Bankruptcy
AI Tidbits Watch; Regulatory Tracking
Currently, there is no comprehensive federal legislation or regulations in the US that govern the development of AI or restrict its use. There are state and local laws that will be highlighted here going forward. On May 17, 2024 Colorado Governor Polis signed into law Senate Bill 24-205 "Concerning Consumer Protections in Interactions with Artificial Intelligence Systems" (Colorado AI Act). This is the first comprehensive law targeting AI in the US. The Colorado AI Act is focused on high-risk AI systems, defined as AI that makes consequential decisions. Consequential decision in turn is defined as any decision that has a material or similar effect across a wide range of domains, including education and employment opportunities, financial and lending services, essential government services, health care services, housing, insurance and legal services. Developers and deployers of high-risk AI systems will have until February 1, 2026 to develop processes to comply with the law's requirements. both developers and deployers have a duty to use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination stemming from the intended uses of the AI system. While this duty is key to the law, it's also important to note that developers and deployers are entitled to a presumption that they used reasonable care if they satisfy some key obligations.
March 26, 2025
Estates and Trusts
Cultural Perspectives on End-of-Life Planning: Traditions, Taboos, and Practical Considerations
The United States is an ever-changing cultural landscape. As a nation of immigrants, we are a complex patchwork of individuals from diverse backgrounds, each bringing distinct ethnic, cultural and religious beliefs. Estate planning attorneys must recognize and respect these differences, as they are deeply embedded in our social structure. To be culturally competent attorneys, we must view each client as a unique individual whose background may influence decisions regarding estate distribution, end-of-life planning and burial arrangements. Cultural Influences on End-of-Life Planning End-of-life planning involves some of the most intimate decisions a person may make, often shaped by religious and cultural beliefs. Attorneys cannot assume a client’s preferences regarding burial, cremation or body donation. Additionally, alternative burial practices such as green burials or organic reduction are gaining popularity, though they may be restricted in certain states or prohibited by specific cultural or religious traditions. Despite the discomfort these discussions may bring, engaging in frank and honest conversations with clients is essential to ensure their final wishes are honored. Religious and Cultural Funeral Practices Islam Islamic law emphasizes minimizing harm. When making end-of-life medical decisions, Muslims are encouraged to pursue treatments that preserve life while avoiding those that may cause unnecessary suffering. As death approaches, a Muslim may lie on their right side, facing Mecca. Upon passing, the deceased’s eyes and mouth are closed, and family members recite a final prayer. Islamic funeral customs require that the body be washed, shrouded, and buried as soon as possible. Embalming is generally prohibited, and cremation is strictly forbidden. The deceased is placed on their right side in the grave, facing Mecca, often with a layer of rocks covering the gravesite to prevent direct contact with the soil. Judaism Judaism also emphasizes the sanctity of life and minimizing suffering. Aggressive medical intervention is encouraged only when it does not prolong suffering. After death, mourners traditionally tear their clothing as a sign of grief. The body is cleansed, groomed, and wrapped in a simple white shroud. A designated “shomer” (guardian) remains with the body until burial, which should occur within 24 hours. Traditional Jewish burials use plain wooden caskets with no metal fastenings. Embalming and cremation are discouraged, and mourners may take part in filling the grave with soil as a final act of respect. Buddhism Buddhist traditions focus on facilitating a peaceful transition to the next life. Burning incense during a person’s final moments may be customary. After death, the body is often left undisturbed for a period, typically up to a week, to allow the soul to transition peacefully. Buddhist funeral customs vary by region, but cremation is the preferred method of disposition, as it is believed to free the soul. In Tibetan Buddhist tradition, a high-altitude burial, where the body is offered to vultures, is customary, though this practice is not permitted in the United States. Catholicism Catholics receive three sacraments at the end of life: anointing of the sick, confession, and Holy Communion. These sacraments provide spiritual comfort, forgiveness, and preparation for the afterlife. The anointing of the sick involves a priest blessing the individual with sacred oil, confession allows for absolution, and Holy Communion serves as spiritual nourishment. A Catholic funeral typically includes a vigil, a Funeral Mass and a Rite of Committal. While cremation is allowed, traditional burial is preferred, and cremated remains must be buried rather than scattered or kept at home. Eastern Orthodox Christianity Eastern Orthodox Christians emphasize sacraments at the end of life. A priest administers the final confession and Holy Communion, and individuals are encouraged to avoid medications that may cloud their consciousness during these sacred moments. After death, the family washes and clothes the body in the presence of a priest. Embalming is optional. A wake is held before the funeral, and hymns, such as the Trisagion, are sung during the procession from the funeral home to the church and then to the cemetery. Cremation is not permitted, as the body is considered sacred even after the soul has departed. Chinese Funeral Customs Chinese funerals are deeply rooted in tradition, with customs varying based on geography and religious beliefs. However, certain elements remain consistent across different communities. Before the funeral, families often consult a feng shui master to determine an auspicious date and time for the funeral and burial. In some cases, the master may also select the grave’s location, which is traditionally on a hillside but never beneath a tree. The deceased is typically dressed in white, though individuals who lived to be 80 or older may be clothed in colorful garments to celebrate the long life. Family members customarily hold a three-day visitation period, during which they spend time with their loved ones before the funeral. When the casket is sealed, all family members turn their backs to avoid the belief that their souls could be trapped inside. Similarly, they avert their gaze when the casket is lowered into the grave. Incense is often burned throughout the funeral service and at the gravesite as a sign of respect. Families may also burn spirit money, known as “joss paper,” to ensure their loved one’s comfort in the afterlife. While cremation is permitted, it is customary for family members to witness their loved one being placed in the cremation chamber. Hindu Funeral Customs Hindu funeral rites are deeply intertwined with the belief in reincarnation. Since the physical body is no longer needed after death, cremation is considered the most effective way to release the soul and facilitate its journey toward rebirth. Before cremation, the body undergoes a sacred cleansing ritual, during which it is washed with ghee, honey, milk, and yogurt. The head is anointed with oil, the hands are placed in a prayer position, and the big toes are tied together. The deceased is traditionally wrapped in a white sheet, adorned with a garland of flowers and rice balls. A lamp is placed near the head as part of the ritual. Hindu tradition emphasizes a swift cremation, usually within 24 hours of death. Until then, the body remains at home, allowing family members to pay their respects and participate in final rites. Unique Cultural Funeral Practices South Korea: Burial Beads In 2000, South Korea enacted a law requiring the removal of remains from burial sites after 60 years due to limited space. As an alternative, many South Koreans now transform their loved ones cremated remains into colorful beads, which are displayed in homes. This practice has also gained popularity among South Koreans who live in the United States. Ghana: Fantasy Coffins In Ghana, elaborate, custom-made coffins celebrate the deceased’s personality, profession or passions. These artistic coffins, crafted in shapes such as animals, airplanes, or everyday objects, serve as tributes and works of art, ensuring a vibrant and meaningful send-off for loved ones. Conclusion These are only a short list of the different cultural and religious traditions influencing end-of-life planning. Estate planning professionals must be sensitive to these diverse perspectives to ensure that the clients’ wishes are properly honored. By fostering open discussions and respecting cultural practices, attorneys can provide thoughtful, personalized guidance that aligns with their clients’ values, beliefs and traditions.
March 21, 2025
Business
Succession Planning for Business Owners: Preparing for the Expected—and the Unexpected
Acquiring a business is an exciting and rewarding achievement, but it’s only the beginning of the journey. Many new business owners focus on growth, operations, and profitability, but one critical factor often gets overlooked: succession planning. What happens if you’re suddenly unable to lead? Have you prepared your business to survive and thrive beyond your direct involvement? According to industry insights, over two-thirds of small business owners plan to retire within the next decade, yet nearly two-thirds of family-owned businesses lack a documented succession plan. Without a solid contingency strategy, a business can face severe disruptions, loss of value, or even risk closure. Succession planning is not just about retirement—it’s about ensuring the business can withstand unexpected challenges, leadership transitions, and shifts in ownership dynamics. It must also take into account your financial legacy, meaning your estate plan is a critical piece of this process. Two Critical Aspects of Succession Planning Succession planning can be broken down into two key areas: management succession and ownership succession through estate planning. While management succession ensures the business continues to operate efficiently after leadership changes, ownership succession focuses on transitioning equity and control in a way that preserves family wealth and business continuity. Succession Planning for Management Purposes For search fund entrepreneurs and independent sponsors, acquiring a business often means stepping into an operation that has relied heavily on the prior owner’s relationships and institutional knowledge. If a crisis arises—whether due to illness, a sudden exit, or unforeseen personal events—having a structured plan ensures the company’s continuity and stability. A business should be able to function independently of its owner to maintain investment value, operational efficiency, and strategic direction. Investors such as family offices and other patient capital providers are increasingly focused on long-term business sustainability. They recognize that a company’s ability to transition leadership smoothly directly impacts its valuation, resilience, and growth potential. Businesses with strong management succession plans are inherently more attractive to investors, lenders, and strategic partners. Key Steps in Management Succession Planning Identifying Future Leadership – Develop a leadership pipeline and invest in training potential successors. Creating Governance Frameworks – Establish clear decision-making protocols, performance benchmarks, and board roles. Documenting Operational Processes – Maintain SOPs, financial reporting procedures, and relationship management protocols. Legal & Financial Structuring – Draft contingency plans, transition agreements, and updated leadership contracts. Employee & Stakeholder Communication – Foster transparency to maintain trust and engagement during transitions. Disney - A Succession Planning Failure: A well-known cautionary tale is Disney’s prolonged succession struggle. It offers a public case study in the risks of delayed or unclear leadership planning. Harvard Law’s analysis explores how missteps in succession planning can result in strategic confusion and shareholder concern. Succession Planning for Ownership & Estate Purposes While leadership succession supports operational continuity, ownership succession via estate planning ensures that equity transfers are executed in a tax-efficient, structured, and family-aligned way. Many business owners delay these conversations until it's too late, leading to conflict and financial inefficiencies. A recent article from J.P. Morgan Private Bank highlights the value of family meetings as tools for creating transparency, aligning generational goals, and easing the emotional weight of wealth transfer decisions. Clear communication and proactive planning are essential to avoiding misunderstandings and ensuring continuity. Key Considerations for Ownership & Estate Succession Planning Recapitalization & Equity Transfers – Gradually shift ownership to heirs, employees, or outside investors. Trust & Estate Structures – Use trusts, GRATs, or similar tools to reduce tax burden and streamline asset transition. Buy-Sell Agreements – Protect against disruption in the event of death, incapacity, or ownership disputes. Liquidity Planning – Ensure cash availability to meet estate taxes and avoid forced asset sales. Open Family Conversations – Define expectations, roles, and stewardship principles across generations. Estate Planning Beyond Business Ownership Estate planning must extend beyond business assets. All holdings—real estate, private equity, marketable securities, and personal property—should be included. A comprehensive plan reduces the risk of asset disputes, tax inefficiencies, and missed philanthropic goals. Key Components of a Comprehensive Estate Plan Multi-Generational Wealth Strategy – Articulate long-term objectives for family stewardship and legacy. Liquidity for Tax Obligations – Prepare for estate taxes without disturbing business operations. Asset Protection – Use legal mechanisms to guard against litigation and liability. Charitable Planning – Incorporate giving strategies that reflect family values and optimize tax outcomes. Building Your Estate Planning Team: Successful estate planning requires the coordinated efforts of legal, tax, and financial professionals. Business owners often work with corporate, tax, and estate attorneys. In addition to legal, family offices are increasingly emerging as a central resource for coordinating these efforts across generations. For example, Cresset Capital offers a holistic family office model that integrates investment, planning, and advisory services. The Role of Recapitalization in Succession Planning Recapitalization is a versatile strategy that supports both management transitions and estate planning. It allows business owners to restructure equity, generate liquidity, and introduce new ownership stakeholders while maintaining stability. Preserve Business Value – Transition ownership strategically to avoid disruption. Generate Liquidity – Create financial flexibility without an outright sale. Support Long-Term Sustainability – Bring in aligned investors who support the next generation of leadership. Final Thoughts: Don’t Leave the Future to Chance Whether you’re planning an exit, acquiring your first business, or simply organizing your affairs, succession planning is not optional. It’s a fundamental aspect of preserving the value you’ve built and ensuring your enterprise—and legacy—endures. A business without a succession plan is a business with an expiration date. Start now. Incorporate recapitalization, leadership development, and comprehensive estate planning into your long-term strategy.
March 21, 2025
Estates and Trusts
How to Have "The Talk" About Estate Planning with Your Parents
Estate planning is one of the most important conversations you’ll ever have with your parents. Discussing wills, trusts, and end-of-life wishes can feel uncomfortable, but having a clear plan in place can save your family from confusion, conflict, and stress down the road. If you’ve been putting off the conversation, you’re not alone. Many adult children hesitate to bring up estate planning for fear of upsetting their parents or appearing greedy. But the truth is, approaching the topic with care and respect can actually strengthen family bonds and ensure that everyone’s wishes are honored. Moreover, learning about your parents’ plan may lead to additional productive conversations—if you are independently wealthy or have creditor concerns, you may not want your parents to leave you assets outright—you can encourage your parents to optimize their planning through the use of trusts or other alternatives. Here’s a step-by-step guide to having "the talk" about estate planning with your parents — without awkwardness or tension. Find the Right Time and Setting Timing and environment matter when discussing sensitive topics. Choose a time when everyone is relaxed and not rushed. A calm and private setting will help everyone feel more comfortable and open. Tip: If you’ve done your own estate plan, then an easy way to start the conversation naturally could be: “I’ve been working on my own estate plan and realized how important it is. Have you thought about yours?” Approach It with Care and Empathy This isn’t about money — it’s about protecting your parents’ wishes and avoiding family disputes later. Make it clear that your goal is to understand and respect their choices, not to control or influence them. Instead of saying, “We need to talk about your will,” try: “I want to make sure we’re prepared as a family if anything happens.” “It’s important to me that your wishes are honored — can we talk about how you’d like things handled?” By framing it as a conversation about their legacy and peace of mind, you’ll help them feel more at ease. Ask Open-Ended Questions Rather than diving straight into the details of their will or assets, ease into the conversation by asking thoughtful, open-ended questions like: “Have you thought about how you’d like your estate handled?” “What matters most to you when it comes to your legacy?” “If something were to happen, how would you want us to handle things?” Give them time to process and respond without pressure. If they hesitate or seem uncomfortable, reassure them that you’re there to listen, not to push. If they don’t feel comfortable discussing the details with you, offer to help them find an experienced estate planning attorney. Discuss the Essentials Once the conversation is flowing, gently introduce key estate planning elements. If they permit you to do so, include an estate planning attorney in the dialogue: Will: Do they have a will? Is it up-to-date and legally sound? A will ensures that their assets are distributed according to their wishes and can prevent costly legal battles. Trusts: Trusts can offer more control over how and when assets are distributed while helping avoid probate and potentially reducing estate taxes. Ask questions like: “Have you considered setting up a trust to protect certain assets?” “Would you want to make sure certain funds are distributed over time rather than all at once?” “Would a revocable or irrevocable trust make sense for you?” Many people don’t realize how flexible and powerful trusts can be for protecting assets and reducing tax burdens. Estate Taxes: Depending on your parents' estate size, estate taxes could significantly reduce the amount passed on to heirs. Questions to consider: “Have you spoken with an advisor about strategies to minimize estate taxes?” “Would you like to explore options like gifting or charitable donations to reduce tax liability?” “Should we look at how setting up a trust could reduce taxes?” Understanding how estate taxes work can help you and your parents make more informed decisions about structuring their estate. Power of Attorney: Have they appointed someone to make financial or healthcare decisions if they’re unable to? A durable power of attorney can give someone authority to manage their financial affairs, while a healthcare power of attorney ensures their medical wishes are respected. Healthcare Directives: Do they have a living will or healthcare proxy to outline their medical wishes? These documents help guide medical decisions if they’re unable to communicate. Beneficiaries: Are their assets (e.g., life insurance, retirement accounts) designated correctly? Beneficiary designations can override what’s written in a will, so they need to be up to date. Executor/Trustee: Have they named someone to carry out their wishes? This person will handle closing accounts, distributing assets, and working with the courts if needed. This isn’t about getting into the nitty-gritty details; it’s about ensuring the basics are covered, and that someone knows where to find important documents. Offer to Help (But Respect Their Decisions) Your parents might not have all the answers. Offer to help them get organized by suggesting they meet with an estate planning attorney. You could say: “Would you like me to help you find an attorney?” “If you want to put together a list of accounts and documents, I’m happy to help.” Of course, their estate plan is ultimately their decision. Your role is to support, not control. Keep the Conversation Going Estate planning isn’t a one-and-done conversation. Circumstances change — marriages, divorces, births, deaths, and financial shifts all impact an estate plan. Check-in periodically with your parents to see if they need to make updates or have questions. Keeping an open line of communication will help avoid misunderstandings later. Thank Them for Their Trust Talking about estate planning requires vulnerability — from both sides. Thank your parents for opening up and trusting you with such personal matters. Let them know how much it means to you that they’re taking steps to protect their legacy and make things easier for the family. Follow Up with Next Steps Once the conversation is underway, help your parents take action: Encourage them to meet with an estate planning attorney. Suggest setting up a trust if it makes sense for their situation. Help them gather financial records, account details, and important documents. Work with them to create a list of assets and liabilities. Following up shows that you’re invested in helping them protect their legacy — without pushing them to make uncomfortable decisions. Final Thoughts Discussing estate planning with your parents isn’t easy — but it’s one of the most loving things you can do as a family. By approaching the conversation with empathy, patience, and respect, you’ll help ensure that your parents’ wishes are honored and that your family is prepared for whatever the future holds.
March 20, 2025
Labor and Employment
Adjusting Job Descriptions for Business Needs – What You Need to Know
Changing an employee's job description during business restructuring can be tricky, especially when balancing business needs with legal requirements. Can human resource managers change an employee’s job description to align with new business needs without the employee’s consent? From a legal perspective, the general answer is yes; in some cases, you can make these changes. Business Necessity and Employment At-Will Unless there is a specific clause in an employment contract or a collective bargaining agreement that dictates otherwise, employers generally have the right to adjust an employee’s job duties, schedule, or work location based on business needs. This flexibility is part of the principle of “at-will” employment, which allows employers to make changes to terms and conditions of employment as long as those changes don’t violate any specific laws or agreements. However, it’s important to note that some local and state regulations may impose additional requirements. For example, certain states and cities have predictive scheduling laws that require businesses to provide workers with advance notice of schedule changes. If the company fails to do so, it could face penalties. Additionally, in some places, if an employee’s scheduled hours are cut upon arrival to work, they may be entitled to what’s known as "reporting pay" or "show-up pay" — a set minimum amount for showing up, even if they aren’t needed to work their full shift. Considerations Under the FMLA If your employee is on Family and Medical Leave Act (FMLA) leave, you must proceed with caution. The FMLA protects employees from having their job duties, schedules, or work locations changed in a way that negatively impacts their ability to take leave. For example, an employer cannot reduce the employee’s hours to avoid their eligibility for FMLA or transfer the employee to a position that discourages the use of leave. Moreover, when the employee returns from FMLA leave, they must be reinstated to their same job or an equivalent one. An "equivalent" position is one that is virtually identical in terms of pay, benefits, working conditions, and responsibilities. While you can offer the employee a different shift, schedule, or position after they return from leave, you cannot pressure them to accept it if it is against their wishes. Retaliation and Discrimination Protections It’s also important to remember that changing an employee’s job duties or schedule in retaliation for exercising their legal rights can result in legal violations. For example, retaliating against an employee for filing a workers' compensation claim, taking FMLA leave, or engaging in other protected activities is illegal. Similarly, making changes based on discriminatory reasons (e.g., reducing hours or authority for only certain groups of employees, such as women) is also prohibited. Key Takeaways for HR Managers Check your company’s policies: Ensure there are no employment contracts or collective bargaining agreements that limit your ability to change the employee’s job description. Know the laws in your state and locality: Be mindful of predictive scheduling laws and reporting pay regulations that may impact your ability to make changes. FMLA considerations: If the employee is on FMLA leave, be careful not to make changes that interfere with their rights to take leave or return to a similar position. Avoid retaliation or discrimination: Ensure that any changes are not made in retaliation for an employee’s legal rights or based on unlawful discrimination. When changing an employee’s job description, balance business needs with legal compliance and clear communication. While you may have the authority to adjust roles, keep employees informed, consider their concerns, and comply with relevant laws to help prevent potential disputes. Thoughtful planning and transparency can go a long way in maintaining a positive workplace during change.
March 20, 2025
Family Law
The Dos and Don’ts of a High-Asset Divorce
Divorce is not easy, and when substantial assets are involved, the process becomes even more complex. High-asset divorces should be approached with the goal of fairness and financial security for the family. I’ve compiled some dos and don’ts to consider when going through a high-asset divorce. The Dos Hire an Experienced Attorney A lawyer with experience in high-asset divorces is important to protecting your financial interests. They will understand the complexities of asset division, tax implications and spousal support calculations. Assess and Document All Assets Work with your legal team to compile a thorough inventory of all assets, including real estate, investments, business interests, retirement accounts and valuable possessions. Comprehensive documentation can prevent disputes and ensure transparency. Consider Mediation or Collaborative Divorce Litigation is emotionally and financially costly and time-consuming. Discuss mediation or the collaborative process with your attorney to negotiate settlements more amicably and efficiently. Understand Tax Implications Property division and spousal support have significant tax consequences. You and your legal team should work with a financial advisor, accountant, or other tax expert to understand how different settlement options will impact your financial future. Protect Your Business Interests If you own a business, discuss ways to safeguard your interest with your attorney. Working with a business valuation expert and legal structuring can help mitigate financial damage and reach a resolution sooner. Think Long-Term Prioritize a settlement that ensures long-term financial stability rather than focusing on short-term gains. Consider future expenses, retirement, and the impact of market fluctuations. Maintain Financial Privacy High-asset divorces can attract unwanted attention. Work with professionals who can help keep your financial matters confidential and protect sensitive information. Discuss with your attorney whether Confidentiality Agreements or Non-Disclosure Agreements should be considered. The Don’ts Don’t Hide Assets Concealing or attempting to conceal assets can lead to legal penalties and a loss of credibility in court. Full financial disclosure is crucial to ensuring a fair division. Don’t Make Emotional Decisions Divorce is emotionally charged by nature, but making decisions based on anger or resentment can lead to financial regret. Approach negotiations with a clear and strategic mindset. Try to treat it more like a business deal. Don’t Rush the Process High-asset divorces take time. Both parties need time to gather and analyze data before negotiations begin. Rushing can result in unfavorable settlements, overlooked assets, and long-term financial issues. Don’t Overlook Prenuptial or Postnuptial Agreements Give a copy to your attorney if you have a prenuptial or postnuptial agreement. Such agreements can significantly impact asset division and protect individual wealth. Don’t Ignore Legal and Financial Advice Some individuals make the mistake of relying solely on their judgment or advice from friends. Professional legal and financial guidance is essential for making sound decisions. Don’t Neglect Estate Planning After divorce, update your estate plan, including wills, trusts, and beneficiaries, to reflect new financial and personal circumstances. Don’t Engage in Public Disputes Avoid airing grievances publicly, whether on social media or in social circles. This can harm negotiations and damage reputations. A high-asset divorce requires a strategic and informed approach to protect financial interests and ensure a fair settlement. By following these dos and don’ts, individuals can navigate the process effectively while minimizing unnecessary conflict and financial loss. Working with experienced professionals will provide clarity and help secure a stable financial future post-divorce.
March 19, 2025
Family Law
We Are Going to Trial! How Your Divorce Lawyer Will Prepare You for Court
Going to court can be a stressful and emotionally charged experience. Your divorce lawyer will play an important role in preparing you for court, ensuring that you understand the legal proceedings, and helping you present your case effectively. Here’s what you can expect during the preparation process: The Legal Process If necessary, your lawyer will explain the legal steps involved in your divorce case, including hearings, motions, and the trial. They will inform you about the judge’s role, courtroom etiquette, and any specific rules or procedures that apply in your jurisdiction. Gathering and Organizing Evidence To build a strong case, your lawyer will help you collect and organize all necessary documents, such as financial records, property deeds, tax returns, and any evidence relevant to child custody or spousal support. They will also guide you on how the evidence will be presented in court. Preparing Your Testimony Your attorney will work with you to develop a clear and compelling testimony. This includes: Reviewing key facts and potential questions you may be asked. Practicing responses to cross-examination by the opposing attorney. Coaching you on how to remain composed, honest, and confident while on the stand. Addressing Potential Challenges Every divorce case has challenges, whether it’s disputes over asset division, custody battles, or allegations made by your spouse. Your lawyer will anticipate potential arguments from the other side and prepare counterarguments to protect your interests. Mock Court Sessions To boost your confidence, some attorneys conduct mock court sessions where you can practice presenting your case in a simulated courtroom setting. This exercise helps you get comfortable speaking in front of a judge and responding to questioning. Guidance on Courtroom Behavior Your attorney will provide instructions on appropriate courtroom conduct, including: Dressing professionally to make a good impression. Speaking respectfully to everyone in the courthouse, including the judge, opposing counsel, bailiffs and security guards. Avoiding emotional outbursts or unnecessary conflicts. Maintaining a calm and composed demeanor throughout the proceedings. Final Review and Strategy Discussion Before your court date, your lawyer will review all aspects of your case with you, addressing any last-minute concerns and refining your legal strategy. They will ensure you feel ready and reassured about the upcoming proceedings.
March 19, 2025
Commercial Litigation
Creative Ways to Avoid Litigation
When disputes arise, parties very often go straight to filing a lawsuit. Sometimes, that tactic can be effective. However, it may not be so effective for those individuals or small businesses seeking to minimize costs. Costs can quickly pile up in litigation, and many of those costs can’t be avoided. There are creative—and effective—ways to avoid litigation, however. Many lawsuits center on contracts being breached and money being owed. When a party to a contract considering filing such a lawsuit, it is important to put in perspective how far away that party may be from getting repaid after winning the lawsuit. It may be months or, more likely, years of work by attorneys before getting paid back anything, assuming the breaching party will still be in operation by then. An often-overlooked option is to approach the party who breached and start a conversation about resolving it without a lawsuit. Lawsuits are public records; avoiding being named in a lawsuit may be valuable and add leverage to negotiate an agreement. This may be enough for some individuals and small businesses to bring them to the bargaining table. Many people opt to hire an attorney to send a letter to the breaching party to see if that starts a dialogue for resolving the dispute. Often, an informal email can have the same effect and elicit a more amiable response from the breaching party—which may be a segue into cooperating to resolve the dispute or even entering into a new agreement to resolve that dispute. If the other party is open to entering into a new agreement, that agreement becomes critically important. It’s an opportunity to add more favorable terms than were in the underlying contract. Those new terms may include that the other party starts making monthly payments, has to pay attorneys’ fees and costs of any lawsuit that comes from the contract, and agrees to a particular court or arbitration forum—all of which may be favorable to the other party. Additionally, this juncture might be the time for the non-breaching party to demand that someone associated with the breaching party sign a personal and unconditional guaranty. That type of guaranty helps reassure the non-breaching party that can be repaid—whether from the breaching party itself or the guarantor. Pursuing these options to avoid litigation may be helpful for individuals or small businesses who don’t want to wait to start being repaid or even would like to give a second chance to the breaching party while strengthening their own hand. It is a cost-effective tactic, and in some situations, it may be just as effective as filing a lawsuit, but without all the associated expenses from taking that more drastic step.
March 18, 2025
Labor and Employment
EEOC Investigates 20 Private Law Firms Questioning Their DEI-Related Employment Practices
On March 17, EEOC Acting Chair Andrea Lucas sent letters to 20 large law firms requesting information about their diversity, equity and inclusion (DEI) related employment practices. The letters express the EEOC’s suspicions that the firms’ employment practices, including those labeled or framed as DEI, are, in fact, discriminatory based on race, sex, or other protected characteristics, in violation of Title VII of the Civil Rights Act of 1964 (Title VII). The suggestion is that the firms are treating various groups in different ways regarding the terms, conditions, and privileges of employment, or that they may be limiting, segregating, and classifying employees according to a protected characteristic. Lucas wrote: “The EEOC is prepared to root out discrimination anywhere it may rear its head, including in our nation’s elite law firms.” Lucas continued, “No one is above the law—and certainly not the private bar.” You can read the letters here. Moreover, the EEOC has established an email where whistleblowers can submit information to the EEOC about potentially unlawful DEI practices at law firms: lawfirmDEI@eeoc.gov. Private employers should carefully re-examine their employment practices, including hiring practices, determining if they are allocating more resources to promote one group of employees, whether all employees are welcome to participate in all programming (for example, a women employees’ support group), and whether pay practices are consistently equal pay for equal work.
March 18, 2025
Construction
Future of Pennsylvania’s Construction Statute of Repose Hinges on Pennsylvania Supreme Court Ruling
The Pennsylvania Supreme Court will decide a pivotal case that could significantly impact the construction industry and the application of the state’s construction Statute of Repose. Aloia v. Diamant raises key questions about how the phrase “lawfully performing or furnishing” design or construction services should be interpreted within the statute. The ruling could have far-reaching consequences for architects, engineers, contractors, and property owners, potentially altering the way construction defect claims are litigated in Pennsylvania. In Aloia v. Diamant, the Superior Court of Pennsylvania upheld a trial court’s ruling that applied Pennsylvania’s Twelve-Year Statute of Repose to bar claims related to construction defects and deficiencies. The Pennsylvania Supreme Court has now accepted an appeal from the homeowners, seeking to clarify the statutory interpretation of the phrase “lawfully performing or furnishing” in the context of construction services under the Statute of Repose. Several prior appeals to the Pennsylvania Superior Court have challenged the application of the construction Statute of Repose, particularly in cases where plaintiffs allege that design or construction deficiencies violate the applicable building code. Notable cases include Johnson v. Toll Bros., 302 A.3d 1231 (Pa. Super. 2023), Tibbit v. Eagle Home Inspections, 305 A.3d 156 (Pa. Super. 2023) and Venema v. Moser Builders, 284 A.3d 208 (Pa. Super. 2023). The plaintiffs in Aloia argue that the Statute of Repose should not apply where there are allegations that the design or construction was not “lawfully performed” due to violations of the building code. This argument raises significant concerns for architects, engineers, and contractors, as it could allow plaintiffs to bypass the Statute of Repose merely by alleging a building code violation—potentially nullifying the statute’s protective function. Legislative Response: Senate Bill 336 Recognizing the ongoing disputes over the Statute of Repose, the legislative affairs committee of AIA-Pennsylvania introduced Senate Bill 336 on January 31, 2023. The bill sought to amend Pennsylvania’s construction Statute of Repose by reducing the period from twelve years to six years, bringing Pennsylvania in line with most states and providing a legislative definition for “lawfully.” However, the bill was not enacted, leaving Pennsylvania with one of the longest construction Statutes of Repose. Key Legal Issues in Aloia v. Diamant The plaintiffs contend that the trial and appellate courts erred in dismissing their claims based on the Statute of Repose before trial. The case facts reveal that building permits were issued for the home’s construction, and a certificate of occupancy was granted on March 30, 2006. Additional certificates of occupancy were issued on February 20, 2007, following the completion of an addition and basement improvements. The plaintiffs, who purchased the home in 2016, filed suit on March 5, 2021, alleging latent construction defects. The contractor invoked the twelve-year Statute of Repose as a defense. The Legal Implications of the Pennsylvania Supreme Court’s Decision Pennsylvania’s construction Statute of Repose provides an absolute bar to claims filed more than twelve years after the substantial completion of a construction project. Unlike a Statute of Limitations, which limits the timeframe in which a lawsuit may be filed but allows for exceptions under equitable doctrines (such as the repair doctrine or discovery rule for latent defects), the Statute of Repose is a strict cutoff for liability. The Pennsylvania Supreme Court’s decision in Aloia will have significant implications for the construction industry. If the court adopts the plaintiffs’ interpretation of “lawfully performed,” it could render the Statute of Repose ineffective by allowing plaintiffs to avoid its application through allegations of building code violations. Such a ruling could expose architects, engineers, and contractors to indefinite liability, fundamentally altering the legal landscape of construction defect claims in Pennsylvania. The outcome of Aloia v. Diamant is eagerly anticipated by construction professionals, developers and legal practitioners alike. A ruling in favor of the plaintiffs could reshape Pennsylvania’s construction litigation framework, potentially extending liability well beyond the current twelve-year period. Conversely, a decision upholding the Statute of Repose’s current interpretation would reinforce the finality intended by the statute, providing greater certainty for construction professionals. Until the Supreme Court renders its decision, the industry remains in a state of uncertainty regarding the long-term enforceability of Pennsylvania’s construction Statute of Repose.
March 17, 2025
Environmental and Sustainability
NYDEC Announces New Environmental Justice Requirements under SEQRA and UPA
Continuing its growing initiatives to protect environmental justice communities, the New York Department of Environmental Conservation (“NYDEC”) recently announced the release of proposed amendments to its State Environmental Quality Review Act (SEQRA) and Uniform Procedures Act (UPA) rules to incorporate provisions of the Environmental Justice Siting Law, which was signed by Governor Kathy Hochul in 2022. The draft regulations, which would impact various permits for projects across the state, seek to require consideration of potential existing burdens in “disadvantaged communities” (“DACs”) that already bear higher levels of pollution, effects of climate change and socioeconomic vulnerabilities. State Environmental Quality Review Act (SEQRA) The proposed rules would require all state agencies in New York to determine if any agency action “may cause or increase a disproportionate pollution burden on a disadvantaged community that is directly or significantly indirectly affected by such action” (6 NYCRR § 617.7(c)(1)(xiii)). Such agency actions include reviewing applications for permits, licenses, zoning changes, site plans, subdivisions, and funding grants by any local or state agency in New York.. Under the existing regulatory framework, government actions resulting in at least one significant adverse environmental impact warrant a determination of significance, triggering the preparation of an Environmental Impact Statement (EIS) on the proposed action. The proposed rules would now require state agencies to evaluate whether an agency action would result in an increased burden on DACs by considering “reasonably related long-term, short-term, direct, indirect, and cumulative impacts” (6 NYCRR § 617.7(c)(2)). To facilitate the implementation of cumulative impact assessments, DEC has introduced the Disadvantaged Community Assessment Tool (DACAT), intended to help permit applicants to identify areas that fall within the criteria of disadvantaged communities. The proposed rules also update DEC’s Environmental Assessment Forms (EAFs) to require permit applicants to analyze and disclose potential disproportionate pollution burdens on DACs (6 NYCRR § 617.2(l)). Thus, the question of what constitutes a “disproportionate burden” becomes a significant consideration for applicants seeking government funding or approvals subject to SEQRA. However, this rulemaking also amends actions that do not require further review under SEQRA to include certain multi-family housing with not more than 10,000 square feet of gross floor area. Uniform Procedures Act (UPA) The proposed rules would also amend DEC’s rules under the Uniform Procedures Act (UPA), which governs how DEC processes permit applications, to further incorporate environmental justice considerations into permitting reviews, including review of applications for projects affecting wetlands, wastewater discharge, solid waste and air facility permits. In effectuating the requirements of the EJ Siting Law, new permit applicants will be required to prepare an Existing Burden Report where the activity “may cause or contribute more than a de minimis amount of pollution to any disproportionate pollution burden on a disadvantaged community.” Permit renewal and modification applications are also required to prepare Existing Burden Reports. Yet NYDEC may provide exemptions if it determines that “the permit would serve an essential environmental, health, or safety need of the disadvantaged community for which there is no reasonable alternative.” NYDEC’s proposal would require project developers to create plans for meaningful community participation, ensuring that applicants demonstrate how they will engage with and involve affected communities. Should the proposed rules go into effect, applicants would now need to “provide opportunities for meaningful community engagement” and incorporate public feedback into project designs. Permit Application Strategy Considering NYDEC’s proposed amendments, permit applicants will likely face uncertainty regarding how the new requirements will impact the permitting process and their projects. To ensure a smooth and cost-effective permitting strategy, it is important that applicants consult with experienced professionals and legal counsel early in the process, as failure to meet these standards could result in permit denials and/or the assessment of penalties. The deadline to submit comments on the proposed SEQRA changes under the EJ Siting Law is May 7, 2025. To read more about the proposed changes to SEQRA under the EJ Siting Law or to comment on the proposal, you can visit NYDEC’s rulemaking page.
March 13, 2025
Estates and Trusts
Not Considering the Importance of Charitable Giving
This is Part 10 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. When a client’s family does not wish to inherit a collection or if its inclusion in the estate would create a significant tax burden, it is crucial to explore charitable giving options. Proper planning can help maximize the benefits of a donation while avoiding unintended legal and tax complications. Ensuring the Charity Will Accept the Gift While many clients may assume that institutions will welcome their generous donation, not every organization is willing or able to accept a collection. Before naming a charity as a beneficiary in estate planning documents or making a present gift, it is essential to confirm the charity’s willingness to accept the donation and any conditions the client wishes to impose on its use. Establishing this agreement in advance can prevent post-mortem disputes and ensure the estate qualifies for the intended tax deductions. Tax Benefits of Lifetime Charitable Giving Beyond philanthropy, charitable gifting can provide substantial tax benefits. Clients should be advised on the income tax advantages of donating all or part of their collection during their lifetime. A charitable income tax deduction is available for contributions of art and collectibles to a public charity, provided the property qualifies as capital gain property and meets the related-use rule (discussed below). If these conditions are met, the donor can deduct the full fair market value of the collection in the year of transfer, subject to a limit of 30% of their adjusted gross income (AGI). Any excess deduction may be carried forward for five years. Since the property must qualify as capital gain property, a lifetime charitable deduction for the donation of art or collectibles is only available to clients who qualify as collectors. As noted in Mistake #1 of this series, creators and dealers recognize ordinary income upon the sale of art and collectibles. Moreover, creators have little incentive to donate their work during their lifetime, as any charitable deduction would be limited to the cost of materials rather than the item’s fair market value. Under the related-use rule, the donee charity must use the donated property in a manner that aligns with its exempt purpose under Internal Revenue Code Section 501. If the charity’s use is unrelated to its mission, the donor’s deduction is limited to the property’s cost basis rather than its appreciated value. Additional limitations apply under the Pension Protection Act of 2006 if the charity sells the donated property within three years of receipt unless the organization certifies that the donation was used for its exempt purpose. For the creator and dealer, it usually makes more sense to consider selling the item and donating the proceeds to charity. Doing so avoids the related-use rule and the requirement that the item be capital gain property. In such a case, the charitable deduction may offset, most if not all of, the ordinary income realized on the sale. Public Charities vs. Private Foundations Clients should also understand the key differences between donating to a public charity versus a private foundation. Donations to public charities allow a deduction based on the collection's fair market value, provided the collection is capital gain property and the related-use rule is met. Donations to private foundations, however, only permit a deduction based on the donor’s cost basis, and the deduction is limited to 20% of AGI. Excess amounts may still be carried forward for five years. Fractional Gifts and Changes Under the Pension Protection Act One of the biggest challenges in lifetime charitable gifting is persuading clients to part with their collection while they are still alive to enjoy it. Before August 17, 2006, clients could donate a fractional interest in tangible personal property, allowing them to share ownership with a charity while retaining partial possession. However, the Pension Protection Act introduced stricter valuation, time, and use limitations that impact the deductibility of fractional gifts. Under IRC Section 170(o), the deduction for a fractional gift is now limited to the lesser of: The value used to determine the deduction for the initial fractional donation, or The fair market value at the time of subsequent contributions. Additionally, the donor must fully transfer their interest in the property within 10 years of the initial fractional gift or before their death—whichever comes first. The recipient charity must also take substantial physical possession of the item within one year of the initial gift (and within one year of any additional gifts) and satisfy the related-use rule. Failure to meet these conditions may result in the recapture of previous deductions, plus interest and an additional 10% penalty. Charitable Bequests and Estate Tax Benefits An outright donation of a collection upon death—whether to a public charity or a private foundation—qualifies for an estate tax charitable deduction based on the fair market value at the time of death. Importantly, bequests of tangible personal property generally do not trigger the related-use rule, making this a valuable option for clients seeking to preserve their collection’s full value for charitable purposes. However, clients planning to donate a collection upon their death should always consult with the intended recipient during life to confirm the organization’s willingness to accept the gift. A public charity’s acceptance of art and collectibles typically depends on whether the donation aligns with its mission and whether it has the necessary facilities and financial resources to store or display the collection.
March 12, 2025
Family Law
Examining the US Supreme Court’s “Reverse Discrimination” Case: Fueling the DEI Fight
On February 26, 2025, the U.S. Supreme Court heard oral arguments in Ames v. Ohio Department of Youth Servicesi . This case that could significantly impact the standards for proving employment discrimination claims under Title VII of the Civil Rights Act of 1964. The central issue is whether plaintiffs from majority groups, such as heterosexual individuals, must meet a higher evidentiary standard, showing that the background circumstances of the alleged discrimination support the suspicion that the defendant is that unusual employer who discriminates against the majority (the “background circumstances test”), in order to establish a prima facie case of discrimination. Background Marlean Ames ("Ames"), a heterosexual woman, began working for the Ohio Department of Youth Services in 2004 ("DYS"). In 2019, she applied for a promotion to a newly created bureau chief position but was passed over in favor of a gay woman who had not applied for the role. Subsequently, Ames was demoted to her previous secretarial position, resulting in a significant pay cut, and her former role was filled by a gay man. Ames filed a lawsuit alleging that these employment decisions were based on her sexual orientation, constituting discrimination under Title VII. The district court granted summary judgmentii in favor of the DYS applying the “background circumstances test;” and finding that there was no evidence that the DYS is among the unusual employers who discriminate against the majority. The U.S. Court of Appeals for the Sixth Circuit affirmed this decision, concluding that Ames had not met this heightened evidentiary standard. The Supreme Court Agrees to Hear the Ames Case The Supreme Court agreed to hear Ames’ appeal to address the disparate application of the “background circumstances test” across various circuitsiii. During oral arguments, several justices expressed skepticism about the validity of imposing a higher standard on a majority group. Justice Neil Gorsuch noted the “radical agreement” between both parties that federal employment laws should impose the same requirements on all plaintiffs, regardless of their majority or minority status. Justice Amy Coney Barrett raised concerns that ruling in Ames’ favor could potentially open the door to more employment discrimination lawsuits by making it easier to bring reverse discrimination cases. However, Ames’ counsel argued that eliminating the “background circumstances” rule would not lead to a flood of new cases, citing the experience of circuits that do not apply this heightened standard. Repercussions of the Decision A ruling in favor of Ames could have significant implications for employment discrimination litigation. It would eliminate the additional evidentiary burden currently placed on majority-group plaintiffs in certain circuits, thereby standardizing the requirements for establishing a prima facie case under Title VII. This could lead to an increase in reverse discrimination claims, particularly in contexts involving diversity, equity, and inclusion initiatives. Conversely, if the Court upholds the “background circumstances” requirement, majority-group plaintiffs would continue to face a higher threshold in proving discrimination claims, potentially discouraging such lawsuits. The Supreme Court’s decision is expected by early Summer 2025, and once handed down, has the potential to equalize the legal framework for all discrimination claims under Title VII, ensuring that the statute’s protections are uniformly applied, irrespective of the plaintiff’s majority or minority status.
March 10, 2025
Estates and Trusts
Not Discussing Collections with Heirs
This is Part 9 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A collection may hold deep personal significance for a client but may not carry the same sentimental or financial value for their heirs. It is essential to encourage clients to have open conversations with their heirs, as appropriate, to understand their intentions and expectations. In many cases, heirs may see a collection primarily as a financial asset rather than a legacy to preserve. Clients should consider alternative disposition strategies beyond an outright bequest if they intend to sell the collection. For instance, donating the collection to a museum, establishing a trust, or selling select pieces during their lifetime may better align with their goals. Even if heirs wish to keep the collection, clients should clarify whether they intend to retain it in its entirety or only select pieces. This distinction is crucial, as valuation discrepancies can arise when certain items are allocated to specific individuals, potentially impacting the overall fairness of asset distribution. Many clients express a desire to donate their collections to museums. However, before proceeding with such a gift, it is essential to confirm that the museum is willing to accept the items. Many museums already have extensive collections in storage and may not be interested in acquiring additional pieces. Additionally, if a museum does agree to accept a collection, it often requires a financial contribution to cover ongoing maintenance and preservation costs. Contacting the museum or other recipient organization before making the gift – especially if the donation is planned through a will or other testamentary document – is essential to ensure its acceptance. Most importantly, clients should consult with an expert in art succession planning. A knowledgeable advisor can help structure a well-organized, tax-efficient plan during life or at death and ensures a smooth transfer of the collection while honoring the client’s wishes.
March 7, 2025
Immigration Law
Trump’s $5 Million “Gold Card” Visa: What it Means for EB-5 Investors
President Donald Trump recently announced a proposed “Gold Card” visa, sparking speculation about its potential impact on the EB-5 Immigrant Investor Program. While details remain unclear, this proposal raises important questions for current and prospective EB-5 investors. Here’s what you need to know. What is the “Gold Card” Visa? The Gold Card visa would offer U.S. permanent residency to individuals investing $5 million in the country. The proposed program is modeled after similar international investor visa initiatives, such as Dubai’s Golden Visa. Key details include: Investment Requirement: The program would require a $5 million investment—substantially higher than the EB-5 program’s minimum of $800,000. Pathway to Citizenship: This visa would offer high-net-worth individuals a streamlined route to U.S. citizenship. Potential Economic Impact: The Trump administration aims to attract a million investors, potentially raising $5 trillion in revenue. Geopolitical Considerations: Given that over 60% of EB-5 investors come from China, some speculate this is a strategic response to U.S.-China tensions. Can the “Gold Card” Replace EB-5? Initial reports suggested that the Gold Card visa might replace EB-5. The Commerce Secretary even indicated this intention, while the president hinted that companies could use the Gold Card to purchase legal permanent residence for employees. However, eliminating the EB-5 program is easier said than done: Congressional Authorization: The EB-5 program is authorized by Congress through at least September 30, 2027. Any attempt to dismantle it would require congressional approval, which is unlikely given past legislative support. 2022 EB-5 Reform & Integrity Act: This act reinforced protections for investors, ensuring that those who file before September 30, 2026, will be grandfathered into the current system. Legislative Hurdles: Introducing a new visa category requires congressional approval. Lawmakers benefiting from EB-5 investments in their states may resist any changes that could reduce economic contributions to their regions. Key Challenges and Concerns While the Gold Card visa has captured attention, several uncertainties remain: Realistic Demand: Expecting one million investors to each contribute $5 million seems highly optimistic, given that the EB-5 program has attracted only about 70,000 applicants over the past 30 years. Tax Implications: There is speculation that Gold Card holders might avoid U.S. global taxation, which could raise legal and policy concerns. Coexistence with EB-5: Rather than replacing EB-5, the Gold Card visa is more likely to exist alongside it, targeting a different investor demographic. What This Means for EB-5 Investors The key takeaways for those currently navigating the EB-5 process is that EB-5 remains intact and legally protected. Current EB-5 Investors: Your investment remains secure, and your path to a green card is unchanged. Thanks to legislative safeguards, your petition will continue to be processed. Prospective Investors: If you’re considering EB-5, filing before September 30, 2026, ensures your investment is protected under the program’s grandfathering provisions. The Bottom Line While Trump’s Gold Card proposal has generated interest, its viability is uncertain. The EB-5 program remains a structured and legally protected pathway to U.S. permanent residency. Investors should stay informed but proceed with confidence in EB-5’s stability. For those looking to secure U.S. residency, now is the time to act before the 2026 grandfathering deadline.
March 5, 2025
Construction
An Update on Federal and Pennsylvania Corporate Reporting Requirements
Much confusion has surrounded the Federal Corporate Transparency Act and the new Pennsylvania annual reporting requirement. Many have asked: what is the status (and deadlines) for compliance? Federal Corporate Transparency Act The Federal Corporate Transparency Act (CTA) was enacted in 2021 with the purpose of combatting money laundering, terrorism financing, and other financial crimes. The gist of the CTA is a requirement to submit a Beneficial Ownership Information Report (BOI Report) that identifies the owner(s) of the business. The CTA is administered and enforced by the newly created Financial Crimes Enforcement Network (FinCEN), which is a bureau within the U.S. Department of Treasury. In December 2024 the U.S. District Court for the Eastern District of Texas issued an injunction that paused the CTA. On January 23, 2025, the U.S. Supreme Court removed the pause. There is still ongoing litigation as to the constitutionality of the CTA, however, while that litigation unfolds, the CTA will be enforced, which means that the BOI Reports must now be filed. On February 18, 2025, FinCEN issued a Notice that BOI Reports must be filed by March 21, 2025. For more information on filing BOI Reports, please see the Offit Kurman informational webpage. Pennsylvania Annual Reporting Requirement In Pennsylvania, starting January 1, 2025, an annual report must be filed with the Pennsylvania Department of State for all domestic and foreign filing associations conducting business in Pennsylvania. This requirement replaces the “ten-year filing” with a yearly filing specific to Pennsylvania. Filing of the federal BOI Report under the CTA to meet federal requirements is not sufficient to meet this Pennsylvania Commonwealth requirement. The Annual Report filing fee is $7 (this fee is waived for non-profit organizations). For each calendar year, corporations must file by June 30; LLCs must file by September 30; and LPs, LLPs, business trusts, and professional associations must file by December 31. There are exceptions to this requirement, including fictitious names, general partnerships that are not LLPs, financial institutions, trademarks and insignias. All other entities conducting business in Pennsylvania must submit this annual report. A failure to report will result in dissolution, termination, or cancellation and a loss of the protection of the entity’s name. If a domestic entity, LLP or electing partnership is administratively dissolved, it will have the opportunity to be reinstated by filing an annual report, paying a reinstatement fee and paying any back fees for delinquent annual reports. If a registered foreign association has been terminated for failure to report, it will be required to submit a new Foreign Registration Statement and will receive a new entity number from the Department of State. Additionally, because a failure to report will result in a loss of protection of the entity’s name, an entity that fails to report may have its name appropriated during its delinquency. The annual reports will include general identifying information including the business name, office address, names and titles of principal officers, and the entity number issued by the Department of State. This information will be publicly available on the Department of State’s website. While these reports may be submitted by mail, it is strongly recommended that they be filed through the Pennsylvania Department of State website. First, the online form will populate any details currently on file with the state to avoid mistakes and delays. Second, and most importantly, an Annual Report that has been submitted online will be automatically approved. For further information on the Annual Report requirements, visit the Pennsylvania Department of State website.
March 4, 2025
Mergers and Acquisitions
The Gray Tsunami: How Retiring Business Owners Can Prepare for a Successful Sale
There is a significant demographic shift headed our way known as the “gray tsunami,” as a very large portion of the American population will reach retirement age and eventually exit the workforce. In fact, we are at a peak time for retirement in America, known as Peak 65 where an average of 4.1 million Americans are projected to turn 65 each year between 2024 and 2027. To put it in perspective, that is about 11,000 people per day. This wave of older adults leaving the workplace stands to have a great impact across the business world as owners pivot to fill these roles left by retiring employees. But it will also have great implications for family-owned businesses as owners reach retirement age and must decide the best course for the future of their company when it is time to step down. A recent Wells Fargo Wealth & Investment Management survey indicates that 52% of business owners do not want their children to run and inherit their business. So, for many, this will mean considering the sale of the business as they look to exit on their own terms. By engaging in advanced planning, entrepreneurs can capitalize on this generational shift, creating a strategic opportunity to ensure their financial security and preserve their life’s work and legacy. Below, we look at some key considerations for baby boomer business owners as they plan for the next chapter in their lives and the potential sale of their family-owned enterprise. Finding the Right Buyer When you have spent your life building your business from the ground up, finding the right buyer when it is time to sell is critical. This means not only finding a buyer that will offer the right price to establish financial security in retirement, but also a buyer who will preserve the values and culture you have established. Finding this perfect buyer means having clearly defined goals for the future of the company. Outline the non-negotiable aspects of the company you want to preserve. This could be anything from retaining your employees to protecting customer relationships. Some owners wish to remain in an advisory capacity during the transition period to ensure continuity, others might want to make sure their business stays family owned. There are numerous types of buyers to consider, each with their own implications for the sale and future of the company. Again, the type of buyer you choose will correlate directly with the goals laid out from the beginning. For those focused more on maximizing value and less on legacy preservation, a strategic buyer such as a competitor could be the best fit. This could involve the integration of the business into a larger organization, so preservation of the company’s employees or culture could be at risk. A sale to a private equity (PE) firm is also an option, noting that the goal here is likely not to hold the business long-term but rather to sell again in 5-7 years. A sale to a family office would likely be a longer-term play. For those focused more on preserving the legacy of the company, selling to key employees or company leadership through a management buyout could be an option, or an Employee Stock Ownership Plan (ESOP) might be a consideration. As both would keep the business with current employees or leadership, maintaining the company culture and vision would be a priority. These are all important points to consider as they help to identify what you are really looking for in a buyer. Owners must work closely with trusted advisors to thoroughly vet potential buyers to ensure they align with those goals, and then carefully craft a deal structure that will best protect their legacy. Maximizing Business Value and Financial Security Maximizing the value of your business well before any exit event is key to establishing financial security for retiring business owners. This means engaging in careful planning, financial optimization, and strategic positioning very early in the process. It will be important to make sure every aspect of the business is streamlined and strengthened including financials, operations, employees, and suppliers. Conduct a comprehensive examination to determine if there are any areas that might need improvement to make the business the most attractive to potential buyers. Making necessary adjustments early on will help to create the best valuation and a smoother due diligence process. Setting the company up for future success by decreasing owner dependency and making sure there is strong leadership firmly in place is also important here. Determining what you will need for your own financial security post-sale must also be top of mind. This should involve working with advisors on significant tax planning to ensure the sale will be structured in the most beneficial way to minimize your tax liabilities as the seller. It will also be important to have a strategy for wealth management to ensure the proceeds of the sale will work for you. Legal Considerations As with any transaction, the sale of a family-owned business also comes with many legal considerations that can have a lasting impact and must be addressed alongside your legal counsel to minimize risk. These can include but are not limited to the following issues: Structuring the sale in the manner that best reduces tax implications and minimizes liabilities for the seller. Planning to avoid excessive capital gains and estate taxes. Conducting due diligence preparation to verify that all information Is accessible and in place and to resolve any outstanding issues. Ensuring liability protection and minimizing risks through avenues such as indemnification clauses and reps and warranties. Compliance with all regulatory and compliance requirements, which can become more complex based on some industries. Conclusion When a business owner makes the significant decision to sell, it will have long-lasting implications for the owner and the family overall. By working with advisors early on to carefully plan and prepare, baby boomers can enter retirement knowing they have not only maximized the value of their life’s work, but also preserved the legacy they have established.
February 28, 2025
Business
Financing in the Independent Sponsor and Search Fund World: SBA vs. Conventional Lending
Financing is one of the most critical components of a successful search fund or independent sponsor acquisition, influencing not just deal structure and capital requirements but also long-term financial health and growth potential. Entrepreneurs and investors evaluating a business purchase must carefully weigh two primary financing options: Small Business Administration (SBA) loans and conventional bank loans. While both have their merits, the choice between SBA and conventional lending impacts everything from cash flow management and debt servicing to operational flexibility and future capital raises. Selecting the right option requires a clear understanding of short-term liquidity needs, financial reporting obligations, investor expectations, and the intended growth trajectory of the acquired company. SBA Loans: Flexible but Costly in Equity Terms The SBA 7(a) loan program is a widely used financing tool, particularly for first-time entrepreneurs and acquisitions of lower middle-market businesses. The program is designed to make small business ownership more accessible by offering low down payments, extended repayment terms, and fewer financial covenants compared to conventional loans. Key Advantages of SBA Loans: Lower Equity Requirements – SBA loans typically require only 10% equity, making them an attractive option for buyers with limited personal capital. In contrast, conventional loans often require 20-50% equity, significantly raising the cash burden. Longer Repayment Terms – The standard 10-year amortization schedule allows borrowers to maintain lower monthly payments, easing cash flow constraints. Limited Financial Covenants – Unlike conventional lenders, SBA-backed loans do not impose strict financial performance benchmarks, providing greater flexibility in early-stage business operations. Easier Qualification Process – Many first-time buyers may find it easier to secure an SBA loan compared to conventional financing due to the government-backed guarantee, reducing lender risk. Challenges of SBA Loans Despite their accessibility, SBA loans come with notable downsides, particularly for search funders and independent sponsors looking for long-term capital efficiency and equity retention: Personal Guarantee Requirements – SBA loans require personal liability from the borrower, meaning that if the business fails, personal assets may be at risk. Restrictions on Seller Notes & Subordinated Debt – The SBA often limits the use of seller financing and additional subordinate debt, making capital structuring more rigid. Prepayment Penalties & Financing Limitations – Borrowers looking to refinance into more favorable debt structures down the road may face prepayment penalties, increasing overall financing costs. Growth Limitations – The lack of institutional-style covenants can prevent businesses from building the structured financial discipline needed for future capital raises or attracting private equity investment. For sponsors and search fund entrepreneurs planning recapitalization, secondary financing rounds, or eventual exit strategies, the limitations associated with SBA loans should be carefully considered. Conventional Bank Lending: More Rigid, but (Maybe) a Stronger Long-Term Fit For experienced operators or businesses with strong existing cash flow, conventional loans can be a more sustainable long-term financing solution. These loans provide greater flexibility in structuring deals, but they also come with stricter requirements. Key Advantages of Conventional Loans: Higher Loan Amounts – Unlike SBA loans, which cap at $5 million, conventional banks can finance larger acquisitions, making them more suitable for companies with $5M+ in EBITDA. Stronger Banking Relationships – Working with a commercial bank can create opportunities for long-term financial partnerships, including credit facilities, treasury services, and strategic capital allocation. More Favorable Equity Retention Terms – Conventional lenders often allow higher levels of seller financing and preferred equity arrangements, giving the buyer greater control over the capital stack. Stricter Covenants: More Financial Controls and Reporting Unlike SBA loans, conventional financing requires detailed financial oversight, which, while adding complexity, can ultimately benefit long-term financial planning and investor confidence: Debt Service Coverage Ratios (DSCR) – Lenders typically mandate a minimum DSCR threshold, ensuring the business maintains healthy cash flow relative to debt obligations. Regular Financial Reporting – Borrowers must provide quarterly and annual financial statements, reinforcing financial discipline and operational transparency. Leverage & Liquidity Limits – Many conventional loans include leverage constraints, preventing businesses from taking on excessive debt that could jeopardize financial stability. While these restrictions may seem burdensome, they prepare companies for future institutional investment and create stronger exit opportunities by making businesses more attractive to private equity firms and strategic acquirers. Choosing the Right Financing for Sponsors and Search Funds The decision between SBA and conventional financing depends largely on the business model, investor profile, and long-term capital strategy of the acquirer. SBA Loans Are Best For: First-time search funders acquiring sub-$5 million EBITDA businesses Deals where seller financing is limited or unavailable Entrepreneurs seeking maximum leverage with minimal equity investment Buyers prioritizing cash flow flexibility over institutional financing constraints Conventional Loans Are Best For: Larger acquisitions requiring more flexible financing structures Search funders looking to build long-term banking relationships Companies planning to secure future private capital or institutional investment Acquisitions where financial discipline and structured reporting will be critical for growth and scalability Final Thoughts: Aligning Capital with Growth Strategy For independent sponsors and search fund entrepreneurs, financing is about more than just getting the deal done—it’s about positioning the business for long-term success. SBA loans can provide immediate access to capital, but conventional financing ensures long-term scalability and financial discipline. Navigating the complexities of acquisition financing requires strategic planning and expert guidance. Working with an experienced attorney and financial advisor can help independent sponsors and search funders structure deals properly, negotiate loan agreements, and ensure compliance with lender requirements, ultimately protecting long-term equity value.
February 28, 2025
Estates and Trusts
Essential Legal Documents Transpeople Must Update for Protection
Navigating life as a transgender individual involves critical steps toward ensuring that your identity is recognized legally and accurately, particularly in the current political climate. Updating your legal documents is an essential part of the process, especially in a world where current systems are not designed with gender diversity in mind. Updating these documents not only reflects your true identity but can also help you avoid potential challenges, whether it is at the doctor's office, in the workplace or when traveling. Below is a comprehensive list of essential legal documents that every trans person should consider immediately to ensure their identity is represented accurately: Legal Name Change One of the most important steps in affirming your gender identity is ensuring your government-issued identification reflects your gender and name. The process of a name change is different in every state. In New York, your local county Supreme Court provides an administrative form to request a name and gender marker change, which is the first step to ensure that all other government IDs can then be changed to align with your true identity. Once approved in New York, you will receive a court order to reflect your name and gender marker. A court order is not required in all states; many states have an administrative process to effectuate the change. Name Change: In New York, unless you are changing your name via marriage, adoption, divorce or citizenship, a court order is required. Once your name and gender marker are legally changed via court order, you may then update your driver’s license and begin the process of updating all other government IDs, including the reissuance of your birth certificate as discussed below. Gender Marker: In some states like New York, you can update the gender marker on your identification to reflect your gender identity. While the process and requirements vary by state, as discussed below, some states require proof of medical transition or a letter from your healthcare provider. Birth Certificate The birth certificate is a foundational legal document. The process of changing a birth certificate varies from state to state and will involve an administrative process or filing a court petition to obtain a court order or directive reflecting the change in name and gender marker. Name Change: Some states allow you to amend your name on the birth certificate without any additional steps or documentation, while others may require a court order. Gender Marker: New York allows you to amend the gender marker on your birth certificate. As of February 2025, Florida, Kansas, Montana, Oklahoma, Tennessee, and Texas are the only states that prohibit the changing of gender marker. Alabama, Arizona, Arkansas, Georgia, Guam, Kentucky, Louisiana, Michigan, Missouri, Nebraska, North Carolina, and Wisconsin all require medical proof of gender change. Certainly, many states make it challenging to amend the gender marker, but it is absolutely worth pursuing to ensure that your birth record aligns with your gender identity. Social Security Upon your legal name change you should update your records with the Social Security Administration (“SSA”). Updating your Social Security records ensures that your name aligns with your legal identity, especially for the purposes of employment, Social Security Disability or Retirement benefits, and taxes. In some states, failing to update your identity with the SSA could even result in the suspension or revocation of your state driver’s license. Name Change: You may update your name by submitting a legal name change document to the Social Security Administration, which is available online at www.ssa.gov. Gender Marker: As of the date of this publication, the Trump Administration has issued a directive to exclude the use of gender marker “X” and prevent the update of gender markers to reflect a transition. Passport Updating your United States Passport information is important for those who wish to travel outside of the country. Your passport must reflect your name and should reflect your gender to ensure ease of travel. A passport reflecting your true identity is necessary not only to leave the US but also to deal with border officials, obtain visas, and participate in immigration processes in other countries. It should be noted that an inconsistent gender marker does not automatically prohibit your travel, but it may cause complications within the United States when leaving or upon arrival in a different country. Name Change: To update your United States Passport, you will need to provide the court order or administrative ruling from your state reflecting your name and a copy of your newly issued birth certificate. Gender Change: The Trump administration has suspended issuing passports with X markers and passport renewals with differing gender markers. This directive is currently pending litigation and there has been no final determination of its legality. As of the date of the publication of this article, it is being widely recommended by trans-rights groups that until there is a legal determination and the policy is released, trans people who have a current, valid passport should refrain from attempting to renew or change it. Health Insurance and Medical Records Your health insurance and medical records should reflect your correct name and gender to prevent confusion and ensure that you are receiving the appropriate medical care. It goes without saying that doctors entrusted to provide medical care and treatment for their patients should be informed of your proper name and gender in the furtherance of health care. HIPAA requires that healthcare providers update a person’s gender identity or transition care and are prevented from sharing this information without your express consent. However, there are several legal battles brewing in states regarding the release of this information for minors and gender-affirming care. Health Insurance: You should contact your insurance provider to update your name and gender on all of your insurance records. In general, proof of a name change and gender markers are requested. Medical Records: Update your doctor, therapist, and other healthcare providers on your name and gender marker so that your medical records accurately reflect your identity. This will also help you avoid issues when seeking medical care, such as incorrect gender-specific treatments or tests. Employment Records Updating your name and gender with your employer ensures that your employer recognizes your identity at your company. Providing this updated information to your employer will avoid unnecessary confusion in official communication from your company, payroll, retirement benefits and health care benefit administration. Name Change: Once you have legally changed your name in your state, you must notify your employer so that your employer may update their records, including the name on your paychecks, your tax documents and your benefits enrollment. Gender Marker: Some employers offer the ability to update gender markers in their records, which can be important for workplace respect and to avoid misgendering. Many employers provide the opportunity for its employees to indicate their gender within office systems, such as email and signature blocks, to promote a culture of respect and affirmation. Estate Planning Transgender individuals should make sure their estate planning documents reflect their identity and desires. They should also ensure that their loved one’s estate planning documents naming them also reflect their name and gender marker changes. These documents may include: Executor, Trustee and Beneficiary Updates: Ensure that your name is properly reflected in your own estate planning documents such as your Last Will and Testament and Trust instruments. For others, ensure that the names of your chosen executors and beneficiaries in your documents are accurate and that their gender is respected in all related documents so that they can be easily identified in the probate or estate administration process. While many states, such as New York, have done away with gender terminology within official legal documents, it is important to note that others’ estate planning documents must also be changed if you were referred to in your parents’ documents as a daughter or a son and said identification no longer applies to you. Health Care Proxies and Powers of Attorney: Make sure that your health care proxies and health care appointment documentation have been updated with both your proper name and gender markers, as well as your agents’ proper names and gender markers. The same is true for Powers of Attorney, which are presented to financial institutions to gain access to your financial accounts. If an identity cannot be verified, often financial institutions will restrict access to prevent fraud and financial misdealing. Bank Accounts and Financial Documents Financial institutions require legal documentation to update your name on accounts, checks, and credit cards affiliated with the institutions. Name Change: You should provide your legal name change court order or administrative determination to your bank and financial institution to update the name on your accounts, credit cards, and other financial documents. You should also ensure that named beneficiaries on your financial accounts are updated when your loved ones have name changes. Gender Marker: While gender markers do not always need to be updated for financial documents, you may request that your gender be reflected accurately in your account details to avoid confusion. Academic Records Educational records held with universities and educational institutions must properly reflect one’s identity. Diplomas and other credentials should be updated to reflect your name and gender marker. Most private educational institutions allow you to change your records to match your name and gender identity; however state institutions will likely follow state law as it relates to name and gender markers. Name Change: You should contact the registrar at your educational institution or university to request that your name be updated on your academic records and diploma to reflect your identity. Gender Marker: Depending on the institution’s policies, you may be able to update your gender marker in school records. Updating official legal documents is a process that requires legal and administrative processes and often patience. However, it is an important step toward living authentically and without continued administrative hassle. Whether you are transitioning or you simply wish to align your documents with your identity, updating your legal records ensures that you are recognized for who you are.
February 26, 2025
Estates and Trusts
Not Properly Insuring a Collection
This is Part 8 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. Accidents happen—whether a piece of artwork or a collectible is damaged in shipping, affected by fire or water or even knocked over by Steve Wynn’s elbow. Having the right insurance in place can help mitigate financial losses and protect a client’s investment. Without proper coverage, even a minor incident could result in significant economic consequences. When insuring a collection, there are three primary options: Including it as part of a homeowner’s policy, Scheduling individual items separately, or Obtaining blanket coverage. For clients with valuable or extensive collections, we often recommend the additional effort and cost of scheduling items separately. This approach typically requires obtaining a qualified appraisal to establish fair market value at the time of coverage. To ensure continued protection, these appraisals should be updated regularly so that coverage reflects the collection’s current worth, rather than its purchase value. Total loss claims are rare. More often, insurers assess the damage to determine if an item is salvageable and provide funds for repairs or restoration. Unfortunately, this can lead to a loss in value that remains unquantifiable until the item is sold. To best protect collectible assets, clients should seek insurance from companies specializing in the relevant categories of items, even if it comes at a higher upfront cost. Additionally, different policies may be necessary if parts of a collection are housed in multiple locations. Are the items in a private residence, a storage facility or on loan to an institution? Are they owned directly by the collector or held within an entity or trust? Understanding these nuances ensures that each piece remains properly protected.
February 25, 2025
Estates and Trusts
Death Tax Repeal Act
On February 13, 2025, Republican lawmakers in Congress introduced the Death Tax Repeal Act, which aims to permanently eliminate the federal estate tax. Since 2015, various legislative efforts to repeal the estate, gift, and generation-skipping transfer (GST) taxes have been introduced in Congress but have failed to pass. Current Federal Transfer Tax Framework The Internal Revenue Code imposes a tax on an individual’s right to transfer property during life and at death. The federal gift tax applies to lifetime transfers at a rate of 40%, though individuals benefit from a "unified credit" that allows a certain value of transfers to be made tax-free during life and at death. In 2025, the unified credit stands at $13,990,000. Any combined transfers exceeding this amount are subject to the 40% tax rate. Additionally, the GST tax applies to transfers made to individuals who are two or more generations below the transferor or to certain trusts benefiting such individuals. The GST tax is also levied at 40%, with an exemption matching the unified credit amount of $13,990,000. Impact of the 2017 Tax Cuts and Jobs Act (TCJA) Under the 2017 Tax Cuts and Jobs Act (TCJA), enacted during the first Trump administration, the unified credit and GST exemption were temporarily doubled. However, since the TCJA was passed as a reconciliation measure, it is set to expire on December 31, 2025. Unless Congress takes further action, the unified credit and GST exemption will revert to their 2016 levels, adjusted for inflation, or approximately $7,000,000 each. Key Provisions of the Death Tax Repeal Act The Death Tax Repeal Act seeks to go beyond simply extending the TCJA provisions beyond December 31, 2025. If enacted, it would: Permanently repeal the federal estate and GST taxes, allowing individuals to transfer unlimited amounts of property at death free of transfer tax. Establish a permanent $10,000,000 lifetime exemption against the gift tax (indexed for inflation to $13,990,000 in 2025). Transfers exceeding this exemption would be subject to a 35% tax rate. Retain the current "step-up" in basis for capital assets at death, minimizing capital gains taxes for beneficiaries upon the sale of inherited assets. Implications for Estate Planning The passage of the Death Tax Repeal Act would significantly impact estate and wealth transfer planning. Estate planning documents that currently reference the federal unified credit or GST exemption amount would need to be reviewed to ensure they align with the proposed law and the client's intentions. Additionally, several states impose a separate estate or inheritance tax — Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska (County inheritance tax only), New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin — or have decoupled from federal estate tax provisions. If the Death Tax Repeal Act becomes law, many of these states will continue to impose their own estate and/or inheritance taxes. Clients residing in or owning property within these states may require substantial revisions to their estate planning documents to optimize state transfer tax savings. Next Steps Our team of estate and trust attorneys is closely monitoring the progression of the Death Tax Repeal Act in Congress. We are available to answer any questions and review your estate planning documents to ensure they accurately reflect your wishes under the proposed law.
February 25, 2025
Real Estate
NYDEC Expands its Jurisdiction over Wetlands
Expansive changes to New York’s Freshwater Wetlands Permitting Program took effect on January 1, 2025, increasing regulated freshwater wetlands. The changes came after the New York State Department of Environmental Conservation (NYDEC) enacted new regulations which amended its Freshwater Wetlands Jurisdiction and Classification rules. The updated rules are expected to protect an additional one million acres of wetlands by 2028. The changes come after New York’s legislature modified the Freshwater Wetlands Act (the “FWA”) in 2022 to make several changes to the way the Freshwater Wetlands Program is to be administered for those in need of Freshwater Permit prior to conducting certain activities in a protected wetland or adjacent area. Such activities include, but are not limited to, the excavation or grading of soil, the modification or construction of buildings, septic systems, bulkheads, dikes or dams, and the application of pesticides in wetlands. NYDEC announced that the changes provide increased protections for wetlands that will help the New York adapt to increased flooding risk associated with the changing climate and conserve critically important natural resources, including threatened and endangered species and the wetlands that they inhabit. These environmental benefits result from NYDEC expanding the areas that are subject to its regulations and the requirement to obtain jurisdictional determinations and/or Freshwater Wetland permits for projects located in such areas. The newly enacted regulations take effect in two stages. The first, which became active on January 1, 2025, expands the areas that fall within the definition of “Wetlands of Unusual Importance.” This includes wetlands in urban and flood-prone areas, wetlands inhabited by rare plants or animals, wetlands important to water quality, and vernal pools. The second stage begins on January 1, 2028, and reduces the size of wetland areas that trigger NYDEC’s jurisdiction from 12.4 acres to 7.4 acres. Individuals in New York can be assured that this expansion in jurisdiction will increase the number of permits needed under the FWA. Another significant change is that property owners must now apply to NYDEC for a jurisdictional determination to ascertain: whether their land contains either state-regulated freshwater wetlands or state-regulated adjacent areas (a “parcel jurisdictional determination”) and/or whether a proposed activity on a parcel subject to NYSDEC freshwater wetlands regulation requires a permit (a “project jurisdictional determination”). Simply, the new regulations not only require significantly more project developers to work with the DEC to determine if their project impacts freshwater wetlands but also require landowners who are planning activity on their property to obtain a determination from NYDEC as to whether freshwater wetlands are located on any portion of their property. In order to allow for a more just transition for permittees, certain projects are exempt from the new requirements until either January 1, 2027 or July 1, 2028, depending on the type of project. The revised regulations become applicable on January 1, 2027, for “minor” projects (as defined in 6 NYCRR § 621.4) or on July 1, 2028, for “major” projects, provided that such projects had achieved certain developmental thresholds before January 1, 2025. In addition to the finalized 2025 regulations, in order to ease the enhanced permitting burdens, DEC has published a statewide draft general permit for public comment (GP-0-25-003). This can be found on DEC’s Freshwater Wetlands General Permit website, for various activities in State-regulated freshwater wetlands (the “Permit”). The General Permit is proposed to be issued for the following: Repair, replacement, or removal of existing structures and facilities. Construction or modification of various residential, commercial, industrial, or public structures. Temporary installation of access roads and laydown areas. Cutting trees and vegetation. Drilling test wells. Routine beach maintenance and replenishment. The comment period runs until January 27, 2025. Considering these changes to the Freshwater Wetland Program, it is imperative that new or expanding project applicants work with experienced wetland permitting attorneys in order to avoid project delays and/or assessment penalties.
February 21, 2025
Business
Congress Extends Telehealth Waivers
On December 20, 2024, as part of its stopgap government funding legislation (the “Continuing Resolution”), Congress issued an important extension of telehealth waivers and flexibilities currently in place for the next two years through December 31, 2026. The Continuing Resolution also includes the following measures relevant to the telehealth market segment: Patients’ homes will continue to serve as eligible Originating Sites for all telehealth services. All Medicare-enrolled providers will continue to be eligible providers for the purpose of providing telehealth services. There will continue to be no geographic limitations on where the patient or the eligible provider is physically located within the United States during a telehealth service. Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) will continue to serve as eligible Distant Sites for non-behavioral health telehealth services. Providers may continue to use audio-only technology to provide reimbursable telehealth services. Hospice providers may continue to use audio-visual telehealth technologies to conduct face-to-face encounters to recertify hospice care eligibility. Additionally, the Continuing Resolution further delays the requirement that Medicare beneficiaries have an in-person visit with their behavioral health provider within six months of their initial telehealth appointment. This CR is indicative of the continued evolution of telehealth services, the trajectory of which accelerated dramatically during the COVID-19 Public Health Emergency. It has become clear that legislators believe telehealth services to be an integral aspect of the U.S. healthcare delivery system. The challenge in the future will be figuring out which industry segments (i.e., behavioral health, rural health access, remote monitoring) will benefit the most from making these rules permanent.
February 20, 2025
Commercial Litigation
How Mediation and Arbitration Can Be Effective Alternatives to Traditional Litigation
Litigation can be a costly and resource-intensive endeavor, particularly when the disputes at hand are complex in nature. For clients who are new to the litigation process, it is not unusual to find the various stages and procedural intricacies daunting. From motions and deadlines to depositions, hearings, and beyond, the demands of litigation can quickly become overwhelming. However, it is important to recognize that there are viable alternatives available, such as Alternative Dispute Resolution (ADR), especially in the early stages of a dispute, that may offer more efficient and cost-effective solutions. These alternatives can help clients navigate the process with greater clarity and achieve favorable outcomes without the need for prolonged courtroom battles. ADR encompasses a range of techniques designed to resolve disputes outside of the formal courtroom setting. These methods can help parties avoid the time-consuming and expensive nature of court proceedings while maintaining greater control of the outcome. The two most utilized forms of ADR are mediation and arbitration. Each offers distinct advantages and procedures tailored to different types of disputes and the needs of the parties involved. Mediation Mediation is a structured process in which a neutral third party, known as the mediator, helps two or more parties resolve a dispute or conflict. The mediator does not make decisions or take sides but facilitates communication between the parties to help them understand each other’s perspectives, identify the underlying issues, and explore potential solutions. The goal of mediation is to reach a mutually agreeable solution that all parties are satisfied with, without the need for formal legal proceedings or a court trial. Mediation can be used in various contexts, such as trust and estate contests, contractual disagreements, corporate disputes, and more. Mediation is typically voluntary, confidential, and often less adversarial than litigation, making it a more flexible and collaborative way of resolving disputes. Arbitration Arbitration is a formal method of resolving disputes in which an impartial third party, known as the arbitrator, is appointed to hear the arguments and evidence from both sides and then make a binding decision. Unlike mediation, where the mediator helps the parties reach their own resolution, the arbitrator acts like a judge, making a final ruling on the matter. The arbitration process is typically less formal and more streamlined than a court trial, but it still involves procedures such as submitting evidence, presenting arguments, and sometimes conducting hearings. Arbitration can be used in various areas but is most often used in corporate disputes as many contracts include arbitration clauses requiring arbitration in lieu of traditional litigation. Arbitration is usually binding, meaning that the decision made by the arbitrator is legally enforceable and cannot be appealed, except in very limited circumstances. This makes arbitration faster and more predictable than litigation, but it also means that the parties have less control over the outcome. It is often chosen because it is typically faster, more cost-effective, and more private than going to court.
February 19, 2025
Business
Search Funds Are Changing the Small Business M&A Landscape
In recent years, search funds have seen increased usage in small business acquisitions, offering a structured yet flexible approach to acquiring and growing companies. The "origin story" is often credited as arising out of Stanford Business School in the 1980s, and has gained traction among entrepreneurs, investors, and family offices since then. It provides a new path to ownership and long-term value creation. So, why are search funds transforming the small business M&A landscape? The answer starts first with the structure of these search funds, how they differ from traditional private equity, and the legal and financial considerations investors and entrepreneurs need to understand. They share many similarities with independent sponsor deals but also have a number of stark differences. What Is a Search Fund? A search fund is a structured investment vehicle designed to help an entrepreneur find, acquire, and operate a small business. It typically follows a two-stage process: Search Phase Investors provide initial capital to support a qualified entrepreneur as they search for a business to acquire. The timeline for this search can typically take 12–24 months and is often dictated by the terms of the investment documents. This initial capital is used to cover due diligence expenses, professional fees, and provide some form of compensation to the searcher (although this last point can turn off some investors). Searchers typically target businesses that fit a particular investment thesis, such as those with strong recurring revenue, low customer concentration, and proven stability. The process requires extensive outreach, negotiation, and due diligence, making it both intensive and time-consuming. Acquisition & Operation Phase Once a suitable business is identified during the search phase, the entrepreneur leads the acquisition, often bringing in additional investor capital and financing for the purchase. SBA loans are often utilized as a financing option unless it is an asset-heavy target, in which case a traditional lender may be willing to finance the deal. Post-acquisition, the entrepreneur operates and scales the business, creating value for investors over a 5- to 10-year horizon. This differs from independent sponsor deals where the independent sponsor may prefer a "hands-off" approach rather than taking on the "operating partner" role. The target size for these acquisitions is typically small businesses with $1M–$5M in EBITDA, focusing on stable, profitable companies where an operational leader can add significant value. Some might be willing to acquire a business with less stable footing if there are clear deficiencies that can be quickly remedied. An example of these remedies can include digital transformation, improved sales or operational processes, faster accounts receivable cycles, or vendor/supplier issues that can be addressed with fresh capital. Why Are Search Funds Growing in Popularity? Aging Business Owners & Succession Gaps Many Baby Boomer-owned businesses are coming up for sale, but they lack internal succession plans. We've all heard about the upcoming "transfer of wealth." This is largely what is being discussed. There are huge amounts of capital locked up in small business ownership. Search funds provide a structured solution, offering business owners an exit while ensuring continuity under capable leadership. Alternative to Private Equity & Traditional M&A Private equity (PE) firms often seek larger, high-growth businesses or require substantial restructuring post-acquisition. Search funds focus on stable, cash-flow-positive businesses, often without excessive debt financing. These search funds also offer emerging managers a platform to showcase their skills and set up future (larger) deals. Strong Investor Interest in Small Business Buyouts Many family offices, high-net-worth individuals, and independent investors are attracted to the long-term, hands-on nature of search fund investments, and the chance to mentor emerging entrepreneurs. Unlike traditional PE, investors partner directly with an operator, aligning interests toward sustainable growth rather than quick flips. Proven Success & Institutional Recognition Studies show that successful search funds yield attractive returns. Stanford’s research indicates an average IRR of 30–35% for successful search fund investments. Business schools and institutional investors are increasingly supporting search funds as a legitimate investment class, with many schools creating "entrepreneurship through acquisition" workshops or curriculums. Key Legal & Financial Considerations While search funds present compelling opportunities, structuring the deal properly is critical to long-term success. Here are key legal and financial considerations investors and entrepreneurs should keep in mind: Legal Considerations: Fund Formation & Investor Agreements: Search fund structures vary—some use traditional LP/GP models, while others form LLCs with pro-rata investor rights. Well-drafted legal agreements define profit splits, investor rights, and operational control. Due Diligence & M&A Structuring: Business acquisitions involve legal, tax, and regulatory complexities. Asset vs. stock purchases have different tax implications and liability considerations. Governance & Founder-Investor Alignment: Search funds operate with investor oversight, often with board seats or advisory committees. Proper corporate governance structures protect both investors and the entrepreneur. Financial Considerations: Equity vs. Debt Financing: Search funds typically rely on equity-heavy funding rather than high levels of debt. However, some deals incorporate SBA 7(a) loans or seller financing to optimize capital efficiency. Profitability & Valuation Metrics: Investors focus on stable EBITDA margins, typically in the 15–25% range. Many search-acquired companies operate in low-tech, recession-resistant industries (e.g., B2B services, healthcare, niche manufacturing). Exit Strategies: Search fund exits typically occur via private equity acquisition, strategic buyer sale, or investor buyout. Holding periods range from 5–10 years, aligning with long-term wealth creation. Should You Invest in or Launch a Search Fund? For investors, search funds offer a compelling alternative to traditional private equity, allowing for: Higher potential returns in undercapitalized small business sectors. More direct involvement and operational influence in acquired businesses. Alignment with long-term value creation, rather than short-term financial engineering. For entrepreneurs, search funds provide: A structured pathway to business ownership with investor-backed support. Access to capital and advisory networks without needing personal funds upfront. A leadership role with strong financial upside. Final Thoughts: The Search Fund Model Is Likely to Continue Trending Upwards As small business ownership transitions accelerate, search funds will continue to play a growing role in the M&A ecosystem. For investors, they provide an opportunity to back talented entrepreneurs in acquiring and scaling high-quality businesses. For "searchers" or buyers, search funds offer a viable and structured alternative to a startup.
February 19, 2025
Estates and Trusts
Not Keeping Records of Your Purchases and Sales, Location, and Authentication Documents – Implications of Restrictions and Patrimony
This is Part 7 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. The provenance of any item is essential to determining its value. Proper documentation of an item’s history and proof of chain of title help establish authenticity, ensuring the highest fair market value at the time of sale. It also prevents clients from wasting money on items later found to be inauthentic. A complete record of an item’s history and chain of title should include the item’s current location and any restrictions on selling or moving the item. This is particularly important when the asset holds historical significance, and the client plans to transfer items between jurisdictions with high taxes on the sale or use of art and collectibles. Understanding the limitations of an item’s sale or transfer can be crucial. Limitations on the use of artwork, as well as patrimony claims often affect the value of an item. For example, in the Estate of Ileana Sonnabend case, Ms. Sonnabend, an art dealer, owned Robert Rauschenberg’s Canyon, a collage featuring a stuffed bald eagle. Federal laws prohibit the possession or trafficking of bald eagles, dead or alive, making the artwork unsellable – although Ms. Sonnabend’s gallery had received a permit allowing the work to be loaned and exhibited during her lifetime. On the federal estate tax return filed for the estate, Canyon’s value was reported as zero. The IRS Art Advisory Panel challenged the valuation, asserting a $65 million fair market value under the assumption that it could be sold on the illicit market to "a recluse billionaire in China." After litigation, the estate resolved the issue by making a long-term loan of Canyon to MoMA in New York City, receiving a full charitable deduction for its full value. Many nations and communities advocate for the return of artworks that hold historical, spiritual, or national significance, arguing that these pieces were taken under coercive or unethical conditions. Patrimony claims often center on the rightful ownership and cultural heritage of works that have been displaced, looted, or unlawfully acquired. Museums and private collectors frequently face both legal and ethical dilemmas when addressing repatriation demands. The most high-profile case involves the Elgin Marbles—renowned Greek sculptures removed from the Parthenon in Athens and currently housed in the British Museum. A UK parliamentary inquiry in 1816 concluded that Britain had legally acquired the Marbles. However, in 2000, the Greek government, in anticipation of the opening of the new Acropolis Museum in Athens, formally requested their return. In 2013, Greece sought UNESCO’s mediation between the Greek and UK authorities regarding the Marbles’ return, but both the UK government and the British Museum rejected UNESCO's offer to intervene. In 2021, UNESCO asserted that the UK had an obligation to return the Marbles and called on the UK government to begin negotiations with Greece. Despite these developments, the controversy remains unresolved. At the Parthenon Museum in Athens, a portion of the original Marbles are on display with white casts held in place of the Marbles, which are still currently on display at the British Museum. While not every client owns artwork as unique as Canyon or the Elgin Marbles, understanding the nuances of a client’s collection is essential for proper representation and estate planning. Every client should keep clear and accurate records that include the acquisition date of each item, its location, and any restrictions on its use.
February 18, 2025
Family Law
Tracing Offshore Accounts in Divorce: How to Uncover Hidden Assets
Offshore accounts are appealing to those trying to hide money because they offer banking secrecy in certain jurisdictions, lax reporting requirements compared to domestic accounts, and complex structures involving shell companies, trusts, or cryptocurrency transactions. However, financial secrecy laws have weakened in recent years due to international regulations, making it harder for individuals to conceal offshore accounts completely. Hiding money offshore often leaves clues. Be alert if your spouse suddenly becomes secretive about finances, transfers large sums to foreign entities, owns international businesses or trusts, reports significantly lower income than expected, and/or has foreign tax filings or receives mail from offshore banks. If any of these signs are present, it’s time to take action. Start with Financial Records Carefully review all available documents, including: Tax Returns: Look at Schedule B (foreign accounts), Schedule D (capital gains from international investments), and FBAR (Foreign Bank Account Report) filings. Bank & Credit Card Statements: Identify unexplained wire transfers to foreign banks or unknown entities. Loan Applications: These often list all assets more honestly than tax returns. Work with a Forensic Accountant Forensic accountants specialize in uncovering hidden assets by analyzing financial patterns, tracing wire transfers, and identifying discrepancies that may indicate offshore holdings. They use advanced financial tracking methods to follow money trails. Leverage Legal Discovery Tools Your attorney can use various legal means to force disclosure of offshore accounts, including requiring your spouse to answer written questions under oath, demanding financial documents related to foreign assets, questioning your spouse under oath about offshore holdings, and/or issuing subpoenas to compel banks, accountants, and business partners to provide financial records. Utilize International Regulations & Reporting Laws Many offshore jurisdictions are now subject to financial disclosure agreements including: FATCA (Foreign Account Tax Compliance Act): Requires foreign banks to report U.S. account holders to the IRS. Common Reporting Standard (CRS): Facilitates global exchange of financial data between governments. Bank Treaties & International Agreements: The U.S. has information-sharing treaties with various countries that can help uncover hidden accounts. Hire an International Asset Tracing Expert If your spouse has business dealings or financial ties in a specific country, an international investigator with expertise in that jurisdiction’s banking laws can be invaluable in identifying hidden assets. Seek Court Orders & Legal Action If your spouse refuses to disclose offshore accounts, your attorney may request contempt of court orders for non-compliance, injunctions to freeze assets before they are moved, and/or orders to compel disclosure of offshore financial records. Don’t Overlook Cryptocurrency & Digital Assets Many individuals hide wealth in cryptocurrency wallets, offshore digital banks, or decentralized finance (DeFi) platforms. Forensic accountants can analyze blockchain transactions to uncover hidden crypto holdings. Tracing offshore accounts in a divorce is complex, but not impossible. With the right combination of forensic accounting, legal tools, and international regulations, hidden assets can be uncovered. If you suspect offshore accounts in your divorce case, consult an experienced attorney and financial expert to ensure a fair and transparent division of assets.
February 18, 2025
Intellectual Property
Navigating the USPTO’s New Trademark Fees
It’s finally here. After months of warnings, announcements, and uneasiness about their application, the U.S. Patent and Trademark Office implemented a number of trademark-related fee changes in January 2025. These fees changes, though, are more than just fee increases. Many of the new fee changes will require new filing practices and strategies to keep Trademark Office fees to a minimum, especially for filings by foreign applicants. Make Sure Your Application Has All Required Information In the past, it was possible to file an application without all of the required information. For example, an application could be filed without a signature and the signature submitted later. While this is still possible, applications filed without the required information will now be subject to an “insufficient information fee” of $100 per class. In some instances, these fees will be incurred at the time of filing (the electronic filing form is supposed to indicate what omissions will incur this fee), and in some instances, they will be incurred during the examination. For example, if an application is for the name of a living individual and is filed without written consent, or if the application is for a mark that is a foreign word and is filed without a translation, the application will incur an insufficient information fee during prosecution. Further, the insufficient information fee will be charged to new classes that are added to an application during prosecution if the application was filed with insufficient information. The Trademark Office does permit pre-examination amendments. The Trademark Office has advised, however, that using a pre-examination amendment to supplement an application with information omitted from the application at filing will wind up incurring the insufficient information fee during prosecution, eliminating a tool that was often used when an application needed to be filed in a hurry. These changes will put a premium on evaluating an application before it is filed to make sure that some effort is made to address all necessary requirements (e.g., a description of the mark, a transliteration, a color claim, applicant’s name, address, and domicile; etc.) Use the ID Manual Applications with listings of goods and services taken from the Trademark Office’s ID Manual (available here: https://idm-tmng.uspto.gov/id-master-list-public.html) are now charged a lower filing fee ($350) than those with listings not taken from the ID Manual ($550). Thus, using the ID Manual where possible is beneficial. In order to be entitled to the lower fee, each item in the listing for a particular class must be taken from the ID Manual. If one item in the listing is not from the ID Manual, then the higher fee will be charged. Further, the Trademark Office has explained that if any text is entered in what it calls the “free-form text” box in an application, the higher fee will be charged, even if some or all of the listings are taken from the ID Manual. Using descriptions from the ID Manual is not necessarily a guarantee that an applicant will be able to avoid the higher filing fee. Some descriptions in the ID Manual require applicants to fill in certain information. Guidance from the Trademark Office indicates that if a good faith attempt to fill in that information is made, the applicant will not be charged the additional fee during examination (use of a description such as “Printed educational materials in the field of specify subject matter” would not be considered a good faith attempt). In those situations, it will be up to the examining attorneys to determine if a good-faith attempt has been made. That will be a subjective determination, and it seems fair to expect the Trademark Office to take its familiar position that one examining attorney is not bound by the acts of another when determining what constitutes good faith. The Trademark Office has also indicated that if a party uses, in good faith, descriptions from the ID Manual and then is required to amend those descriptions, the additional fee will not be charged. Moreover, if an applicant files an application with a description from the ID Manual and then amends to a specification that is not in the ID Manual, the application will not incur the additional charge. One issue with the ID Manual is that it does not list every good or service (this can be a particular issue with new products, technology, etc.). One option for resolving this issue is to ask that a particular description be added to the ID Manual. This can be done by sending an email to tmidsuggest@uspto.gov with the following information: the name of the party submitting the proposed identification; an email address for correspondence relating to the proposed identification; and the proposed identification, which should be concise and no more than 25 words. Depending on how long it takes the Trademark Office to add descriptions to the ID Manual, that may not be a practical option (the Trademark Office’s website suggests that reviews will take 1 to 2 business days, and that accepted updates will be made in the next weekly update, but whether that time frame is accurate remains to be seen). Trademark Office guidance indicates that the insufficient information fee will not apply to issues with descriptions of goods or services. Keep Specifications Short One goal of the Trademark Office is to cut down on lengthy descriptions of goods and services. Thus, the Trademark Office has implemented a new fee of $200 per class where a specification entered as free-form text is in excess of 1,000 characters (the fee does not apply to specifications derived entirely from the ID Manual). The fee applies for each group of characters over 1,000, so a specification over 1,000 characters would incur a fee of $200 and a specification over 2,000 characters would incur a fee of $400. According to the Trademark Office, this fee will only be applied at the time an application is filed and will not be assessed during examination. Consider Filing Multiple Applications Instead of Multiclass Applications While a multiclass application may seem like it would be less expensive, under the Trademark Office’s new rules, it could actually be more expensive. For example, any insufficient information fees will be assessed against each class in an application. Further, if an application has two classes, and the description of goods or services for one is taken from the ID Manual and the other is entered as free-form text, both classes will be charged the additional fee due to the use of the free-form text feature. Additionally, if an application is filed using the free-form text option and a new class is added during examination, the fee for that class will be the higher fee, even if the description of the goods or services in that class is taken from the ID Manual. While it can be difficult to predict whether additional classes will have to be added during prosecution, filing a single class application rather than a multiclass application can reduce the likelihood that the higher fee will be incurred. File Through the Madrid Protocol, If You Can Applications filed through the Madrid Protocol are not subject to the new fees discussed above, making that an attractive means of filing in the United States. Use of the Madrid Protocol already had benefits not afforded to direct filings in the U.S.; applicants who file through the Madrid Protocol have six months in which to respond to any Office Actions that may be issued, rather than the three-month response period for applicants who file directly in the U.S., and this will continue to be the case. Applications filed directly in the U.S. will be subject to the Trademark Office’s new fees, even if those applications are filed based on foreign applications or registrations or claim priority to a foreign application or registration. Anyone considering filing directly in the U.S. based on a foreign application or registration would be well served to match the goods or services description in their home filing to those in the Trademark Office’s ID Manual, if possible, in order to avoid additional fees. If the application is based on a foreign application or registration that has already been filed, consider paring down lengthy specifications to avoid surcharges. A Note on Pending Applications Applications filed before January 18, 2025, will not be subject to any of the new fees if filed as TEAS Standard applications. Applications filed before January 18 as TEAS Plus applications (at the lower filing fee) may incur the insufficient information fee, if appropriate. Conclusion The Trademark Office’s fee changes have ushered in a brave new world of trademark practice in the United States. Only time will tell if these changes will accomplish the Trademark Office’s goals. At this point there are some means of avoiding the imposition of the Trademark Office’s new fees (particularly with some planning), and it is likely that the new fees will cause filers from outside of the U.S. to increase their use of the Madrid Protocol. In the end, though, the new fees and procedures reinforce the importance of working with skilled counsel to secure registration of a mark in as efficient a manner as possible.
February 17, 2025
Family Law
Co-Parenting a Child with Medical Issues Post-Divorce
Divorce is challenging under any circumstances, but when a child has medical issues, teamwork is key. Effective co-parenting is crucial to ensure your child’s health and emotional well-being while navigating medical appointments, treatments, and daily care. Some pointers for successfully co-parenting a child with medical needs after divorce are outlined below. Regardless of past disagreements, both parents must put their child's well-being first. This means setting aside personal conflicts and making joint decisions that prioritize the child’s medical care. Keep communication focused on the child’s needs rather than lingering relationship issues. A structured medical plan should be a key part of your co-parenting agreement. This plan may include: Primary care responsibilities: Who will take the child to doctor’s appointments and therapy sessions? Emergency protocols: What steps should be followed in a medical emergency? Medication and treatment schedules: Clear documentation of medication dosages, therapy sessions, and specialist appointments. Ensure both parents have access to medical records and communicate any changes in treatment. Clear and consistent communication is essential. Use tools like co-parenting apps (e.g., OurFamilyWizard, TalkingParents) to share medical updates, upcoming appointments, and concerns. If face-to-face communication is difficult, rely on written communication to keep emotions in check and ensure accuracy. Medical expenses can be significant, so both parents should agree on how to handle costs. Discuss things like who provides health insurance, how out-of-pocket expenses will be divided, and how unexpected medical expenses will be paid. A written agreement can prevent future disputes. Children with medical conditions often thrive on routine. Ensure both homes follow a consistent schedule for medication, therapy, diet, and rest. Disruptions in care can negatively impact their health, so cooperation is key. Medical conditions can be unpredictable, requiring last-minute schedule changes or adjustments to custody arrangements. Both parents should remain flexible and willing to accommodate each other when emergencies arise. If communication becomes strained, consider involving a mediator, family therapist, or parenting coordinator. These professionals can help facilitate discussions and create solutions that serve the child’s best interests. Divorce can be emotionally challenging for any child, but those with medical issues may feel additional stress. Encourage open conversations about their feelings, reassure them of both parents' love, and work together to create a stable environment. Conflicting medical opinions can create tension. Work together to make informed decisions, consulting with doctors, specialists, or medical advisors when needed. If disagreements persist, mediation or legal counsel may be necessary. Caring for a child with medical needs is demanding, and co-parenting adds another layer of complexity. Ensure you’re also taking care of your own mental and physical well-being so that you can be the best parent possible. Co-parenting a child with medical issues after divorce requires teamwork, patience, and mutual respect. By prioritizing your child’s health, maintaining open communication, and working together, both parents can provide the stability and care their child needs to thrive.
February 17, 2025
Franchise Law
Maryland Franchise Reform Act Introduced
On January 31, 2025, Delegate Marc Korman of Montgomery County introduced Maryland House of Delegates Bill 992, entitled the Franchise Reform Act, which would make the first significant changes to the Maryland Franchise Registration & Disclosure Law (the “Maryland Franchise Law”) since its enactment in 1981. Delegate Korman told me that he introduced the bill because several of his constituents had raised concerns about the franchising process in Maryland. He told me that, in preparing the bill over the past year, he did a deep dive into this law, consulting with the franchise regulators in the Maryland Attorney General’s Office, with me and with others who are familiar with this law. The Maryland Franchise Law is designed to protect people considering the purchase of a franchise from being misled or under-informed when deciding whether to buy. The law requires franchisors to prepare a prospectus (called a “Franchise Disclosure Document” or an “FDD”) detailing a wide variety of information and submit it to the Securities Commissioner, who is an officer with the Maryland Office of the Attorney General (the “OAG”) and obtain that agency’s approval to sell franchises in Maryland. That approval, called registration, must be renewed each year in which the franchisor continues to sell franchises to Maryland residents or for operation of the franchised business in Maryland (collectively, “Maryland Franchises”). The current law mostly addresses the franchise sales process rather than the ongoing relationship between the franchisor and the franchisee. The bill would do the following: For the Benefit of Franchisors Generally: The bill would establish a pilot program, to be run by the Securities Commissioner, that is intended to expedite franchise registration renewals. Maryland registration renewal delays have frustrated many franchisors from throughout the United States. For the Benefit of Maryland Franchisors: Based on the author’s communications with Delegate Korman since the bill’s introduction, he will submit an amendment to the bill that will limit the private parties who can sue a franchisor for violation of the Maryland Franchise Law solely to Maryland Franchisees. This will eliminate the ability of out-of-state franchisees to use the statute as a weapon in disputes with franchisors that are or were headquartered in Maryland – which was a deterrent to franchising from Maryland as compared to nearby states. This expected amendment is a key to making this a balanced and fair bill. For the Benefit of Franchisees: Given the Maryland Franchise Law’s purpose, parts of the bill will benefit franchisees. Specifically: For the first time, the Maryland Franchise Law will address the imbalance of power between franchisees and franchisors within the ongoing relationship, by prohibiting a franchisor from restricting or inhibiting Maryland Franchisees from associating with other franchisees within their brand for the franchisees’ common benefit “for any lawful purpose” – which could include collectively raising grievances with the franchisor for the franchisees’ mutual benefit. Maryland Franchisees will have a right to sue for injunctive relief and damages, in Maryland, if the franchisor violates this prohibition. This provision is similar to “free association” laws passed in several other states, including California and Illinois. The time period in which a franchisee may bring a private claim for violation of the law will be extended until the later of five years from buying the franchise rights or two years after the date of the initial commencement of operations of the franchise. This is a significant relaxation of the time restriction, which had been three years from the date the franchise rights were purchased (regardless of when the franchised business opened). This seems to be an overaggressive change for private rights of action, as we would prefer to see the time period be the later of three years from buying the franchise rights or three years after commencing operations. The Securities Commissioner will be directed to increase the dollar amount of the exemption from full registration review that exists for franchisors with significant “net equity” to account for inflation since that exemption was established in the 1990s. This will allow the Securities Commissioner to substantively review many more FDDs, which may increase compliance by medium-sized franchisors with the disclosure requirements. The time period for the Securities Commissioner to bring claims for violation of the Maryland Franchise Law also will be extended to five years from a violation, giving that office greater ability to protect franchisees who were misled into buying a franchise. (Of note, the amendments concerning private rights of action will not inhibit the Securities Commissioner’s enforcement ability, including the potential that it could sue a Maryland-based franchisor whose misrepresentations harm a substantial number of franchisees outside of Maryland.) The bill will be heard by the House of Delegates Economic Matters Committee in Annapolis on the afternoon of February 19, 2025, and the author has been invited to testify on the bill and plans to do so favorably, with the amendments discussed above. We plan to keep a close watch on the activity surrounding the bill and provide additional information.
February 14, 2025
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