitutional claims. By opinion issued on January 31, 2024, the Fourth Circuit Court of Appeals ruled that Judge Bailey should not have abstained. The appellate court also directed Judge Bailey to first address the standing issue before addressing any other pending issue. The opinion does not specify a deadline for Judge Bailey to rule on those issues. If Judge Bailey finds that Sonda and Corwin continue to lack standing to assert their claims, the case will presumably be dismissed on that ground alone. If Judge Bailey concludes that Sonda and Corwin have established standing, Judge Bailey will likely address the merits of the Commission’s other arguments for dismissal.

© Copyright Babst, Calland, Clements and Zomnir, P.C.
For more news on the Constitutionality of West Virginia’s Oil and Gas Laws, visit the NLR Election Law / Legislative News section.

How to Maximize February’s Holidays for Your Social Media Content Calendar

February, though the shortest month, is rich with opportunities for lawyers and law firms to deepen connections with their audience and spotlight their commitment to pivotal social causes. From raising awareness on privacy and internet safety to celebrating historical contributions and advocating for health, this month is ripe for engagement. Here’s a guide on leveraging these special days to not only boost your firm’s social media footprint but also to underscore your expertise and societal commitments.

  • Engage with #PrivacyAwarenessWeek (First Week of February): Kick off the month by demystifying privacy laws and sharing protective measures for personal data. Consider hosting webinars or interactive Q&A sessions to discuss privacy-related topics.
  • Participate in #SaferInternetDay (Second Tuesday of February): Highlight the importance of cybersecurity with informative articles or infographics. Provide valuable insights through free digital security workshops or consultations.
  • Celebrate #WorldJusticeDay (February 20): Showcase your firm’s dedication to justice by spotlighting pro bono work and initiatives that champion social justice. Share impactful stories that illustrate your contributions to upholding justice.
  • Honor #BlackHistoryMonth (Throughout February): Dedicate the month to celebrating the achievements of African American legal luminaries. Engage in discussions about diversity, equity and inclusion (DEI) within the legal field and share how your firm is actively supporting these values.
  • Promote #AmericanHeartMonth (Throughout February): Focus on heart health awareness, sharing wellness tips and how your firm supports the well-being of its people and clients. This is an excellent opportunity to show the human side of your firm. Organize or partake in health-focused community events and share wellness tips that encourage a balanced professional life.
  • Reflect on #PresidentsDay (Third Monday of February): Delve into the legal legacies of U.S. Presidents and their influence on current laws. Host enlightening discussions or debates on historical legal precedents and their relevance today.
  • Recognize #InventorsDay (February 11): For IP-focused firms or firms with IP practices, spotlight groundbreaking inventors and their journeys through the legal system. Share advice on navigating the patent process and protecting intellectual property.
  • Embrace #RandomActsOfKindnessDay (February 17): Inspire your team and followers by engaging in and sharing acts of kindness within your community. This day is a great opportunity to humanize your firm and reflect its values.
  • Inform during #ConsumerProtectionWeek (Last week of February): End the month by enlightening the public on consumer rights and the legal frameworks that protect them. Host free legal clinics or informative sessions to empower consumers with knowledge.
  • Celebrate #ValentinesDay (February 14): Utilize this day to express appreciation for your clients and colleagues. A simple message of thanks can go a long way in strengthening relationships.
  • Leverage #GroundhogDay (February 2): Incorporate Groundhog Day as a fun way to engage your audience. Perhaps draw a light-hearted parallel between the groundhog seeing its shadow and predicting weather patterns to the predictability and preparation in legal processes. It’s an opportunity to showcase your firm’s personality and connect with your audience on a relatable level.

When using hashtags, be strategic and relevant; use popular hashtags like #ValentinesDay, #BlackHistoryMonth or #PresidentsDay to increase visibility, but also incorporate niche or branded hashtags to stand out and engage directly with your target audience. Always ensure your content is respectful, inclusive and aligns with your brand’s values. Creatively linking your products or services to these holidays can boost engagement, foster a deeper connection with your audience and enhance your brand’s presence on social media.

February’s diverse holidays present a unique platform for law firms to engage with their audience on a deeper level. By actively participating in these observances, your firm not only enhances its visibility but also fortifies its relationship with the community. This strategic approach to social media not only highlights your expertise and services but also showcases your firm’s dedication to important societal issues and causes.

Copyright © 2024, Stefanie M. Marrone. All Rights Reserved.
For more news on Optimizing Social Media Content Calendars, visit the NLR Communications, Media & Internet section.

What Software Is Used in a Law Firm?

Law firms leverage a spectrum of digital solutions to streamline their operations. From intricate case analysis with legal research platforms to seamless accounting with legal billing software, technology has become the unseen backbone of a successful practice. In fact, 77% of firms worldwide have reported increasing legal tech usage at their organization in the past few years.

This piece aims to explore the diverse digital tools essential for legal professionals, showcasing how these technologies and legal software examples collectively enhance the operational efficiency of a law firm.

What Software Does a Lawyer Use?

Lawyers today rely on a variety of software to maintain their competitive edge. Here’s a brief overview of the most commonly used software:

CASE MANAGEMENT SOFTWARE

Legal case management software serves as the operational hub for many law firms. It allows legal professionals to organize case files, track deadlines, and manage day-to-day tasks. High-quality case management software will also offer calendar integration, task assignment, and advanced reporting, all of which promote collaboration among team members and boost law firm growth.

COMMUNICATION TOOLS

Are law firms using Slack for communication? Texting? Teams? Numerous communication tools exist, but the best option is communicating through practice management software. With this method, users can save various conversations to different clients and matters, ensuring the recording and organization of all conversations. Firms can also easily communicate with their clients if the practice management software has a client portal to exchange information and documents securely.

DOCUMENT MANAGEMENT SOFTWARE

With the bulk of legal work being document-intensive, legal document management software is indispensable. It allows for secure storage, quick retrieval, and easy sharing of documents. Robust search functionality is a hallmark of this software, enabling lawyers to find specific documents or reference materials in seconds. Version control is also crucial, ensuring everyone works on the latest document without losing prior edits.

BILLING SOFTWARE

Billing software automates invoicing, tracks billable hours and expenses, and manages client payments. It is often a part of case management software, providing a seamless transition from work performed to invoice generated. Modern billing software bolsters trust through transparent, customizable invoices that outline specific actions taken with only a few clicks of a button.

LEGAL RESEARCH SOFTWARE

Lawyers use this software to navigate the vast ocean of legal precedent and statutory material. When initiating a research project, approximately 38% of attorneys typically start with well-known search engines, and 37% prefer using paid online legal databases, illustrating the reduced reliance on printed materials, which only 4% of lawyers now use as a starting point. Legal research software boasts powerful search features, annotation capabilities, and collaborative functions, seamlessly connecting lawyers with the precise information they need for their cases.

What Is the Best Legal Office Management Software?

Identifying the best legal office management software involves looking for key features like the following:

  • User-Friendly Interface: Reduces training time and enhances productivity.
  • Robust Security Features: Protects sensitive client information.
  • Comprehensive Case Management: Manages all case-related information in one place.
  • Native ePayments: Makes it easy for clients to pay their invoices.
  • Seamless Billing: Offers efficient time tracking and invoicing.
  • eSignature Capabilities: Reduces the signing process to mere minutes.
  • Effective Client Communication Tools: Enhances client engagement with secure portals.
  • Document Handling: Organizes documents with their corresponding matters.

What Is CRM for Law Firms?

CRM software for law firms focuses on client relationship management, a fundamental aspect for any law firm looking to grow and maintain a strong client base. CRM systems help attorneys track interactions with current and potential clients. These features are essential in a field where timely and personalized communication can significantly impact client satisfaction and retention.

A well-designed CRM tool will assist with the following:

  • Automated Intake Forms: Client intake and CRM software go hand in hand, and automated intake forms are a must-have feature. This feature ensures that client data is accurately and efficiently transferred to your CRM, reducing manual data entry and enhancing the accuracy of client information.
  • Custom Tags and Workflows: Custom software tags make organizing client information more manageable. Firms can categorize contacts as clients, prospects, or professional contacts and even filter these tags for business insights. Automated workflows enable the creation of triggered tasks and events, improving client interaction and ensuring no one misses critical deadlines or appointments.
  • Intuitive Dashboard: You’ll want an intuitive dashboard that offers a comprehensive view of case statuses, including contact and matter details, account balances, and payment information. This centralized view aids in better case management and client service.
  • Client Communication and Reminders: Look for CRM software that automates the scheduling process, including sending automatic meeting reminders via email, SMS text, or through the client portal. This feature ensures effective engagement with clients at various touchpoints.

The ability to blend CRM with existing practice management software is beneficial for law firms. Lawyers can access everything from case documents to client communication histories in a single system, which reduces the risk of errors likely to occur when flipping between different platforms.

What Accounting Software Do Law Firms Use?

Law firms use specialized accounting software to handle legal-specific financial needs like trust accounting, billing, and expense tracking. With accurate accounting, law firms can maintain financial compliance and keep a pulse on their financial health.

Efficient law firm accounting software should also automate time-consuming tasks like invoicing, expense tracking, and financial reporting. This automation saves valuable time, allowing lawyers to focus on client cases rather than financial administration. Moreover, it helps in forecasting and budgeting, which is essential for strategic planning and growth.

For law firms, an integrated approach to software solutions is the best choice. While standalone accounting programs exist, law practice management software with accounting features offers a more streamlined experience. These integrated solutions reduce the need for multiple software platforms, simplifying workflows and minimizing the risk of data entry errors.

© Copyright 2024 PracticePanther
For more news on Software for Law Firms, visit the NLR Law Office Management section.

CalRecycle Seeks Stakeholder Feedback on Single-Use Packaging EPR Program

Tomorrow, February 1, the California Department of Resources Recycling and Recovery (CalRecycle) will host a hybrid question and answer session to discuss the draft rulemaking on their extended producer responsibility (EPR) program, as discussed below. A 45-day public comment period will follow. Members of the regulated community who wish to attend can find in-person and virtual information on the session here.

Members of B&D’s Plastics and Packaging team will attend the public meeting and will be prepared to answer any questions clients and contacts may have. A more substantive update on what to expect from CalRecycle and the rulemaking process is forthcoming.

Background

In June 2022, the California legislature passed a transformational law creating an EPR program with ambitious goals to ensure 100% of single-use packaging and plastic food ware is recyclable or compostable by 2032. The law creates responsibility for producers, typically manufacturers that are brand owners (although it applies to others as well), to join a producer responsibility organization (PRO) that will develop a plan to implement the law, including raising $5 billion from industry members over 10 years. CalRecycle has selected the Circular Action Alliance (CAA) as the PRO and is developing regulations to implement the law.

Companies potentially impacted by the SB 54 regulations should monitor the rulemaking process and prepare to submit comments within the upcoming 45-day public comment period. To receive periodic updates on CalRecycle’s implementation of SB 54, subscribe to the Agency’s SB 54 listserv here.

© 2024 Beveridge & Diamond PC
For more news on California’s Recycling Program, visit the NLR Environmental, Energy & Resources section.