Family Law
Electronic Surveillance Abuse in Family Law Cases
Technology has made it easier than ever to communicate, share information, and stay connected. Unfortunately, it has also created new opportunities for a spouse or partner to improperly monitor the other. In family law cases, electronic surveillance can raise serious concerns involving privacy, safety, credibility, and the well-being of children. Electronic surveillance may take many forms. Allegations can involve unauthorized access to emails or social media accounts, monitoring text messages, tracking a person's location through a device or vehicle, or the use of technology to monitor communications. In some cases, a party may not realize that their activity is being monitored until evidence of the surveillance emerges during a divorce or custody proceeding. These allegations can have significant legal consequences. Depending on the circumstances and applicable law, information obtained through unauthorized surveillance may raise questions about how the evidence was obtained and whether it may be used in court. Surveillance allegations may also become relevant to broader issues in a custody case, particularly when the conduct suggests an effort to intimidate, control, or interfere with the other parent's privacy or safety. Electronic surveillance can also create discovery issues. A party may seek records concerning devices, accounts, applications, location data, or other electronically stored information. At the same time, attorneys must carefully consider the privacy implications and the legal limits concerning the collection and use of that information. The important lesson is that technology is an inherent part of family law, not a separate consideration. As electronic devices and digital accounts become increasingly integrated into everyday life, disputes over monitoring and surveillance are likely to become more common. Anyone who believes they are being electronically monitored, or who is accused of engaging in surveillance, should seek legal advice before accessing, copying, deleting, or distributing potentially relevant digital information.
September 11, 2026
Family Law
Could Your AI Searches Become Evidence in a Family Law Case?
As artificial intelligence becomes part of everyday life, a new family law discovery issue is beginning to emerge. What happens when attorneys seek a party’s AI search history? People are increasingly using AI tools to ask questions they might previously have entered into an internet search engine or discussed privately with a friend. In a contentious custody case, however, a search such as “how can I keep my children from my spouse?” could potentially take on a very different significance when viewed in the context of litigation. Family law attorneys may begin seeking AI prompts, conversation histories, and other records during discovery or through subpoenas, particularly when those records could shed light on a party’s intentions, state of mind, or conduct. A series of searches concerning hiding assets, restricting parenting time, monitoring a spouse, or keeping children away from the other parent could become relevant evidence depending on the facts of the case and applicable discovery rules. Although traditional rules of discovery and evidence still apply, the use of AI presents a new and evolving area of uncertainty. Courts and practitioners may have to grapple with questions about the relevance, discoverability, authenticity, privacy, and admissibility of AI-generated conversations and search histories. Adding to the uncertainty, whether an AI provider retains the requested information, and whether it can or will disclose that information in response to a subpoena or other legal process, may vary significantly depending on the platform, its policies, and the circumstances of the request. Nevertheless, the practical lesson for family law litigants is important: AI searches should not necessarily be treated as consequence-free conversations. Just as texts, emails, social-media activity, and internet searches can become relevant in litigation, AI interactions may increasingly become another source of electronically stored information. For attorneys, this creates a new area of discovery to consider. For clients, it creates a new reason to think carefully about what is entered into an AI platform, particularly when a divorce, custody dispute, or other family law proceeding is anticipated. As AI becomes more integrated into daily life, family law discovery will likely have to evolve with it.
September 11, 2026
Business
OIG Advisory Opinion 26-12 Approves Concierge Program Warranty for Surgical Outcomes
On May 22, 2026, the Office of Inspector General ("OIG") issued Advisory Opinion 26-12, concluding that a proposed warranty program offered by an orthopedic surgery provider would not generate prohibited remuneration under either the Federal Anti-Kickback Statute ("AKS") or the Beneficiary Inducements Civil Monetary Penalty ("CMP") provisions. Accordingly, OIG stated that it would not impose administrative sanctions in connection with the arrangement. The opinion provides important guidance regarding the application of the AKS warranty safe harbor to innovative service delivery models. The Proposed Arrangement The Requestor, an orthopedic surgery provider, offers patients an optional concierge program that includes post-operative recovery support services and products for one (1) year following surgery. These services include wellness coaching, educational support, nutritional programs, digital health monitoring tools, and recovery-related products. The provider certified that none of these concierge services are reimbursable by Medicare, Medicaid, or commercial insurance, although the underlying surgical procedures may be covered by Federal health care programs. Patients who elect to participate pay a separate concierge fee and execute a membership agreement before surgery. Under the proposed arrangement, the provider would warrant that a patient's substantial compliance with the concierge program would result in the patient not requiring revision surgery within two (2) years of the initial procedure. If the patient nevertheless required revision surgery during that period, the provider would refund the concierge fees paid in connection with the original surgery. The provider would not refund medical expenses, cover revision surgery costs, or provide any additional remuneration. Nor would the patient be required to return to the provider for the revision procedure. Anti-Kickback Statute Analysis OIG recognized that the arrangement potentially implicates the AKS because the offer of a refund could make the provider more attractive to prospective patients seeking surgeries that are reimbursable by Federal health care programs. As a result, OIG examined whether the arrangement satisfied the regulatory safe harbor for warranties found at 42 C.F.R. § 1001.952(g). The warranty safe harbor protects certain written undertakings to refund, repair, replace, or provide other remedial action when an item, bundle of items, or related services fail to meet specified performance standards. OIG concluded that the proposed concierge fee refund met the regulatory definition of a warranty because: The commitment was memorialized in a written membership agreement The warranty formed part of the bargain between the provider and the patient The provider agreed to take remedial action in the form of a refund The refund would be triggered by the failure of the concierge program and related services to achieve the promised outcome of avoiding revision surgery within two years OIG further determined that the arrangement satisfied the applicable conditions of the warranty safe harbor. Among other things, the provider certified that it would accurately disclose and document any refund, require patients to provide information to government authorities upon request, and refrain from conditioning the warranty on exclusive use of the provider or minimum purchase requirements. Because the arrangement fit squarely within the warranty safe harbor, OIG concluded that it would not constitute prohibited remuneration under the AKS. Beneficiary Inducements Civil Monetary Penalties Analysis OIG likewise found no violation of the Beneficiary Inducements Civil Monetary Penalties (CMP). Although the refund offer could arguably influence a Medicare or Medicaid beneficiary's selection of a provider, the CMP's definition of remuneration excludes practices that are permissible under an AKS safe harbor. Having determined that the proposed arrangement qualified for protection under the warranty safe harbor, OIG concluded that the arrangement likewise posed no risk under the Beneficiary Inducements CMP. Key Compliance Considerations Several facts were central to OIG's favorable determination: The concierge services were separately purchased at fair market value The refund applied only to the concierge fees paid by the patient and not to medical, hospital, or surgical expenses Patients were not required to use the provider for any future procedure, including revision surgery The provider did not condition the warranty on exclusive use arrangements or minimum purchasing commitments Appropriate reporting, documentation, and disclosure requirements were incorporated into the membership agreement Conclusions Advisory Opinion 26-12 demonstrates OIG's willingness to recognize properly structured outcome-based warranty programs tied to non-covered services that satisfy the warranty safe harbor. The opinion may be particularly relevant to providers developing concierge, care coordination, recovery support, or other value-added patient programs. At the same time, OIG emphasized that its approval was limited to the specific facts presented. Notably, the agency distinguished the proposed arrangement from the provision of free concierge services or other free benefits to patients. OIG reiterated its longstanding concerns that free items or services connected to federally reimbursable care may present significant fraud and abuse risks and would not necessarily qualify for safe harbor protection. While advisory opinions bind only the requesting party, Advisory Opinion 26-12 offers a useful roadmap for providers seeking to design patient-centered warranty programs that reward outcomes without running afoul of the AKS or Beneficiary Inducements CMP. Proper structuring, fair market value pricing, careful documentation, and strict adherence to the warranty safe harbor remain essential to achieving a favorable compliance result.
September 9, 2026
Mergers and Acquisitions
Can AI Buy a Company? What Buyers Need to Know About AI’s Role and Limitations in M&A Transactions
Artificial intelligence is changing just about everything in our lives, including the merger and acquisition (M&A) process. AI-powered tools can add tremendous efficiency to the acquisition process by reviewing large volumes of documents, summarizing contracts, organizing diligence materials, and identifying provisions that might otherwise take hours to find. While these efficiencies can accelerate the M&A process, speed should not be mistaken for judgment. An acquisition is not just about collecting and summarizing information. Buyers must determine what that information means for the value of the business, the structure of the transaction, and their willingness to proceed. AI can be a very helpful tool, but it cannot replace the wisdom and judgment that comes with experienced M&A counsel. The better question is not whether AI can buy a company. It is how buyers and their advisors can effectively use AI tools without losing sight of the human judgment that ultimately protects the deal. AI Can Review Documents, But It Cannot Assess the Buyer’s Risk During due diligence, AI tools can be very useful in taking over time consuming tasks such as: Summarizing contracts Locating change-of-control or assignment provisions Comparing similar agreements Flagging unusual or inconsistent terms Organizing documents by subject matter Identifying potentially missing information AI’s speed here is particularly helpful in transactions involving hundreds or thousands of contracts. That said, identifying a provision is only the beginning of the analysis. Suppose an AI tool finds change-of-control language in several agreements. The real questions are: Which agreements are critical to the business? Will consent be required before closing? Could the counterparty terminate or renegotiate? How would the loss of that relationship affect revenue, operations, or valuation? The same language can create very different levels of risk depending on whether it appears in a minor vendor agreement or a contract with the target’s largest customer. AI may locate the provision, but it cannot reliably determine how much risk it creates for this particular buyer in this particular transaction. That requires a human’s understanding of the buyer’s objectives, the target’s business, the industry, and the broader structure of the deal. AI Finds Issues, But Lawyers Determine Materiality Due diligence often produces a long list of potential concerns, including incomplete employment agreements, gaps in intellectual property ownership, inconsistent customer contracts, regulatory deficiencies, or unresolved disputes. AI can help identify these issues, but it can also identify so many potential concerns that the buyer ends up with more information than clarity. This is where experienced deal counsel can help the buyer separate meaningful risks from background noise. Not every issue warrants the same response, and many times, matters can be corrected before closing. Others may justify a purchase-price adjustment, escrow, or holdback. Certain risks may require a special indemnity, a closing condition or a change to the transaction structure. A sufficiently serious issue may cause the buyer to reconsider the deal altogether. But that kind of analysis depends on context, and determining how the pieces fit together remains a judgment-intensive exercise. AI Does Not Negotiate the Deal Every acquisition involves compromise. Even when the parties agree on price, they must negotiate representations and warranties, indemnification obligations, liability caps, escrows, closing conditions, earnouts, and numerous other provisions that allocate risk between the buyer and seller. AI can propose language based on prior agreements or common market formulations. It may also help compare drafts and identify changes. But it is critical to note that it cannot be entrusted to manage the negotiation itself. That requires an understanding of what the other side wants, where the buyer has leverage, and which issues are worth pressing. It also requires the ability to recognize when a proposed solution creates a new problem elsewhere in the agreement. Sometimes the strongest response is to hold firm. Other times, the better strategy is to address the concern through a price adjustment, special indemnity, post-closing covenant or alternative structure. A good deal lawyer does more than argue over language. They help the parties find a workable path to closing while protecting the client’s most important interests. There is also a strong relationship component to every transaction. Many buyers need the seller, management team, or key employees to remain involved after closing, but an unnecessarily aggressive negotiation can damage the working relationship before the buyer takes control of the company. AI cannot read the room, understand personalities, or know when winning a drafting point could hurt the larger transaction. AI Cannot Identify Every Question the Buyer Should Be Asking AI is generally most effective when it has the right documents and receives the right inputs and instructions. The difficulty is that buyers do not always know what is missing, or even what they should be asking in the first place. Experienced M&A counsel can recognize patterns from prior transactions. They know which diligence requests are likely to uncover problems, which industries present specialized risks, and which seemingly routine answers require follow-up. A contract summary will not help if a significant agreement was never uploaded to the data room. A review of the target’s intellectual property schedule may not reveal that a former contractor created critical software without signing an assignment. Employment records may look complete until someone asks how workers are classified, compensated, or managed in practice. AI analyzes only the information it receives; whereas deal counsel knows when the available information does not tell the entire story. This ability to identify the unknown is particularly important for buyers entering a new industry or making their first acquisition. An experienced attorney can anticipate where issues tend to arise and tailor the diligence process to the buyer, the target, and the transaction. AI Outputs Still Need to Be Verified AI-generated summaries can sound authoritative even when they are incomplete or incorrect. A tool may overlook an exception, misinterpret a defined term, miss the interaction between multiple provisions, or reach a legal conclusion that the underlying language does not support. In an M&A transaction, even a small error can have significant consequences. A missed consent requirement could delay closing. An incomplete summary of a customer agreement could distort the buyer’s view of recurring revenue. A mistaken interpretation of an indemnification provision could leave the buyer with less protection than expected. AI should be treated as an analytical tool, not as the final reviewer or decision-maker. Its work must be checked against the underlying documents and evaluated by professionals who understand the legal and business consequences. Buyers and their counsel must also consider how sensitive deal information is handled. Confidential financial records, customer data, employee information, and trade secrets should not be entered into an AI platform without understanding the tool’s security, retention, and privacy practices. Using AI the Right Way in an Acquisition The strongest acquisition teams will not ignore AI, but importantly, they will not treat it as a substitute for experienced advisors. AI is most valuable when it handles repetitive, time-intensive tasks and allows deal counsel to spend more time on higher-value work. Buyers should have a firm understanding of: Which AI tools their advisors are using How confidential information is protected Whether AI-generated findings are independently verified How identified issues are prioritized and escalated Which decisions remain subject to human legal and business judgment The goal in using these tools to help deal teams ask better questions, find issues sooner, and make better-informed decisions. AI may help a buyer move through diligence more efficiently, but it cannot decide whether a risk is acceptable, negotiate the right protection, or determine whether the deal still makes strategic sense. Those decisions will always require the experience, context, and judgment legal counsel and advisors bring to the table.
September 8, 2026
Bankruptcy
Celsius Litigation: Framework for Valuing Digital Assets in Avoidance Actions
In a recent decision addressing a question raised by the crypto winter, the United States Bankruptcy Court for the Southern District of New York outlined a framework for valuing digital assets recovered through bankruptcy avoidance actions. The ruling is noteworthy because it confronts an issue that traditional bankruptcy jurisprudence has rarely faced: volatile, highly liquid assets that can dramatically increase or decrease in value in a short period of time. As Judge Glenn observed, digital assets differ from traditional property because they are easily transferable, actively traded, and subject to significant market fluctuations. In the Celsius litigation, the court had to determine: “1. Is the Litigation Administrator entitled to recover (a) the allegedly transferred digital assets if they remain in the applicable Defendant’s possession, custody or control or, alternatively, (b) their value? 2. If the Litigation Administrator is entitled to recover the value of any allegedly transferred digital assets, what value is the Litigation Administrator entitled to recover if the allegedly transferred digital assets: i. Have appreciated since they were transferred from Celsius? ii. Have depreciated since they were transferred from Celsius?” In re Celsius Network, LLC, No. 22-10964-MG, 2026 WL 1999187, at *1 (Bankr. S.D.N.Y. July 10, 2026) The litigation administrator claimed that the appropriate measure of damages is either (1) the return of the digital asset or (2) the market price of the asset if the asset appreciated. In the event the transferred asset has depreciated, the litigation administrator claimed that the court should award the market price of the digital asset on the date of the transfer. Section 550 of the Bankruptcy Code allows a trustee or estate representative to recover either the property transferred or, if the court so orders, the value of that property. The Bankruptcy Code, however, does not specify how value should be measured when the property fluctuates in price after the transfer. Judge Glenn therefore turned to the statute's underlying purpose: restore the estate to the position it would have occupied had the transfer never occurred. The Court's Three-Part Framework Judge Glenn ultimately adopted a practical framework designed to balance three competing concerns: Making the estate whole Preventing preference defendants from profiting from avoidable transfers Avoiding unfair or potentially limitless liability resulting from cryptocurrency market volatility The court held: For depreciating assets, the estate may recover the transfer-date value, regardless of whether the defendant still holds the asset. For appreciating assets still held by the defendant, the estate may recover the asset itself. For appreciating assets that have been sold, the estate may recover the sale price obtained by the defendant. The defendant bears the burden of proving both that the asset was sold and the amount for which it was sold. If the defendant cannot establish those facts, the estate may recover the judgment-date value. This framework represents an effort to tailor traditional avoidance principles to the realities of cryptocurrency markets. The Decision Regarding Depreciating Assets is Based on Well-Established Precedent Judge Glenn's analysis began with what he viewed as the easier question: assets that declined in value after transfer. The court emphasized that the purpose of § 550 is restorative rather than punitive. If a cryptocurrency worth $100,000 at the time of transfer later falls to $10,000, requiring the estate to accept only the depreciated asset or its current value would leave the estate substantially worse off than if the transfer had never occurred. In effect, the bankruptcy estate would bear the entire market loss. Relying on prior fraudulent transfer and avoidance precedent, Judge Glenn concluded that transfer-date value is the proper measure for depreciating property because it restores the estate to the financial position it would have occupied absent the transfer. The court reasoned that allowing only recovery of the current value would undermine the statute's remedial purpose. Why the Court Rejected Judgment-Date Value for Appreciating Crypto The more difficult issue involved assets that appreciated after transfer. The litigation administrator argued that appreciation should inure to the benefit of the estate because, had the transfer never occurred, the estate would have retained the asset and potentially realized the upside. The argument found support in cases involving real estate and other appreciating property. Judge Glenn, however, distinguished digital assets from many traditional forms of property. He noted that cryptocurrency is extraordinarily liquid, highly volatile, and can be sold almost instantaneously. Moreover, unlike real estate, many transferees no longer possess the specific assets that were transferred. The court was particularly concerned that imposing judgment-date valuation on a defendant who sold cryptocurrency years earlier could create what it described as "essentially limitless liability." A customer who withdrew and sold Bitcoin long ago could be exposed to damages tied to market increases occurring long after the asset had been disposed of. The court concluded that such a result would be inequitable. Judge Glenn also observed that there was no evidence that Celsius would necessarily have held the assets through the period of appreciation. The company may have sold, rebalanced, hedged, or otherwise deployed the assets. Awarding judgment-date appreciation therefore risked providing the estate with a windfall rather than merely restoring it. The Court's Middle Ground Rather than adopting either transfer-date value or full judgment-date value as a universal rule, Judge Glenn crafted a middle-ground approach. If a defendant still possesses an appreciating digital asset, the estate may recover the asset itself and thereby receive the benefit of appreciation. That result mirrors what would have occurred had the transfer never happened. If the defendant sold the asset, however, recovery is limited to the benefit actually realized through the sale. The estate receives the sale proceeds, including any appreciation captured by the defendant, but not speculative gains that accrued after disposition. In the court's view, this approach honors Congressional concern regarding a "wait-and-see" strategy by transferees while avoiding exposure to unlimited liability based solely on subsequent market movements. Practical Takeaways for Digital Asset Holders Judge Glenn's decision represents one of the first comprehensive attempts to address how cryptocurrency should be valued in bankruptcy avoidance actions. Rather than applying a rigid valuation date, the court adopted a flexible framework that distinguishes between appreciating and depreciating assets and considers whether the cryptocurrency remains in the transferee's possession. The ruling seeks to restore the estate and avoid imposing limitless liability driven solely by crypto market volatility. For digital asset holders, the message is clear: maintain thorough records, understand the risks of later-avoidable transfers, and recognize that post-transfer appreciation may not always belong to the party currently holding the coins.
August 31, 2026
Commercial Litigation
DExit: How Texas is Building a Corporate Alternative to Delaware
Through business court reform, corporate governance legislation, and the creation of a national stock exchange, Texas is making a deliberate bid to compete with Delaware as America's preferred corporate domicile. Texas is a lot of things, but subtle is rarely one of them. And there is certainly nothing subtle about Texas's recent efforts to attract businesses and capital to the Lone Star State. The latest evidence can be found in a term that has increasingly entered corporate nomenclature: DExit. Short for "Delaware Exit," DExit refers to the growing trend of companies reconsidering Delaware as their state of incorporation. Much of the public discussion surrounding DExit has focused on a handful of high-profile corporate relocations and reincorporations. That focus, however, risks missing the larger story. For more than a century, Delaware has occupied a singular place in corporate America. That dominance is remarkable when one considers Delaware's size. The entire State of Delaware could fit within the greater Houston metropolitan area and still leave room for a few Buc-ee's locations. Yet this geographically tiny state became the legal home of many of America's largest corporations by offering something few jurisdictions could match: a sophisticated body of corporate law and a specialized judiciary capable of resolving corporate disputes with predictability. Texas has spent the last several years studying that playbook. Recent amendments to the Texas Business Organizations Code, the creation of the Texas Business Court and Fifteenth Court of Appeals, and the launch of the Texas Stock Exchange suggest that Texas is no longer content merely to attract a company's regional office or even its corporate headquarters. Texas now wants the company's legal domicile as well. Whether Texas ultimately succeeds remains to be seen. Delaware's advantages remain substantial. But for the first time in decades, a serious challenger appears to be emerging. Rewriting the Corporate Rulebook The clearest evidence of Texas's ambitions appear in Senate Bill 29 and the legislature's recent amendments to the Texas Business Organizations Code (TBOC). The legislature was not particularly coy about what it hoped to accomplish. State Senator Bryan Hughes described Delaware as a jurisdiction in which many companies had become "shackled by a burdensome Delaware legal establishment dominated by activist judges and special interest groups" and stated that the legislation would help bring American enterprise and jobs to Texas.1 The bill's legislative history described Texas's goal as becoming the "corporate law capital of America."2 Amended TBOC § 21.218 narrows shareholder inspection rights by requiring a shareholder to hold shares for at least six months or own at least 5% of the corporation's outstanding shares before demanding access to books and records. The statute also limits inspections to requests related to a shareholder's economic interest in the corporation and generally restricts access to certain categories of electronic communications. That restriction on electronic communications is particularly significant. Emails, text messages, and other electronic communications are among the most voluminous and expensive categories of information for a company to collect, review, and produce upon a books and records request. The legislature also codified the business judgment rule through TBOC § 21.419, establishing a statutory presumption that directors and officers acted in good faith, on an informed basis, and in the best interests of the corporation. Senator Hughes stated that the change would allow Texas businesses to "confidently deploy capital" by providing greater certainty to corporate decision-makers.3 Finally, new TBOC § 21.373 permits qualifying corporations to adopt heightened requirements for shareholder proposals, including minimum ownership thresholds, holding periods, and proxy solicitation requirements. Reasonable minds may disagree on the wisdom of these changes, but their purpose is clear. Texas is actively reshaping its corporate-governance framework to make itself more attractive to corporate managers and directors considering where to incorporate. Building a Texas Version of the Court of Chancery Corporate lawyers have never chosen Delaware solely because of its statutes. Delaware's true advantage has long been its Court of Chancery and the extensive body of precedent developed through decades of specialized corporate litigation. Texas’s response is the Texas Business Court. Operational since September 2024, the court has jurisdiction over certain complex business disputes, including corporate-governance matters and significant commercial transactions. For many claims, Business Court jurisdiction generally requires an amount in controversy exceeding $5 million. Appeals proceed directly to the newly established Fifteenth Court of Appeals, creating a centralized path for the development of Texas business law.4 Early results suggest the court is attracting substantial use. During its first year, the Texas Business Court received 185 filings, including 145 corporate-governance cases. Judges issued more than 680 orders, conducted more than 270 hearings and conferences, and produced 42 written opinions.5 Those numbers matter. Delaware's dominance did not emerge overnight. It developed because companies, lawyers, and judges repeatedly chose a singular and specialized forum for business disputes, which resulted in a predictable body of case law. Texas appears to be attempting a similar process. Ringing the Opening Bell The most ambitious piece of Texas's strategy may be the Texas Stock Exchange (TXSE). A state can attract incorporations through favorable laws. It can improve predictability through specialized courts. But creating a genuine alternative corporate ecosystem requires access to capital markets. The Texas Stock Exchange received SEC approval in September 2025 and completed its rollout into full production trading in July 2026. It is Texas’s first fully integrated national securities exchange.6 Its launch was more than symbolic. TXSE began trading with more than 50 member-firms and described its opening as the broadest day-one participation of any exchange launch in half a century. TXSE leadership has stated that the exchange was designed to provide “real competition for primary listings for the first time in decades."7 In August 2026, Reuters reported that TXSE secured its first primary listings, an early milestone in that effort, and noted that the venture is backed by prominent financial institutions and investors, including BlackRock, Citadel Securities, and Charles Schwab.8 TXSE plans to begin facilitating initial public offerings in 2027, which would mark its next major step toward becoming a full-service competitor to the established New York exchanges.9 No one should expect TXSE to depose the New York Stock Exchange or Nasdaq anytime soon. That is not the point. The significance of TXSE lies in what it represents. Texas is no longer content to attract headquarters. It is building the infrastructure that supports public companies after they arrive. The message seems to be that if a company is willing to move its charter to Texas and litigate its disputes in a Texas business court, Texas would also like it to ring the opening bell here. Viewed alongside the TBOC amendments and Business Court reforms, the exchange is another step in Texas's broader effort to become the legal home of major American businesses. Texas Makes Its Move Delaware remains the dominant corporate domicile in America. Its position rests on more than a century of corporate law precedent and the predictability that comes with it. No state can replicate that overnight. Texas, however, enters this competition from a position of strength. In 2026, Texas surpassed California as the state with the largest number of Fortune 500 headquarters. The state is now home to 57 Fortune 500 companies with a combined $2.8 trillion in annual revenue.10 For decades, Texas competed on cost, taxes, and population growth. Today, it is competing on corporate governance and capital as well. Whether DExit ultimately becomes a wave or merely a footnote in corporate history remains to be seen. What is already clear is that Texas has made a deliberate decision to challenge Delaware's dominance. The coming years will determine whether businesses embrace that challenge. Texas, however, is no longer content to be where companies do business. It wants to be where they choose to call home. 1 Press Release, Office of Senator Bryan Hughes, Senator Bryan Hughes Files Groundbreaking Bill to Transform Texas Corporate Law (Feb. 27, 2025). 2 S.B. 29, 89th Leg., Reg. Sess. (Tex. 2025), legislative history and bill analyses; Tex. Bus. Orgs. Code §§ 21.218, 21.373, 21.419. 3 Note 1, supra. 4 H.B. 19, 88th Leg., Reg. Sess. (Tex. 2023), legislative history; S.B. 1045, 88th Leg., Reg. Sess. (Tex. 2023), legislative history; Tex. Gov't Code ch. 25A and § 22.2151. 5 Office of Court Administration, The Business Court of Texas, Annual Report FY 2025. 6 Office of the Governor, Governor Abbott Marks Successful Trading Launch of Texas Stock Exchange (July 31, 2026). 7 Texas Stock Exchange, Texas Stock Exchange Celebrates Successful Launch of Trading (July 31, 2026). 8 Reuters, Texas Stock Exchange Lands First Primary Listings in Bid to Carve Out Market Turf (Aug. 18, 2026; updated Aug. 19, 2026). 9 Eric Revell, Texas Stock Exchange Officially Goes Live to Rival NYSE and Nasdaq, Fox Business (July 31, 2026). 10 Fortune Media, Amazon Claims No. 1 Spot on the Fortune 500 (June 3, 2026); Office of the Governor, Texas Leads With Most Fortune 500 Headquarters (June 3, 2026).
August 31, 2026
Labor and Employment
When the Algorithm Recommends Termination: Employer Liability for AI in Hiring, Discipline, and Performance Management
Employers have moved quickly to bring artificial intelligence into parts of the employment relationship that used to depend entirely on human judgment. Applicant tracking systems now score resumes before a recruiter sees them. Scheduling and productivity platforms flag employees as underperforming based on keystroke counts, call times, or delivery windows. Performance management tools generate draft write-ups, and in some organizations, recommend whether an employee should be coached, placed on a performance improvement plan, or terminated. The efficiency case for these tools is obvious. The legal exposure they create is less obvious, and it is growing. The core problem is not that AI is involved in employment decisions. It is that AI outputs are increasingly being treated as conclusions rather than inputs, and that shift changes how those decisions look in a deposition, an EEOC position statement, or a jury instruction. The Employer Cannot Delegate the Decision Title VII, the ADA, the ADEA, and their state and local counterparts all impose liability on the employer, not on the software the employer purchased. An employer cannot defend a discrimination claim by pointing to a vendor’s algorithm and arguing that a machine, not a person, made the call. Regulators have already made this point explicit. The EEOC has stated that employers remain responsible for adverse impact caused by algorithmic decision-making tools even when a third-party vendor built and maintains the tool. Several state laws, including New York City’s Local Law 144 governing automated employment decision tools, impose independent audit and notice obligations directly on the employer using the tool. That means the familiar advice to document a legitimate, nondiscriminatory reason for an adverse action now has a second layer. It is not enough that AI flagged the employee. The employer must show that a human reviewed the flag, understood why it was generated, and exercised independent judgment before acting on it. A termination file that says only “system-generated performance score of 2.1, employee terminated” is a much harder file to defend than one that documents what a manager actually observed and considered. Disparate Impact Hides Inside the Model Disparate treatment claims require some evidence of intent, but disparate impact claims do not, and AI-driven employment tools are a natural fit for disparate impact theories. A scoring model trained on historical performance or attrition data can quietly reproduce whatever bias existed in that history. A resume screening tool can learn to penalize employment gaps, certain schools, or language patterns that correlate with protected characteristics even though the model was never told to consider race, sex, age, or disability directly. The practical exposure here is twofold. First, if a plaintiff’s counsel obtains statistical evidence that an AI tool selects or rejects candidates or employees at meaningfully different rates across protected groups, the employer will need validation data showing the tool is job related and consistent with business necessity, the same standard that has applied to any selection device since Griggs v. Duke Power Co. Vendors rarely provide this validation data unprompted, and employers frequently discover during litigation that they never asked for it. Second, an employer that never tested its own tool for adverse impact will have a difficult time arguing it acted reasonably, even where no discriminatory intent existed. Ignorance of how the tool works is not a defense; in a disparate impact case, it can be the plaintiff's best evidence that no one was minding the store. Discovery Now Reaches Further Than the Personnel File AI adoption expands what is discoverable in an employment case well beyond the traditional personnel file. Prompts entered by HR or supervisors, model outputs and confidence scores, version histories showing when a scoring model was retrained, and internal communications about why an alert was or was not acted on are all now fair game. Plaintiffs’ counsel is increasingly requesting this material specifically, because it can show not just that an adverse outcome occurred, but what the company knew and when. This creates a preservation problem many employers have not yet solved. Some platforms overwrite scoring history as new data comes in or retain outputs only briefly by default. If a company has no policy governing retention of AI-generated employment data, it may find itself unable to produce records that plaintiffs assume exist, inviting a spoliation argument, or it may find that the only surviving record is an unfavorable one that a human reviewer never actually relied upon but that now looks, in hindsight, like the smoking gun. Practical Governance Closes the Gap None of this counsels against using AI in employment decisions. It counsels against using it without a governance structure built for the way these tools will actually be examined after the fact. At a minimum, employers should be able to show that a person with real authority to disagree reviewed any AI-generated recommendation before it became a personnel action, that the tool has been validated or at least tested for disparate impact on a periodic basis, that managers are trained to document their own independent reasoning rather than simply citing the tool's output, and that retention practices for AI-generated data are deliberate rather than accidental. Where a jurisdiction imposes specific notice, bias audit, or disclosure obligations on automated employment decision tools, those requirements need to be built into the rollout, not addressed after a candidate or employee complains. The employers best positioned when one of these tools produces a bad outcome are the ones who can show, with contemporaneous documentation, that a human being was accountable for the decision the whole way through. The tool can inform that judgment. It cannot substitute for it, and the law has no intention of letting it try.
August 27, 2026
Labor and Employment
NLRB General Counsel Signals Another Round of Precedent Reversals: What Employers Need to Know About GC Memo 26-04
On August 26, 2026, NLRB General Counsel Crystal S. Carey issued Memorandum GC 26-04, "Further Guidance Regarding General Counsel Priorities." This is a follow-up to her earlier guidance in GC Memo 26-03 on shifting enforcement priorities, and it's a useful roadmap for any private employer trying to anticipate where federal labor law is heading over the next year or two. The headline for clients: No changes have been made yet, but many of the precedents adopted by the NLRB during the Biden administration may change over the next months or possibly years while the Trump administration remains in office. A General Counsel memo does not change what the National Labor Relations Board has held is unlawful. It's a statement of prosecutorial priorities and the legal positions the GC's office intends to argue in pending and future cases. But GC memos are a reliable early-warning system for where Board law is going, and this one specifies, case by case, which Biden-era Board precedents the current GC is actively trying to unwind. The list includes essentially all of the new or revised interpretations of the National Labor Relations Act issued during the Biden administration. If your organization has non-union operations, unionized operations, or is navigating an organizing campaign, several of these items are worth putting on your radar now. GC Carey opens by reporting that the agency has resolved 9,247 pending cases since she took office, more than a 50% reduction in the backlog she inherited. Significantly, the regional offices are not required to route cases involving these targeted issues through the Division of Advice. Instead, they will keep investigating and prosecuting under existing Board law while the GC pursues these arguments through litigation. Positions Already Being Argued in Pending Cases These are precedents the GC's office has already asked the Board or an administrative law judge to overturn in specific, named cases: Severance agreements and confidentiality/non-disparagement clauses. In Valley Radiology, P.A., the GC is arguing to overrule McLaren Macomb (2023) — the decision that made broad confidentiality and non-disparagement provisions in severance agreements presumptively unlawful. If the Board agrees, employers will regain more latitude to include standard confidentiality and non-disparagement language in severance and separation agreements without automatically committing an unfair labor practice. Consent orders. In the Amazon cases, the GC is asking the Board to overturn Metro Health/Hospital Metropolitano Rio Piedras (2024), which limited the Board's discretion to approve consent orders (settlement mechanisms) over the General Counsel's objection. A reversal would restore more flexibility for administrative law judges to approve settlements even without GC sign-off. Work rules and handbook policies. In Honeywell International, the GC is arguing to overturn Stericycle (2023), the standard that made facially neutral work rules unlawful if they could "chill" protected activity from the perspective of an economically dependent employee reading them in the worst reasonable light. A rollback would ease pressure on standard handbook provisions — think confidentiality, social media, and civility policies — that many employers rewrote to comply with Stericycle. "Captive audience" meetings. In UPS Supply Chain Solutions, the GC has moved to withdraw exceptions in favor of overturning the current Amazon.com Services (2024) rule, which bars employers from requiring employees to attend meetings where the employer expresses its views on unionization. She's urging a return to the decades-old Babcock & Wilcox standard, which permitted mandatory captive-audience meetings. This is a significant one for any employer that uses employee meetings as part of a union-avoidance or communication strategy. Statements predicting the impact of unionization. In the same UPS case, GC Carey has explicitly broken from her predecessor's position under Starbucks/Siren Retail (2024) and will instead urge the Board to reinstate Tri-Cast (1985), a more permissive standard for employer statements predicting what might happen to wages, benefits, or working conditions if a union is voted in. Dress codes. In Starbucks Corporation, the GC argues against the employee-protective standard from Tesla (2022) and asks the Board to reinstate Wal-Mart Stores (2019), which gave employers more room to enforce dress code and uniform policies — including logo and pin restrictions — without running afoul of Section 7. Waiver of the right to bargain. In HPC Industrial Group, the GC has flagged Endurance Environmental Solutions (2024) for reversal and intends to push for a return to the MV Transportation (2019) "contract coverage" standard, which gives more weight to broad management-rights clauses as a basis for unilaterally changing terms and conditions of employment without additional bargaining. Positions the GC Intends to Raise When the Right Case Comes Along These are precedents GC Carey has flagged as targets but hasn't yet had a procedural vehicle to formally argue. Employers should watch for these to surface in future litigation: Bargaining orders without an election. (Cemex Construction Materials Pacific, 2023): The GC wants the Board to abandon the Cemex framework — which allows a bargaining order to issue without a union election in some circumstances — and return to the pre-Cemex combination of Gissel Packing (1969) and Linden Lumber (1971), which is generally viewed as more protective of an employer's right to insist on a secret-ballot election. Duty to bargain before changing existing terms. (Wendt Corporation and Tecnocap, both 2023): These decisions currently require bargaining over changes even where there's longstanding past practice guiding the action. The GC views this as slowing down routine contract administration and wants it revisited. Union dues checkoff after contract expiration. (Valley Hospital Medical Center, 2022): The GC wants to return to the 1962 Bethlehem Steel rule, under which an employer's obligation to deduct union dues from paychecks ends automatically when the collective bargaining agreement (and its checkoff clause) expires — rather than continuing post-expiration as Valley Hospital currently requires. Objector fee disclosures. (UFCW Local 700/Kroger, 2014): The GC intends to argue that unions should have to disclose more detailed information to dues objectors than Kroger currently requires under Beck and California Saw & Knife Works. Protected concerted activity and workplace conduct. (Miller Plastic Products and Lion Elastomers II, both 2023): The GC has specifically called out Lion Elastomers II as extending protection to employee conduct — including conduct that would otherwise be prohibitable — that is only tenuously connected to activity protected under the Act. This case is already pending on remand before the Board. Enhanced/"make whole" remedies. (Thryv, 2022): The GC wants the Board to reconsider the expanded consequential-damages remedy adopted in Thryv, noting that courts have repeatedly cut back on it and that it hasn't yet been tested through a full compliance proceeding. What This Means for Your Organization Every item above requires the Board to actually rule in the GC's favor. National Labor Relations Act will likely stay in flux for months to come. Practical Takeaways (For Now) If your severance agreements, handbook policies, or dress code provisions have been revised in the last two to three years specifically to comply with McLaren Macomb, Stericycle, or Tesla, it may be worth flagging those provisions for a fresh look once the Board rules. This may not mean revising them immediately, but it may help you determine in advance what revisions may be permitted or advisable. If you would rely on mandatory employee meetings as part of your communications strategy during organizing activity, the captive-audience question is one to watch closely, since a reversal would restore an employer tool that's currently off the table, except in a few states that have outlawed captive-audience meetings under state law. If you're a unionized employer with a broad management-rights clause, the outcome in the waiver-of-bargaining cases could materially affect how much unilateral flexibility you have when administering the contract.
August 27, 2026
Construction
Best Practices When Terminating for Cause a Downstream Contractor/Subcontractor
Terminating for cause a downstream contractor (or subcontractor) is considered the “nuclear option” when handling breaches of contract. Terminating for cause usually increases the risks and likelihood of litigation. Frequently, by the time the terminating party contacts the lawyer, it has already made the decision to terminate and wants the lawyer to effectuate the termination as quickly as possible. But a snap termination may cause compound problems. Instead of a quick termination, best practice is to follow a methodical, well-documented approach. Follow the Contract Documents Most contracts outline a process for declaring breach and terminating the contract. Generally, these steps must be followed. Some contracts identify with specific precision the types of breaches that allow for termination versus other remedies. The governing law (e.g., which state’s law applies) can have significant effect on the righteousness of a termination. Some states rigidly require all processes, notices, and terms set forth in the contract termination clauses to be satisfied prior to termination. Other states may allow exceptions to the drawn-out termination process, affording quick termination that shortcuts contractual notice clauses, depending on the circumstances. Still, whether a contract can be terminated more quickly than set forth in the contract is open to interpretation, and terminating more quickly than the contract strictly requires increases the risk of wrongful termination. Meanwhile, if the contractual processes have been followed, it significantly reduces the risk of a wrongful termination. Thus, as a general rule of thumb, following the contract processes for declaring breach and termination is a good start. Best Practice is to Issue a Notice to Cure Most contracts that outline a process for termination also require issuing a notice to cure prior to termination. As previously stated, it is best to follow the contractual requirements. Even if the contract does not require a notice to cure, it is typically best practice to still issue a notice to cure. There are two main reasons why this is recommended. First, if the default party cures the breach, then, perhaps there is no need to terminate, because the work has been brought “back on track.” Generally, forcing the defaulting party to cure the breach at its own cost is less expensive than terminating and fronting the costs to bring in another trade to finish or cure the work. Second, when proving that the termination was justified, typically it must be demonstrated that the defaulting party was in “material breach” of the contract. If the breach pertains to a critical component of the work, and the defaulting party fails to cure it after a proper notice, that is very strong proof that the defaulting party was in material breach and cannot perform. Thus, the termination for cause is more likely to be adjudged as righteous and justified after a failed cure opportunity. Meanwhile, if no opportunity to cure was provided, the defaulting party can argue that it would have cured the breach. If the breach could have been cured, that is strong evidence that the breach was not material (it was fixable). Thus, a notice to cure is typically the “other foot dropping” that proves the default could not be cured and therefore the defaulting party was in material breach. Some states require a notice to cure to be issued prior to termination for cause. Lastly, sometimes the breach has already, previously been cured by the defaulting party. Occasionally, an irritated higher-tier party will provide a lengthy list of transgressions and reasons for termination, but all of them are old, stale, and already cured. Generally, it is problematic to terminate for cause, if the reason for the termination has already been cured. Usually, terminating for cause requires the defaulting party to be in current, uncured breach at the time of termination. If terminating a party for yesteryear’s transgressions, then, you are not technically terminating for breach of contract (it was already cured); instead, you are terminating because you are still angry about it. But that is not a justified basis for termination under the law. It is an uncured (or uncurable) material breach that justifies termination, not a subjective opinion that the party was incompetent due to past issues that are of no current moment. Document the Breach of Contract, the Remediation, and the Costs/Losses When terminating a defaulting party, it is important to document breach. Photographs, daily logs/reports, notices to cure, and meeting minutes should corroborate and prove the breach. Documentation of the redesign or remediation work should be well maintained, including annotated sketches or drawings to explain the details of the breach and remediation. Likewise, clear, segregated cost tracking proving the specific additional costs for remediation and cure of the issue should be maintained. Also, best practice is to maintain documentation of the curative work to show and explain the steps taken to cure the issue. Often, the curative work itself speaks volumes as to what the problem was. Preserve Evidence, Allow Access to Evidence, and Avoid Spoliation Obviously, the evidence of breach, notice, termination, and the remediation work should be preserved. Relatedly, it is best to provide notice of the pending remediation work and allow the terminated party access to the site for a last inspection of the issue prior to the remediation work occurring. This is because, once the remediation work commences, the evidence of breach will inherently be destroyed and manipulated. Sometimes the terminated party will dispute the evidence, and argue that if it had been allowed the opportunity to inspect the defect, it would have been able to prove that the work was in fact satisfactory or a less expensive cure could have been utilized. The best approach is to allow the terminated party to access the site to inspect the work and observe the remediation work. The terminated party cannot interfere with the work or project, of course, but providing reasonable access for inspection (and sometimes destructive testing) is the best practice. Lastly, sometimes, if allowed to inspect prior to the final termination, the defaulting party might present analysis or evidence to change minds about the course for remediation. Ensure that All Interested Parties Have Been Given Notice Sometimes there is a reason to give notice of the termination to third parties. For example, if there is a performance bond posted by the defaulting party, typically it is best to give notice to the surety. Also, sometimes the contract documents require notice of a termination to be given to either a lender, higher tier, or owner. Consider Whether Statutes Impose a Limitation or Constraint on Termination Sometimes the basis for termination might conflict with a separate statute. For example, under the Bankruptcy Code it is technically a violation to terminate a contract on the basis of a declared bankruptcy. You must seek bankruptcy court approval for terminating a contract with a bankrupt debtor. Other times, statutory payment acts or other statutes may require a process or steps to be taken prior to termination. This is particularly true if there are withholdings or demands for payment, which is frequently the case. Ultimately, termination of a party on a construction project is a very strong action with significant repercussions. Missteps in the termination process can compound losses and escalate risk. Care must be taken to approach the termination with careful consideration of strategy and planning in the best interests of both the project and the litigation claims/defenses. It is highly recommended to consult with legal counsel starting with the notice and termination period. Lastly, these approaches are general points for consideration; recognize that each specific situation, project, or contract will have different factors to consider when terminating a downstream party. JEFFREY C. BRIGHT is a Principal attorney in Offit Kurman’s Construction Practice Group and maintains a multi-state construction law practice, representing contractors, subcontractors, owners, construction managers, design-builders, and design professionals. He is licensed and active in construction law matters in PA, MD, DC, VA, and CA. In addition to handling construction litigation and project disputes, including termination of contracts mid-project, he regularly advises on the preparation, revision, and negotiation of construction contracts for various project delivery systems. He can be reached at jeff.bright@offitkurman.com.
August 26, 2026
Family Law
A New Era in Child Custody Law: Why New York’s Proposed Shared Parenting Presumption Will Harm the Best Interests Standard
For more than 50 years, New York has adhered to one fundamental principle in child custody cases: there is no one-size-fits-all answer. Every child is different. Every family is different. Every custody dispute presents its own unique facts, challenges, strengths, and concerns. That principle is embodied in a deceptively simple phrase that has become the cornerstone of New York custody law: the child's best interests. It is not merely a slogan. It is the product of decades of thoughtful decisions by the New York Court of Appeals and the Appellate Divisions, recognizing that judges — not legislators — must evaluate each family individually and fashion custody arrangements based on the evidence in each case. Despite the “best-interests” standard being gender-neutral, some New York legislators find the individualized best-interests standard insufficient or believe it has run its course. They want 100% unmitigated equality from the starting gate — before the evidence is heard, before the family is understood, and before anyone has determined whether equal parenting time is actually best for the child. Equality first; facts later. Enter Senate Bill S4128. Bill S4128 is not New York law. Not yet, anyway. As of the 2025–2026 legislative session, it remains in Committee. But the thinking behind it is dangerous and deserves attention, because when it becomes law it will upend traditional custody analysis: instead of starting with the child and asking what arrangement best serves that child, it starts with an answer — parental equality — and works backward from there. At first glance, the legislation appears benign. After all, who could oppose children having meaningful relationships with both parents? But this bill does not. Instead, it fundamentally changes New York custody law by creating a legal presumption that shared parenting is in a child's best interests and shifting the burden of proof to the parent seeking sole custody. The bill sets forth: "The provisions of this act establish a presumption, affecting the burden of proof, that shared parenting is in the best interests of minor children." It further states: "The burden of proof that shared parenting would be detrimental to such child shall be upon the parent requesting sole custody." Finally, the legislation establishes an order of preference that places an award of shared parenting to both parents first, requiring the court to explain why it declined to order shared parenting whenever a different custodial arrangement is selected. Those provisions mark a dramatic departure from decades of New York law. The Presumption Is the Problem Supporters of the legislation argue that the bill merely encourages judges to consider shared parenting. Critics argue that is incorrect. New York judges already consider shared parenting every day. Current law does not prevent a court from awarding joint legal custody. It does not prevent equal parenting time. It does not prevent creative parenting schedules tailored to a particular child's needs. Indeed, judges frequently fashion parenting plans that maximize each parent's involvement when doing so serve the child's best interests. The existing law is not hostile to shared parenting if the parties agree. But it does not impose it on hostile parents who cannot even agree whether the sun or the moon is in the sky. The proposed legislation does just that. It forces combative litigants to suddenly become pillars of friendship and equanimity. Instead of asking,"What custodial arrangement is in this child's best interests?" the court is first instructed to begin with a predetermined answer and then determine whether someone has produced sufficient evidence to overcome it. That subtle shift has enormous consequences. The presumption becomes the starting point rather than the conclusion. The burden shifts. Litigation changes. Most importantly, the focus shifts away from the child as an individual and toward satisfying or rebutting a legislative assumption. That is precisely what New York's appellate courts have spent decades avoiding. The Legislature Cannot Know Every Family Family Court judges decide custody cases involving real children, not abstract notions. These children include those with autism, anxiety disorders, intensive medical needs, parents working overnight shifts, long-distance parents, communication issues requiring police, exposure to domestic violence, manipulation by one parent, or a need for both parents, and protection from one. No statute can anticipate those facts. No legislative committee can predict them. No presumption can account for them. The legislature has never met these children. The trial judge has. That distinction matters. Experience Cannot Be Legislated Custody trials are unlike virtually every other civil proceeding. Judges observe parents’ testimony. They evaluate credibility. They hear from forensic evaluators. They review school records, medical records, therapy records, Child Protective Services investigations, and police reports. They assess demeanor, consistency, judgment, insight, and empathy. These are countless intangibles that never appear in a transcript. Those observations cannot be reduced to a statutory formula. Nor should they be. The genius of New York's custody law has always been its flexibility. The law recognizes that children are individuals, not categories. The proposed legislation would replace that flexibility with a presumption crafted in Albany by legislators who will never meet the family appearing before the court. The Bill Solves a Problem That Does Not Exist There is nothing inherently wrong with encouraging parents to cooperate. Recognizing the importance of both parents in a child's life is not controversial. Those principles are already reflected in New York law. What is controversial is converting those aspirations into a legal presumption that shifts the burden of proof. Presumptions are appropriate when experience shows that one factual conclusion almost always follows from another. Custody cases are the opposite. Every experienced matrimonial attorney knows that no two custody cases are alike. The facts that matter in one family may be completely irrelevant in another. That is why New York has wisely resisted bright-line rules for decades. The legislature now proposes to create one. And that is where the proposal goes fundamentally wrong. Fifty Years of New York Law Reject Bright-Line Rules The most fundamental flaw in Senate Bill S4128 is not its endorsement of shared parenting. Rather, it is its departure from a principle that has guided New York custody law for generations. There are no categorical presumptions in custody cases because every child deserves an individualized determination based on his or her own circumstances. For more than 50 years, New York has adhered to a fundamental principle in child custody cases: there is no one-size-fits-all answer. Domestic Relations Law § 240(1)(a) directs courts to determine custody "in accordance with the best interests of the child," a standard the Court of Appeals has consistently interpreted as requiring an individualized determination based on the totality of the circumstances. N.Y. Dom. Rel. Law § 240(1)(a); Friederwitzer v. Friederwitzer, 55 N.Y.2d 89, 94–95 (1982); Eschbach v. Eschbach, 56 N.Y.2d 167, 171–74 (1982). Long before phrases such as "shared parenting" and "equal parenting time" entered the public conversation, the New York Court of Appeals recognized that custody disputes cannot be resolved by formulas. They require careful judicial evaluation of the child's particular needs before the court. This individualized approach was articulated decades ago in Lincoln v. Lincoln, where the Court of Appeals recognized that custody litigation differs fundamentally from ordinary civil litigation because the court's paramount obligation is to protect the child's welfare. To fulfill that obligation, the Court authorized trial judges to conduct in camera interviews of children, when appropriate, underscoring that custody determinations require a careful examination of each child's unique circumstances. Lincoln v. Lincoln, 24 N.Y.2d 270, 272–73 (1969). That philosophy permeates nearly every significant custody decision issued by New York's highest court. In Braiman v. Braiman, the Court of Appeals rejected the notion that joint custody should be the norm, noting that it is generally inappropriate when parents are embattled and unable to cooperate. The Court explained that joint custody is reserved for the relatively rare situations in which parents have demonstrated an ability to set aside their personal differences and work together to raise their children. Braiman v. Braiman, 44 N.Y.2d 584, 589–90 (1978). The lesson from Braiman remains as relevant today as it was nearly 50 years ago: joint custody is appropriate only when it serves a particular child's needs, not because the law presumes it should. The Court later reaffirmed that joint custody is appropriate only when the parents possess sufficient cooperation and mutual respect to make shared decision-making workable. Louise E.S. v. W. Stephen S., 64 N.Y.2d 946, 947 (1985). Four years later, in Friederwitzer v. Friederwitzer, the Court reaffirmed that custody determinations must rest on "the best interests of the child" after considering all relevant facts and circumstances. Rejecting mechanical approaches, the Court emphasized that custody decisions require careful weighing of the evidence in each case. Friederwitzer, 55 N.Y.2d at 94–95. The Court explained that no single factor governs the custody determination and that trial courts must evaluate all relevant circumstances bearing on the child's welfare. Id. That same year, the Court decided Eschbach v. Eschbach, perhaps the most frequently cited custody decision in New York. There, the Court articulated what has become the cornerstone of New York custody jurisprudence: courts must consider the totality of the circumstances, including the quality of each parent's home environment, parental guidance, relative fitness, the child's emotional and intellectual development, the stability of existing arrangements, and any other factor bearing on the child's welfare. Significantly, the Court declined to elevate any single factor above the others, instead entrusting trial judges with broad discretion to determine which arrangement serves the child's best interests. Eschbach, 56 N.Y.2d at 171–74. Among the factors identified by the Court are the quality of each home environment, each parent's past performance and relative fitness, the child's emotional and intellectual development, the stability of the existing custodial arrangements, and each parent's willingness to foster the child's relationship with the other parent. Id. The significance of Eschbach cannot be overstated. It rejected formulaic decision-making and rigid hierarchies. Most importantly, it reaffirmed that custody determinations cannot be reduced to a single presumed outcome. That philosophy perhaps reached its clearest expression in Tropea v. Tropea, the Court's landmark relocation decision. Prior to Tropea, New York courts frequently applied rigid rules governing relocation requests. The Court of Appeals expressly abandoned those rules, holding that no single factor should be treated as dispositive and that courts must instead evaluate all relevant facts to determine the child's best interests. Tropea v. Tropea, 87 N.Y.2d 727, 739–41 (1996). Likewise, in Nehra v. Uhlar, the Court recognized that although prior custody agreements and existing custodial arrangements are important considerations, they cannot override the court's independent obligation to determine the child's best interests. Nehra v. Uhlar, 43 N.Y.2d 242, 251 (1977). Although Tropea involved relocation rather than shared parenting, its reasoning is directly applicable here. The Court rejected bright-line rules because they inevitably fail to account for the extraordinary variety of family circumstances in custody litigation. The irony is striking. While the legislature proposes creating a statutory presumption favoring one custodial arrangement, the Court of Appeals has spent decades rejecting rigid rules that interfere with individualized decision-making. A Presumption Is Not Merely a Preference Supporters of Senate Bill S4128 often argue that the legislation encourages meaningful involvement from both parents. If that were all the bill accomplished, there would be little controversy. New York law has long recognized the importance of preserving children's relationships with both parents whenever consistent with their welfare. See Eschbach, 56 N.Y.2d at 171–74. The bill, however, does considerably more. It expressly provides: "The provisions of this act establish a presumption, affecting the burden of proof, that shared parenting is in the best interests of minor children." It further provides: "The burden of proof that shared parenting would be detrimental to the child shall be on the parent requesting sole custody." S. 4128, 2025–2026 Leg., Reg. Sess. (N.Y. 2025). That language is critical. A judicial preference guides discretion. A statutory presumption that shifts the burden of proof, changes the legal framework itself. Instead of beginning with two parents standing on equal legal footing while the court determines what arrangement serves the child's best interests, the legislation instructs courts to begin with a preferred outcome that must be overcome through litigation. That marks a fundamental change in New York custody law. The Reality of Custody Litigation The legislature's proposal also reflects a misunderstanding of how custody cases usually unfold. Few custody disputes involve two equally capable parents who disagree only about the allocation of parenting time. Family Court judges routinely handle cases involving domestic violence, coercive control, untreated mental illness, substance abuse, parental alienation, developmental disabilities, educational disputes, and children with extraordinary medical or psychological needs. Some parents communicate effectively despite the end of their marriage. Others cannot exchange a child without police intervention. Still others demonstrate extraordinary cooperation under extraordinarily difficult circumstances. The point is not that shared parenting is inappropriate. Often, it is precisely the right solution. The point is that no legislature can know which family falls into which category before the evidence is presented. That is why judges conduct hearings. That is why forensic evaluations are ordered. That is why attorneys for the child participate. Furthermore, that is why appellate courts repeatedly emphasize that custody determinations depend on the totality of the circumstances, that no single factor is dispositive, and that considerable deference is afforded to the Family Court's credibility determinations because it has the unique opportunity to observe the witnesses firsthand. Eschbach, 56 N.Y.2d at 171–74; Friederwitzer, 55 N.Y.2d at 94–95; Louise E.S., 64 N.Y.2d at 947. Judicial Discretion Protects Children The genius of New York custody jurisprudence has never been that it favors mothers over fathers — or fathers over mothers. It favors neither. It favors children. By refusing to adopt categorical rules, New York has preserved what matters most: the ability of trial judges to listen to witnesses, evaluate credibility, assess expert testimony, and fashion parenting arrangements tailored to the unique needs of each child. That discretion is not a weakness in our law. It is its greatest strength. The legislature undoubtedly seeks to encourage meaningful parental involvement, an objective few would dispute. But good intentions cannot justify replacing individualized justice with statutory presumptions. The best interests of children are too important to be decided by legislative formula. The question should never be whether the legislature prefers shared parenting. The question should remain the one New York courts have asked for generations: What arrangement is in the best interests of this child? Until someone can demonstrate that New York's courts have failed to answer that question faithfully, and there is no empirical evidence establishing such systemic failure, the legislature should resist replacing decades of thoughtful jurisprudence with a presumption that assumes the answer before the first witness is sworn. The legislature cannot legislate wisdom into custody cases. It cannot legislate parental cooperation. And it cannot legislate what is best for children it has never met. That responsibility properly belongs where New York law has always placed it: with the judges who hear the evidence, evaluate the facts, and decide each case, child by child.
August 25, 2026
Tax
A Missed Tax Court Deadline Is No Longer an Automatic Jurisdictional Death Sentence in the Eighth Circuit
For decades, taxpayers who missed the 90-day deadline to file a Tax Court deficiency petition were often told the same thing: Too late. Case dismissed. The Tax Court has no power to hear you. That answer just changed in the Eighth Circuit. On August 11, 2026, the Eighth Circuit issued a published opinion in Maniktala v. Commissioner, reversing the Tax Court and holding that the 90-day deadline under Internal Revenue Code section 6213(a) is not jurisdictional and may be subject to equitable tolling. I had the privilege of briefing and arguing this appeal on behalf of the taxpayers, making this decision both professionally meaningful and practically important for taxpayers in the Eighth Circuit. The Eighth’s decision may sound procedural. It is. But procedure is often where taxpayer rights either survive or disappear. Why This Matters A notice of deficiency is the IRS’s formal determination that a taxpayer owes additional tax. For most taxpayers, once that notice is mailed, section 6213(a) gives them 90 days to file a petition in the United States Tax Court. Tax Court matters because it allows taxpayers to challenge the IRS before paying the disputed tax. That prepayment forum is often the difference between a taxpayer being able to challenge the IRS at all and being priced out of the fight. Without Tax Court access, a taxpayer may be forced to pay the disputed liability first, pursue an administrative refund claim, and then sue for a refund in federal court if the IRS denies the claim. For many taxpayers, that is not a realistic alternative. The amount at issue may be too large. The process may be too expensive. The taxpayer may never get a meaningful chance to be heard. So, when the Tax Court treats the 90-day deadline as jurisdictional, the consequence is severe. If the petition is late, even by circumstances outside the taxpayer’s control, the court says it has no power to do anything about it. No equitable tolling. No consideration of fairness. No hearing whether the taxpayer acted diligently. Just dismissal. Maniktala changes that rule in the Eighth Circuit. What the Eighth Circuit Held The Eighth Circuit held that section 6213(a)’s 90-day filing deadline is a claims processing rule, not a jurisdictional bar. And this is the important distinction. A jurisdictional rule limits the court’s power. If a deadline is jurisdictional, courts generally cannot forgive a late filing, even for compelling reasons. A claims-processing rule, by contrast, still matters. Deadlines still matter. Taxpayers still need to file on time whenever possible. But a claims-processing deadline may be subject to equitable tolling in appropriate circumstances. In plain English, the court agreed with our position: a late petition does not automatically mean the courthouse doors are locked forever. The Eighth Circuit also held that the deadline is subject to equitable tolling. That does not mean every late petitioner wins. It means taxpayers may have the opportunity to show that they pursued their rights diligently and that extraordinary circumstances prevented timely filing. It is not a free pass to miss the deadline, and it shouldn’t be. But it is a chance to be heard. And in tax procedure, that chance can make all the difference. The Facts Make the Point The Maniktalas filed joint returns claiming research and development credits based on activities of an S corporation. The IRS later issued a notice of deficiency to the shareholders. The notice was mailed on December 20, 2023, and listed March 19, 2024, as the last day to file a Tax Court petition. Our clients, however, did not receive the notice until July 9, 2024. A Tax Court petition was filed on July 19, 2024, after the 90-day period expired. The Tax Court dismissed the case for lack of jurisdiction. On appeal, the Eighth Circuit reversed and remanded so the Tax Court could determine whether equitable tolling is warranted. The Eighth Circuit did not hold that the taxpayers automatically receive tolling. It held that the Tax Court has authority to consider whether they do. That is the point. The Tax Court is no longer required to stop at “late.” It may now ask “why.” The Growing Circuit Split Maniktala is part of a much larger, unsettled national issue. The Eighth Circuit joined the Second, Third, and Sixth Circuits in holding that section 6213(a)’s deficiency petition deadline is not jurisdictional and is subject to equitable tolling. Other circuits have gone the other way or have not yet adopted that view. The Tax Court itself has continued to treat the deadline as jurisdictional in cases not appealable to circuits that have rejected that approach. That means taxpayer rights currently depend, in part, on geography. A taxpayer in one circuit may receive a chance to seek equitable tolling. A similarly situated taxpayer in another circuit may not. That is a hard result to justify when the issue is access to court. As of now, this issue remains active nationally, with circuit law continuing to develop. Unless and until Congress or the Supreme Court resolves the issue nationwide, taxpayers may continue to face different procedural rules depending on where their case is appealable. That is not how access to Tax Court should work. Congress Is Watching Too This is not just happening in the courts. Legislation currently before Congress reflects the same position taxpayers advanced in Maniktala: The Tax Court should have authority to apply equitable tolling in deficiency cases when the facts and circumstances warrant it. The Tax Court Improvement Act would expressly provide that the Tax Court has jurisdiction to toll the section 6213(a) filing period when equity warrants tolling. It would also address the harsh consequences that may follow when a late Tax Court petition is dismissed. That legislative development reflects a broader recognition that procedural deadlines should not become automatic traps that prevent taxpayers from ever challenging the IRS on the merits, particularly when the taxpayer acted diligently, and circumstances beyond the taxpayer’s control caused the late filing. Deadlines matter. But they should not become traps that eliminate judicial review when equity warrants a hearing. What Taxpayers Should Take Away The first takeaway is simple: do not miss the 90-day deadline if at all possible. If you receive a notice of deficiency, act immediately. The deadline is short. Interest may continue to run. Collection consequences may follow. And even in circuits that allow equitable tolling, tolling is not automatic. The second takeaway is just as important: if the deadline has already been missed, the analysis may not be over. Taxpayers should not assume that a late petition automatically ends the fight. Depending on where the case is appealable, and depending on the facts, equitable tolling may be available. The third takeaway is that notices matter. Mail issues matter. Timing matters. Documentation matters. If a taxpayer receives a notice late, never receives it, relies on incorrect information, faces serious circumstances preventing timely filing, or otherwise misses the deadline despite diligence, those facts should be preserved immediately. Equitable tolling is fact intensive. Taxpayers should keep records of everything they do when dealing with the IRS, including notices received, envelopes, mailing dates, calls, correspondence, representative communications, and efforts to act once they learn of a problem. The IRS makes mistakes. Mail gets delayed. Notices are missed. But the burden remains on the taxpayer to show that an extraordinary circumstance, and not simple inattention, caused the missed procedural deadline. The Bottom Line Maniktala gives taxpayers in the Eighth Circuit something they did not clearly have before: the opportunity to ask the Tax Court to consider equitable tolling in deficiency cases. That is not a technicality. It is access to court. And when the IRS says a taxpayer owes more money, access to court is often the difference between having rights on paper and having a real chance to use them.
August 20, 2026
Real Estate
Why Delaware Legal Opinions Matter – Part 5: A Practical Guide to Getting the Opinion to Closing
A Delaware legal opinion is rarely intended to drive the closing schedule, but when the workstream starts too late, it can become one of the last unresolved closing items. Usually, the issue is not the opinion itself; the issue is coordination. The opinion request comes in late. Organizational documents are incomplete. The opinion form does not match the transaction. The authorization documents were prepared without reference to the governing agreement. Or the transaction changes, but Delaware opinion counsel does not receive the revised documents. Most of these problems are preventable. After handling Delaware opinions in transactions of varying size and complexity, an efficient opinion workstream generally follows the same basic sequence. Here is a practical roadmap. Step 1: Identify the Delaware Entities and the Opinion Requirement Start with the basics: identify which Delaware entities are involved and define each entity's role in the transaction. Determine whether each entity is acting as a borrower, guarantor, pledgor, general partner, managing member, or another transaction party, and then identify exactly what opinion is required. A credit agreement or closing checklist may simply require an “opinion of Delaware counsel,” but that description does not necessarily tell you what Delaware counsel is expected to cover. Obtain the proposed opinion form — or at least the requested opinion provisions — as early as possible. For transaction counsel, the practical question is not whether Delaware counsel can deliver the opinion, but whether the right materials reach the right people early enough. Step 2: Build the Organizational Document Package For each Delaware entity, assemble the complete organizational record. Depending on the type of entity, the package will typically include: the certificate of formation or incorporation and any amendments the current LLC agreement, partnership agreement, bylaws, or other governing agreement relevant amendments, joinders, assignments, or other modifications certificates of good standing or similar certificates existing resolutions, consents, or other authorization documents relevant to the transaction Do not assume that the certificate filed with the Delaware Secretary of State tells the entire story. For Delaware alternative entities in particular, the governing agreement matters. Delaware law provides significant contractual flexibility. An LLC agreement, for example, may establish approval requirements, manager authority, voting thresholds, restrictions, or other conditions that affect whether the entity can properly authorize a transaction. This organizational package becomes the foundation for the later authorization analysis, so the governing documents should be reviewed before the authorization documents are finalized, not after. Step 3: Provide the Transaction Documents Next, identify the documents the Delaware entity will actually execute. Depending on the transaction, these might include a credit agreement, guaranty, pledge agreement, security agreement, mortgage, purchase agreement, merger agreement, or other operative documents. These documents do not necessarily need to be in final execution form when opinion review begins. They should, however, be sufficiently developed to allow counsel to understand the transaction and determine what the Delaware entity is being asked to do. This distinction matters: waiting for absolute final documents can unnecessarily delay the opinion process, while starting from documents that are changing materially every day can create a different problem. The practical goal is to begin with documents that are substantially settled and then keep opinion counsel informed of material changes as the transaction moves toward closing. Step 4: Determine Who Is Covering What This is one of the most important steps. Not every legal issue involving a Delaware entity is necessarily a Delaware opinion issue. A transaction may involve Delaware entity law, New York contract law, the law of the jurisdiction where real property is located, Article 9 of the Uniform Commercial Code, federal law, or the laws of several other jurisdictions. Different counsel may therefore be responsible for different portions of the overall opinion package. The parties should determine early which opinions are expected from Delaware counsel and which are being provided by primary transaction counsel, local counsel, UCC counsel, or other specialized counsel. Doing this early prevents a particularly frustrating closing-day discovery: everyone assumed someone else was covering the opinion. Step 5: Review the Requested Opinions Before the Closing Crunch Once the organizational documents and substantial final transaction documents are available, the requested opinion language can be analyzed. This is where assumptions, qualifications, limitations, and proposed revisions should be addressed. An opinion request should not be treated as boilerplate simply because it came from a form used in another transaction. The entity may be different, the governing documents may be different, the transaction structure may be different, and the governing law may be different. Most importantly, the opinion being requested may be different. A power opinion is not an authorization opinion; an authorization opinion is not an enforceability opinion; and an enforceability opinion is not a perfection or priority opinion. Precision matters. Resolving those distinctions before the closing date is considerably easier than negotiating them while everyone is waiting for funding. Step 6: Match the Authorization to the Governing Documents Once the transaction structure is sufficiently settled, the authorization documents should be checked against the entity's governing documents. Who has authority to approve the transaction: members, managers, the board, or another person or entity with consent rights? Does the governing agreement impose a particular voting threshold, and if the entity acts through another entity, has the authority chain been followed all the way through? The goal is simple: the transaction documents, governing documents, authorization documents, and signature blocks should tell the same story. When they do not, that is when seemingly small issues can become closing problems. Step 7: Keep Delaware Counsel Informed of Material Changes Transactions change, and that is normal. Not every revised draft needs to restart the opinion analysis, but changes affecting the Delaware entity, its obligations, the parties, the transaction structure, or the documents being executed should be communicated promptly. A seemingly small change to the deal terms may affect an opinion conclusion. The safest approach is not to guess whether a change matters, but to identify the change and allow counsel responsible for the opinion to determine whether it affects the analysis. Step 8: Finish the Opinion Before Everyone Is Waiting for It By the time the transaction reaches closing, the substantive opinion work should ideally be complete. The remaining items should primarily involve confirming final documents, completing appropriate bring-down diligence, such as confirming good standing and checking for final changes to governing or transaction documents, confirming execution and authorization, and issuing the opinion. That is the objective: the closing table is not the place to discover an unusual provision in an LLC agreement, negotiate the scope of an opinion, or determine who had authority to approve the transaction. Those issues should already have been resolved. The Practical Takeaway The Delaware opinion process does not need to be complicated. In most transactions, the formula is straightforward: Identify the entities Obtain the opinion form Assemble the organizational documents Provide the transaction documents Allocate opinion coverage Confirm authorization Resolve comments Communicate material changes Close None of those steps are particularly remarkable; what matters is the order in which they happen. A Delaware legal opinion is a relatively small closing deliverable, but it sits at the intersection of the entity's governing documents, Delaware law, the transaction documents, and the closing requirements. That is what makes preparation important. The best opinion process is the one nobody remembers after closing, because the issues were identified early, the documents matched, and the opinion was ready when needed.
August 19, 2026
Labor and Employment
When Safety and Disability Rights Collide: Navigating the ADA in the Workplace
Employers in the construction and manufacturing sectors occasionally confront complex workplace issues involving employees with disabilities, often related to prior injuries, where those conditions may pose safety risks to the employees themselves or to their co-workers. Such situations often involve employees who have valuable skills and experience, but who pose safety risks if they are assigned the full spectrum of tasks under their job description. These employees are protected by rights under the Americans with Disabilities Act (ADA), but their employer has an obligation to prevent them and co-workers from being exposed to known risks of serious physical harm. This balance is not easy to navigate. For HR professionals and in-house counsel, understanding where the ADA draws its lines, and where employers most often cross them, is essential to managing safety-related situations without inviting a discrimination claim. The Direct Threat Standard: The Only Real Safety Exception The ADA doesn't allow employers to exclude an employee from a position, or take adverse action, simply because the employee has a disability that could create risk. The statute carves out a narrow exception: an employer may act if the employee poses a direct threat, which is defined as a significant risk of substantial harm to the health or safety of the employee or others that cannot be eliminated or reduced through reasonable accommodation. That standard has teeth, and each word matters: Significant risk, not a slightly elevated or speculative one Substantial harm, not minor or theoretical injury Assessed through an individualized evaluation, not generalized assumptions about a diagnosis or condition Based on the most current medical knowledge and/or objective evidence, not outdated stereotypes or a manager's gut instinct Considered only after evaluating whether reasonable accommodation would neutralize the risk The EEOC has been consistent for decades: an employer cannot rely on generalizations about a disability, an employee's diagnosis in isolation, or a “better safe than sorry” instinct. The threat has to be real, current, and specific to the individual in the specific job. The Four-Factor Direct Threat Analysis When evaluating whether a genuine direct threat exists, courts and the EEOC look at: Duration of the risk. Is this a temporary condition or an ongoing one? Nature and severity of the potential harm. How serious could the injury be? Likelihood the harm will occur. Is this a real probability or a remote possibility? Imminence of the harm. How soon could the harm materialize? Employers frequently stumble by skipping bullet point one and going straight to bullet point two, imagining worst-case harm, without seriously grappling with likelihood and imminence. A theoretical catastrophic outcome with a low probability of occurring generally will not satisfy the standard. Essential Functions Come First Before any safety analysis, the more fundamental question is whether the employee can perform the essential functions of the position, with or without reasonable accommodation. Safety concerns are frequently really essential function concerns in disguise — an employer worried about a “safety issue” is often actually worried about whether the person can physically or mentally execute a core job duty. This distinction matters procedurally. Essential function analysis and direct threat analysis are related but separate inquiries, and conflating them tends to produce sloppy, defensible-sounding decisions that don't hold up. A written, thorough, and updated job description identifying essential functions, developed before a dispute arises, is one of the most valuable tools an employer can have in either analysis. Objective Evidence, Not Instinct A recurring theme across ADA safety litigation is the demand for objective evidence over subjective judgment. Employers who prevail tend to point to: Documented, specific incidents (falls, near-misses, errors with safety implications) Credible medical opinions tied to the actual essential functions of the job Observable, recent performance or behavioral indicators, not stale history or rumor Employers who lose tend to rely on assumptions: the belief that a particular diagnosis inherently makes someone unsafe, or that a visible mobility aid, medication, or past medical leave signals risk. The ADA's core anti-stereotyping purpose is aimed precisely at that kind of reasoning. Reasonable Accommodation Still Comes First Even where a legitimate safety concern exists, the ADA requires employers to consider whether reasonable accommodation would eliminate or sufficiently reduce the risk before taking adverse action. This might include modified duties, additional safety equipment, adjusted schedules, or reassignment. Only if no accommodation reduces the risk to an acceptable level, and the employer can show that the accommodation would pose undue hardship, does exclusion become legally supportable. Skipping this step, even with good intentions, is one of the most common and costly mistakes employers make. Fitness-for-Duty Exams: A Common Flashpoint Safety concerns often lead employers toward fitness-for-duty (FFD) exams, which are permissible under the ADA only when job-related and consistent with business necessity — generally requiring objective evidence that a medical condition may impair job performance or create a safety risk. A single ambiguous incident, a known diagnosis standing alone, or generalized concern typically won't clear that bar. The request also has to be narrowly scoped to what's needed to assess ability to safely perform the job, not a broad inquiry into unrelated medical history. The Bottom Line The ADA doesn't ask employers to ignore safety. It requires them to prove it, with facts, with process, and with an honest accounting of whether accommodations could have solved the problem. Employers who build that discipline into their practices protect their workforce and substantially reduce their legal exposure at the same time.
August 19, 2026
Commercial Litigation
AI, Data Breaches, and an Old Lesson from the Law of Bailment
OpenAI recently disclosed that, during testing of one of its frontier artificial intelligence models, AI agents working to solve assigned tasks found ways to access the internet and ultimately infiltrate the systems of another AI company, Hugging Face. They did so through pathways OpenAI's developers never intended them to reach. The incident quickly dominated technology and cybersecurity headlines. It also prompted OpenAI to send two of its security engineers to Black Hat USA 2026, one of the cybersecurity industry's premier conferences, to discuss what occurred.1 Although the Black Hat presentation included highly technical explanations of the exploits, there were two noteworthy statements that stood out from a legal perspective. First, one OpenAI engineer explained that agents who became stuck on their assigned tasks "thought to try to get internet access in ways we didn't intend." Second, the presenters repeatedly emphasized that the incident was not the result of malicious human actors. It was an unintended consequence of testing frontier AI systems whose behavior ultimately extended beyond what their developers anticipated.2 Some observers view the incident as another example of the broader concerns surrounding AI autonomy and alignment. Others see it as evidence that cutting-edge AI systems require greater oversight, testing safeguards, and deployment controls. Regardless of where one falls in that debate, the incident highlights a challenge general counsel cannot afford to ignore. Organizations increasingly face risks not only from malicious actors, but also from highly capable systems pursuing legitimate objectives through unexpected means. The legal implications of that reality, however, may be far less revolutionary than many assume. The Technology Has Changed. The Legal Question Has Not. In Krupa v. TIC International Corp., a federal court recently summarized the relationship between businesses and customer data in simple terms: "Consumers entrust their data to firms with the expectation that those firms take reasonable care against data breaches."3 Long before courts dealt with ransomware, credential theft, or AI-enabled cyberattacks, they addressed a more basic question. What duty does someone owe when entrusted with another person's property? The law answered that question through the doctrine of bailment. A custodian was not an insurer against every loss. But the custodian was expected to exercise reasonable care over property entrusted to it. More than a century ago, in Claflin v. Meyer, a New York court explained that a warehouse owner was not automatically liable simply because thieves successfully stole property entrusted to his care. Liability turned on whether the warehouse failed to exercise the degree of care that a prudent person would use to protect his own property under similar circumstances.4 That same principle continues to echo through modern data-breach litigation. Courts may label the theory differently depending on the jurisdiction. One court may analyze negligence. Another may discuss bailment. A third may focus on some other duty. Yet the practical question remains remarkably consistent throughout. Did the company take reasonable steps to protect information entrusted to its care? Today's businesses may not store their customers’ data in warehouses, but they are the keepers of a vast array of valuable digital data. Banks maintain clients’ financial information. Law firms possess confidential communications. Healthcare providers store patient records. Virtually every organization now serves as a custodian of information entrusted to it by someone else. In the nineteenth century, courts looked at locks, guards, and warehouse security. Today they examine the overall cybersecurity posture of an organization. The specific safeguards may be different, but the inquiry is very similar. The tools have changed. The standard has not. Why the OpenAI Incident Matters The significance of the OpenAI-Hugging Face incident is not that it suddenly created a new legal duty. It may, however, influence what decision-makers come to expect from organizations entrusted with sensitive information. During the Black Hat presentation, OpenAI's engineers acknowledged a concern increasingly shared across the cybersecurity industry. Offensive AI capabilities may be advancing faster than defensive ones. For general counsel, that does not mean every company must immediately deploy cutting-edge AI security tools or spend unlimited resources on cybersecurity. Courts have never required perfection, and they are unlikely to start now. But reasonable care is not a static concept. As threats evolve, expectations evolve. A security posture that appeared reasonable five years ago may not appear reasonable five years from now. What General Counsel Should Be Asking The lesson from the OpenAI incident is not that every company needs to keep up with all the goings-on of every cutting-edge AI company. The lesson is that cybersecurity can no longer be treated as an issue that belongs exclusively to IT. General counsel do not need to know how to configure firewalls or administer cloud environments. They should, however, be able to explain why the organization chose the safeguards it did and why those safeguards were reasonable under the circumstances. In advising a client after reviewing the OpenAI incident, it would be important to determine whether management could confidently answer a handful of basic questions: What sensitive information does the company hold? Where is that information stored, and who has access to it? What cybersecurity standards or frameworks guide the company's program? How often does the company assess new risks or known vulnerabilities? Which vendors store or process sensitive information for the company? How does the company monitor emerging AI-related cybersecurity threats? When did the company last conduct a tabletop exercise or incident-response drill? If a breach occurred tomorrow, what evidence would show that the company acted reasonably? The goal is not merely to have answers. The goal is to document the process. If a breach ultimately occurs, a company is far better positioned when it can point to documented, pre-breach evaluations of its cybersecurity risks and safeguards. That evidence tells a compelling story. It shows that management recognized the risks, discussed potential safeguards, consulted the appropriate professionals, and made informed decisions before anything went wrong. A judge or jury is generally more likely to view that conduct as reasonable than a company attempting to reconstruct and justify its decisions only after a breach has occurred. The Legal Standard Has Not Changed The emergence of increasingly capable AI systems has generated plenty of headlines and speculation. Some of that concern may prove justified. Some may prove overstated. From a legal perspective, however, the underlying principle remains remarkably familiar. No company is expected to create an impenetrable system. No company is expected to anticipate every threat. What courts have historically required is reasonable care. AI may have altered the speed, scale, and sophistication of cyberattacks. Yet the fundamental question that follows a breach remains much the same as it was when courts evaluated warehouse burglaries more than a century ago. Did the company act reasonably to protect what was entrusted to its care? The warehouses have changed. They are now digital. The duty of reasonable care, however, remains the same. 1 Michael Dalton & Eric Wallace, The "Breaking" News: The OpenAI-Hugging Face Incident: A Technical Reconstruction and Its Implications for AI, Black Hat USA 2026, YouTube (Aug. 2026), https://www.youtube.com/watch?v=87DyyMV0kCY. 2 Id. 3 Krupa v. TIC Int'l Corp., No. 1:22-cv-01951-JRS-MG, 2023 WL 143140, at *2 (S.D. Ind. Jan. 10, 2023). 4 Claflin v. Meyer, 75 N.Y. 260, 264-65 (1878). See also In re Target Corp. Customer Data Sec. Breach Litig., 66 F. Supp. 3d 1154, 1175-77 (D. Minn. 2014) (allowing data-breach claims to proceed past the pleading stage).
August 17, 2026
Labor and Employment
When Does the Commute Count? What Two New DOL Opinion Letters Mean for Flexible Schedules
Employers have been asking a version of the same question for years: If we let employees split their day between home and the office, or let a field employee handle calls before getting in the car, are we suddenly on the hook to pay for the drive? On August 6, 2026, the Department of Labor's Wage and Hour Division answered that question twice, in two opinion letters (FLSA2026-9 and FLSA2026-10) that reach opposite conclusions on similar facts. Read together, they give employers a genuinely useful roadmap for structuring flexible and hybrid schedules without accidentally converting an employee's commute into paid working time under the Fair Labor Standards Act. The Employee's Choice: Mid-Day Commuting Stays Unpaid The first letter deals with a familiar hybrid-work scenario. Employees want to work part of the day from home and part from the office, timing their drive to dodge rush hour rather than sitting in traffic during the worst of it. The employer worried that under the FLSA's continuous workday doctrine, once an employee clocks in for the day, any travel before clocking out again becomes compensable, even if it is really just a commute that happens to fall in the middle of the day rather than at the beginning or end. WHD said no. When the employee decides when to travel and that decision is driven by personal preference rather than any work demand, the trip remains what it has always been: an ordinary commute. It does not matter that it happens mid-shift. The agency went further and effectively created a third bucket of non-compensable time that exists alongside off-duty periods and bona fide meal breaks: voluntary, employee-driven travel that falls inside the continuous workday but outside the definition of "hours worked." This is a meaningful win for employers trying to offer real flexibility. It confirms that letting people avoid gridlock, or duck out mid-afternoon to handle something at home before logging back in later, does not by itself create new wage exposure. The Employer's Control: Travel Bookended by Required Work Gets Paid The second letter tells a different story, and the contrast is the point. Here, a field service engineer with no fixed office spends up to an hour most mornings on the phone, fielding pages, and scheduling appointments with clients and colleagues, before ever leaving the house in a company vehicle to reach the first job. WHD found that the scheduling calls themselves are compensable because they are integral to the engineer's actual job of installing and servicing equipment. More importantly for scheduling purposes, the drive that follows is compensable too, because the employer requires substantial work immediately before and immediately after the travel, and because the employer, not the employee, controls when and how that travel occurs. Notably, WHD drew a line even within this letter. Simply receiving pages during the drive was treated as incidental to using an employer-provided vehicle and did not, by itself, trigger compensability. The dividing line the agency keeps returning to is not the mere presence of a phone or a laptop during the commute; it is whether the employer is dictating the timing of the trip and sandwiching it between required work. Reading the Two Letters Side by Side Both opinion letters apply the same "primary beneficiary" framework that has guided FLSA travel-time analysis for decades, and both reach different results because of who is actually calling the shots. Where the employee sets the schedule, and the travel serves the employee's own convenience, the trip stays an ordinary, unpaid commute even if it happens smack in the middle of a workday. Where the employer sets the schedule and requires real work on both ends of the drive, the travel loses its status as an ordinary commute and becomes paid time. What This Means for Employers Right Now For employers running hybrid schedules, offering flexible start and end times, or managing a field-based workforce, these letters offer something rarer than most agency guidance: a clear, factor-based test that can actually be built into policy. The safest ground is genuine employee choice over the timing of travel, paired with no requirement to perform work immediately before or after the drive. The moment an employer starts dictating when someone has to leave, or requiring calls, paperwork, or scheduling tasks right up against the commute, the analysis shifts and the travel time risk goes up. It is worth remembering that opinion letters are not binding law, but they do carry real practical weight. An employer who structures a policy consistent with an opinion letter and later faces a Fair Labor Standards Act claim on the same facts has a strong argument against a finding of willfulness, which can matter enormously for liquidated damages and the statute of limitations. It is also worth remembering that these letters interpret federal law only. A number of states impose stricter rules on what counts as compensable travel time, so any policy built around this guidance still needs to be checked against state law before it is rolled out. Employers revisiting hybrid work policies, flexible scheduling, or field employee protocols in light of this guidance should take a close look at who actually controls the timing of the commute and what, if anything, employees are required to do immediately before or after they get in the car.
August 14, 2026
Commercial Litigation
Data Center Developers Take Note: Virginia Court Allows Nuisance Suit Against Amazon to Proceed
Virginia's booming data center industry received an important legal reminder this summer. In Newsom v. Amazon Data Services, Inc., a federal court in Virginia allowed a neighboring property owner's nuisance lawsuit against Amazon to move forward, overruling, in part, Amazon's motion to dismiss. Newsom v. Amazon Data Services, Inc., W.D. Va. No. 3:25-CV-00074, 2026 WL 1993954, at *1 (W.D. Va. July 10, 2026). The landowner and business tenant plaintiffs alleged that construction of Amazon's Louisa County data center created excessive noise, bright lights, dust, flooding, water-quality issues, vibrations, structural cracking to the plaintiffs’ property, and disruptions to the plaintiffs’ business. The court found the plaintiffs’ allegations sufficient to withstand a motion to dismiss. The case will now proceed, and discovery can begin. Why This Matters The decision is significant because it reinforces a growing trend of opposition and resistance to data center developments. Even if a project is properly permitted, it can still face nuisance claims from neighboring property owners or occupants. Virginia courts have long recognized that lawful development activities can become actionable if they unreasonably interfere with a neighbor's use and enjoyment of property. Bowers v. Westvaco Corp., 244 Va. 139, 147, 419 S.E.2d 661, 667 (1992). Just as importantly, the court refused to analyze each complaint in isolation. Instead, it looked at the alleged impacts collectively, considering the combined effects of noise, dust, lights, vibrations, flooding, and other conditions on the neighboring property. For data center developers, that approach creates risk. A complaint that might appear manageable when viewed issue-by-issue can look much different when all alleged impacts are bundled together into a single nuisance claim. A Growing Challenge for Large-Scale Projects The ruling comes as data center development continues to expand beyond Northern Virginia into communities such as Louisa County and elsewhere across the country. These projects often involve years of construction activity, extensive grading, heavy truck traffic, large-scale utility work, and around-the-clock operations. As a result, developers should expect increased scrutiny from nearby residents and businesses, particularly when projects are located near existing homes or commercial properties. Key Takeaways for Developers Developers should view this decision as a reminder to focus not only on regulatory and permitting compliance but also on neighboring-property impacts. Some practical lessons include: Document noise, dust-control, and stormwater-management efforts Investigate complaints from neighboring property owners and occupants promptly Engage with neighboring property owners early in the development process Recognize that tenants and occupants, not just property owners, may have standing to bring nuisance claims in certain circumstances Bottom Line Newsom is only an initial procedural ruling, not a determination that Amazon is liable. But it sends a clear signal that Virginia courts are willing to entertain nuisance claims arising from large-scale data center construction when neighbors plausibly allege substantial interference with their property rights. For developers, owners, and contractors, the case is a reminder that successful projects require more than permits and approvals. Managing the impact on neighboring properties may be just as important as managing the project itself.
August 13, 2026
Family Law
High-Risk Protection Reform: Rethinking Orders of Protection in High-Risk Domestic Violence Cases
Every day, judges in New York issue Temporary Orders of Protection to help prevent domestic violence. These orders play a crucial role. They can remove an abuser from the home, prohibit contact, require surrender of firearms when permitted, and give law enforcement clear authority to act if the order is violated. Just as paper cannot refuse ink, the order itself cannot stop physical violence. The order can ban violent acts and punish violations, but it cannot physically stop someone determined to cause harm. This is not meant as a criticism of courts or judges. It simply shows that orders of protection should be the first step in keeping victims safe, not the last. Unfortunately, that is often the case. The order is issued, but the abuse continues – because it cannot be stopped without putting the offender in jail. And on many occasions, the offender does more than just continue the abuse. Most domestic violence homicides come with warning signs. These can include increasing control, stalking, threats to kill, strangulation, access to guns, prior assaults, and violations of court orders. The period immediately after separation or a court action is especially dangerous, as abusers may feel they are losing control. The main question, therefore, is not whether New York should continue issuing orders of protection — they are clearly needed. The real issue is whether a Temporary Order of Protection in high-risk cases should automatically trigger additional protective measures. This issue is not theoretical. In April of this year, Tomeka Kamwani, a 41-year-old New Jersey nurse and mother of four, reportedly obtained a temporary restraining order after her former fiancé followed her to a friend’s residence. According to her family, he repeatedly violated the order. Court records reported by NJ.com indicate that he was subsequently charged with burglary, terroristic threats, criminal mischief, and simple assault after allegedly breaking into her home and assaulting her. A request to detain him pending trial was denied. Weeks later, according to her family, he entered her home, shot her three times, and then killed himself while two of her children were present. See Matt Gray, N.J. Nurse Killed by Ex-Fiancé in Murder-Suicide Weeks After Getting Restraining Order, Family Says, NJ.com (Apr. 2, 2026), republished by Yahoo News; Shawnette Wilson, Vigil Held for Swedesboro Nurse and Mother of Four Killed in Suspected Domestic Violence, FOX 29 Philadelphia (Apr. 3, 2026). In another case in April of this year, Victoria Alexander, also a New Jersey nurse, was killed at her workplace in Egg Harbor Township. Prosecutors report that her estranged husband blocked her car, left suicide notes, pursued her into her workplace, shot her multiple times, and then took his own life. The Atlantic County Prosecutor described the incident as “a tragic and deliberate act of domestic violence.” See Stephen Sorace, New Jersey Nurse Gunned Down at Work by Estranged Husband in Murder-Suicide: Police, Fox News (Apr. 14, 2026); EHT Nurse Killed in “Tragic and Deliberate Act of Domestic Violence,”, BreakingAC (Apr. 14, 2026). Despite differences in location and procedure, both cases reveal a common failure: warning signs were evident before the fatal incidents. New York’s Strong but Reactive Framework New York law gives Family Court and Criminal Court substantial authority to protect victims of domestic violence. Article 8 of the Family Court Act authorizes orders of protection that may include stay-away directives, no-contact provisions, and other restrictions to prevent further abuse. Courts may consider prior abuse, threats, substance abuse, access to weapons, and related risk factors when determining appropriate conditions. See N.Y. Fam. Ct. Act § 842 (McKinney 2026). It is also important to distinguish a Temporary Order of Protection from a Temporary Restraining Order. A Temporary Restraining Order, or TRO, is generally a civil litigation tool used to preserve property, assets, contractual rights, or the status quo while a lawsuit is pending. In New York, TROs may arise in Supreme Court commercial or matrimonial matters, Surrogate’s Court estate disputes, federal intellectual-property or business cases, and certain civil matters involving property or contractual interference. By contrast, a Temporary Order of Protection, or TOP, is directed at personal safety and behavior. It is issued by courts with authority over family offenses, criminal charges, or matrimonial proceedings, most commonly Family Court, Criminal Court, and Supreme Court when connected to a divorce action. For the public, the difference is practical: a TRO may freeze a bank account, stop a sale, or preserve business rights, whereas a TOP is the court order meant to protect a person from abuse, threats, stalking, harassment, or violence. That distinction matters because the article’s focus is not ordinary civil restraint; it is whether personal-safety orders in high-risk domestic violence cases provide sufficient immediate protection beyond the paper order itself. New York has also strengthened firearm surrender provisions. Family Court Act § 842 -a requires an inquiry into firearm access when a temporary order is issued and authorizes the suspension, surrender, seizure, and related protections in specified circumstances. Criminal Procedure Law § 530.14 provides parallel firearm-surrender authority in criminal cases. See N.Y. Fam. Ct. Act § 842-a (McKinney 2026); N.Y. Crim. Proc. Law § 530.14 (McKinney 2026). These provisions are not symbolic; they recognize that domestic violence can become lethal quickly when threats, weapons, and separation converge. The case law underscores both the power and the limits of orders of protection. In People v. Wood, 95 N.Y.2d 509, 511–12, 742 N.E.2d 114, 115–16, 719 N.Y.S.2d 639, 640–41 (2000), the Court of Appeals described New York’s parallel civil and criminal protective-order statutes as designed to “stem the tide of domestic abuse between people locked in destructive relationships.” Id. at 516, 742 N.E.2d at 119, 719 N.Y.S.2d at 644. The decision arose in a double-jeopardy context, but its premise remains important: orders of protection constitute a broader public response to domestic abuse, not simply private paperwork between litigants. These laws matter and have saved lives. But they are not enough if the legal system treats issuing an order as the last step. A court order tells someone what not to do, but it does not track their actions, verify that guns are removed, coordinate agencies, assist with emergency moves, or ensure that safety plans continue. For many people, the risk of arrest is enough to stop them. But for the most dangerous offenders, this is not always true. Sometimes, the first time they violate the order is the last warning before a tragedy occurs. The Warning Signs Are Known Research shows that requesting an order of protection often indicates that the danger is higher, not that the order does not work. The warning signs are clear, but the main problem is the lack of an automatic, coordinated response when these signs appear. Those indicators include: Threats to kill the victim, children, others, or the offender himself Prior strangulation or attempted strangulation Access to firearms or other deadly weapons Stalking, surveillance, or obsessive jealousy Escalating violence, forced sexual conduct, or violence during pregnancy Recent or anticipated separation Repeated violations of prior orders of protection Statements suggesting the offender has “nothing left to lose” When several risk factors are present, the danger is real and predictable, not merely a possibility. These situations require more than a written warning. Lessons from Australia Australia offers useful models because several jurisdictions treat high-risk domestic violence as a continuing public-safety emergency, not merely a court case. Victoria’s Multi-Agency Risk Assessment and Management Framework (MARAM) provides a shared structure for identifying, assessing, and managing family violence risk across agencies. It emphasizes coordinated safety planning, information sharing, and keeping perpetrators “in view” rather than placing the burden of safety solely on victims. See State Gov’t of Victoria, Family Violence Multi-Agency Risk Assessment and Management Framework (updated July 27, 2023). New South Wales offers another example through Safer Pathway. Its Domestic Violence Safety Assessment Tool evaluates threats to victim-survivors’ life, health, and safety. Cases deemed to pose a serious threat may be referred to Safety Action Meetings, where police and government and non-government service providers share relevant information and develop coordinated steps to reduce risk. See N.S.W. Dep’t of Communities & Justice, General Information About Safer Pathway (Oct. 6, 2023); N.S.W. Dep’t of Communities & Justice, Domestic Violence Safety Assessment Tool (Apr. 29, 2026). No system can promise complete safety, but these approaches are based on the right idea: high-risk cases need a team response that goes beyond just giving an order. A New York High-Risk Protection Protocol New York should improve its system by establishing a statewide High-Risk Domestic Violence Protection Protocol. This protocol should not depend on the decisions of individual courts, prosecutors, police, or service providers. Instead, it should activate automatically when a Temporary Order of Protection is issued and there are clear signs of serious danger. At minimum, the protocol should include: Mandatory lethality assessment at the time emergency relief is considered, including the victim’s perception of danger Automatic referral of serious-threat cases to a multidisciplinary high-risk team Immediate firearm verification, including confirmation of surrender and access to unregistered weapons, ammunition, and third-party firearms Emergency practical protection, including relocation, secure communications, transportation, workplace and school safety planning, and technology-stalking assessment Continuing judicial review to confirm service, firearm compliance, violations, changes in risk, and implementation of the protection plan Carefully limited information sharing with confidentiality, due process, privilege, medical privacy, and record-security safeguards in place The aim is not to take away judicial discretion or weaken due process. People must still receive notice, a meaningful opportunity to be heard, decisions tailored to their situation, fair conditions, set time limits, and regular reviews. But due process does not mean courts and agencies should ignore real evidence of deadly risk. The Required Shift: From Paper Protection to Real Protection This reform is both urgent and about changing how we think. New York should look beyond just past violations and focus on taking action to prevent deadly harm to those who need protection. A Temporary Order of Protection remains important. However, when there are clear signs of possible homicide, it should prompt risk assessment, teamwork, firearm checks, safety planning, and continued oversight. A written order by itself cannot stop violence. But if the legal system treats a high-risk protection order as an urgent warning rather than the last resort, it could help prevent future harm. New York should adopt this approach.
August 12, 2026
Intellectual Property
Pop Art Time Bomb: The Second Circuit's Ruling in Hayden v. Koons
In the late 1980s, American artist Michael Hayden created a Styrofoam serpent sculpture for Ilona Staller, the Italian adult film actress and parliament member better known as Cicciolina, to use as a prop during her live erotic performances. Hayden sold the work to Staller's production company in 1988 for approximately $900. A year later, Staller’s husband, American artist Jeff Koons, posed with Staller for a series of erotic photographs that would become Koons’ Made in Heaven series. Three of those works depicted Koons and Staller atop Hayden's sculpture, and they debuted at the 1990 Venice Biennale to what Hayden himself described in his complaint as a "media sensation and scandal" that "launched Koons into the art world's stratosphere." Hayden claims he did not discover any of this until 2019, when a news article about an unrelated Staller lawsuit caught his attention. He registered his copyright and sued Koons in December 2021. The case never reached the merits. The Copyright Act requires that infringement claims be filed within three years of when the copyright owner discovers, or reasonably should have discovered, the infringement. The Second Circuit affirmed dismissal on statute of limitations grounds, rejecting Hayden's argument that constructive discovery requires a plaintiff to have actual knowledge of specific triggering facts before the clock starts running. The court clarified that constructive discovery turns on a fact-intensive, objective inquiry into whether a reasonably diligent copyright holder, given all the surrounding circumstances, should have uncovered the infringement. Applying that standard, the panel found the answer here was obvious: Hayden lived in Italy for nearly three decades, was fluent in Italian, consumed Italian news daily, had a direct professional relationship with Staller, and was present in Italy during the very Biennale that made Koons internationally famous, with Staller prominently featured. The court was careful to note that its ruling does not create a "celebrity privilege" that automatically starts the limitations clock whenever a famous artist is involved. Fame is one factor among many, not a categorical rule. The practical lesson for copyright owners is sobering. A rights holder who ignores widespread, international coverage of allegedly infringing work does so at significant legal peril, regardless of whether they actually saw that coverage. Hayden's claim failed not because he sat on a known injury, but because the court concluded a reasonably diligent person in his position could not plausibly have missed it.
August 11, 2026
Family Law
Should the Future of Frozen Embryos Be Addressed in a Prenuptial Agreement?
When couples are planning a wedding, conversations about finances, property, and future goals are common. For couples who are considering in vitro fertilization (IVF), have already created frozen embryos, or anticipate using assisted reproductive technology in the future, there is another important topic that deserves careful discussion: What happens to embryos if the marriage ends? While no one enters a marriage expecting divorce, addressing these issues in a prenuptial agreement can provide clarity, reduce conflict, and protect both parties from emotionally and financially costly disputes. Unlike bank accounts or real estate, frozen embryos occupy a unique legal and ethical space. They represent both reproductive potential and significant emotional investment. When a relationship ends, former spouses may disagree about whether embryos should be used to attempt a pregnancy, donated to another individual or couple, donated for scientific research, or destroyed. These disagreements can become some of the most difficult issues courts face in divorce proceedings because they involve competing interests in reproductive autonomy. A carefully drafted prenuptial agreement may include provisions that outline the parties' intentions regarding embryos created before or during the marriage. For example, the agreement may specify: Who will have decision-making authority if the marriage ends Whether embryos may be used only with the consent of both parties Whether one spouse waives any future claim to use the embryos Whether the embryos will be donated or discarded if the parties cannot agree How expenses related to storage will be handled Although the enforceability of these provisions depends on state law and the specific facts of the case, documenting the parties' intentions before a dispute arises can be valuable. Divorce often involves heightened emotions. Without prior agreement, decisions about frozen embryos may become lengthy and expensive legal battles. Discussing these issues before marriage offers several benefits: It encourages open communication about future family planning It helps both parties understand each other's expectations It reduces uncertainty if circumstances change It may minimize litigation and legal costs Having these conversations while both parties are working together is often far easier than attempting to resolve them during a divorce. Laws governing embryo disputes vary significantly from state to state. Some courts place substantial weight on prior agreements between the parties, while others balance competing constitutional and public policy interests. In addition, fertility clinic consent forms may also play an important role in determining what happens to stored embryos. Because the legal landscape continues to evolve, couples should work with an experienced family law attorney and, when appropriate, coordinate with their fertility clinic to ensure their agreements are consistent and as effective as possible under applicable law. A prenuptial agreement is more than a tool for protecting financial assets. For couples pursuing or anticipating assisted reproductive technology, it can also provide a thoughtful framework for addressing one of the most personal decisions they may ever face. Planning for the future does not reflect a lack of commitment to the marriage. Instead, it reflects careful communication, informed decision-making, and respect for each person's reproductive rights. By addressing the disposition of embryos before conflict arises, couples can reduce uncertainty and focus on building their future together with greater confidence.
August 11, 2026
Family Law
Determining the Matrimonial Property Regime in an International Marriage: A U.S. Perspective
International marriages can create complex questions about which country’s laws govern the spouses’ property rights. A couple may marry in one country, live in another, and acquire assets across several jurisdictions. In such cases, the place of marriage alone does not necessarily determine the applicable matrimonial property regime. In the United States, matrimonial property is primarily governed by state law, rather than a single federal regime. States generally follow either a community property or equitable distribution system. Therefore, the first step is to identify the court hearing the dispute and examine that state's choice-of-law rules. Those rules determine whether the court will apply its own law or the law of another state or country. Factors that may be relevant include the spouses' domicile, matrimonial residence, the place where property is acquired, the location of the property, and the parties' intentions. After identifying the potentially applicable law, the assets must be classified. Property may be treated as separate property or marital/community property depending on the governing law. Important questions include: Was the asset acquired before or during the marriage Where were the spouses domiciled when it was acquired Where is the asset located Was it inherited or received as a gift Was separate property mixed with marital funds Is there a prenuptial or postnuptial agreement Real estate can require particular attention because the law of the property's location may have a significant role. In a community-property state, qualifying property acquired during marriage is generally treated as belonging to the marital community, subject to state-specific exceptions. In an equitable-distribution state, marital property is divided according to principles of fairness rather than necessarily divided equally. Some community-property states also recognize concepts such as quasi-community property, which can affect property acquired while the spouses were living elsewhere. A valid prenuptial or postnuptial agreement can significantly affect the analysis. Such an agreement may specify how property will be characterized and may contain a choice-of-law provision. However, the agreement must satisfy applicable requirements for validity and enforceability. In an international marriage, it is therefore important to consider not only where the agreement was signed, but also which jurisdiction's laws may govern it. Determining the matrimonial property regime in an international marriage is essentially a choice-of-law and property-classification exercise. The place of marriage is only one consideration. Domicile, the matrimonial home, the location and timing of asset acquisition, applicable state conflict-of-laws rules, and marital agreements may all influence the result. Because U.S. matrimonial-property law varies significantly from state to state, an international couple should identify the potentially applicable jurisdictions and obtain advice before assuming that one country's or state's property regime governs the entire marital estate.
August 11, 2026
Intellectual Property
Why Trademark Issues Slow Deals and Launches More Than the USPTO Ever Will
When a trademark timeline slips, the U.S. Patent and Trademark Office is often the first to receive the blame. Applications take months before they are examined. Office Actions interrupt momentum. Publication introduces another waiting period. If an opposition is filed, the timeline extends even further. Those delays are real, but in my experience, they are rarely the reason a transaction stalls or a product launch is postponed. More often, the real delay occurred months, or even years earlier, when important trademark decisions were deferred because they did not seem urgent at the time. By the time financing, acquisition, product launch, or national expansion is on the calendar, those unresolved issues have become immediate business problems. The trademark process itself has not changed. What has changed is the company's tolerance for uncertainty. For in-house counsel, recognizing this distinction is important. The USPTO follows a predictable process. Internal decision-making often does not. Understanding where delays truly originate allows legal teams to identify and eliminate bottlenecks before they jeopardize business objectives. Trademark Problems Rarely Appear Overnight Most trademark issues do not emerge suddenly. They develop gradually. A company may know that a registration does not cover a new product line but decides to revisit the issue later. A clearance search may identify a potentially conflicting mark, but the business concludes that expansion into that market is still years away. A brand may be used inconsistently across websites, packaging and marketing materials without anyone viewing it as a pressing legal concern. Individually, these decisions often seem reasonable. Resources are limited, business priorities shift, and not every trademark issue requires immediate action. The problem is that unresolved issues rarely disappear. They simply remain dormant until another business event makes them impossible to ignore. When that event arrives, the timeline has already become compressed. Transactions Have a Way of Exposing Trademark Weaknesses Corporate transactions are particularly effective at bringing trademark issues into focus. During due diligence, buyers, investors, and lenders expect intellectual property to be organized, documented, and defensible. Questions that may never have been raised internally suddenly become central to the transaction. Who owns the trademark registrations? Are key brands properly assigned? Do registrations cover the products and services that generate the company's revenue? Are there unresolved Office Actions, opposition proceedings, or coexistence agreements that affect the strength of the portfolio? Has the company consistently used its marks in a way that preserves their distinctiveness? These are not obscure legal questions. They directly affect the value of the business being acquired or financed. The important point is that these issues almost never originate during the transaction itself. They simply become visible because someone outside the organization is evaluating the portfolio with fresh eyes and a lower tolerance for uncertainty. The due diligence process does not create trademark risk. It reveals trademark risk that already existed. Product Launches Create the Same Dynamic Product launches create a similar form of pressure, although the audience is different. Early in the branding process, changing a proposed product name is usually inexpensive. Marketing materials have not been finalized. Packaging has not been printed. Domain names can still be secured, and advertising campaigns have not yet begun. As the launch progresses, those options become more expensive. Eventually the company reaches a point where significant investments have already been made. Packaging is in production. Retail partners have committed shelf space. Sales teams have begun customer outreach. Digital marketing campaigns are scheduled to go live. At that stage, even a relatively modest trademark issue can disrupt the entire launch. Leadership is no longer asking whether the legal risk exists. Instead, the discussion becomes whether the company is willing to absorb the cost of changing course or accept the risk of moving forward. Neither option is ideal. Had the trademark issue been identified and resolved earlier, the same legal analysis could have been completed with far less business disruption. The Real Bottleneck Is Usually Internal Alignment One of the more interesting aspects of trademark practice is that the USPTO is often the most predictable participant in the process. The agency publishes examination timelines. Filing procedures are well established. Office Actions follow defined rules, and applicants generally know the deadlines for responding. Internal decision-making rarely operates with the same level of predictability. Trademark issues often require input from legal, marketing, product development, executive leadership, and sometimes outside agencies or investors. Each group may view the issue through a different lens. Marketing may prioritize brand recognition. Product teams may prioritize launch dates. Business leaders may focus on revenue targets. Legal may focus on protecting long-term brand value and reducing litigation risk. None of these perspectives is wrong, but reaching alignment can take far longer than preparing and filing a trademark application. When no clear decision-making framework exists, each trademark issue becomes an individual negotiation. Time is spent identifying stakeholders, gathering information, evaluating alternatives, and revisiting questions that could have been addressed months earlier. That is where many delays occur. Earlier Conversations Matter More Than Earlier Filings The solution is not necessarily filing trademark applications earlier in every circumstance. Rather, it is beginning the strategic conversations earlier. Regular trademark portfolio reviews can identify gaps before they affect a financing or acquisition. Consistent clearance procedures can reduce the likelihood of late-stage naming disputes. Periodic reviews of ownership records, assignments, and registrations help ensure that documentation is complete when diligence begins. Equally important is establishing clear escalation procedures. When a significant trademark issue arises, decision-makers should understand who needs to be involved, what level of risk requires executive attention, and how competing business objectives will be evaluated. Organizations that have these processes in place generally make trademark decisions more efficiently because they are not creating the decision-making structure while simultaneously facing a business deadline. Trademark Strategy Is Really Business Strategy It is easy to think of trademarks as a legal compliance issue or simply another filing obligation. In reality, trademarks support some of a company's most valuable business assets: its brand identity, customer recognition, goodwill, and market reputation. When those assets are managed proactively, transactions tend to proceed more smoothly, product launches face fewer last-minute obstacles, and business leaders have greater confidence in the decisions they make. Conversely, when trademark issues remain unresolved until a deal or launch forces action, legal teams often find themselves responding under compressed timelines with fewer practical options available. The trademark process itself is usually not what slows the business. More often, the delay results from waiting too long to make decisions that were always going to have to be made. The companies that move fastest are not necessarily the ones that file the most trademark applications. They are the ones that treat trademark strategy as an ongoing business function rather than a task reserved for moments of crisis. By addressing issues before they become urgent, they preserve flexibility, reduce transaction friction, and keep important business initiatives moving forward.
August 6, 2026
Mergers and Acquisitions
The Earnout Trap: Hidden Post-Closing Risks in M&A Transactions
Earnouts are often presented as a solution that can help get a deal across the finish line. If a buyer and seller disagree on valuation, an earnout can help bridge that gap by tying a portion of the purchase price to the future performance of the company post-closing. It’s a simple concept in theory. If the company performs as expected, the seller will receive additional payments. If the company does not meet the established metrics, the buyer pays less. However, in practice, earnouts can introduce a significant layer of complexity, and they are one of the most heavily litigated provisions in M&A transactions. Why does this happen? Because after closing, the seller is no longer in control of the business – something that is often seriously underestimated during negotiations. Founders generally have a belief that the company they created and built is poised for substantial growth. And while that might have been true pre-sale, once there is an ownership transfer, things can change significantly. The seller no longer has the ability to make decisions to achieve growth targets. Hiring decisions, sales strategy, marketing budgets, staffing levels, pricing models, operational priorities, and integration efforts are all solely in the hands of the buyer once the deal is done. To further complicate matters, the acquired company may be integrated into a larger platform business or combined with another portfolio company. Revenue streams may be reallocated, expenses may be shifted, and key employees may choose to leave. Long-term integration might also be a higher priority for the buyer as opposed to short-term profitability. Each of these decisions can directly impact whether earnout metrics are achieved. And this is where disputes arise. Sellers must carefully negotiate earnout provisions to avoid losses or even the courtroom down the road. Establishing Clear Standards One of the biggest mistakes sellers make when negotiating earnouts is agreeing to vague or subjective standards. The more discretion the buyer has post-closing, the greater risk to the seller that they will never receive their full earnout payment. This is why sellers should work with legal counsel to establish objective, clearly measurable performance metrics. For example, revenue-based earnouts are typically easier to evaluate than EBITDA or profitability metrics because profit calculations can be heavily influenced by post-closing decisions. And even the most straightforward revenue metrics need to be carefully drafted. Sellers must understand exactly what counts toward the target, how revenue is recognized, whether certain contracts are excluded, and how deferred or recurring revenue will be treated. Properly Structuring Earnouts The structure of earnouts also matters, because when these are not structured properly, a seller could forfeit millions in earnout consideration if targets are barely missed. Therefore, the following provisions must be heavily negotiated or there can be a dramatic sway in the ultimate economics of the transaction: Is the earnout all or nothing? Will missing the target by a small margin result in no payment at all? Is there a sliding scale that allows for partial payments if performance reaches certain thresholds? If the company exceeds projections, does the seller benefit from that upside? Post-Closing Information and Enforcement Rights Another critical factor to consider are the seller’s post-closing information and enforcement rights. Sellers should negotiate their access to financial information, reporting obligations, audit rights, and dispute resolution procedures before signing any deal documents. Without having these kinds of protections in place, it becomes increasingly difficult to determine whether a buyer appropriately calculated the earnout or if operational decisions unfairly impacted performance. The Broader Financial Risk It is common for sellers to underestimate the broader financial risk that is tied to variable consideration structures such as earnouts and rollover equity. These can be extremely valuable tools in the right transaction, but they also shift risk back to the seller. The more price is tied to future performance, the less certainty the seller has regarding their proceeds from the sale. This is why legal counsel and deal advisors encourage sellers to limit the percentage of total deal value that is tied to earnouts whenever possible. Cash at closing equals certainty. While earnouts can provide an upside, they can also establish a continued dependency on a business that the seller no longer controls. These risks do not mean earnouts should be avoided in every situation. They do have value in their ability to bridge valuation gaps, align incentives, and move deals forward that otherwise would have stalled out. But sellers must approach earnouts with caution and a clear understanding of these risks. In M&A transactions, much of the important negotiations center on the purchase price. But remember, the most important disputes occur post-closing, with earnouts being at the center of them. Negotiate earnouts wisely.
August 3, 2026
Intellectual Property
Danger Zone: Top Gun Heirs Ask Supreme Court to Rewrite the Rules on Copyright Similarity
When Ehud Yonay wrote "Top Guns" for California Magazine in 1983, an 11-page account of the Navy's elite fighter pilot training program, Paramount Pictures came calling almost immediately, licensing the rights, and using the article as the springboard for the 1986 blockbuster Top Gun. After Yonay's death in 2012, his heirs attempted to exercise a powerful but often-overlooked copyright tool: statutory termination rights under 17 U.S.C. § 203, which allow an author's heirs to reclaim copyright grants made during the author's lifetime after a statutory period has elapsed. When Paramount released Top Gun: Maverick in 2022 without compensating or crediting the Yonay estate, the heirs promptly sued for copyright infringement and breach of contract. A district court disposed of the case in 2024, granting Paramount’s motion for summary judgment. The Ninth Circuit affirmed in January 2026, holding that Maverick did not infringe the article because every meaningful similarity between the two works, the shared setting, the fighter-pilot culture, aerial training sequences, etc., reflected unprotectable facts about the real Top Gun program rather than any protected original expression from Yunay’s work. While courts ultimately resolved the § 203 claim forming the basis of the suit in the Yonay’s favor, confirming that the rights to the initial article reverted to them, the central legal battleground became "substantial similarity,” the established standard that copyright plaintiffs must satisfy to show that a defendant copied their original creative expression, as opposed to the underlying facts or ideas, which lie in the public domain. The Ninth Circuit applies a two-step approach to determine substantial similarity. First, an "extrinsic test" that dissects a work into its component parts, filters out unprotectable elements like facts and generic ideas, and compares what remains piece-by-piece. Only works that clear this analytical gauntlet proceed to an "intrinsic test,” a holistic, ordinary-observer assessment of overall similarity. The Yonays argued that the article's vivid language, innovative structure, and the distinctive way Yonay wove those elements into a coherent portrait of a fighter pilot’s life were all protectable, including under a "selection-and-arrangement" theory, which recognizes that an original combination of otherwise unprotectable elements can itself merit copyright protection. The Court disagreed; every similarity, the Court stated, either dissolved into uncopyrightable facts about the real program or evaporated into abstract narrative ideas too general to be owned (the "redemption of a hero," beauty and terror juxtaposed in aerial sequences). Thus, the Yonays' selection-and-arrangement theory failed because the narrative patterns they identified were storytelling conventions, not Yonay's original contribution. The Yonays are appealing the Ninth Circuit’s decision and are applying for certiorari to make their case before the Supreme Court, basing their appeal on a new theory highlighting a significant circuit split. While the Ninth Circuit requires plaintiffs to clear the extrinsic-dissection test before any holistic similarity assessment, the Second, Third, Fifth, Seventh, and D.C. Circuits consider overall similarity without the threshold hurdle. Should SCOTUS grant certiorari and find for the Yonays, the result may be a sea change in the way copyright analysis is handled in one of the busiest jurisdictions for such cases. The Second and Ninth Circuits handle the heaviest copyright dockets in the country, covering the publishing and entertainment capitals. Yet, rights holders face materially different legal standards depending on which coast their lawsuit lands. The Yonays’ petition frames this as a $2 trillion problem, invoking copyright-intensive industries' contribution to the national economy, and argues that the Ninth Circuit's approach effectively strips protection from works like Yonay's, where original expression is inseparable from journalism about real events. Whether the Court grants certiorari remains to be seen, but the petition puts a consequential question about how courts measure creative similarity directly on its radar.
August 3, 2026
Estates and Trusts
Why a Trust Can Be Essential When Planning for a Family Vacation Home
A family home often carries value far beyond its market price. It may be the place where generations gathered for holidays, summers, milestones, and ordinary moments that became family memories. But when that property is transferred without careful estate planning, even a well-intentioned decision can produce a result no one expected. Consider the following real-life example. Jane owned a home at the Jersey Shore that had been in her family for more than 100 years. She viewed herself as the steward of the property and wanted it to remain available for future family gatherings. Her only daughter, Rachel, was close to Jane and seemed like the natural person to take over that role someday. Jane asked her former estate planning attorney whether she should transfer the shore house to a trust for Rachel’s benefit. She was told that a trust might create additional administrative burdens and expenses. Instead, Jane signed a deed transferring the property directly to Rachel during Jane’s lifetime. At the time, the direct transfer appeared simple, inexpensive, and practical. That decision created two significant issues. First, it created a tax issue: because Rachel received the property as a lifetime gift, Rachel generally took Jane’s carryover basis in the property rather than receiving a new basis equal to the property’s fair market value. Second, it created a control issue: once the property was titled in Rachel’s individual name, Jane no longer controlled what would happen to the shore house if Rachel died, changed her estate plan, married or divorced, encountered creditor issues, or simply made different decisions about the property. For the next few years, the family carried on as though nothing had changed, leaving Jane with the comfort of believing she had made the right decision. Sadly, a little more than five years later, Rachel died. Rachel had lived modestly, rented an apartment, and accumulated only limited savings. Under Rachel’s Last Will and Testament, she left her estate to her close friend, Michael. Jane initially did not focus on that provision because she did not think of the shore house as part of Rachel’s estate in any meaningful way. The following spring, Jane drove to the shore house, as she had done every year, with her car packed for the start of the summer season. When she arrived, her key no longer worked. A car she did not recognize was in the driveway. Confused, Jane knocked on the door. Michael answered and explained that he now owned the shore house because Rachel had left all of her assets to him. Jane then realized the critical consequence of the earlier deed: by transferring the house outright to Rachel, Jane had made the property part of Rachel’s estate. Rachel’s Will controlled where the property went next. Of course, Jane had not intended to give Michael the family shore house. Rachel likely had not intended that result either. But because the property had been titled in Rachel’s individual name, and because Rachel’s Will left her assets to Michael, Jane no longer had any legal right to the property. The outcome was devastating. Jane had lost a home that generations of her family had cherished. She also faced the difficult task of explaining to her siblings, nieces, and nephews how a property entrusted to her care had passed outside the family. When Jane contacted us to see if we could help, unfortunately, there were few viable solutions. This is exactly the kind of problem thoughtful trust planning can help prevent. Jane could have transferred the shore house to a trust for Rachel’s benefit, with clear instructions about who could use the property, who would manage it, how expenses would be paid, and what would happen at Rachel’s death. Depending on the structure, a properly drafted trust may also be designed to avoid unnecessary administrative complexity. In many estate plans, a trust is a control, continuity, and protection tool. It can help keep property within the family, protect beneficiaries from unintended consequences, address creditor and divorce concerns, and provide a structure for long-term management of emotionally significant assets. Key planning lesson: transferring property outright is not always the simplest solution when the goal is to preserve a family asset. Before signing a deed, families should consider what happens if the recipient dies, divorces, has creditor issues, changes their estate plan, or simply has different ideas about the property’s future. They should also understand the income tax consequences. A lifetime gift of appreciated real estate generally does not produce the same step-up in basis that may be available when property is inherited at death. As a result, the recipient may take the donor’s low basis and face greater capital gains tax exposure if the property is later sold. For families with vacation homes, inherited real estate, or other legacy assets, the right plan should address legal ownership, family expectations, and tax basis. That may include a revocable trust, irrevocable trust, limited liability company, use agreement, maintenance fund, buyout mechanism, or other planning structure tailored to the family’s goals. The best solution depends on the family’s objectives, the property’s appreciation, creditor and divorce concerns, administrative tolerance, and desired tax result.
July 30, 2026
Commercial Litigation
Defending Property Managers Against Expanding Debt Collection Claims in Maryland
Over the last several years, plaintiffs' lawyers have increasingly attempted to repackage routine landlord-tenant disputes as violations of Maryland consumer protection and debt collection statutes. What historically would have been lease disputes, rent collection matters, or disagreements over fees are now being asserted as claims under the Maryland Collection Agency Licensing Act ("MCALA"), the Maryland Consumer Debt Collection Act ("MCDCA"), and related consumer protection statutes. Frequently, these claims are brought as putative class actions seeking relief on behalf of thousands of current and former tenants. For property managers, owners, and multifamily housing operators, the stakes can be significant. These cases often seek not merely individual damages, but class-wide relief, disgorgement of rent, restitution, attorneys' fees, declaratory relief, and injunctions affecting ongoing business operations. As a result, the costs and disruption associated with defending such claims can be substantial, even where the underlying legal theories are ultimately unsuccessful. Why These Claims Matter The modern wave of debt collection litigation against property managers often starts with a deceptively simple premise: that because a property manager receives rent payments or communicates with tenants regarding payment obligations, it must be acting as a debt collector subject to Maryland debt collection licensing requirements. From that premise, plaintiffs frequently attempt to build far-reaching claims asserting that: A property manager operates as an unlicensed collection agency Rent accepted by the property manager must be disgorged or refunded Consumer protection statutes have been violated Lease provisions are unlawful Entire classes of tenants are entitled to restitution or statutory remedies. These theories can create enormous exposure if allowed to proceed, particularly in the class action context. Even weak claims can generate significant litigation costs through class certification proceedings, electronic discovery, expert witness expenses, and settlement pressure. For that reason, early strategic evaluation is critical. The Threshold Question: Is the Property Manager Actually Acting as a Debt Collector? In many of these cases, the central legal question is not whether rent was collected. Rather, the question is whether the challenged activity constitutes debt collection as defined by Maryland law. Property management companies perform a broad range of functions that extend far beyond collecting rent. Depending on the management arrangement, they may: Market and lease units Execute leases Manage maintenance and repairs Supervise vendors and contractors Coordinate utilities and common-area operations Handle tenant communications Manage compliance obligations Administer financial aspects of the property The mere fact that rent collection is one component of those responsibilities does not necessarily transform a property management company into a regulated collection agency. Equally important, many management companies collect rent pursuant to direct contractual authority granted in the lease itself. When a tenant agrees to pay rent directly to a property manager or a management entity acting on behalf of ownership, the legal significance of that relationship may differ substantially from the activities of a third-party debt collector whose sole function is collecting delinquent debts. These distinctions have proven critical in recent Maryland litigation. Why Early Motions to Dismiss Matter One of the most effective defense tools in these cases is a carefully crafted motion to dismiss. Too often, defendants approach these cases as if discovery is inevitable. In many instances, however, the central disputes are legal rather than factual. Questions concerning: The meaning of MCALA Whether a statutory exemption applies Whether a property manager falls within a statutory definition Whether a claim for unjust enrichment is available Whether lease provisions are lawful as a matter of law Whether a plaintiff has adequately alleged damages may be resolved at the pleading stage An early dismissal can eliminate the need for class certification proceedings, extensive document production, expensive depositions, expert testimony, and protracted litigation. In recent cases, some Maryland courts have dismissed challenges to routine property-management practices before discovery began, recognizing that statutory interpretation questions often can and should be resolved on the pleadings. Other Maryland courts have allowed these claims to proceed, thereby forcing property management companies and property owners to incur significant litigation expenses and the risk of an adverse judgment. Common Claims and Defense Themes Consumer Protection and Debt Collection Claims Many complaints rely on the assumption that collecting rent is synonymous with debt collection. A successful defense often requires careful examination of: The statutory definitions The nature of the defendant's business The relationship between the parties Any applicable exemptions Whether the challenged conduct falls within the intended scope of consumer debt collection statutes Frequently, plaintiffs focus on labels rather than conduct. Courts, however, can be persuaded to look beyond labels and examine the actual role performed by the defendant. Unjust Enrichment and Restitution Claims Another common theory seeks restitution of rent on the ground that the defendant allegedly lacked authority to collect it. Maryland law provides substantial defenses to these claims, particularly where a written lease governs the relationship, the tenancy was fully performed, the tenant received possession and use of the property, and the tenant obtained the benefit of the bargain. These principles can provide a powerful basis for dismissal at an early stage. Lease-Based Claims Plaintiffs also increasingly challenge lease provisions governing fees, notice requirements, holdover language, liability provisions, or other operational terms. Again, many of these claims present legal questions suitable for resolution through motion practice. A careful analysis of the lease language, applicable statutes, and governing case law can often narrow or eliminate these claims before substantial litigation costs are incurred. Practical Recommendations for Property Managers and Owners Although these lawsuits are often driven by aggressive legal theories, there are practical steps property managers and owners can take now, before they are sued, to reduce risk. Maintain Clear Contractual Authority Review management agreements and leases to be sure they clearly define the property manager's role and authority, including authority relating to rent collection and tenant communications. Review Collection and Communication Practices Evaluate whether rent demands, notices, and tenant communications are consistent with applicable law and internal policies. Understand Vendor Relationships Confirm whether outside vendors involved in collection activities require licensing or other regulatory approvals. Document the Basis for Charges Maintain complete records regarding rent, fees, utility allocations, and other assessments. Strong documentation can be critical when defending statutory or class-action claims and may help avoid unnecessary disputes. Engage Experienced Counsel Early The expression an ounce of prevention is worth a pound of cure applies here. Counsel familiar with these emerging debt-collection theories can help identify and address potential vulnerabilities before litigation arises. Once a lawsuit has been filed, opportunities to shape the facts and contractual framework are often limited. Early reviews of leases, management agreements, collection practices, and vendor relationships can place property managers and owners in a far stronger position if challenged later. Experience Matters in Developing Areas of Law The legal landscape surrounding rent collection and debt collection statutes continues to evolve. Several trial courts have rejected expansive theories seeking to treat routine property management activities as debt collection, while other cases continue to work their way through Maryland's courts. In developing areas of law, results frequently depend on identifying the dispositive legal issues early and presenting them in a way that allows courts to address them before litigation spirals into costly discovery and class certification battles. For property owners, managers, and housing providers, the goal is not simply to win eventually. The goal is to win efficiently, before litigation costs and business disruption overwhelm the practical value of the defense. Because Maryland courts have reached differing conclusions in some of these cases, the law remains developing. Property managers and owners should assume that these theories will continue to be tested until the appellate courts provide further guidance.
July 29, 2026
Business
Pennsylvania Supreme Court Narrows Scope of Workers’ Compensation Anti-Referral Provision: Implications in Light of Federal Physician Self-Referral Law
On June 16, 2026, the Pennsylvania Supreme Court issued a significant decision interpreting Section 306(f.1)(3)(iii) of the Workers’ Compensation Act (the “Act”), commonly known as the Anti-Referral Provision. The Court held that the placement of the phrase “goods or services” following a list of enumerated medical services does not operate as a broad catch-all prohibition on physician self-referrals. Instead, the Court concluded that the statutory prohibition is limited strictly to the specifically enumerated services that precede that phrase. As a result, physician self-referrals to pharmacies in which they hold a financial interest (e.g., ownership interest or compensation arrangement) fall outside the scope of the Act’s anti-referral restriction. Employers and insurers are therefore required to reimburse for reasonable and necessary prescriptions, even where the prescribing physician has a financial interest in the dispensing pharmacy. This ruling represents a major shift in the interpretation of Pennsylvania’s healthcare cost-containment framework and invites comparison to the federal Ethics in Physician Self-Referral Law, 42 U.S.C. § 1395nn (“Stark Law”) enacted in 1989 and later expanded in 1993. Background The case arose from multiple consolidated claims involving two (2) physicians who issued prescriptions filled by 700 Pharmacy, an entity in which they held a financial interest. When the State Workers’ Insurance Fund (“SWIF”) denied payment for those prescriptions, the pharmacy filed Medical Fee Review Applications seeking reimbursement. The applications were denied at the administrative level, when the hearing officer concluded that the prescriptions constituted unlawful self-referrals under the Act. The Commonwealth Court affirmed that determination, relying on what it viewed as the plain language of the statute. In its view, the phrase “goods or services” reflected a deliberate legislative choice intended to broadly encompass all forms of medical care, including pharmaceuticals and pharmacy services. Supreme Court Opinion The Pennsylvania Supreme Court reversed. The majority applied a textualist approach, concluding that the statutory language does not extend beyond the specific categories of medical services expressly listed in the provision. Because prescription drugs and pharmaceutical services are not included among those specified categories, the Court held that they fall outside the scope of the Anti-Referral Prohibition. In doing so, the Court rejected the argument that “goods or services” should function as a residual clause capturing all forms of medical treatment. Instead, it interpreted the statute as intentionally limited, declining to expand its reach based on broader policy considerations. Two dissenting opinions highlight the stakes of that interpretive choice. Justice McCaffery emphasized that the Anti-Referral Provision was enacted to prevent financially motivated medical decision-making and argued that the phrase “goods and services” should be read broadly to effectuate that purpose. Justice Wecht, in a separate dissent, challenged the majority’s textual analysis, suggesting that the statutory language more naturally supports a broader interpretation. Legislative Context and Comparison to Stark Law The Anti-Referral Provision was enacted as part of Pennsylvania’s workers’ compensation reform efforts in 1993 (Act 44), legislation designed to control rising system costs and curb perceived abuses. Its purpose closely parallels that of the federal Stark Law, which Congress enacted in 1989 to address the risks posed by physician self-referrals and the resulting overutilization of healthcare services. The difference lies in execution. The Stark Law is deliberately expansive, covering a wide range of “designated health services,” including outpatient drugs, and imposing strict liability for prohibited referrals unless a regulatory exception applies. It is grounded in the premise that financial incentives can distort clinical judgment and therefore must be tightly regulated. By contrast, the Pennsylvania Supreme Court’s decision reflects a narrower, text-driven interpretation of state law. Rather than extending the Anti-Referral Prohibition to align with its underlying purpose, the Court confined its application to the statute’s enumerated categories. The result is a regulatory gap: a set of financial relationships that would raise significant concerns under federal law now fall outside the scope of Pennsylvania’s workers’ compensation anti-referral framework. Practical Implications for Healthcare Providers The Court’s decision opens the door for physicians to more freely integrate ancillary services into their practices, particularly in the area of pharmacy ownership. Physicians may now prescribe medications that are filled by a pharmacy in which they have a financial interest without violating the Anti-Referral Provision. This flexibility brings with it clear financial opportunities. Providers now have the ability to capture additional revenue streams tied to prescription medications, including dispensing margins and pharmacy-related services. Given the frequency with which injured workers require ongoing medication management, particularly in chronic or complex cases, this development may have a meaningful economic impact on certain practices. At the same time, the decision does not eliminate compliance risk; rather, it shifts the focus of that risk. Providers remain subject to the Act’s cost-containment measures, including fee schedules and utilization review. Prescribing decisions must still be medically necessary and defensible, and patterns of overutilization or unusually high-cost prescribing are likely to draw scrutiny. In practice, the question is no longer simply whether a referral is permitted, but whether it can be justified. It is also critical to recognize that this ruling is limited to Pennsylvania’s workers’ compensation system and does not alter obligations under federal law. The Stark Law and the Anti-Kickback Statute continue to impose strict limitations on financial relationships tied to referrals in Medicare, Medicaid, and other federal healthcare programs. As a result, providers must take care not to conflate what is permissible in the workers’ compensation context with what is allowed elsewhere. Maintaining clear compliance boundaries between these regulatory frameworks will be essential. From a strategic standpoint, the decision is likely to prompt providers to reconsider how they structure ownership and referral relationships. Investments in pharmacies, compounding operations, and related ancillary services may become more attractive, particularly where those services can be aligned with workers’ compensation patients. The ruling effectively invites more deliberate planning around the integration of care delivery and revenue generation. At the same time, providers should expect increased scrutiny from insurers and payers. Carriers are unlikely to accept this shift passively and may respond by intensifying utilization review and monitoring prescribing patterns more closely. High-cost medications, unusual prescribing volumes, or patterns suggesting financial motivation may face heightened challenge. In that sense, while the legal restriction has narrowed, the practical oversight surrounding these arrangements may increase. Conclusion The Pennsylvania Supreme Court’s decision represents a significant narrowing of the Workers’ Compensation Act’s Anti-Referral Provision, grounded in a strict textual reading of statutory language. While the ruling is consistent with principles of statutory interpretation, it departs from the broader policy approach embodied in the federal Stark Law and from the apparent cost-containment objectives underlying Act 44 of 1993. By excluding pharmaceuticals from the anti-referral framework, the Court has created a gap between legislative intent and statutory reach. For healthcare providers, the decision presents both opportunity and risk: new flexibility in structuring business relationships, coupled with continued regulatory oversight and the possibility of future legislative correction. Whether the General Assembly will act to close that gap remains to be seen, but the decision has already reshaped the compliance landscape for provider self-referrals in Pennsylvania’s workers’ compensation system.
July 28, 2026
Labor and Employment
Three Workers' Compensation Mistakes Small Businesses with Independent Contractors Can Avoid
Many business owners assume that once they've purchased a workers' compensation policy, they've adequately managed their risk. Unfortunately, some of the most significant exposures arise not from the absence of insurance, but from misunderstandings about who is covered, whether independent contractors are properly classified, and whether coverage remains in place when an injury occurs. A workplace injury can quickly lead to disputes over worker status, insurance responsibility, and employer liability. The good news is that many of these risks are preventable. A few proactive steps can significantly reduce your company's legal and financial exposure. Don't Assume Your Independent Contractors Have Workers' Compensation Coverage Many businesses hire independent contractors with the expectation that the contractor is responsible for maintaining their own workers’ compensation insurance. That assumption can become costly. If a contractor is injured and does not maintain valid workers' compensation coverage, the hiring business may face more than a dispute over insurance obligations. In some cases, the injured worker may contend that he or she was actually an employee rather than an independent contractor. If a state’s Workers' Compensation Commission agrees, the business may become responsible for a workers' compensation claim despite having treated the individual as an independent contractor. The business may also face additional insurance premiums, audits, and scrutiny regarding worker-classification practices. Just as importantly, insurance status and worker classification are separate issues. A signed independent contractor agreement and a contractor's certificate of insurance do not necessarily determine whether the individual will be treated as an independent contractor under a state’s workers' compensation law. When evaluating workplace injuries, agencies and commissions often look beyond labels and examine the actual working relationship, including the degree of control exercised by the hiring entity. Businesses should periodically evaluate contractor relationships to ensure the classification remains defensible and consistent with day-to-day operations. Build a Process to Verify and Continuously Monitor Coverage Insurance verification should be an ongoing process, not a one-time administrative task. Many businesses obtain a certificate of insurance when a contractor is first engaged and never look at the file again. Months later, the policy may have expired without anyone noticing. Consider implementing a standard contractor onboarding and renewal process that includes: Obtaining current proof of workers' compensation coverage, including declarations pages or other documentation confirming active coverage Collecting certificates of insurance for applicable policies Recording policy effective and expiration dates Calendaring renewal dates and requesting updated documentation before policies expire Requiring contractors to notify your business if coverage is cancelled or allowed to lapse Periodically auditing contractor files to confirm documentation remains current Verifying coverage before work begins is an important first step, but it should not be the only step. Businesses should also periodically evaluate whether the contractor relationship is structured and administered in a manner consistent with independent contractor status. An expired policy creates risk, but so does a contractor relationship that may not withstand scrutiny if an injury occurs. Workers' compensation should not be reviewed in isolation. Where appropriate, contractor agreements should also require commercial general liability coverage naming your business as an additional insured. While workers' compensation policies generally do not provide additional insured status in the same manner, verifying both types of coverage helps create a more comprehensive risk-management program. Contracts Matter, Too Insurance verification works best when paired with well-drafted contractor agreements. Depending on your business and industry, contracts should address insurance requirements, require contractors to maintain coverage throughout the engagement, obligate them to provide updated proof of insurance upon renewal, require notice of any lapse or cancellation, and include appropriate indemnification provisions where legally appropriate. While strong contracts are important, they do not guarantee that a worker will be treated as an independent contractor following an injury. Courts and administrative agencies generally examine the substance of the relationship rather than the title used in the agreement. For that reason, businesses should view a contractor agreement as just one component of a broader compliance strategy. Don't Overlook Owner Coverage Elections Another frequently overlooked issue involves business owners themselves. Whether an owner is automatically covered under a workers' compensation policy, or may exclude themselves from coverage, often depends on the state law’s requirements, the company's legal structure, and the owner's role. Depending on the state, sole proprietors, corporate officers, LLC members, and partners may be treated differently. As your business grows or ownership changes, it is worth confirming that your insurance policy accurately reflects your intentions. At least annually, review: Whether owners are currently included in the policy Whether any available elections or exclusions have been properly completed Whether changes in ownership or business structure require updates to your coverage A short annual review can help prevent misunderstandings after a workplace injury. A Five-Minute Annual Compliance Check Once a year, ask yourself: Have I verified that every contractor currently maintains workers' compensation coverage Do I have current declarations pages or other proof of active coverage on file Am I tracking policy renewal dates Do my contractor agreements require continuous insurance coverage Have I confirmed appropriate commercial liability insurance and additional insured endorsements where applicable Have I reviewed whether owner coverage elections still reflect my business structure Have I evaluated whether each independent contractor relationship remains properly classified Are my managers treating contractors differently from employees in day-to-day operations Would the facts of the relationship support independent contractor status if reviewed by my state’s Workers' Compensation Commission If any answer is "no," now is the time to update your procedures. Not after someone gets hurt. In sum, workers' compensation risk management with your independent contractors is more than just collecting certificates of insurance. Businesses should verify contractor coverage, maintain current insurance documentation, periodically review worker classifications, and use carefully drafted agreements that align with actual business practices. Taking these steps can help reduce the risk of unexpected workers' compensation liability, classification disputes, insurance audits, and related litigation.
July 24, 2026
Real Estate
Why Delaware Legal Opinions Matter – Part 4: The Practical Value of Delaware Opinion Counsel
No one enjoys explaining to a client that a closing has been delayed. Yet many closing delays have little to do with negotiating business terms or obtaining financing. Instead, they stem from issues that are entirely preventable: organizational documents that were never located, governing agreements that contain unexpected approval requirements, or entity issues that surface only days before funding. These are precisely the types of issues that experienced Delaware opinion counsel can help identify before they become problems. The Opinion Letter Is the End Product, Not the Entire Service Clients often view a Delaware legal opinion as another closing deliverable. In reality, the opinion process begins long before the opinion letter is signed. Preparing a Delaware opinion requires reviewing the entity's formation documents, governing agreements, certificates from the Delaware Secretary of State, authorizing resolutions, and the transaction documents themselves. During that review, counsel frequently identifies issues that deserve attention before closing. Sometimes those issues are minor and easily resolved. Occasionally they are significant enough that addressing them early prevents a much larger problem later. In that respect, the opinion process serves as another layer of transaction diligence. Small Issues Can Become Big Delays Most transactions do not encounter major legal defects. Instead, they are slowed by relatively routine issues such as: Missing or outdated organizational documents Governing agreements requiring approvals that were overlooked Inconsistencies between the entity documents and the loan documents Administrative issues affecting an entity's status or authority Last-minute changes to transaction documents that require additional review None of these issues are unusual. The challenge occurs when discovering them the day before closing instead of several weeks earlier. Include Delaware Opinion Counsel Early One of the easiest ways to keep a transaction moving is to involve Delaware opinion counsel early. When opinion counsel is brought into the transaction after documents are substantially complete, there is generally sufficient time to review organizational records, request missing information, coordinate with transaction counsel, and resolve any questions without disrupting the closing schedule. When the opinion request arrives only a day or two before funding, even relatively minor issues can create unnecessary pressure for everyone involved. Early coordination almost always produces a smooth closing. A Collaborative Transaction Process Preparing a Delaware legal opinion is rarely done in isolation. Successful transactions require coordination among lender's counsel, borrower's counsel, local counsel, company representatives, lenders, and title companies. Clear communication allows questions to be answered early, documentation to be gathered efficiently, and expectations to remain aligned throughout the transaction. Like many aspects of commercial lending, the opinion itself is only one part of a much larger collaborative process. More Than an Opinion The best Delaware opinion engagements rarely attract attention. Documents are reviewed, issues are addressed, questions are answered, and the transaction closes on schedule. That is precisely the point. An effective opinion process reduces uncertainty, identifies issues while they are still manageable, and helps clients, lenders, and transaction counsel move confidently toward closing. When handled thoughtfully, Delaware opinion practice is not simply about producing a legal opinion. It is about helping transactions succeed.
July 23, 2026
Labor and Employment
The Hidden HR Issues Lurking in Union Labor Relations
Most labor relations playbooks focus on the visible stuff: election timelines, bargaining sessions, grievance procedures. But the issues that may actually blindside HR teams tend to be the ones nobody charts. Here are five worth a second look. Your frontline managers are the real early-warning system — and they're the least prepared Supervisors are usually the first to notice organizing chatter among employees. Their reactions in the first 48 hours often determine whether a campaign fizzles or accelerates. Yet most manager training still treats labor relations as an infrequent compliance issue rather than a live skill. A supervisor who issues a threat, a promise, or a surveillance-related comment can hand a union an unfair labor practice charge that reshapes the entire election. The fix isn't more policy, it's rehearsed, scenario-based manager readiness training before there's any sign of activity, not after. The captive audience meeting is becoming a legal minefield Thirteen states have now banned mandatory "captive audience” meetings in which company executives speak to groups of employees about the disadvantages of union organization and advantages of company policies. Even more legislation is pending, and litigation is still working through the courts. For any employer operating across state lines, this means the standard anti-organizing company speech playbook — one script, rolled out everywhere — no longer holds. HR needs a jurisdiction-by-jurisdiction approach to employee communication during organizing campaigns, which is a heavier lift than most labor relations budgets currently assume. Organizing is happening somewhere HR can't see it Social media has quietly become the default organizing channel, letting employees coordinate, compare notes, and build momentum well before any petition reaches HR's desk. By the time a campaign becomes visible internally, it may already have the signatures it needs. That shifts the real work upstream, toward genuine listening infrastructure and manager relationships, rather than reactive monitoring once cards start circulating. The NLRB Cemex decision hasn't gone anywhere Despite a more employer-friendly NLRB following recent appointments, the NLRB’s Cemex decision framework, which allows a union to immediately gain recognition via signed authorization cards and can strip an employer of its right to an election if it commits unfair labor practices during a campaign, remains in force. Employers who assume the board's new composition has quietly reset the rules are operating on outdated assumptions. Until Cemex is formally revisited, a single misstep during organizing can still mean losing the election process entirely. Grievance and arbitration data is now a data privacy problem As more states expand employee data protection statutes, the systems HR uses to store grievance files, arbitration records, and investigation notes are coming under new scrutiny. Unionized workplaces generate an unusually sensitive paper trail — medical details, disciplinary history, witness statements — and that data often sits in older case management tools never built with today's privacy requirements in mind. This is quietly becoming as much a compliance exposure as the labor relations issues the data documents. The common thread None of these issues show up on a standard labor relations checklist, and that's the point. They sit at the intersection of HR, legal, IT, and frontline management, which means they tend to fall through the cracks between departments rather than getting owned by any one of them. The employers managing labor relations well in 2026 aren't necessarily the ones with the toughest anti-union posture. They're the ones who've mapped these blind spots and assigned someone to actually watch them.
July 23, 2026
Business
Search Funds, Independent Sponsors, and CCVs: Choosing the Right ETA Model
Entrepreneurship through acquisition has moved well beyond the traditional search fund. Today, ETA buyers can pursue small business acquisitions through several different capital models, each with different implications for fundraising, governance, control, and post-close operations. For emerging searchers, search fund entrepreneurs, and acquisition-minded operators, that creates both opportunity and confusion. The same target company may attract interest from a traditional searcher, a self-funded buyer, an independent sponsor, a committed capital vehicle, a family office, or a holding company. Each buyer may describe itself as part of the ETA ecosystem. But each model raises acquisition capital differently, allocates economics differently, and creates different expectations around governance, speed, control, and post-close operations. That matters because the structure you choose does more than affect fundraising. It affects: how sellers view you how lenders underwrite you how investors control decisions how much equity you may own after closing, and whether your structure works for one acquisition or a multi-acquisition platform For most emerging searchers, the first structure does not need to solve every future problem. It needs to fit the buyer’s current stage, capital access, risk tolerance, and first acquisition strategy. That distinction matters. A buyer may eventually want to build a roll-up, raise committed capital, or create a long-duration holding company. Those goals can inform the strategy, but they should not automatically dictate the structure for acquisition number one. Overbuilding the structure too early can create unnecessary legal expense, investor complexity, governance friction, and fundraising burden before the buyer has proven the core thesis. It can also push the searcher into a model that requires capabilities the buyer has not yet developed. In many cases, the better approach is to choose the simplest structure that supports the first credible acquisition while preserving room to evolve. A searcher who has not yet operated one business usually benefits more from building the foundational operator skills than from designing a vehicle for acquisition number five. The question is not only, “Where do I want to be in five years?” It is also, “What structure gives me the best chance to close and operate the first deal well?” The ETA Market Is Becoming More Fragmented Traditional search funds remain the most recognized and studied model. They have a long track record, a familiar investor base, and a relatively standardized playbook. For many first-time searchers, they remain the cleanest path into ETA. But they are no longer the only serious option. Self-funded search has become increasingly common, particularly among buyers who want more control, more ownership, and the ability to pursue small business acquisitions using SBA financing or smaller investor syndicates. Independent sponsors have also become one of the most active buyer categories in the lower middle market M&A ecosystem, especially for experienced operators and executives with investor relationships. Family offices continue to deploy more direct capital into private companies, sometimes backing searchers and sometimes acquiring companies directly. At the same time, committed capital vehicles and long-duration holdcos have become more visible. These structures are not entirely new, but their use within the ETA ecosystem appears to be accelerating. They reflect a shift from the classic idea of buying one company toward a broader effort to build repeatable acquisition infrastructure. That is the key development. ETA is no longer a single path. It is a group of related acquisition models that sit along a spectrum between individual entrepreneurship, lower middle market M&A, family office direct investing, and institutional private equity. Traditional Search Funds The traditional search fund is still the baseline model for many emerging searchers and search fund entrepreneurs. In a traditional search fund, investors provide capital to fund the search phase. The searcher uses that capital to source, evaluate, and negotiate the acquisition of a single target company. Once a target is identified, the same investor group typically has the right to participate in the acquisition financing. After closing, the searcher usually becomes the CEO or operating leader of the acquired business. This model works particularly well for first-time buyers who want structure, mentorship, and investor support. Many traditional search investors have seen dozens of transactions and can help a searcher evaluate industries, negotiate LOIs, manage acquisition diligence, structure financing, and prepare for post-close operations. The benefit is credibility and support. The tradeoff is control. Traditional searchers usually have investors deeply involved from the beginning. Those investors may have approval rights over the acquisition, the financing, the governance structure, major post-close decisions, and the searcher’s ongoing role. That involvement can be valuable, especially for a first-time operator, but it also means the searcher is not operating independently. Economically, traditional search funds usually give the searcher meaningful upside if the acquisition closes and performs well. The searcher typically receives a salary during the search phase, then earns equity through a combination of closing, time-based vesting, and performance-based vesting. While structures vary, many traditional search economics are designed to give the searcher a meaningful minority ownership position over time rather than majority control. The model is best understood as an apprenticeship into ownership. It is often a strong fit for a searcher who wants to buy and operate one good company with investor backing, guidance, and a known playbook. It may become less efficient if the searcher’s goal is to pursue serial acquisitions, build a multi-company platform, or retain more control over long-term capital allocation. Self-Funded Search Self-funded search is different in both psychology and economics, and it has become one of the most discussed alternatives to the traditional search fund. In a self-funded search, the buyer does not raise a formal search fund at the outset. Instead, the buyer funds the search personally or with limited outside support. Once the buyer identifies a target, the buyer raises capital for that specific transaction. In many small business acquisition strategies, SBA financing plays a central role. This model appeals to buyers who want more autonomy. A self-funded searcher usually has more freedom to define the target profile, negotiate directly with the seller, select investors later, and structure the deal around the specific opportunity. The model can also allow the buyer to retain substantially more equity than a traditional searcher, particularly in smaller transactions where debt financing (usually in the form of a SBA loan) covers a large portion of the purchase price. That ownership upside is one of the main attractions. But the model also places more risk on the buyer. Self-funded searchers often pay search expenses themselves. They may sign personal guarantees, especially in SBA-financed transactions. They may have fewer institutional resources during diligence. They may also have a thinner advisory network unless they intentionally build one. The economics can be attractive, but they are less standardized. The buyer may retain a large common equity stake, raise preferred equity from a small group of investors, and personally guarantee a portion of the acquisition debt. In a successful transaction, that can create better ownership economics than a traditional search fund. In a difficult transaction, it can create greater personal exposure. Self-funded search is often well suited for smaller acquisitions, local service businesses, business services companies, light industrial businesses, trades, healthcare services, and other lower middle market companies where SBA financing and hands-on operation can support the acquisition. The model is strongest when the buyer wants to own and operate a business with meaningful personal control. It becomes harder when the buyer wants to pursue larger targets, institutional equity, multiple add-on acquisitions, or a more formal acquisition platform. Independent Sponsors The independent sponsor model sits closer to private equity than traditional search and has become an important part of the lower middle market acquisition landscape. An independent sponsor typically sources a deal first, signs or negotiates the LOI, conducts diligence, and then raises equity for that specific acquisition. Unlike a committed fund or committed capital vehicle, the independent sponsor usually does not have fully committed capital available before the transaction is identified. This model works best for people with prior operating, investing, industry, or transaction experience. The independent sponsor must persuade three groups at once: the seller, the lender, and the equity investors. The seller wants confidence the buyer can close. The lender wants confidence in the sponsor, the capital stack, and the operating plan. The investors want confidence that the sponsor found a good deal and can manage it after closing. The model provides flexibility. The sponsor can choose different investors for different deals, customize governance, structure economics around the specific acquisition, and pursue opportunities that do not fit a traditional search fund profile. But the main weakness is capital certainty. Because the sponsor often raises equity after signing the LOI, sellers and intermediaries may worry about whether the buyer can actually close. That concern becomes more significant in competitive processes or situations where the seller wants speed and certainty. Economically, independent sponsor structures often include a mix of transaction fees, direct equity, management fees, and carried interest or promote. A sponsor might receive a closing fee, a minority equity position, and a promote above a preferred return to investors. The precise terms vary widely because independent sponsor economics are negotiated deal by deal. That variability is both a strength and a weakness. It gives the sponsor flexibility, but it also means the sponsor must negotiate economics repeatedly. If the sponsor lacks a strong investor base, the economics can compress quickly. The independent sponsor model is often a strong fit for a more experienced buyer who has deal access, sector knowledge, and investor relationships, but does not yet have a committed capital vehicle or fund. Committed Capital Vehicles Committed capital vehicles, or CCVs, are becoming increasingly relevant in ETA, especially for searchers and operators who want to move from one-off acquisitions toward a repeatable acquisition platform. A CCV generally refers to a structure where investors commit acquisition capital before a specific acquisition is identified or before a series of acquisitions is completed. The vehicle may be designed to acquire one platform company, pursue multiple acquisitions, or build a long-duration holding company. The basic appeal is straightforward: capital certainty. A buyer with committed capital can often move faster than a buyer who must raise equity after signing an LOI. That matters to sellers, lenders, brokers, and investment bankers. It also matters in fragmented industries where add-on acquisitions may become part of the strategy. This is why CCVs are gaining attention among more sophisticated searchers, acquisition entrepreneurs, independent sponsors, and operators. They are not simply trying to buy one company. They are trying to create a structure that can support multiple acquisitions, longer hold periods, and more repeatable capital deployment. The economic terms of CCVs usually look more like a small private equity or holding company structure than a classic search fund. The buyer often becomes an operator-sponsor and may receive management company economics, carried interest, direct co-investment rights, transaction-related fees, or long-term incentive economics tied to the performance of the vehicle. Investors may receive a preferred return, priority distributions, approval rights over major decisions, and protections around leverage, concentration, conflicts, related-party transactions, and sponsor removal. In many CCVs, the sponsor’s upside comes primarily through carry or promote after investors receive agreed economic thresholds. The model can create meaningful upside for a sponsor who builds a durable platform. But it also increases complexity. The sponsor is no longer just a searcher or operating CEO. The sponsor becomes a capital allocator, investor relations manager, acquisition strategist, governance manager, and platform builder. That is a different job. For emerging searchers, this distinction matters. A CCV may sound attractive because it offers more capital certainty and a more scalable structure. But it also requires a more developed investment thesis, stronger investor relationships, better governance design, and a clearer plan for how capital will be deployed. A CCV is usually more appropriate when the buyer has a repeatable acquisition thesis, a credible capital partner, a reason to pursue more than one acquisition, and the experience or support needed to manage a more institutional structure. It is usually less appropriate for someone who simply wants to buy one small business and operate it directly. Long-Duration Holdcos Long-duration holdcos overlap with CCVs but are not always identical. A holdco is usually designed to own operating companies over a long period of time. Instead of buying one company with the expectation of selling it in five to seven years, the holdco may be built around long-term compounding, cash flow reinvestment, and permanent or semi-permanent ownership. This model has become increasingly attractive to investors and operators who dislike the forced exit pressure of traditional private equity. For sellers, the holdco model can also be attractive. Founder-owned businesses often care about what happens after closing. They may prefer a buyer who plans to hold the business, retain employees, preserve culture, and invest in long-term operations. Economically, holdco structures can vary substantially. Some resemble private equity funds with preferred returns and sponsor carry. Others give the sponsor direct equity in the holding company. Some include management fees or shared services fees. Others rely more heavily on long-term equity appreciation. The central economic question is how value gets allocated between the capital providers and the operator-sponsor building the platform. That question can become complicated because the sponsor may be doing several things at once: sourcing acquisitions, managing executives, building systems, allocating capital, and creating the broader platform value. Holdcos can be powerful structures when the sponsor has a long-term vision and a patient investor base. They can also become difficult if investors want liquidity sooner than expected, if governance is unclear, or if the sponsor lacks the operational infrastructure needed to manage multiple companies. Family Office Direct Acquisition Models Family offices play several roles in the ETA ecosystem and broader lower middle market M&A market. Some invest in traditional search funds. Some back self-funded searchers. Some provide equity to independent sponsors. Some anchor CCVs or holdcos. Others acquire privately held companies directly. This makes family office capital both important and hard to categorize. In direct acquisition models, a family office may use its own balance sheet or investment vehicle to acquire a privately held company. It may install an operator, partner with a searcher, back an industry executive, or manage the company through an internal team. The main advantage is patient capital. Many family offices do not face the same exit pressure as private equity funds. They may be willing to hold a business for a longer period, prioritize cash flow, and structure a transaction around seller concerns, employee continuity, and long-term stewardship. But family offices vary dramatically. Some are highly institutional, with formal investment committees, detailed diligence processes, and experienced deal teams. Others are relationship-driven, informal, and dependent on a small number of family decision-makers. That variation affects everything: speed, governance, reporting, decision-making, and post-close expectations. Economically, operators working with family offices may receive salary, bonus, direct equity, phantom equity, profit participation, or equity vesting tied to long-term performance. The terms depend heavily on whether the operator is functioning as an employee, partner, sponsor, or acquisition entrepreneur. For emerging searchers, family office backing can be valuable, but it requires clarity. The searcher should understand whether the family office expects control, what decisions require approval, how future acquisitions will be funded, how economics vest, and whether the searcher is building personal ownership or merely operating a family-owned asset. Comparing the Models The models differ less by label than by what they are built to accomplish. A traditional search fund is designed to help a searcher find, acquire, and operate one company with investor support. A self-funded search is designed to give the buyer more control and potentially more ownership, usually in a smaller transaction with more personal risk. An independent sponsor model is designed to let an experienced buyer pursue deals without a committed fund, but it requires the sponsor to raise capital transaction by transaction. A CCV is designed to provide more capital certainty and support a broader acquisition strategy. A holdco is designed for long-duration ownership and compounding across one or more operating businesses. A family office model depends on the family office itself, but often emphasizes patient capital, direct ownership, and flexibility. The right model depends on the buyer’s objective. If the goal is to buy one strong business and become CEO, a traditional search fund or self-funded search may be the better fit. If the goal is to pursue larger or more complex deals with customized capital, the independent sponsor model may fit. If the goal is to build a repeatable acquisition platform, a CCV or holdco may make more sense. If the goal is to partner with patient capital and operate over a longer horizon, family office backing may be attractive. Economic Terms Matter Because They Shape Behavior Emerging searchers often focus on headline ownership percentage. That is understandable, but incomplete. The more important question is how the economic structure shapes behavior after closing. A buyer with too little equity may lose motivation. Investors with too much control may slow decisions. A sponsor with carry but no real capital at risk may create alignment concerns. A structure with no liquidity path may create investor tension. A self-funded searcher with too much personal guarantee exposure may become overly conservative after closing. The economics are not just financial terms. They are governance terms. We've discussed the importance of negotiating a governance structure in prior editions of Search Fund Operate. These terms influence who makes decisions, who bears risk, who receives upside, and how the company responds when post-close reality differs from the acquisition model. This is why vehicle selection matters before the LOI. By the time a buyer is under LOI, the structure has already started shaping the deal. A Practical Way to Think About Model Selection For an emerging searcher, the best starting point is not the structure. It is the strategy. If you want mentorship, institutional backing, and a proven path into operating one business, traditional search remains highly relevant. If you want control, ownership concentration, and are comfortable with personal risk, self-funded search may fit. If you have deal experience and investor relationships but no committed fund, independent sponsor may be viable. If you want to pursue multiple acquisitions under a repeatable thesis, a CCV or holdco may be appropriate. If you have access to a family office that understands your operating thesis, family office backing may provide patient and flexible capital. The mistake is choosing the model because it sounds more sophisticated. The better approach is to choose the model that matches the buyer’s actual capabilities, capital relationships, risk tolerance, and acquisition plan. ETA has become more institutionalized, but the core issue remains simple. The buyer has to close the deal, operate the company, and live with the acquisition structure after closing. That is where the differences between these models become real.
July 21, 2026
Offit Kurman Blogs
Page 1 of 36
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