Bankruptcy
One Way or Another: Non-U.S. Crypto Customers Will Have to Face Celsius Preference Lawsuits
Why You Should Read Terms Before You Click or Check the Box with “I Agree” As Blondie sings: One way, or another, I'm gonna find ya I'm gonna get ya, get ya, get ya, get ya One way, or another, I'm gonna win ya I'm gonna get ya, get ya, get ya, get ya Earlier this summer, the Bankruptcy Court for the Southern District of New York rejected a challenge to the Litigation Administrator, Moshin Y. Meghji, lawsuits against Celsius Network LLC customers. The challenge was based on, among other grounds, lack of personal jurisdiction over defendants who resided outside of the United States and undertook transactions with Celsius online. The litigation administrator asked the Bankruptcy Court to hold that the foreign defendants were subject to personal jurisdiction, and that the preferential transfers they received were domestic transfers for the purposes of the preference avoidance provisions of the Bankruptcy Code, or, in the alternative, that these provisions of the Code applied extraterritorially. The foreign defendants argued that jurisdiction cannot be decided without a factual record, given questions about which entity owned the crypto, inconsistent Terms of Use provisions, potential fraudulent inducement, and the heavy burden on foreign defendants to litigate in the U.S. In his July 29 decision, Judge Glenn held that a bankruptcy court may exercise jurisdiction over a foreign defendant if the defendant has minimum contacts with the United States as a whole. The court further found that, as to all customers, the transfers were domestic and involved a domestic application of the Bankruptcy Code. Because the transfers are domestic in nature, the court did not reach the issue of extraterritoriality[1]. The court held that the transfers were domestic in nature because they were made from a Delaware company via LLC-designated frictional wallets and workspaces. The court’s analysis meticulously followed the textbook test for exercising specific personal jurisdiction over a non-resident defendant. Judge Glenn reviewed the three requirements that must be satisfied: “(i) a defendant must have purposefully availed itself of the privilege of conducting activities within the forum State or have purposefully directed its conduct into the forum State, or the United States when the issue arises in adversary proceedings in bankruptcy courts; (ii) the plaintiff’s claim arises out of or relates to the defendant’s forum conduct; and (iii) the exercise of jurisdiction must be “reasonable under the circumstances.” U.S. Bank Nat’l Ass’n v. Bank of Am. N.A., 916 F.3d 143, 150 (2d Cir. 2019).” Why the Court Found There was Personal Jurisdiction All non-US customers were bound by the Terms of Use, which contained a New York choice of law provision and a forum selection clause requiring litigation in New York courts, and that had shifted Celsius’ primary business operations, relationships, and obligations away from a U.K. entity to a U.S. company. Accordingly, the Bankruptcy Court found that the foreign defendants’ decision to contract with the U.S. company manifests an intent to purposefully direct their activities at the forum. Defendants have contracted to open accounts in a U.S.-based entity and signed a contract subject to the laws of the State of New York. The transfers were made by a U.S. entity to the foreign defendants accounts. “[A] contract with a New York choice of law provision is “a significant factor in a personal jurisdiction analysis because the parties . . . invoke the benefits and protections of New York law.” In re Celsius Customer Preference Actions, No. 24-04024 (MG), 2025 WL 2125270 (Bankr. S.D.N.Y. July 29, 2025) citing Sec. Inv. Prot. Corp. v. Bernard L. Madoff Inv. Sec., LLC, 460 B.R. 106, 117 (Bankr. S.D.N.Y. 2011), aff'd, 474 B.R. 76 (S.D.N.Y. 2012). These principles, Judge Glenn, emphasized also apply to clickwrap agreements. Id. at 12 citing Zaltz v. JDATE, 952 F. Supp. 2d 439, 451–55 (E.D.N.Y. 2013) (finding plaintiff assented to defendant’s terms of service when she clicked a box agreeing to the defendant's terms of service). Additional analysis of the forum selection clauses also supported the finding of personal jurisdiction over the foreign defendants. The Terms of Service included the following language: [t]he relationship between you and Celsius is governed exclusively by the laws of the state of New York. . . . Any dispute arising out of, or related to, your Celsius Account or relationship with Celsius must be brought exclusively in the competent courts located in New York, NY and the U.S. District Court located in the Borough of Manhattan. . . . Judge Glenn held that the Terms of Use were reasonably communicated to the defendants, the forum selection clause was mandatory, and the claims and parties involved in the litigation were subject to the forum selection clause. Lastly, the court held that the foreign defendants have not demonstrated a strong showing to rebut the presumption of enforceability. The court was not persuaded by the argument that an individualized determination with respect to each defendant was necessary, and the court could not rule on the defendants “en masse,” because the defendants did not dispute that the Terms of Use that were active during the preference period contained a forum selection clause. While allegations of fraudulent inducement and other defenses may be addressed in future proceedings, the court concluded that the litigation administrator had made a prima facie showing of personal jurisdiction over all defendants. In summary, Judge Glenn’s decision reinforces a clear message: engaging with U.S.-based platforms — even digitally —comes with legal obligations. The ruling not only affirms the reach of U.S. bankruptcy jurisdiction but also sets a precedent for how courts may treat cross-border crypto transactions going forward. The fine print matters! [1] As Judge Glenn pointed out the presumption against extraterritoriality is a “basic premise of our legal system.” It provides that “[a]bsent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” RJR Nabisco v. Eur. Cmty., 579 U.S. 325, 335 (2016) (citing Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 255 (2010)). The two-step inquiry, when analyzing extraterritoriality issues, requires to ascertain if a statute gives a clear indication of an extraterritorial application and if there is no such clear indication of an extraterritorial reach then a court has to examine the statute’s ‘focus’ to determine whether the case involves a domestic application of the statute.
August 27, 2025
Business
Non-Compliance with CMMC Could Put Your DoD Contracts at Risk
This past month, the Department of Defense sent the final rule for the new Cybersecurity Maturity Model Certification (CMMC) program under the Federal Acquisition Regulation to the Office of Information and Regulatory Affairs for review. This action precedes the inclusion of the new rule in Department of Defense contracts beginning this autumn. So, it is time to get into compliance for all who have been delaying the inevitable. Below is a quick review of these requirements. Background CMMC is designed to bolster the cybersecurity posture of the DoD’s supply chain by validating that DoD contractors and subcontractors possess the necessary cybersecurity practices and processes to safeguard Federal Contract Information (FCI) and various kinds of Controlled Unclassified Information (CUI). CMMC introduces a tiered, certification-based approach, ranging from Level 1 (basic cybersecurity practices for FCI) to Level 2 (advanced practices for most CUI), and Level 3 (expert practices for sensitive CUI). Why is This Important? Contractors and subcontractors must attain the appropriate CMMC level aligned with the security requirements of their contracts to bid and work on DoD projects. In addition to the cybersecurity and reputational risks of non-compliance, if contractors and subcontractors fib or cut corners, they could face False Claims Act (FCA) liability, including draconian damage and penalty assessments. One disgruntled employee who decides to bring an FCA complaint can cost a company significant pain. Contracts Covered by CMMC The CMMC requirement applies to DoD acquisitions that involve the handling of FCI and CUI. Major Contract Programs: Contracts for the procurement of defense systems, weapons, military equipment, and related services that require access to CUI or FCI will be directly impacted. This includes a broad spectrum of procurement categories across the DoD, from large-scale hardware contracts to software development and services. Subcontractors and Supply Chain: Importantly, the rule also extends to subcontractors at all tiers. This flow-down creates a ripple effect throughout the defense supply chain. Contracts Not Subject to CMMC While the rule is broad, it does not universally apply to all federal contracts. FAR Part 12 Commercial Item Contracts: Some commercial item contracts purchased under FAR Part 12 may be excluded unless the scope involves sensitive information or national security concerns. Contracts with No Access to CUI or FCI: Contracts that do not involve access to or handling of CUI/FCI will not be subject to CMMC requirements. Other Exceptions: The FAR Council has provisions for exemptions for technical or administrative reasons, but these are limited and require justification. What is FCI If you are a contractor or subcontractor that handles controlled information such as CUI, you likely have some sophistication regarding cybersecurity. But those with FCI may not be aware that they have protectible information, and most medium and larger-sized DoD contracts will have FCI. FCI refers to information that is not intended for public release but is provided by the federal government to a contractor or subcontractor for the purpose of fulfilling a federal contract. It includes data that is critical to the performance of government contracts. Examples include technical data (e.g., details about a supplier’s hardware specifications), contract schedules and milestones (e.g., timelines for delivering military equipment), and financial or administrative information shared with contractors. Typical Contracts:Smaller contracts Basic supply chain activities FCI Requires Level 1: Basic Cyber Hygiene Key Requirements: Implementation of basic controls, including access only by authorized users, maintaining identification and authentication, and physical protection of information systems. Practices include routine login credentials, portable device protections, and basic awareness training. Annual self-assessment and annual affirmation of compliance with CMMC requirements. What is CUI It’s not classified information, but it is information that requires safeguarding pursuant to various laws, regulations, and government policy. Examples include information about physical security, system vulnerability, or operational issues. CUI Requires Level 2 (Intermediate) or Level 3 (Expert) Processes Level 2: Intermediate Cyber HygienePractices: 110 practices, aligned with NIST SP 800-171 security requirements. Focus: Establishing more disciplined cybersecurity processes and practices suitable for organizations handling CUI. Third-party assessments are required for certification at this level. Level 3: Expert Cyber HygienePractices: Over 130 security controls, closely aligned with NIST SP 800-171, plus some additional practices. Focus: A mature, enterprise-wide cybersecurity program. This will apply only to a limited number of contractors with larger, more sensitive defense contracts that require higher levels of CUI protection. Third-party assessment is required.
August 27, 2025
Labor and Employment
Evolving Standards for Religious Accommodations at Work
The legal framework surrounding religious accommodations in the workplace has evolved significantly, driven by recent court decisions, EEOC enforcement actions, and federal guidance. Employers must gain a clear understanding of these changes, to ensure compliance with Title VII of the Civil Rights Act of 1964. With heightened scrutiny on religious exemption requests, particularly in the wake of COVID-19 vaccine mandates, employers must stay informed to avoid costly litigation and foster inclusive workplaces. Key Court Rulings Clarify Religious Accommodation Standards Recent judicial decisions have reshaped how employers must evaluate religious accommodation requests under Title VII. Below are pivotal cases that highlight the courts’ focus on sincerity of belief and the elevated standard for denying accommodations. Second Circuit: Defining Sincerely Held Beliefs In Gardner-Alfred v. Federal Reserve Bank of New York, 143 F.4th 51 (2d Cir. 2025), the Second Circuit offered critical guidance on assessing “sincerely held” religious beliefs in the context of COVID-19 vaccine mandate exemptions. The Federal Reserve Bank of New York (FRBNY) terminated two employees after denying their religious exemption requests. The court’s ruling clarified: Low Threshold for Sincerity: Plaintiff Gardner-Alfred’s exemption request was dismissed due to its reliance on a generic “exemption package” lacking ties to specific religious practices. Employers can expect courts to require detailed, individualized expressions of belief. Inconsistency Does Not Disqualify: Co-plaintiff Diaz’s claim was revived despite inconsistent behavior (e.g., using medications potentially conflicting with her religious objections). The court emphasized that imperfect adherence does not negate sincerity. Misunderstandings Are Valid: Diaz’s objection to mRNA vaccines, based on a mistaken belief about fetal cell lines, was deemed genuine. Employers cannot dismiss requests due to factual inaccuracies. Other Landmark Cases Groff v. DeJoy, 143 S. Ct. 2279 (2023): The Supreme Court raised the bar for denying accommodations, requiring employers to show a “substantial increased cost” or operational burden. This decision significantly strengthens employee protections. Keene v. City and County of San Francisco, No. 22-16567 (9th Cir. 2024): The Ninth Circuit ruled that blanket denials of religious exemptions, without engaging in the interactive process, violate Title VII. Bube v. Aspirus Hospital, Inc., No. 22-cv-745 (W.D. Wis. 2024): A federal district court rejected a hospital’s denial of exemptions based on vague claims of workplace disruption, reinforcing the need for specific evidence of undue hardship. Employers must conduct individualized, respectful inquiries into the sincerity of religious beliefs and avoid denials based on assumptions or skepticism. EEOC’s Robust Enforcement of Religious Rights The Equal Employment Opportunity Commission (EEOC) has intensified its focus on religious accommodations, particularly in response to COVID-19 vaccine mandate disputes. Key developments include: Recent EEOC Appellate Decisions (August 4, 2025) The EEOC’s Office of Federal Operations issued three decisions clarifying accommodation standards: Department of Veterans Affairs: A physician requesting Friday afternoons off for prayer was offered reduced hours or an overly burdensome schedule. The EEOC ruled these options unreasonable, noting that accommodations causing employee disadvantage (e.g., reduced pay) are insufficient. Claims of “low morale” among staff were also deemed inadequate justification. Federal Reserve Board: A law enforcement officer’s exemption request was denied without exploring accommodations or documenting hardship. The EEOC applied the Groff standard retroactively, emphasizing the need for a thorough process. EEOC’s Enforcement Milestones (August 18, 2025) In its “200 Days of EEOC Action to Protect Religious Freedom at Work” press release, the EEOC reported: Over 10,000 charges related to religious accommodations for COVID-19 vaccine mandates More than $55 million recovered for workers, including a $1 million settlement with Mercyhealth Lawsuits against organizations like Silver Cross Hospital and the Mayo Clinic for improper denials of religious exemptions The EEOC is prioritizing robust enforcement, and employers face significant risks for cursory or unsubstantiated denials of religious accommodations. Federal Guidance Promotes Accommodation The Office of Personnel Management (OPM) issued memoranda on July 16 and July 28, 2025, urging federal agencies to adopt a pro-accommodation stance. Key points include: Emphasizing a good-faith interactive process with detailed documentation Encouraging low-cost solutions like telework or flexible scheduling, which require strong justification if denied While directed at federal agencies, these guidelines reflect broader expectations for all employers under Title VII. Practical Steps for Employers To navigate this high-scrutiny environment, employers should adopt the following strategies. Risk Area Actionable Steps Sincerity Challenges Conduct respectful interviews, focusing on the employee’s stated beliefs. Avoid demanding theological proof or overly intrusive inquiries. Undue Hardship Claims Provide specific, data-backed evidence of substantial costs or operational burdens. General claims like “staff discomfort” are insufficient. Manager Training Train supervisors on clear protocols for handling accommodation requests compassionately and escalating them appropriately. Policy Review Update accommodation policies to align with the Groff standard and EEOC’s enforcement priorities. Ensure procedures are transparent and consistent. Documentation Log every step of the interactive process to demonstrate compliance and build a defensible record. The Lasting Impact of COVID-Era Policies The legal and regulatory focus on religious accommodations, spurred by COVID-19 vaccine mandates, has created a lasting shift in employment law. From scheduling adjustments to exemption requests, religious considerations are now central to workplace compliance. Employers must stay proactive, ensuring policies and practices reflect the latest legal standards to avoid litigation and promote a respectful, inclusive workplace.
August 25, 2025
Estates and Trusts
Trust Protectors – Should You Have One?
When creating a trust, determining who you want to serve as trustee(s) and benefit from the trust as beneficiaries are decisions that need to be made for every trust. The role of “trust protector” may not be as commonly known or understood, but the decisions whether to have one and, if so, who might best serve in the role, can be key to a smooth administration. A “trust protector” can provide valuable trustee oversight, flexibility, and inexpensive revisability — especially in long-term or complex trust arrangements. Deciding whether to have one and, if so, who might best serve in the role, can be key to a smooth trust administration. What is a Trust Protector? A “trust protector” is a person or entity appointed to monitor and, if necessary, intervene in the administration of a trust. Unlike a trustee, the trust protector does not manage trust assets or distributions. Instead, they are granted specific powers, defined in the trust document, to ensure the trust continues to operate in line with the grantor’s intent. Typical powers of a trust protector may include some combination of the following: Removing or replacing a trustee Amending trust provisions to comply with changes in law Resolving disputes between trustees and beneficiaries Approving or vetoing certain trustee actions This role is especially useful in irrevocable trusts, where flexibility is generally pretty limited. Does My Trust Need a Trust Protector? Not every trust requires a trust protector, but there are several scenarios where appointing one may make more sense: Long-Term Trusts: Trusts designed to last decades or generations benefit from a mechanism to adapt to changing laws and circumstances. Irrevocable Trusts: Since these trusts are difficult to modify, a trust protector can provide limited flexibility without court involvement. Complex Family or Business Dynamics: If there’s potential for conflict or concern about trustee performance, a trust protector can serve as a neutral safeguard. Asset Protection or Offshore Trusts: These often include a trust protector as a standard feature to enhance oversight and control. How Do I Choose the Right Trust Protector? If you’ve chosen to include a trust protector, how do you how do you decide which person is the right fit for your particular trust? Electing the appropriate trust protector is critical to ensuring the role adds value rather than complexity, and every situation should be evaluated on its own merits. That said, you might want to consider some or all of the following when making your choice: Independence: Ideally, the trust protector should not be either a beneficiary or a trustee to minimize or avoid altogether potential conflicts of interest. Expertise: Legal, financial, or fiduciary experience is beneficial, especially if the trust is complex or long-term. Trustworthiness: As the name implies, this role requires someone who can be relied upon to act in good faith and consistently with and in furtherance of the grantor’s intent. Availability: The trust protector should be willing and able to serve for the duration of the trust or have a succession plan in place. Often, clients choose a trusted advisor, attorney, or corporate fiduciary to serve in this role. Common Misconceptions About Trust Protectors Despite their growing use, the purpose and/or responsibilities of trust protectors can be misunderstood. Here are a few common misconceptions: “Trust protectors replace trustees.” It depends on what is meant by “replace” in this context. They generally oversee and intervene with the authority to replace one or more trustees with another only when necessary (such as when a trustee is perceived to be abusing his or her position or failing to carry out the terms or intentions of the trust). Trust protectors do not, however, manage assets or make routine decisions by substituting or “replacing” their own judgment for that of the appointed trustee(s). “Only large or offshore trusts need a trust protector.” While the use of trust protectors is common for large or offshore trusts, trust protectors can be helpful in domestic estate plans, especially where flexibility or oversight is desired. Reasons why a particular trustee may have been named at the time of drafting may no longer apply when the time comes. Successor trustees may not be in a position to step in as established in the trust (due to age or health issues, for instance). With a trust protector in place, it can be like having an added layer of defense against life’s unexpected twists. “Appointing a trust protector complicates the trust.” If “complicates” means the addition of more words, then yes, the addition of a trust protector does complicate things. Nevertheless, when properly drafted, a trust with a built-in protector can simplify administration of the trust and reduce, or even eliminate altogether, the need for court involvement. Take the situation faced by Jimmy Buffett’s widow. With Jimmy’s former legal counselor/advisor and his wife on equal footing as trustees, they quickly deadlocked over what can, should, or must be done with the assets and distributions. A well-chosen trust protector in Jimmy Buffett’s case could have served as the needed tie-breaking vote and/or insisted upon a “change in attitude” or occasioned a “change in latitude” by ousting whichever of the trustees, in the judgment of the trust protector, seemed to be missing the settlor’s intention, or as Jimmy might have said, acting as the “people our parents warned us about.” Final Thoughts A trust protector is not an essential requirement but, in the right circumstances, can be a valuable addition to a trust. The presence of a trust protector can serve as a “check and balance” feature to help ensure your trust remains effective, adaptable, and aligned with your goals over time by providing oversight after you passed on. If you're wondering whether a trust protector is right for a new trust you are considering, simply be sure to mention it to your estate planner/drafting attorney. If considering revising an existing trust to add a trust protector, seek a second opinion, separate from the initial drafting attorney, to evaluate your specific needs and objectives and whether these are more likely to be met with or without a trust protector.
August 25, 2025
Labor and Employment
Pregnancy and Lactation in the Workplace: Employer Duties Under Federal Law
August is the most popular birth month in the U.S., meaning many employees will return from parental leave this fall and winter with new postpartum needs. Two key federal laws – the PUMP Act and the Pregnant Workers Fairness Act (PWFA) – shape the legal obligations employers must provide to nursing employees and others with pregnancy-related conditions. Understanding these laws is essential for compliance and creating a supportive workplace for new parents. PUMP Act The Providing Urgent Maternal Protections for Nursing Mothers Act (“PUMP Act”), 29 U.S.C. § 218d, signed into law in December 2022, expands protections under the Fair Labor Standards Act (FLSA) for employees who need to express breast milk at work. The PUMP Act requires that employers provide reasonable break time, whenever needed, for an employee to express breast milk for her nursing child during the first year after birth and prohibits denying a covered employee a necessary pumping break. The law also requires employers to provide a space, other than a bathroom, that is shielded from view and free from intrusion by coworkers and the public. These protections apply to nearly all FLSA-covered employees; however, certain employees of airlines, railroads, and motorcoach carriers are exempt from the law, and employers with fewer than 50 employees are not subject to the break time and space requirements if compliance would impose an undue hardship. Even so, employees who are exempt under federal law may still be entitled to protections under state or local laws. The PWFA The Pregnant Workers Fairness Act, 42 U.S.C. §§ 2000gg to 2000gg-6, effective June 27, 2023, requires covered employers to provide reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions, unless doing so would cause undue hardship. Examples of reasonable accommodations under the PWFA include modified work schedules to allow for pumping, additional breaks beyond those required by the PUMP Act, and temporary changes in duties to reduce postpartum physical strain. The PWFA covers private and public sector employers with 15 or more employees, Congress, federal agencies, employment agencies, and labor organizations. 42 U.S.C. § 2000gg(2). Employers can take several proactive measures to comply with the PUMP Act and PWFA while supporting pregnant, nursing, and postpartum employees. Employers should start by reviewing and updating workplace policies to ensure they reflect the requirements of both laws, including clear procedures for requesting accommodations and designating appropriate lactation spaces that meet the PUMP Act standards for privacy and accessibility. Employers should also have processes in place to ensure that managers, supervisors, and HR personnel understand how to promptly respond when an employee raises a pregnancy- or postpartum-related need or accommodation request. Finally, maintaining open communication with employees returning from parental leave by proactively providing information on their rights and the resources available to them can help prevent misunderstandings, reduce legal risk, and foster a more supportive and inclusive workplace culture.
August 22, 2025
Bankruptcy
Fifth Circuit Confirms Third-Party Liens Survive Chapter 11 Discharge
The Fifth Circuit has confirmed the old adage that liens “ride through” bankruptcy regardless of a discharge. Reversing a Texas bankruptcy court, the Circuit Court has held that a statutory privilege (a lien) against property of a non-debtor cannot be extinguished by a Chapter 11 discharge or by a plan provision stating that the underlying claim is “settled” or “satisfied” by the plan’s payments. In In re Dynamic Offshore Res. NS, L.L.C., 2025 WL 1651901 (5th Cir. June 11, 2025), the panel reversed the Bankruptcy Court for the Southern District of Texas and held that an oil driller’s “statutory privilege” under Louisiana law to a lien against an oil well site’s owner or lessee was not extinguished by the Chapter 11 discharge or the confirmed plan’s provisions that creditors’ payments are in “settlement” and “satisfaction” of their claims. The debtor, Fieldwood, an oil well operator, had failed to pay a driller $13 million for its services prior to the bankruptcy case. The driller sought to enforce its statutory privilege against the site lessee under Louisiana law, but the lessee argued that the confirmed plan, which discharged the debt and indicated confirmation constituted a “satisfaction’ of the claim, meant the lien could no longer be enforced. Of course, the “black letter” rule that a lien “rides through” bankruptcy regardless of discharge would seem to apply. The twist was that under the “Louisiana Oil Well Lien Act” (LOWLA), the “privilege [was] extinguished ... [u]pon extinction of the obligation it secures.” So, the debtors were able to argue that, if the discharge or confirmed plan rendered the debt “extinct,” then the lien must be extinguished as well. They managed to get the bankruptcy court’s attention. After first ruling that the lien was not extinguished, Judge Isgur reversed himself and found that the obligation was rendered “extinct” by the discharge and plan provisions stating that creditor payments were in “settlement” and “satisfaction” of claims. A settlement and satisfaction, Judge Isgur reasoned, meant that the obligation ceased to exist, meaning the privilege must be extinguished. On appeal, the court noted the well-known rule that a discharge does not extinguish a claim but simply operates as a permanent injunction against its collection. So, the discharge couldn’t be grounds for extinguishing the lien under Louisiana law. The panel then noted that plan’s “settlement” and “satisfaction” language applied only to the relationship between the creditor and the debtor and cannot release a third-party from the underlying lien rights. Taking its cues from Purdue, the panel stated that not only were non-consensual release provisions generally prohibited by the code, but that no third-party release could arise from general language such as “settlement” or “satisfaction,” because such releases must be stated specifically in the language of the plan.
August 21, 2025
Sports Entertainment and Media
Federal Court Rules SoundExchange Lacks Standing in SiriusXM Royalty Dispute
Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York dismissed SoundExchange's $150 million lawsuit against SiriusXM, finding that the performance rights organization lacks legal standing to pursue litigation against broadcasters. The August 7, 2025, decision centered on allegations by SoundExchange, a non-profit entity designated by Congress as the singular entity responsible for collecting and distributing digital performance royalties for sound recordings, that SiriusXM manipulated its revenue accounting to shortchange artists on royalties stemming from the company’s satellite radio services. SoundExchange based its suit primarily on Section 114 of the U.S. Copyright Act, and claims that the underpaid royalties by SiriusXM have climbed since filing the initial suit in 2023, now allegedly exceeding $400 million. Judge Buchwald's opinion concluded that while Section 114 of the Copyright Act designates SoundExchange as the authority for collecting and distributing digital performance royalties, Congress never explicitly granted the body a private right to enforce nonpayment through litigation —unlike Section 115 — which expressly confers similar litigation powers to The Mechanical Licensing Collective. Notably, Judge Buchwald did not specifically address the merits of SiriusXM’s alleged nonpayment, restricting analysis solely to the threshold issue related to Section 114 of the Copyright Act, potentially leaving a door ajar for further enforcement by SoundExchange. SoundExchange disputed the ruling, calling Judge Buchwald's interpretation "entirely wrong on the law" and argued that Congress's inclusion of the word "enforcement" in Section 114 necessarily implies litigation authority. The organization contends that being charged with collecting and distributing royalties without the ability to bring legal action against non-compliant licensees would undermine the entire statutory licensing framework's function and efficiency. SoundExchange also points to practical precedent, noting as well that SiriusXM has acknowledged in prior disputes that SoundExchange reserves the right to sue for compliance. The ruling may have broader implications beyond the immediate SiriusXM case, affecting SoundExchange's enforcement capabilities across the digital music industry, including pending lawsuits against Napster and Sonos for similar nonpayment. SoundExchange is considering an appeal to the Second Circuit and potentially filing actions in state courts to preserve its enforcement mechanisms. The case presents a fundamental question about Congressional intent in creating the modern digital music licensing framework and whether administrative efficiency requires corresponding enforcement authority, with the resolution likely to have lasting implications for the balance of power between streaming services and rights holders in the music industry.
August 20, 2025
Family Law
Can You Start Dating While Divorcing? Legal and Personal Considerations
When couples agree to divorce, one of the first questions that is often asked is: “Can I start dating?” The simple answer is yes you can, but there are things to keep in mind. Even after you’ve filed for divorce, you are still legally married until a judge signs the final divorce papers. That means dating is technically “dating while married.” In most cases today, this won’t stop your divorce from going through. But it can impact issues like custody arrangements, financial matters, and how smoothly the proceedings unfold. If you have children, the court is always focused on what’s best for them. Dating amid a divorce often prompts questions such as: Is the new partner being introduced too soon Does the new relationship disrupt the children’s routine Is it adding stress or confusion for the kids Is the new partner reputable, a criminal, a public figure, etc. Judges want to see stability. Even if you feel ready to move forward, the court may see early dating as a potential distraction from your children’s needs. One of the biggest financial pitfalls of dating during divorce is something called “dissipation of marital assets,” which is a legal way of saying: spending money that belongs to both spouses on things outside the marriage, without your spouse’s consent. Examples include: Buying gifts for a new boyfriend or girlfriend Paying for trips, meals, or hotels with marital funds Using joint accounts for entertainment, rent, or travel related to the new relationship If the court finds that money was spent in this manner, the spouse responsible may be required to “pay it back” by giving the other spouse a larger share of the remaining assets. There are other practical concerns. For instance, negotiations may become more challenging. If your spouse finds out you’re dating, they may feel hurt or angry, which can make reaching an agreement more difficult. Dating while married can be emotionally messy. Divorce already comes with a lot of stress. Adding a new relationship may complicate your own healing process. If you start dating, children must come first. They may need time, as children often struggle with change. Bringing a new partner into their lives before the dust settles may make things harder on them. Tips if You Do Decide to Date Don’t use joint or marital funds on the new relationship Keep your dating life private until after the divorce is finalized Wait to introduce a new partner to your children until things are more settled or you’ve discussed a process with a mental health professional Talk with your lawyer about how dating might impact your specific case There isn’t a law that outright bans dating during a divorce, but between possible custody concerns, financial risks like dissipation, and the emotional toll, it often does more harm than good. If you want the divorce process to go as smoothly as possible, and protect your finances and your kids, the safest choice is usually to wait until the divorce is final before jumping back into dating.
August 19, 2025
Estates and Trusts
Planning and Parting Wisdom to Consider for Your College-Bound Children
Sending a child off to college is a major milestone — one filled with pride, excitement, and, in my case, a little anxiety. Two years ago, I sent my eldest to Europe for her university experience and, while my second is staying in the U.S., she is headed south this fall. I am sorry to report to the parents sending their child off for the first time that it does not get any easier. As parents, we spend years preparing them emotionally for this next chapter. But there’s another critical aspect of preparing them to fly the nest that often gets overlooked: legal documents and related planning. Once your child turns 18, you no longer have automatic access to their medical records, financial accounts, academic records, and in some states, you do not even have the right to make decisions on their behalf in an emergency. Without certain legal documents in place, you may be powerless in a situation where your guidance, input, and authority are most needed. Healthcare Proxy (sometimes referred to as a Medical Power of Attorney) A Healthcare Proxy allows your eighteen-year-old child to appoint someone (usually a parent) to make medical decisions on their behalf, in the event that they cannot articulate their wishes to care providers. This is crucial in emergency situations. Without this document, and pursuant to the Health Insurance Portability and Accountability Act (HIPAA), medical professionals are prevented from sharing any information, even with you, about your child’s condition. HIPAA Authorization Form HIPPA protects your eighteen-year-old child’s privacy once they are legally an adult. A HIPAA Authorization form specifically allows healthcare providers to release medical information to you, giving you the ability to communicate with doctors, access medical records, and be informed in case of an emergency. Durable Power of Attorney (POA) A POA empowers you, or whomever your child names, the authority to handle their financial matters. This can include managing bank accounts, signing tax returns, handling financial aid or tuition payments, and more, either on a temporary or ongoing basis. A POA is invaluable if your child is studying abroad, facing a logistical emergency, or simply needs help managing administrative tasks while adjusting to college life. FERPA Release Form The Family Educational Rights and Privacy Act (FERPA) limits a parent’s access to their child’s educational records (grades, disciplinary actions, tuition bills, etc.) once the child turns 18 or attends a postsecondary institution. If your child signs a FERPA release form, it authorizes the college to communicate with you directly about their academic records. Many universities provide this form during orientation, but it’s important to ask proactively. Digital Assets and Passwords University students, like all their peers, live much of their lives online. From email accounts to social media to online banking and cloud storage, ensuring a trusted individual has access to these digital assets in case of emergency is often overlooked. Encourage your child to create a secure list of important passwords or use a password manager that can grant emergency access to trusted individuals. Lists of passwords should never be stored on a phone or similar device that can be accessed by those who are not the appointed trusted individuals. Health Insurance Considerations When my child attended university in Europe, we discovered that her health care would be covered by university while in Europe. Still, we had to review her existing coverage here in the U.S., to ensure she still had coverage when she was home. It is imperative to verify whether your child will remain on your health insurance plan or if the university requires participation in a student health plan managed by the university. Sometimes the options provided by the university are more economical or make more sense if the university is far away and the plan has local coverage. If your child remains on your health care insurance, they should have at least a copy of their health insurance card. They should also understand how to locate in-network providers near campus and know the process for seeking care away from home, so that you are not stuck with a large medical bill from an out-of-network provider. Emergency Contacts and Local Resources Ensure your child’s phone has updated emergency contacts. It is recommended that named emergency contacts should be designated as such in their phone so others can assist in contacting you, if needed. In addition, make sure that your child has the names and locations of local, reputable urgent care centers, hospitals, dentists, mental health providers off campus, and pharmacies near their university. Emergencies are, by nature, unpredictable. In a crisis, the last thing you want is to be delayed by red tape. Having these documents in place not only gives you peace of mind but also empowers your child to step into adulthood with a well-prepared safety net. This is also a great opportunity to introduce your child to the concept of planning, in general, which is a personal responsibility and something to consider as they join the ranks of legal adulthood. By having these conversations now, you are not just preparing for emergencies, you are equipping them with the mindset of proactive life planning. Providing the tools to handle their newfound independence is one of the best send-off gifts you can give.
August 19, 2025
Family Law
Who Controls the Money Doesn’t Control the Divorce
It’s very common in a marriage for one spouse to earn most of the income or handle all the financial decisions. But when divorce happens, the spouse who hasn’t managed the money often feels anxious or powerless. The good news is that the law provides protections to make sure both spouses are treated fairly, regardless of who made or controlled the money. During a divorce, both spouses must provide full financial disclosure. That means: Listing income, bank accounts, retirement accounts, investments, and debts Producing tax returns, pay stubs, and account statements Explaining assets like real estate, businesses, or pensions Even if your spouse controlled the accounts during the marriage, they must disclose everything in the divorce. If they try to hide assets, courts can impose penalties or sanctions. Courts understand that one spouse may need money to get by while the divorce is pending. The dependent spouse has options like asking the court for: temporary spousal support (sometimes called “pendente lite” support) to cover living expenses until the divorce is final access to marital accounts to use for reasonable living expenses during the divorce, as long as money isn’t wasted attorney’s fees if one spouse has no access to funds to pay toward attorney’s fees, so both sides can participate fairly In most states, marital property includes income and assets acquired during the marriage — even if only one spouse earned the paycheck. That includes retirement accounts, savings, and property bought during the marriage, which are usually divided fairly (though not always 50/50), and debts, like mortgages or credit cards, are also divided. So even if you didn’t control the finances, you still have a legal claim to your share of what was built during the marriage. If one spouse has been financially dependent on the other, the court may award spousal support. This is not formulaic in most jurisdictions, and instead is based on factors such as: Length of the marriage Each spouse’s income and earning ability Standard of living during the marriage Contributions to the household (including childcare and homemaking) Health of each spouse Age of the parties Cause of the breakup of the marriage The goal is to ensure a fair transition, particularly for spouses who have given up career opportunities to support the family. Before or during the divorce process, the dependent spouse can take steps to protect themselves. For instance, collect as much financial documentation as possible, copy it, and provide it to their lawyer. Inform your lawyer if you are aware of assets, even if you do not have access to the records. If possible, avoid using credit cards to survive. Taking on debt may lead to future complications, speak with your attorney about safer alternatives. If your spouse made all of the money and managed the finances, you are not at their mercy in divorce. The law requires financial transparency, gives you the right to a fair share of marital assets, and provides ways to make sure you have the financial support you need during and after the process. You don’t need to have been the “breadwinner” to be treated fairly in a divorce.
August 19, 2025
Commercial Litigation
Three Key Tips for Drafting Strong Discovery Requests
The discovery phase of a case is critically important. Navigating a case appropriately through the discovery stage can lead to achieving favorable settlement terms, disposing of the case by summary judgment, or prevailing at trial. Thoughtfully crafting discovery requests is one of many tactics that maximize the chances for success. Keep these three points in mind when preparing discovery requests. Tailor the requests to the claims and defenses. Consider the elements for each claim and then the elements for each defense when drafting the requests. If the requests cover each element in an individualized manner, the door opens to potentially disposing of the case at the summary judgment stage. This approach leads to the parties exchanging relevant documents and information and allows them to digest each other’s theory of the case, minimizing the chances for a surprise at trial. Further, when both sides disclose documents and information, they also end up revealing the strengths and weaknesses of their respective claims or defenses. By identifying those strengths and weaknesses, the parties can more readily identify the components of the case, where they have leverage, and become more likely to come to a settlement (which saves the parties valuable time and resources). Pursue potential evidence to use to impeach witnesses’ credibility and to flesh out the theory of the case. Once you have your theory of the case, discovery is the time to further develop that theory by bringing out the context of the case. No case should take place in a vacuum. Typically, parties have ample evidence the other side can use (e.g., at trial) to illustrate the theory of the case. In a breach of contract case, for instance, it may be helpful to request documents or information about other contracts the party held at the time or the benefits that a party obtained when it breached the contract. In response to the request, you may receive a document that shows why the party breached the contract — a helpful piece of context that you can use at trial to better tell your client’s story and diminish the other party’s credibility. Although each case is factually distinct, there are always pieces of evidence that can be used for these purposes, which may make the difference in persuading a judge or jury. Include requests for information and documents where the adversary’s lack of a response is useful. Requesting documents and information from the other side that directly relate to the claims and defenses in the case is a great starting point. Adding requests with an eye toward the adversary not providing a response can also be very useful at trial. The lack of a response narrows the universe of evidence that the parties can present at trial, providing you with a more predictable trial and an ability to identify the weak points of your adversary’s case. It also provides the opportunity to flesh out the testimony you wish to elicit from the other side as to the lack of evidence. This can be particularly powerful when you cross-examine the other side’s witness and have that witness testify — in response to a string of questions from you — that they do not have evidence touching on a number of aspects pertaining to the case. Those moments during trial are not only good theater but also highly persuasive.
August 18, 2025
Estates and Trusts
Obergefell in Question: Estate Planning Risks for Same-Sex Spouses
On August 11, 2025, the United States Supreme Court was asked to reconsider Obergefell v. Hodges, the 2015 decision that federally guaranteed marriage equality for all couples. This new case involves the four-times married former Kentucky county clerk who famously denied marriage licenses to same-sex couples in 2015. She argues that her religious freedom should have allowed her to refuse to recognize same-sex marriage and asked the Supreme Court to take up her cause. While many remain cautiously optimistic that marriage equality will not be undone, the fact that the Court may even consider this petition is deeply unsettling for the LGBTQ+ population and their allies. (Axios, Forbes, The New Republic) Why This Matters for Estate Planning A Return to Patchwork State Laws If Obergefell were overturned, the U.S. would revert to a pre-2015 tapestry of laws in which individual states would have the opportunity to determine marriage rights for their own domiciliaries. For those residing in more conservative states, it could mean disaster for same sex spouses. Legal and Emotional Chaos for Families Suddenly, all the rights, protections, and privileges that come automatically with marriage, such as hospital visitation, medical decision-making authority, inheritance, and tax breaks, would once again require lawyers to draft elaborate, and admittedly brittle workarounds. In some states, lawmakers are bound to make those workarounds incredibly difficult to accomplish. Estate Planning Problems MagnifiedTax implications: Without a legally recognized spouse, couples will lose spousal estate tax exemptions at the federal and possibly state levels. Probate exposure: Without the automatic transfer rules of marriage, such as tenancy by the entirety designations on deeds, estates could be forced to go through a full probate proceeding or worse, pass to next-of-kin heirs, and not the spouse. Healthcare proxies and decision-making: Health care directives, such as Health Care Proxies, would need constant updates as cross-state enforcement could become uncertain when an individual’s status is demoted from “spouse” to simply “agent” under a health care directive. It should be noted that the rights of an agent are certainly less secure than spousal rights. Children and parentage issues: The parental presumptions, adoptions, and guardianships may also be under fire and could become contested in ways they have not been observed for a decade. As with documented workarounds for estate planning, it is concerning that parentage could hinge on an estate planning document that is enforceable in one state and not another. In summary, this possibility bears a real human cost if the federal government no longer sees a marriage as valid, and all the financial ease, parental securities, medical protections, and end-of-life comfort assumed to be guaranteed are no longer. Same-sex couples do not just lose a symbolic right to marry — they face disruptions to fundamental life, health, and legacy decisions. This is not just another court case: the ramifications will fundamentally reshape how families, especially those with trans and LGBTQ+ members, plan their lives, protect each other, and preserve their legacies. It is vital we pay attention, share the facts, and act with allyship.
August 14, 2025
LGBTQIA+
Marriage Equality and the Supreme Court: Preparing for the Unexpected
Big news dropped this week, and it’s one of those stories that makes my phone start buzzing with texts from clients, friends, and family asking: “Could the Supreme Court actually take away marriage equality?” Kim Davis, the Kentucky clerk who famously refused to issue marriage licenses to same-sex couples, has asked the Court to overturn Obergefell v. Hodges, the 2015 decision legalizing marriage equality nationwide. For Davis, the appeal is about religious beliefs, but for LGBTQ+ families, it’s about the security of marriages and rights. Can the Supreme Court Overturn Obergefell? For Davis, the case is based on her personal beliefs and most experts think it’s a long shot to undo marriage equality entirely. Still, this Court has surprised us before. Justice Thomas has already suggested revisiting Obergefell, and the fact that the question is back before the Court is a reminder that the fight isn’t over. What Would Happen if Obergefell Were Overturned? If Obergefell were overturned, some states could stop issuing marriage licenses to same-sex couples almost overnight. Old bans and “trigger laws” are still sitting on the books in many states. However, due to the 2022 Respect for Marriage Act, current same-sex marriages would almost certainly still be recognized nationwide. Under this law, if a same-sex couple is legally married in one state, every other state and the federal government must honor that marriage, even if the couple later moves to a state that bans it. Why Does This Matter if You’re Already Married? Some may assume, “Well, we’re already married, so we’re fine.” Not necessarily. Without Obergefell, certain rights could become more difficult to enforce at the state level, such as hospital visitation, inheritance without a will, or the ability to make medical decisions for your spouse. For families with children, especially when only one parent is biologically related, the stakes are even higher. Steps to Take Now Make your family “court-proof.” Ensure you have legal documents in place, including wills, healthcare proxies, powers of attorney, and guardianship documents for kids. Lock in parental rights. A court order, such as a second-parent adoption, is recommended to make parental rights secure, even when both parents’ names appear on the birth certificate. Know your safe states. In areas with an uncertain record on LGBTQ+ rights, it’s important to know where your family would be protected in the event of upheaval. Stay engaged. Local and state protections matter. Back ballot measures and candidates who will uphold marriage equality in your state constitution. Final Thoughts Though it seems unlikely that Obergefell will be reversed in the immediate future, it would be unwise to become complacent or to assume it is beyond challenge. Now is the time to double-check your legal safety net, because the best time to protect your family is before the storm starts.
August 13, 2025
Landlord Representation
Federal Class Action Targets Common Add-On Charges in Virginia Leases: Pest and Community Fees Under Scrutiny
A federal class action lawsuit[1] is alleging that monthly pest fees and community fees are unlawful attempts to shift landlord obligations to tenants, in violation of the Virginia Residential Landlord and Tenant Act (VRLTA) and the Virginia Consumer Protection Act (VCPA). If the plaintiffs are successful, the case could trigger industry-wide consequences and result in substantial liability for property owners and managers who use similar fee structures. Initial Recommendations Evaluate all recurring fees, such as pest control, trash, amenity, and community fees to determine whether they relate to obligations that are legally the landlord’s responsibility under Virginia law (e.g., habitability and maintenance of common areas). Distinguish between charges for required services and those for optional or additional tenant benefits. Remove or recharacterize unlawful fees. Eliminate any separate fees that relate to non-waivable landlord duties. Where appropriate, incorporate the cost of pest control and common area maintenance into the base rent rather than charging them separately. Clearly define any remaining fees. Avoid using overly broad or ambiguous language such as “programs deemed necessary by ownership,” which may be interpreted as deceptive or misleading under consumer protection laws. Further Details and Legal Background Plaintiffs’ Allegations Plaintiffs allege that landlords cannot charge tenants for costs of pest control, trash disposal, or common area maintenance. Plaintiffs allege these duties are non-waivable landlord obligations under Virginia Code § 55.1-1220, and that the charging of pest control, trash disposal, and other common area maintenance fees are deceptive representations in violation of Virginia Code § 59.1-200(14). Legal Basis Virginia Residential Landlord and Tenant Act (VRLTA) Virginia Code § 55.1-1220(A): Requires landlords to maintain pest-free premises and clean, structurally safe common areas. These duties may not be waived through the lease. Virginia Consumer Protection Act (VCPA) Virginia Code § 59.1-200(14): Prohibits misrepresentation or deception in consumer transactions, including residential leases. The lawsuit claims tenants were misled into believing that payment of the pest and community fees was required to receive services already required under Virginia law. Analysis Importantly, Virginia Code § 55.1-1220 does not explicitly prohibit landlords from charging for pest control and trash disposal fees, if such fees are authorized under the lease agreement. Plaintiffs are, therefore, making allegations based on implication and a broad reading of Virginia Code § 55.1-1220. It is not clear how the court may rule on the plaintiffs’ allegations. Regardless, plaintiffs’ allegations have merit based upon landlords’ obligations as defined under Virginia Code § 55.1-1220. Potential Impact This lawsuit signals an aggressive new approach to enforcing landlord-tenant law under both the VRLTA and VCPA. This case could set precedent for whether bundling landlord obligations into fees is inherently deceptive under the VCPA and unlawful under the VRLTA. Further, a ruling in favor of plaintiffs could lead to a wave of similar class actions across Virginia and other states. Offit Kurman will continue to monitor the case and provide further recommendations once the court issues a ruling. [1] Valencia Rios v. Belvedere NRDE, LLC and Pegasus Residential, LLC (E.D. Va. No. 3:25-cv-474)
August 12, 2025
Estates and Trusts
Settling an Estate with Efficiency and Care — Guidance for the Personal Representative
When someone dies, the task of settling the person’s estate descends upon the personal representative. Being appointed a personal representative, or “executor,” is an honor that includes a broad range of responsibilities. This person must be part administrator, part accountant, and part diplomat! Depending on the complexity of the estate, the process can drag on for years, or the estate can be opened and closed the same day. A typical estate takes nine months to a year to close. Regardless of how complex the estate is, the personal representative may want to begin with a phone call to an estates and trusts attorney for guidance. The attorney can simply point the personal representative in the right direction during a single consultation. Or the attorney can assume some or all of the duties of the personal representative, making the process considerably less burdensome. The challenge for most people settling an estate is that they do this only once in their lives, and therefore have to learn on the job. Here is an overview of the steps involved. Secure the Home If a house is sitting vacant as a result of the death, it is important to protect the property and its contents. Any valuables should be removed and kept in a safe place. Windows and doors should be locked and the alarm set, if there is one. If other people have keys to the house, consider having the locks changed. Mail should be forwarded to the personal representative, and a trusted neighbor should be asked to keep an eye out for any packages or fliers left at the door. It is also important to pay any mortgage installments, condominium fees, utilities, or property taxes as they become due. If funds for these expenses are not immediately available, the personal representative can advance these costs and seek reimbursement from the estate when possible. Locate the Will To open the estate, you will need the original will—not a photocopy. Once located, the will should be filed with the Register of Wills, even if the decedent had no assets. (If there is no will, the person has died “intestate” and the assets will be distributed according to Maryland’s rules of intestacy.) Upon opening the estate, the personal representative will receive “Letters of Administration,” putting him or her in charge of the estate and its assets. A tax ID number can then be obtained, and an estate checking account opened. Notify Agencies of the Death Banks and brokerage houses should be notified of the death, as well as insurance, credit card, and utility companies, and credit-reporting agencies. If the person received Social Security or other government benefits, notify the agencies that provided them. Marshal the Assets It may be advisable to liquidate any securities and other investments to lock in the value as close to the date of death as possible. The proceeds from any liquidated accounts should be deposited in the estate checking account. Prepare an inventory of the estate assets, including cars and household items, as well as real estate (whether in Maryland or elsewhere), bank accounts, CDs, investment portfolios, and life insurance policies. The inventory must include the date-of-death value of each item and be filed with the Register of Wills. Determine whether any of the assets name a beneficiary or have a co-owner. Those that do may be “non-probate” assets, which will transfer to the beneficiary or co-owner directly and are not part of the probate estate. Run the Numbers Creditors of the deceased have six months to make claims against the estate, and if there are sufficient funds, these will need to be paid from the estate account. Estimate the amount of cash needed to pay the claims and any taxes, and, as necessary, arrange for any assets to be sold for distribution. Deal with Taxes A Form 1040 individual income tax return must be filed for the portion of the year the decedent was living. This return is due by April 15 of the following year, just like a standard personal tax return. If the estate includes bequests to individuals who are not close family members, Maryland's 10% inheritance tax will apply. Unless the will specifically states otherwise, this tax is generally payable by the beneficiary who receives the bequest. Estate taxes may also apply, depending on the total value of the estate. In Maryland, estates valued at more than $5 million may be subject to state estate tax of up to 16%. At the federal level, estates exceeding $13.99 million in value (as of 2025) may trigger federal estate tax obligations of up to 40%. In addition, during the course of estate administration, if the estate generates more than $600.00 in income—perhaps from interest or dividends—fiduciary income tax returns must be filed. This includes IRS Form 1041 for the federal return and Maryland Form 504 for the state return. Because estate and tax matters can be complex, enlisting the help of an accountant experienced in estate administration is often a wise decision. Make Distributions Once an accounting showing all estate activity has been filed and approved by the Register of Will, a 20-day waiting begins. If no objects are made to the accounting as filed, it will then be time to distribute the remaining assets to the beneficiaries. The personal representative might first ask each beneficiary to sign a document releasing the personal representative from any future liability in connection with the estate. Settling an estate is more than a legal obligation—it is a final act of care and respect for the person who has died. By carrying out their wishes with diligence, fairness, and thoughtfulness, the personal representative helps bring closure not just to the estate, but to the life it represents. Though the work can be complex and at times overwhelming, it is also a meaningful way to honor the departed and ensure that their final wishes are handled with integrity and grace.
August 11, 2025
Labor and Employment
New DOJ Memo Addresses Legality of DEI Programs for Federal Funding Recipients
On July 30, 2025, the Department of Justice released a memo from Attorney General Pam Bondi offering guidance to federal agencies and recipients of federal funding regarding practices that the administration views as potentially unlawful under federal antidiscrimination laws. While the memo focuses heavily on institutions of higher education, its implications extend to all federal funding recipients, federal contractors, and employers subject to Title VII. The memo outlines the administration’s interpretation of federal law as it applies to diversity, equity, and inclusion (DEI) initiatives and similar programs. It provides examples of practices the DOJ considers unlawful or legally questionable, as well as "best practices" intended to help organizations avoid liability. Key Takeaways Applicability Beyond Higher Education: Although many examples concern colleges and universities, the guidance expressly encourages all entities subject to federal antidiscrimination laws, including public and private employers, state and local governments, and contractors, to review and evaluate their DEI programs. DOJ’s Interpretations Are Not Binding Law: The memo reflects the DOJ’s interpretation of existing law, not a change in the law itself. Courts remain the final arbiters of what federal statutes mean, and state laws may impose different or additional requirements, especially in areas such as transgender rights, where the administration’s views may conflict with both state law and judicial precedent. Examples of Practices the DOJ Views as Unlawful or Problematic Race-Based Scholarships or Opportunities: Programs that limit access to scholarships, internships, or leadership initiatives based on race (e.g., a “Black Excellence Scholarship”) violate federal law unless they meet the very high bar for race-conscious programs. Race-Exclusive Facilities or Resources: DEI initiatives that designate certain physical spaces (e.g., “BIPOC-only lounges”) or create identity-based access restrictions may amount to unlawful segregation or exclusion, even if intended to foster inclusion. Segregated Training or Affinity Groups: Programs that separate participants based on race (e.g., mandatory DEI sessions with race-exclusive breakouts) risk violating civil rights laws. Voluntary, open-to-all professional support networks may be permissible. Diverse Slate Hiring Requirements: Mandating racial or demographic composition in interview pools (e.g., requiring a minimum number of minority candidates per hiring slate) may violate the law if used to exclude otherwise qualified individuals based on race. Race- or Sex-Based Contracting Preferences: Automatically favoring minority- or women-owned businesses in procurement decisions, without narrowly tailoring those preferences to a compelling government interest, raises legal concerns. Note: The DOJ flags this area as particularly sensitive given that many entities, including government contractors, are required to establish utilization goals for disadvantaged businesses. The legality of these long-standing programs may now be in flux. Proxies for Race or Sex Consideration: Cultural Competence or “Lived Experience” Requirements: When tied to race or ethnicity, such criteria may unlawfully advantage candidates based on protected characteristics Diversity Statements or “Obstacle” Essays: Requiring narratives that implicitly reward racial or gender identity may function as indirect proxies for discrimination The memo sharply narrows the permissible interpretation of the Supreme Court’s language in Students for Fair Admissions v. Harvard, particularly Chief Justice Roberts’ explicit statement that applicants may discuss how race shaped their experiences, provided race itself is not the basis for decisions. Recommended “Best Practices” To reduce legal risk, the DOJ encourages organizations to: Eliminate Demographic-Driven Goals: Avoid designing policies or using facially neutral criteria (e.g., “first-generation student” or “underserved zip code”) to achieve demographic outcomes tied to protected characteristics Justify Criteria with Legitimate, Non-Discriminatory Rationales: Document how selection criteria are related to objective performance or institutional needs — not race, sex, or other protected traits Evaluate Potential Proxy Effects: Before implementing race-neutral policies, assess whether they function in practice as proxies for race, sex, or other protected statuses Abandon Diversity Quotas: Avoid policies that require representation of specific demographic groups in candidate pools, committees, or final hiring selections Include and Enforce Nondiscrimination Clauses in Contracts: Require third parties receiving federal funds to comply with nondiscrimination obligations. Monitor compliance and terminate funding where violations occur. Note on Scope of Coverage The DOJ memo applies to recipients of federal financial assistance, which includes grants, loans, subsidies, and insurance, not federal procurement contracts. However, many principles may be relevant to federal contractors, particularly where compliance with Title VII or similar statutes is at issue.
August 8, 2025
Intellectual Property
Future-Proofing Your Brand During Expansion
Expanding a brand into a new category can be an exciting time. It can also be one of the riskiest moves a brand can make. Branding is more than logos or ad campaigns. It’s about identity, voice, values, and the emotional connection with your audience. Whether it's a fashion house entering beauty, a beverage company exploring wellness, or a tech firm launching a novel product, the potential for growth is enormous. But with that opportunity comes risk. When managed well, brand expansion reinforces that connection, but when rushed or misaligned, it weakens the trust that took years to build. Why Future Proofing Matters from Day One Often, brands treat category expansion like a standalone marketing campaign. They focus on quick wins, media buzz, short-term sales, or a different position in shelf space, which, without a strategic foundation, can backfire. Every product launch, brand partnership, or new line sends a message to consumers about what your brand stands for. That means any missteps risk undermining that story. Future proofing begins by asking tough but essential questions: Does this new product offering align with our brand’s culture? Will our core messaging still align as we scale or expand into new regions or categories? Define the Relationship with the Parent Brand An often undervalued aspect of expansion is the structure that connects the dots on how new offerings relate to the master brand. Will the new product be a sub-brand, an extension, or something distinct and possibly even unrelated? Consider Apple’s ecosystem: iPhone, iPad, Apple Watch, AirPods. Each product serves a unique function, yet they all come together and reinforce the parent brand’s identity of innovation and integration. That clarity builds customer trust and makes each launch feel like a natural extension of what consumers already believe about Apple. In-House vs. Licensed: A Strategic Decision Deciding to build a new category in-house or license it to a third party is important and has significant financial implications. Licensing can offer speed as well as immediate category expertise. Additionally, licensees will generally have established distribution channels in their product category. However, licensing carries the risk of inconsistent execution and diminished brand control. In contrast, in-house development ensures alignment but can stretch internal resources and delay time-to-market. Neither option is inherently better; it depends on your long-term goals. Some brands start with licensing, then bring successful categories in-house to better integrate them into the brand’s DNA. Choose the approach that supports authenticity, quality, and growth over time. Be realistic about what it takes to launch a new product category from product development through sales and distribution. Going Global? Think Local Launching into new regions multiplies complexity, particularly when expanding internationally. What resonates with customers in North America might fall flat in Asia without cultural and regional nuances. A one-size-fits-all global campaign can seem tone deaf. Moreover, international regulations pertaining to product categories can differ substantially, and fluctuating tariffs and trade treaties may also impact a company’s ability to be successful in a country or region. Strong brands can adapt for regional differences in messaging, image, tone, and packaging, etc., while still expressing a consistent global identity. Nevertheless, brands must still learn the local market and its customs, and understand how to navigate and comply with local regulations. Beyond the Launch: The Core of a Future-Proof Brand To future-proof your brand, you need to think beyond launch day. A brand isn’t defined by one product, campaign, or social media moment. It’s how your customers experience and perceive you over time. Strong brands continuously learn from their customers, observing shifts in expectations, sentiment, and values. Gen Z, for example, views itself as a stakeholder in the brands it supports. They expect companies to live up to their stated values, and they take notice and speak out on TikTok when those values ring hollow. Authenticity is key. Internal Culture Is Brand Culture Your external brand reflects your internal culture. When your employees, from C-suite to frontline workers, understand and live the brand’s values, it shows in every customer interaction. Future-proofing your brand requires embedding that alignment throughout your organization. Your brand is reflected in the way products are designed and services are delivered. Everyone should feel a sense of ownership in the brand story and understand how their role contributes to it. Every touchpoint, from social media posts, customer service exchanges, product packaging, and speaking engagements, is a chance to reinforce (or undermine) your brand. Nourish the Brand Ongoing thought leadership helps keep your brand visible, relevant, and aligned with your customers' needs. Great brands often own a point of view in their industry, publishing insights or setting trends that reinforce their authority. Measure what works through perception studies, engagement metrics, and customer feedback, and adapt accordingly. The market will change. Customers will evolve. Competitors will disrupt. Your logo may stay the same or change, but the context in which it operates never does. The launch is just the beginning. Your brand's success depends on how well it fits into a broader, evolving dialogue. Future proofing is about preparing your brand to meet what comes next.
August 8, 2025
Estates and Trusts
Major Estate Tax Changes Under the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is a sweeping piece of legislation spanning nearly 1,000 pages. It includes significant changes to federal estate and income tax laws that will affect estate planning. Here’s an overview of a few key provisions in OBBBA and some strategic estate planning opportunities that it provides. Estate and Gift Tax Exclusion Increased Effective January 1, 2026, the federal estate and gift tax exclusion increases to $15 million per individual (or $30 million per married couple), with future adjustments for inflation. Although the increased exclusion was made “permanent” under the Act, it may still be changed or repealed by a future Congress or administration. High-net-worth clients should take full advantage of what may be a limited window for significant planning options. Spousal Lifetime Access Trusts (SLATs) and Grantor Retained Annuity Trusts (GRATs) are excellent options for front-loading an estate plan while still allowing the client or spouse access to assets. Individuals who have already utilized all or a portion of their current exclusions should consider “topping off” their current estate plans with additional gifts. While the increase in the federal exclusion amount provides substantial federal tax relief, state-level estate and inheritance taxes still apply, in many jurisdictions: 12 states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia continue to impose an estate tax Six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania) impose an inheritance tax Connecticut is the only state that also imposes a gift tax New York does not have a gift tax, but adds back gifts made within three years of death to the taxable estate With proper planning, assets can still be transferred free of both federal and state-level transfer taxes, but state-specific rules must be carefully navigated. Spousal Lifetime Access Trusts (SLATs), Dynasty Trusts, and sales to intentionally defective grantor trusts offer excellent opportunities to both leverage and utilize the $15 million federal gift tax exclusion while removing those assets from a state estate tax regime. New York’s Estate Tax “Cliff” New York’s estate tax has a particularly harsh feature known as the “estate tax cliff.” This means that estates just slightly over the exclusion amount may lose the exclusion entirely and owe significant tax. For example, in 2025: A New York taxable estate of $7,160,000 will owe no estate tax A New York estate of $7,161,000 will owe $2,863 in tax A New York estate of $7,518,000 will owe $707,648 This makes planning for residents of New York and similarly situated states especially important. New York State residents, and even non-resident individuals with substantial New York situs property, should consider making immediate and significant gifts designed to lower their New York taxable estates below the cliff. If they survive three years after the gift, the gifted property will be excluded from their New York taxable estate. Generation-Skipping Transfer (GST) Tax Exemption The federal GST tax exemption also increases to $15 million per individual beginning January 1, 2026. This is particularly relevant for gifts or bequests made to “skip persons” (such as grandchildren) or to trusts subject to GST tax. Despite the increase, careful planning is still needed to make full use of this exemption. Unlike the federal estate and gift tax exclusion, the increased GST tax exemption is not “portable” – meaning that unless both spouses’ GST exemptions are used during life, they may be forfeited at the first death. And like the federal estate and gift tax exclusion, the increased GST tax exemption is also subject to a potential repeal if the political winds change. For clients and their families focused on multi-generational planning, now is the time to “use it or lose it” by fully sheltering appreciating assets from the generation skipping tax in an irrevocable trust. Careful allocation of exemption is the key to maximizing tax efficiency and wealth for future generations. SALT Deduction Cap Raised — But with Limits Starting in 2025, the cap on deductions for state and local taxes (SALT) increases from $10,000 to $40,000. This is especially beneficial for residents in high-tax states. However, the increased cap phases out for high-income earners: For those with modified adjusted gross income (MAGI) between $500,000 and $600,000, the cap is reduced by 30% of the excess MAGI The deduction is completely phased out for taxpayers with MAGI of $600,000 or more Unless extended, the cap will revert to $10,000 in 2030. Clients living in high-tax states should consider “stacking” multiple non-grantor trusts. Since each trust is treated as a separate taxpayer under the Internal Revenue Code, carefully drafted multiple trusts can potentially reallocate MAGI and shelter thousands of dollars in SALT deductions that could not otherwise be taken on an individual’s income tax return. Changes to Charitable Giving Rules OBBBA introduces new benefits and limitations for charitable giving: The 60% limitation for cash contributions to qualified charities is not “permanent” Standard deduction filers can now take an additional $1,000 charitable deduction ($2,000 for joint filers) Itemizers are subject to a new 0.5% floor, meaning charitable deductions are only allowed to the extent that total contributions exceed 0.5% of adjusted gross income (AGI) before losses To maximize deductibility, the new 0.5% floor encourages consolidating charitable giving in a single tax year. For high-net-worth individuals, this is the perfect opportunity to fund or expand a private foundation. Donor-advised funds may also provide an option for maximizing charitable giving in a single year while providing flexibility in the choice of charities and the timing of distributions. Final Thoughts The OBBBA marks a significant shift in the tax landscape for estate planning. While some changes provide enhanced opportunities for wealth transfer and charitable giving, others introduce complexity and planning pitfalls — especially at the state level.
August 7, 2025
Intellectual Property
Voice Actors Clear Early Legal Hurdle in AI Cloning Suit
Voice actors received a rare, if incomplete, victory against alleged AI infringers in a recent opinion from an SDNY judge in Lehrman v. Lovo, Inc. Voice actors Paul Lehrman and Linnea Sage filed an action against AI voiceover company Lovo, alleging the company used artificial intelligence to synthesize and sell unauthorized "clones" of their voices. Plaintiffs discovered their voices being used in YouTube videos and podcasts after they had been hired through the freelancing app, Fiverr, for what they believed were limited voice recording projects used for research purposes. The result is a case of first impression regarding AI voice cloning tech, asserting claims under New York civil rights and consumer protection laws, the Lanham Act, the Copyright Act, and various common law theories, including breach of contract, fraud, conversion, unjust enrichment, and unfair competition. Judge J. Paul Oetken issued a mixed ruling on Lovo's motion to dismiss, concluding that "for the most part, Plaintiffs have not stated cognizable claims under federal trademark and copyright law." The court explained that what plaintiffs sought was essentially "copyright protection for their voices" as abstract concepts rather than specific expressions, and that copyright "must concern the expression of ideas, not the ideas themselves." However, the court did allow the plaintiffs’ breach of contract and right of publicity claims to proceed, finding that communications through Fiverr and the platform's terms of service supported their allegations that the voice recordings were used beyond the agreed scope. The court also moved claims under New York Civil Rights Law Sections 50 and 51 forward, stating that these state laws are "tailored to balance the unique interests at stake" in voice misappropriation cases. While the ruling represents a partial victory for the voice actors, it highlights significant gaps in federal intellectual property protections for AI-generated content and voice cloning technology. The court's decision suggests that voice actors and similar plaintiffs may find more success pursuing state law remedies for unauthorized AI voice cloning rather than relying on federal copyright protections.
August 6, 2025
Estates and Trusts
Estate Planning for Musicians and Protecting Your Legacy Off the Stage
For musicians, estate planning is not just about deciding who inherits guitar collections or song royalties. It is about protecting your artistic legacy, ensuring your intellectual property is handled according to your wishes, and providing clarity for loved ones who may be unfamiliar with the nuances of the music industry. Unlike a typical estate plan, musicians face unique considerations, especially when it comes to rights management, royalties, and long-term protection of their creative works. Whether you are a seasoned performer or an up-and-coming artist, here are essential estate planning steps every musician should take. Catalog and Protect Your Intellectual Property Your songs, recordings, compositions, and even unreleased material are valuable assets. The first step is creating a comprehensive inventory of your published works, unreleased recordings or demos, copyright registrations, licensing agreements, and publishing contracts. Ensure these assets are clearly documented in your estate plan, which means if you have a revocable trust in place, these assets must be “assigned” to that trust to avoid probate. You should also provide instructions to your trustee or executor on how these assets should be managed, distributed, and monetized after your death. Establish Ownership Structures for Royalties Royalties can continue to generate income long after a musician’s passing. To ensure proper management, it is most efficient to set up a trust to collect and distribute these royalties to your beneficiaries. A trust can provide the mechanism to provide ongoing support to your loved ones to ensure they receive the funds in a way that makes sense, particularly if your beneficiaries are minors. Having a trust in place can also make it easier to manage the various income streams to ensure they flow centrally during your life in the way that you intend. Certain trusts can even provide creditor protection, protection from estate disputes, and mismanagement if you become incapacitated. When a trust is created, it is important to think about who will serve as your trustee if you can no longer act, or upon your death. The trustee chosen by you should have familiarity with your intellectual property, royalties, licensing, and the value of your catalogue. Assign Control Over Your Artistic Legacy Do you want your unreleased recordings shared with the world? Should certain songs be licensed for commercials or films? It is essential that you appoint the right person with this level of discretion to answer these questions because they can determine how your music is used after your death. It is, therefore, vital to ensure that the person you assign the control has an understanding of your legacy. This person is often referred to as a “creative executor” or a “creative trustee” who understands your artistic vision and can carry out your wishes regarding issues like posthumous releases, licensing decisions, and the preservation of your work. Digital Assets and Social Media A musician’s online presence can be as valuable as their physical recordings. A properly drafted estate plan will include instructions regarding your social media profiles, your official website, your digital music platforms (Spotify, Apple Music, YouTube channels), and access to each of those platforms. You may direct whether these platforms should remain active as they were during your life, or if you would prefer that they remain active as a memorial or taken down altogether. Business Succession Planning for Bands or Labels If you own a record label, music publishing company, or are part of a band with business agreements, succession planning is critical. Ensure that your partnership agreements address what happens in the event of your death or incapacity and how ownership interests will be transferred or managed. Your operating agreements and shareholder agreements should be reflective of your wishes and must address your particular circumstance; failure to do so allows your state to determine how those interests can be transferred or managed. Plan for Personal Assets and Family Needs Beyond your musical career, you must ensure that you have a traditional estate plan in place that also addresses bequests to your family members and friends, guardianship of your children, and designations of health agents and powers of attorney. If your musical career is successful, you should consider the issue of estate tax and consult with an insurance professional for life insurance policies that could provide economic support for your family or liquidity to pay estate tax. If your music catalog has significant value, proactive estate tax planning is essential. Strategies might include gifting portions of your catalog during your lifetime, setting up irrevocable trusts to shield assets, and working with a valuation expert to determine accurate appraisals for estate tax purposes. Musicians, like most artists, often experience fluctuating incomes, so proper planning is crucial for providing long-term security to loved ones. Final Thoughts Proper planning is the ultimate backstage pass to your legacy. It empowers musicians to control not just the financial aspects of their legacy, but also the integrity and future of their creative works. Without a solid plan, disputes over rights, royalties, and artistic decisions can tarnish the legacy you have worked so hard to build.
August 5, 2025
Franchise Law
Understanding the FDD and Franchise Agreement Before You Invest
Franchise Agreements Are Binding and Often One-Sided Franchise Agreements are typically drafted by the franchisor and presented on a “take it or leave it” basis. These contracts often impose strict controls over how you operate your business — from approved vendors and marketing strategies to pricing, hours of operation, and technology platforms. They also frequently include provisions that: Limit your ability to exit the business without penalties Impose personal guarantees and long-term non-competes Allow the franchisor to raise fees or change system rules unilaterally Require extensive marketing spend and recurring royalty payments, regardless of profitability Once signed, these agreements are legally binding, and courts generally enforce them as written. That’s why it’s critical to understand every term, especially the financial and operational obligations that can continue even if your business underperforms. The FDD Reveals More Than You Think—If You Know Where to Look Federal law requires all franchisors to provide an FDD at least 14 days before you commit to purchasing a franchise. This document includes 23 mandatory items covering everything from fees and restrictions to litigation history and franchisee turnover. Key areas to focus on include: Item Seven (Estimated Initial Investment): Are the start-up costs realistic? Do they include real estate, equipment, training, and working capital Item 19 (Financial Performance Representations): Does the franchisor provide actual revenue or profit data? If not, you’ll need to speak directly with current and former franchisees to assess performance Item 20 (System Growth and Turnover): How many outlets have closed, transferred, or terminated in the past three years? A high rate of turnover may signal problems in the system Location, Location, Location: Real Estate Considerations Matter For brick-and-mortar franchises, securing the appropriate location is mission-critical. But many prospective franchisees underestimate just how complex and time-consuming the real estate process can be. Questions to ask include: Will the franchisor assist with site selection and lease negotiations Does your market have sufficient demand for the service you're offering Have you accounted for construction costs, permitting delays, or the need for tenant improvements Before signing a lease, make sure your site is approved by the franchisor, zoned appropriately, and competitively situated within your target market. Poor location decisions can be fatal, even with a strong brand behind you. Due Diligence Is Not Optional — It’s Essential Even if a franchise system seems successful from the outside, the only way to know whether it’s viable for you is through diligent research. This includes: Contacting five to seven current and former franchisees in similar markets to ask about actual revenue, marketing effectiveness, franchisor support, and break-even timelines Building a financial model that includes royalties, fees, payroll, rent, and realistic revenue assumptions Consulting experienced franchise counsel to identify red flags or possible negotiation points (such as non-compete terms, marketing obligations, or transfer fees) Understand the Fine Print: Non-Competes and Post-Termination Restrictions One of the most overlooked — but potentially harmful — aspects of franchise agreements is the restrictive covenants that survive after your business ends. Most franchise agreements include: In-term and post-term non-compete clauses that prevent you from operating a similar business for up to two years within a certain geographic radius Non-solicitation provisions that restrict contact with former clients, employees, or vendors Injunctive relief and fee-shifting clauses that give the franchisor significant enforcement rights if they believe you’ve violated these obligations These provisions can limit your ability to earn a living in your field if things don’t work out. You must understand exactly what you are agreeing to before committing to the franchise. Franchise Investment Is a Long-Term Commitment Most franchise agreements last between five and 10 years, and renewal isn’t guaranteed. Even if renewal is offered, it often requires signing a new agreement that may include higher fees or stricter obligations. If your situation changes, selling or transferring your franchise may trigger high administrative fees or require franchisor approval. Some agreements even prohibit termination unless certain financial benchmarks are met. No Guarantees of Success Finally, it’s important to remember — buying a franchise is not a guarantee of success. Many franchisors explicitly disclaim responsibility for your profitability, and even those that provide financial data often include broad disclaimers. You bear the operational risk, and in many cases, personal financial risk. Bottom Line: Don’t Buy Blind The decision to invest in a franchise should be driven by facts — not hope, hype, or brand appeal. Review the FDD and Franchise Agreement in full. Speak to other franchisees. Build your own financial model. And don’t move forward until you’ve consulted an attorney who specializes in franchise law. The costs of skipping this step — both financial and emotional — can be far greater than you think.
August 5, 2025
Mergers and Acquisitions
Deal Flow Thawing: Is the M&A Market Finally Finding Its Footing?
After a rocky past six months, there is cautious optimism that merger and acquisition (M&A) activity is beginning to unfreeze. For much of the past year, there have been mismatched expectations around valuations and limited access to capital that have caused activity to stall. According to a recent report by PwC Global, “lending rates have long been one of the two key factors influencing M&A activity, the other being valuations.” So, while buyers were eager and sellers were hopeful, the numbers rarely lined up. But things could now start to change. The Valuation Tug-of-War One of the biggest barriers to getting deals across the finish line has been price. Many sellers have been holding onto lofty valuations based on pre-2022 market highs that simply aren’t realistic today. Meanwhile, buyers, who have been dealing with tighter credit markets and greater scrutiny from lenders, have been laser-focused on the fundamentals. All of this has resulted in a frustrating standoff where deals collapse not due to a lack of interest, but because no one can agree on what the business is truly worth. In fact, earlier this year, Arrowpoint Advisory noted a 26% decline in deal volume in North America, due in large part to “valuation mismatches between buyers and sellers.” We're now seeing a slow realignment. Valuation expectations are coming back to earth, with PwC noting that in today’s uncertain environment, it is important to not overreach on valuations. Deal structures are also evolving to bridge the remaining gaps, with earnouts, seller financing, and rollover equity becoming more common. It is this kind of flexibility that is helping to get deals done. A Shift in Diligence Dynamics Another notable change has been the quality of earnings (QoE) process. Two years ago, it was often a buyer-driven analysis, completed after signing a letter of intent (LOI). Now, many sellers are proactively conducting QoE studies before going to market. It’s a smart move to arm themselves with clean, vetted financials that can help to accelerate buyer confidence and reduce the risk of retrading. But there is a catch. Even with a proactive QoE, once a deal goes under LOI, buyers are digging deeper than ever. Diligence is intense, and the time from LOI to closing can stretch longer than expected. KPMG’s 2025 Deal Market Study points to heightened diligence and risk assessment as top challenges for 52% of corporates and 42% of private equity sponsors in the current economic landscape. And 47% of corporates also pointed to prolonged deal closing timelines as an issue, highlighting the link between deeper diligence and slower transactions. So, by the time due diligence wraps, earnings may have shifted, or market conditions may have changed, sometimes to the point where the lender’s original terms no longer match the reality of the deal. The Capital Crunch is Real, But Not Fatal Banks are still lending, but there is an increased level of caution and a decreased appetite for risk. We’ve seen situations where buyers get a term sheet for, say, $8 million in debt financing, only to find that after diligence or revised financials, the deal no longer pencils out, or the loan size is cut. That kind of late-stage shift can derail even the most promising transaction. That’s why it’s more important than ever to stress-test the deal early. Build in buffers, anticipate lender concerns, and don’t underestimate the importance of aligning everyone (seller, buyer, and lender) on realistic numbers from the start. The M&A market may not be booming, but the ice is cracking as valuations find firmer footing, buyers adapt to longer timelines, and sellers are more prepared. If you're contemplating a transaction on either side, now is the time to get your house in order. Quality of earnings, capital access, transparency, and flexibility will be the make-or-break factors in the deals that get done in the second half of 2025.
August 4, 2025
Bankruptcy
Broadway Realty Ruling Highlights Narrow Scope of Collateral Surcharges
Another bankruptcy court decision shows the skepticism of courts to Chapter 11 debtors’ arguments that they can surcharge a creditor’s collateral to pay extensive administrative expenses, such as professionals’ fees. A decision from Judge Jones in the Southern District of New York emphasizes again, how bankruptcy courts are hesitant to allow such broad surcharge claims under section 506(c) of the Bankruptcy Code. See In re Broadway Realty I Co., LLC, No. 25-11050 (DSJ), 2025 WL 1803089, at *1 (Bankr. S.D.N.Y. June 29, 2025). The decision also dealt with other issues, principally adequate protection in the form of “shared” equity cushions between multiple affiliated debtors. But in addressing 506(c), Judge Jones took issue with a sweeping effort to justify a surcharge of “millions of dollars of professional fees and other administrative expenses” on the theory that the Chapter 11 case generally benefited the secured lender. The debtors, 82 entities which owned a number of multifamily residential rental buildings, filed bankruptcy to block foreclosure actions proceeding in state court. The secured lender contested the debtors’ cash collateral motion, arguing that the proposed expenses depleted its cash collateral without adequate protection. The debtors responded, in part, by arguing that the expenses should not require an adequate protection analysis (or themselves constituted adequate protection) because they benefited the lender’s collateral and therefore could be surcharged under section 506(c). Judge Jones was not convinced. After finding that the lender was not adequately protected by “shared” equity cushions between the debtors, he addressed the surcharge argument. Section 506(c) surcharges, he found, might sometimes be relevant to the question whether a lender is adequately protected for a debtor’s expenditures, but here, the debtors argument that nearly all of its expenditures, including millions of dollars in professionals’ fees, “adequately protected” the lender was overbroad. What made the surcharge attempt particularly egregious in Broadway Realty was the fact that the debtors sought to apply the surcharge “prospectively,” that is, before the administrative expenses were incurred, and that the debtors argued that their ability to pay such expenses then surcharge the collateral, supported a claim that the creditor was adequately protected for the use of its cash collateral. Section 506(c), Judge Jones found, is not intended to serve this purpose, but was intended to apply to expenses already incurred, and was not intended to support an argument of adequate protection. There are two principal takeaways for debtors entering Chapter 11. First, most bankruptcy courts remain hostile to the argument that a secured creditor’s hypothetical benefit from the case can ever justify charging their collateral for the expenses of the case. It’s not simply a matter of crafting a convincing evidentiary showing that the creditor will do better through a Chapter 11 plan or 363 sale, instead, section 506(c) is simply not intended to govern such “broad” benefits, only to justify narrow and specific surcharges for necessary collateral-based expenses. Second, because section 506(c) is retrospective, it can only be invoked after the expenses have been incurred. This, of course, places the risk on the debtor incurring the expense, that it will be seen as a justifying surcharge. It also places the premium on negotiation with the creditor in advance of incurring the expense to mitigate that risk. In reality, if broad administrative expense support is to be sought, the debtor should attempt to do so through a restructuring support agreement or similar arrangement prior to filing the case.
August 1, 2025
Labor and Employment
Sustaining LGBTQ+ Inclusivity: Legal and Workplace Strategies After Pride Month 2025
Pride Month 2025, commemorating the 1969 Stonewall Riots, celebrates the LGBTQ+ community’s contributions, but inclusivity must extend beyond June to foster workplaces where everyone feels valued. Navigating the complex legal landscape — shaped by the Supreme Court’s 2020 Bostock decision, Executive Order (EO) 14173, and the Department of Justice’s (DOJ) Civil Rights Fraud Initiative — requires strategic planning. Cultural dynamics, including employee activism and consumer expectations, further emphasize the need for year-round inclusivity. This blog provides actionable legal and practical strategies to ensure compliance with Title VII, mitigate False Claims Act (FCA) risks, and create psychologically safe workplaces where LGBTQ+ employees can thrive without hiding their identities. Understanding the Legal Framework The Supreme Court’s Bostock v. Clayton County (140 S. Ct. 1731, 2020) decision established that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation and gender identity for employers with 15 or more employees. The Equal Employment Opportunity Commission (EEOC) enforces Title VII, providing guidance on restroom access aligned with gender identity, harassment prevention, and protections against discrimination based on nonconformity to sex-based stereotypes (EEOC Guidance, 2021). However, a May 15, 2025, federal court ruling vacated parts of the EEOC’s harassment guidance, pending appeal. The Eleventh Circuit’s Lange v. Houston County decision underscored the importance of inclusive benefits, holding employers liable for excluding gender-affirming care from health plans. State and local anti-discrimination laws in 25 states, the District of Columbia, and many municipalities, may impose stricter standards or apply to smaller employers. Globally, over 60 countries criminalize same-sex relationships, creating risks for employees on international assignments. EO 14173, signed January 21, 2025, requires federal fund recipients to certify DEI program compliance with anti-discrimination laws, with violations risking FCA liability. The DOJ’s Civil Rights Fraud Initiative, launched May 19, 2025, targets false certifications in DEI programs, such as gender-identity-based restroom policies, using FCA’s treble damages and qui tam provisions. Addressing Workplace Challenges Post-Pride Month Beyond Pride Month, employers must address ongoing challenges to sustain inclusivity. Many LGBTQ+ employees feel pressured to “cover” (hiding aspects of their identity), such as avoiding mention of same-sex partners or gender identity to fit in, which can harm mental wellbeing and productivity. Despite Bostock, harassment over pronouns, dress codes, or benefits persists, risking Title VII claims. Employee activism, often heightened during Pride, may continue as resource groups push for robust inclusion policies. Missteps could lead to union organizing, lawsuits alleging discrimination, or consumer backlash from perceived over or under-support of LGBTQ+ issues. The DOJ’s focus on “unlawful DEI” may prompt some to scale back inclusivity efforts, while religious accommodation requests require careful balancing with Title VII obligations. FCA Defenses: Safeguarding Against DOJ Enforcement The DOJ’s Civil Rights Fraud Initiative frames false DEI compliance certifications as FCA violations, but employers can leverage robust defenses. In United States ex rel. Schutte v. SuperValu Inc. (143 S. Ct. 1391, 2023), the Supreme Court held that FCA liability requires subjective knowledge of noncompliance. Employers who reasonably believed their DEI programs complied with Title VI, Title IX, or Section 1557 — based on legal counsel or ambiguous regulations — can argue they lacked the “scienter” needed for liability. Documenting good-faith compliance efforts strengthens this defense. In Universal Health Services, Inc. v. United States ex rel. Escobar (136 S. Ct. 1989, 2016), the Court required that false certifications materially influence federal payment decisions. If the government knew of DEI practices through audits or continued funding despite disclosures, employers can argue immateriality. The Eleventh Circuit’s Honeyfund.com v. Florida (2023) decision, which invalidated anti-DEI restrictions as First Amendment violations, supports arguments that inclusivity initiatives, like employee resource groups or training, are protected speech. These defenses — good-faith compliance, lack of materiality, and free speech — help mitigate FCA risks when supported by legal counsel. Practical Strategies for Year-Round Inclusivity To sustain inclusivity post-Pride Month while complying with Title VII and mitigating FCA risks, employers can adopt the following strategies to create workplaces where employees feel safe and valued: Update Policies for Clarity and Compliance Revise anti-discrimination policies to explicitly cover sexual orientation and gender identity, aligning with EEOC guidance, state/local laws, and Title VI/IX/Section 1557. Ensure DEI programs avoid assigning benefits by protected characteristics. Support restroom and dress code access aligned with gender identity, offering gender-neutral facilities as a compliance option. Accurately reflect these practices in federal certifications to avoid FCA liability. Offer Voluntary, Inclusive Training Provide voluntary training on preferred pronouns, names, and Title VII compliance to reduce discrimination risks and foster inclusion. Training should be non-segregatory to avoid DOJ scrutiny. Equip HR with de-escalation training to handle identity-based conflicts, creating a psychologically safe environment where employees can be authentic, without fear of judgment. Implement Confidential Reporting Channels Establish confidential reporting mechanisms and thorough investigation processes to address discrimination promptly, preventing workplace hostility and Title VII claims. Swift responses to inappropriate comments, such as those about restroom access, demonstrate a commitment to inclusivity. Support Gender-Affirming Benefits and Accommodations Ensure health plans cover gender-affirming care, compliant with Lange and the Respect for Marriage Act (Pub. L. 117-228). Develop accommodation plans for transitioning employees, ensuring accurate federal certifications. For international assignments, assess destination laws and provide safety protocols for LGBTQ+ employees. Conduct Privileged DEI Reviews Perform privileged reviews of DEI programs and certifications under Title VI/IX/Section 1557, focusing on policies like restroom access that may attract DOJ scrutiny. Document compliance efforts to support Schutte defenses and track payment decisions for Escobar arguments. Foster Inclusive Cultural Observances Extend Pride Month’s spirit by integrating inclusivity into year-round observances, such as decorating contests with rainbow themes or inclusive swag like pens, to foster belonging. Apply consistent, objective criteria to cultural observances (e.g., Pride Month, Black History Month) aligned with company values to avoid FCA risks. Ensure events are voluntary and inclusive, with legal review for sponsorships or displays to address FCA and First Amendment implications. Balance Religious Accommodations Process religious accommodation requests for inclusivity initiatives compliantly, balancing with Title VII duties. Manage conflicts without compromising anti-discrimination policies to maintain a safe workplace for all. Encourage Mentorship and Allyship Promote mentorship programs to support LGBTQ+ employees, fostering career growth and a sense of belonging. Encourage allyship year-round by creating spaces where employees can be open about their identities, reducing the need to cover, and enhance wellbeing. Align Legal, HR, DEI, and PR Teams Coordinate across teams to ensure inclusivity initiatives reflect brand values and risk tolerance. Prepare communication strategies to address employee and consumer sentiment, leveraging Honeyfund arguments for expressive activities. Maintain records of compliance efforts to counter potential FCA claims. Sustaining Inclusivity Beyond Pride Month 2025 Hiding one’s identity to fit in can erode mental wellbeing and limit professional growth. With over 500 anti-LGBTQ+ bills pending and heightened DOJ scrutiny, employers must remain vigilant. By aligning with Title VII, leveraging FCA defenses (Schutte, Escobar, Honeyfund), and fostering psychologically safe environments, employers can create workplaces where authenticity thrives. Legal counsel is essential to navigate Title VII, FCA, and First Amendment complexities, ensuring sustained inclusivity for LGBTQ+ employees year-round.
July 31, 2025
Bankruptcy
The “One Big Beautiful” Bill and the State of AI Regulation
After several weeks of back and forth on a potential 10-year moratorium on state or local AI legislation and regulation enforcement, the final version of the so-called One Big Beautiful Bill Act, signed into law on July 4, 2025 (Pub. L. No. 119-21), abandoned the proposed provision. Accordingly, companies must be alert to and comply with a variety of evolving state and local laws governing the use and deployment of AI tools. In addition, companies that supply AI systems or produce outputs intended for use in the EU are subject to the EU AI Act. Here we will provide a high-level overview of the state laws that are AI-specific (as opposed to regulating use cases or general conduct that might involve AI). Colorado AI Act The Colorado AI Act is scheduled to go into effect on February 1, 2026. It is considered a consumer protection law and imposes obligations on developers and deployers of so-called "high-risk" AI systems "to use reasonable care to avoid algorithmic discrimination in the high-risk system." The law creates a rebuttable presumption that a developer or deployer used reasonable care if they complied with specified provisions in the law. Texas Responsible Artificial Intelligence Governance Act The Texas governor recently signed the Texas Responsible Artificial Intelligence Governance Act, which will become effective on January 1, 2026. It creates a regulatory system for AI development and use, AI disclosure requirements for government agencies, a program that allows AI development with relaxed legal constraints, and an advisory council to analyze AI use and provide recommendations to state agencies. Although it primarily regulates governmental agencies and health care providers, the new law is of relevance to private sector organizations, more generally the new law clarifies that: It is unlawful for any person to use an AI system to intentionally discriminate against individuals based on a protected characteristic, with limited exceptions for certain insurance companies and financial institutions. Showing a disparate impact on a given group is insufficient to demonstrate intentional discrimination. Maine Chatbot Disclosure Law On June 12, 2025, Maine enacted H.P. 1154, a law requiring disclosure of the use of AI chatbots. Under the law, a person may not use an AI chatbot of any other computer technology to engage in trade and commerce with a consumer in a manner that may mislead or deceive a reasonable consumer to believing that the consumer is engaging with a human being, unless the consumer is notified in a clear and conspicuous manner that the consumer is not engaging with a human being. Violation of the law is a violation of the Maine Unfair Trade Practices Act. New York RAISE Act New York state lawmakers passed the groundbreaking Responsible AI Safety and Education Act (RAISE Act) on June 12, 2025. New York will become the first state to impose enforceable AI safety standards on powerful “frontier models” to prevent catastrophic harm by advanced models, if the governor signs off. The law would take effect 90 days after the governor signs the bill. The law applies to AI models with $100M+ compute cost (or $5M+ for certain “distilled” versions) and covers any frontier models developed, deployed, or operated in New York The law imposes on developers, of extremely large-scale AI systems, sweeping transparency and safety obligations. They must develop a safety and security protocol and publish the safety protocols (with limited redactions for trade secrets or security purposes). Any serious incident indicating heightened risk must be reported to state regulators within 72 hours. Businesses must participate in ongoing reassessment of protocols as models evolve. Utah Artificial Intelligence Consumer Protection Amendments On March 27, 2025, Utah Governor Spencer Cox signed S.B. 226, a law governing the use of GenAI in consumer transactions and regulated services. The law: States it is not a defense to violation of any law administered by the State Division of Consumer Protection that AI:made the violative statement, undertook the violative act, or was used in the furtherance of the violation. Requires disclosure for the use of GenAI when:in connection with a consumer transaction, and providing services in a regulated occupation. Establishes a safe harbor for clear and conspicuous disclosure GenAI is used, subject to additional rulemaking specifying forms and methods of disclosure. Allows the Division of Consumer Protection to impose administrative fines of up to $2,500 per violation. Gives courts the power to:declare an act or practice violates the law, issue an injunction for violation, order disgorgement of money received in violation, impose fines of up to $2,500 per violation, plus costs and fees. The law is effective May 7, 2025. EU AI Act The EU AI Act, known as Regulation (EU) 2024/1689, is a comprehensive regulatory framework designed to govern AI systems and the organizations that supply and use them within the EU. It categorizes AI systems based on their risk levels and imposes obligations on providers, importers, distributors, and deployers of AI systems. Compliance deadlines vary, with most provisions applying from August 2, 2026, but some have earlier compliance dates, including: Prohibited AI practices are banned outright from February 2, 2025[1], AI literacy[2] obligations apply from February 2, 2025, GPAI model rules become effective on August 2, 2025, and Penalties, which apply from August 2, 2025, except penalties applicable to GPAI model providers, which apply from August 2, 2026. Rules on high-risk AI systems forming the safety components of products covered by existing EU product safety legislation apply from August 2, 2027. The EU AI Act defines AI systems as machine-based systems designed to operate with varying levels of autonomy and adaptiveness, generating outputs such as predictions, content, recommendations, or decisions that can influence environments. It excludes certain AI systems used for military, defense, national security, and other specific purposes. Organizations must determine their role in the AI supply chain, whether as providers, deployers, distributors, or importers, and comply with the corresponding obligations. Providers must create technical documentation, conduct conformity assessments, and appoint authorized representatives, among other requirements. Deployers must ensure human oversight, monitor AI system performance, and complete fundamental rights impact assessments, if applicable. Distributors must verify compliance with CE marking and conformity declarations and take corrective actions if necessary. Organizations must assess whether their AI systems are high-risk and meet technical requirements, including risk management systems and data governance practices In connection with the upcoming effective date for the general-purpose AI, the European Commission issued guidelines for providers to assess whether their model is a general-purpose AI model. Article 3(63) AI Act defines a ‘general-purpose AI model’ as ‘an AI model, including where such an AI model is trained with a large amount of data using self-supervision at scale, that displays significant generality and is capable of competently performing a wide range of distinct tasks regardless of the way the model is placed on the market and that can be integrated into a variety of downstream systems or applications, except AI models that are used for research, development or prototyping activities before they are placed on the market’. This definition lists, in a general manner, factors that determine whether a model is a general-purpose AI model. Nevertheless, it does not set out specific criteria that potential providers can use to assess whether a model is a general purpose AI model. The specific criteria the commission chose is based on computational power. An indicative criterion for a model to be considered a general-purpose AI model is that its training compute is greater than 1023 FLOP and it can generate language (whether in the form of text2 or audio3), text-to-image or text-to-video. If a general-purpose AI model meets the latter criteria, but does not display significant generality or is not capable of competently performing a wide range of distinct tasks, it is not a general-purpose AI model. Similarly, if a general-purpose AI model does not meet that criterion but, exceptionally, displays significant generality and is capable of competently performing a wide range of distinct tasks, it is a general-purpose AI model. In Conclusion Companies must create a risk-management framework to navigate a complex, evolving patchwork of rules. With compliance deadlines stretching across 2025–2027, organizations must now proactively monitor and adapt to both U.S. mosaic regulation and EU mandates depending on their markets and use cases. Ultimately, treating AI regulation as a dynamic and strategic compliance horizon will be essential to manage legal risk, maintain trust, and sustain innovation in this rapidly evolving landscape. [1] Prohibited AI practices include: Subliminal techniques which can materially distort a person's behavior by impairing their ability to make an informed decision in a way that causes or is reasonably likely to cause them significant harm. Exploiting the vulnerabilities of a person or specific groups of people (for example, due to their age, a disability or economic situation) which can materially distort their behavior in a way that causes or is reasonably likely to cause them significant harm. Social scoring systems based on known, inferred or predicted personality characteristics which causes detrimental or unfavorable treatment that is disproportionate or used in a context unrelated to the context in which the data was originally collected. Risk assessment systems which assess the risk of a person to commit a crime or re-offend (except in support of a human assessment based on verifiable facts). Indiscriminate web-scraping for the purposes of creating or enhancing facial recognition databases. Emotion recognition systems in the workplace or educational institutions (except for medical or safety reasons). Biometric categorization systems used to infer characteristics, such as race, political opinions or religion. Real-time, remote biometric identification systems in publicly accessible spaces for the purpose of law enforcement except (subject to safeguards and within narrow exclusions) searching for victims of abduction, preservation of life and finding suspects of certain criminal activities (as listed in Annex II: criminal offences permitting use of real-time biometric systems). Real time means live or near-live material, to avoid short recording delays circumventing the prohibition. [2] AI literacy is defined as the skills, knowledge and understanding of a deployer or a provider (and other affected persons) to make informed use of AI systems and to be aware of both the opportunities of AI systems and the risks of potential harm. The obligation to take measures to ensure a sufficient level of AI literacy is set out in Article 4.
July 31, 2025
Family Law
Legal and Practical Considerations Before Leaving the Marital Home During Divorce
One of the most common and emotionally charged questions people ask when facing divorce is, “Can —or should— I move out of the marital home before we have an agreement or court order?” The answer isn’t always straightforward. Moving out can have practical, financial, and legal consequences, especially if there are minor children or disputes over property. In most cases, there is no absolute legal requirement to remain in the marital home until an agreement or court order is reached. Adults generally have the right to decide where they live. However, if children are involved leaving without a plan or without understanding the implications may affect custody and parenting time. Courts tend to look at the status quo when making temporary custody decisions. If you move out and the children stay with your spouse, that could set a pattern. In some jurisdictions, one party can ask the court to award temporary exclusive use and possession of the home, especially if children are living there. Moving out doesn’t forfeit your ownership interest, but it can complicate practical issues such as access to documents, personal items, or the ability to oversee the property's condition. If there is domestic violence, threats, or a toxic environment that affects your safety or your children’s safety, moving out may be necessary. In such cases, you should document the reasons why you left and consider seeking a protective order or temporary custody order to clarify parenting arrangements and protect your rights. Your well-being and your children’s well-being always come first. If you have minor children, think carefully. Moving out without taking the children can unintentionally signal to the court that your spouse is the primary caretaker. Moving out with the children without agreement or court order may escalate conflict and may be seen as improper “self-help.” The best approach before moving is to try to reach a temporary written parenting agreement or seek a temporary custody order. Even if you move out, you may still be responsible for paying the mortgage or part of it, contributing to household expenses, and maintaining utilities or insurance. Leaving can also mean taking on the cost of a second household, which may be unsustainable during a pending divorce. If, after weighing these factors, you decide it’s best to move out, you should consult a lawyer and obtain advice, based on your jurisdiction and the specifics of your case. Document your property by making a list —and taking photos— of furniture, valuables, and documents. Secure important records like tax returns, bank statements, insurance documents, passports (take copies so you’re not left without them). Attempt to reach a temporary agreement with your spouse on issues including parenting time, bill payment, and use of property. If you and your spouse can’t agree, you may file a motion for pendente lite (temporary) relief. In such a hearing, the court can decide who stays in the home, who pays certain bills, and sets a temporary custody schedule. These temporary orders maintain stability until the divorce is finalized.
July 28, 2025
Commercial Litigation
Scandal in the Spotlight: When Leadership Fails the Company Code
In my years as a commercial litigator, I have seen several boardroom implosions, but few begin with a Coldplay concert and end with the resignation of the CEO. The now-infamous “kiss cam” moment at Gillette Stadium between Astronomer’s CEO, Andy Byron, and his Chief People Officer, Kristin Cabot, was more than just a passing moment of virality. It was an object lesson on how public conduct can trigger private consequences at the intersection of fiduciary duties, employment contracts, and corporate governance. On July 16, 2025, Byron and Cabot, were caught on camera in a moment of intimate embrace. It seems innocent enough except, they were both married to other people. Their instinctive panicked reaction, as their image was broadcast to more than 50,000 fans was a dead giveaway of illicit conduct and the catalyst for instant virality. One of the concert goers captured the moment and uploaded it to her TikTok account. Within hours, the post had gathered 125 million views. In the following days, Byron was placed on leave, Cabot followed, and Astronomer’s board launched a formal investigation. From a legal standpoint, this incident raises several red flags, including a potential breach of fiduciary duty. As the CEO, Byron is a fiduciary and obligated to always act in Astronomer’s best interest. If Byron’s relationship with Cabot influenced hiring decisions, compensation, or internal investigations, then shareholders have a good-faith basis to allege that Byron breached that fiduciary duty. Another apparent issue is a serious conflict of interest involving Cabot. At its core, a conflict of interest arises when an individual’s personal interest interferes or appears to interfere with their professional obligation. Cabot’s relationship with Byron triggers scrutiny across several areas of corporate risk. As the head of Human Resources, she may have had oversight over such policies on interoffice romantic relationships, a policy that she herself has violated. Additionally, as head of Human Resources, Cabot may have had influence over executive compensation, promotions, or performance evaluations, while engaged in a romantic relationship with an executive. Overall, her behavior does not look good, even if no policies were breached. Conflict of interest is about perception and accountability. Finally, Byron’s conduct raises serious concern about a breach of his employment contract. Many executive employment agreements contain “morality clauses” that allow termination for conduct that brings disrepute to the company. Morality clauses set behavioral expectations for executives who are seen as the face and embodiment of the company. Morality clauses often cover off-duty conduct that could reflect poorly on a company’s brand. A viral cheating scandal arguably qualifies as one. If Byron’s contract contains a morality clause, then the scandal will qualify as a breach event. The board’s swift action, by placing both parties on leave and appointing an interim CEO, suggests it is trying to mitigate reputational and legal exposure. Upon a formal internal investigation, on July 19, 2025, Byron resigned from his position as CEO. Astronomer’s actions following the scandal show a commitment to leader accountability and upholding the company’s best interests. As for Cabot, her continued employment, although on leave, has sparked debate. Terminating an employee in Cabot’s position for “ugly headlines” is not always legally sound. Internal investigations must be thorough, and any termination must be substantiated by documented violations, not just public embarrassment. Overall, this is an important lesson for executives: your personal conduct can have unintended consequences. Executives should be mindful that they represent the image of their companies. And for companies, this is a reminder to revisit employment agreements, update ethics policies, and ensure your crisis response plan does not rely on hope and a hip social media intern.
July 24, 2025
Estates and Trusts
When a Corporate Trustee May Be a Disadvantage for Your Trust
Last month I explored the potential advantages of naming a corporate trustee, acknowledging that the decision is ultimately a matter of personal preference. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. Should you name a financial institution as corporate trustee to manage your trust when you are no longer able to do so for yourself? Whether you name a financial institution to manage your trust assets when you are no longer able to do so for yourself is ultimately a matter of personal preference and choice. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. $$$ - Higher Costs Relying on a financial institution to manage your trust when you are no longer able to do so for yourself generally requires a more substantial commitment to administrative costs. While friends and family might be willing to serve when you’re gone – and frequently agree to do so with no thoughts of compensation (or the time commitment potentially involved!) – no corporate trustee is going to undertake or continue the effort without being adequately compensated. Corporate trustees charge annual fees that typically range from 0.5% to 2% of the trust’s “assets under management,” depending on the size and complexity of the trust. These fees are intended to compensate reasonably for professional services required to manage the assets and administrative responsibilities. In my experience, family members and friends serving as trustees typically charge little or nothing for their trust/asset management efforts, regardless of the discretion afforded to them under the governing trust document(s). The decision whether to exercise this discretion in favor of taking a fee is typically driven on the one hand by a sense of entitlement and, on the other, by an inherent sense of fairness (including an assessment of the likelihood of heartburn and frustration) to be generated by beneficiaries’ uninformed and often unwarranted perception of impropriety occasioned by the resulting imbalance as violative of “equality for all” expectations. To be sure, individual circumstances vary widely, and a family/friend trustee should have no reservations about being reasonably compensated for work that money managers and financial advisors would otherwise be charging a significant sum. Most trusts expressly afford trustees discretionary authority to be compensated for their efforts. And, unless expressly stated in the trust document, Virginia, like most jurisdictions, allows such discretionary compensation by default. Consequently, one can generally expect trust administration costs under a corporate trustee to exceed what an individual trustee might be expected to charge (if anything) for his or her trust management services. It is typical to allow an individual trustee the discretion to take a fee for one’s services. The more substantial the trust, the more time and effort can be expected to monitor and manage – especially if one or more family members have their own expectations (however misguided or unrealistic they may be!) regarding the timing and extent of their inheritance. In my experience, there’s almost always at least one troublemaker beneficiary making things miserable for everyone else – especially the trustee. Lack of Personal Touch Corporate trustees are in the business of managing trusts and, therefore, manage many trusts at once. Consequently, a corporate trustee may not be able to provide the personalized attention that a close family member could. In all fairness, a corporate trustee cannot be expected to understand or appreciate the unique family dynamics or emotional aspects of the trust as well as a family member or close friend could. Perhaps you are in the 1% of those fortunate to have developed a close long-term relationship with a trusted advisor at a corporate trustee and have convinced yourself that no other friend or family member could possibly be trusted to do as good a job carrying out your wishes. I’m not here to talk you out of your blissful naivety, but you owe it to yourself to give due consideration to the probabilities of your trusted advisor dying and how familiar the likely successor(s) is/are with your situation. Less Flexibility Institutional trustees often operate under strict guidelines and may be less flexible or slower to respond than an individual who can make quick, informal decisions. This relative inflexibility stems, at least in part, from a higher likelihood of being held to task in hindsight for decisions which, at the time, may have seemed eminently reasonable. A beneficiary is more likely to attempt to create a legal issue about holding a corporate trustee liable for decisions that, in retrospect, turn out sub-optimally. Consequently, a corporate trustee can be expected to apply a more rigorously conservative approach to investing and discretionary distributions, for instance. Of course, this may be precisely what you’re looking for in a trustee. Alternative Asset Limitations Along with less flexibility in the manner in which they might be expected to make decisions regarding the assets under their management, corporate trustees are oftentimes limited in the asset classes they manage. Precluded from keeping particular types of assets in their portfolio, a chosen corporate trustee may become the tail wagging the proverbial dog when they prove incapable of serving 100% of your trustee needs. For instance, real estate is quite frequently beyond the purview of a corporate trustee. Therefore, if you have substantial “alternative asset” holdings (i.e., beyond the traditional “stocks and bonds,” annuities, and typical financial market holdings such as derivatives), a corporate trustee may not be the right choice for you. On the other hand, the more specialized or unique the holdings, the more likely you will want to try to find a trustee with the needed specialized expertise to manage these alternative assets appropriately. Special circumstances demand special consideration. Just recognize, as well that a corporate trustee with the relevant specialized skill set may not be the best choice to serve as your fiduciary for your other trust assets. And even if they are a potential fit across all of your asset classes, their relative expertise and/or comfort level may require some drafting cooperation to develop and settle on an arrangement with which the corporate trustee can get comfortable. For instance, we recently assisted a blended family in avoiding a potentially very costly legal fight by identifying and working with an independent corporate trustee to develop a settlement trust arrangement, the terms, procedures, and potential liability protections of which the trustee could accept. The new trust arrangement overcame the mutual distrust factors, avoided significant legal fees, and uncertain outcomes. Cooperatively addressing and overcoming the specific corporate fiduciary’s reservations ultimately afforded all of the trust beneficiaries the independent management/oversight they each needed. Final Thoughts I would be dishonoring the legal profession if I did not acknowledge, quite lawyerly, that “it depends!” If you haven’t figured it out yet, there is no one-size-fits-all “right” answer. Everyone’s situation is in some respects unique and people’s risk preferences fall across a full spectrum (from a nihilistic “what do I care? I’ll be dead!” to “I couldn’t possibly do that to my loved ones!”). Choosing a trustee is a deeply personal decision that depends on the size and complexity of your trust, your family situation, and your priorities for administration and oversight. For many, a hybrid approach—naming both a family member and a corporate trustee as co-trustees—offers the best of both worlds: professional management and personal insight. While I can’t possibly speak to my readers’ individual risk preferences, there are clearly certain factors that might lend themselves more favorably to a corporate trustee selection in a given situation. All other things being equal, you may want to consider appointing a corporate trustee in the following circumstances: Your trust is large or complex. There is potential for conflict among beneficiaries. You lack a trustworthy or capable family member to serve. You want to ensure long-term, professional management. The trust includes specialized assets such as real estate, business interests, or significant investments. Before making a final decision, I would encourage you to consult with your estate planning attorney or financial advisor to weigh the pros and cons in your specific situation. After the fact, if you find yourself trying to manage or extricate yourself from inheritance-related entanglements (with or without a trust), you should seriously consider engaging an experienced trust and estates litigator to assist in crafting and implementing an outside-the-box arrangement which might very well result in a third-party, corporate fiduciary as the answer . . . or then again, it might not. I would be glad to offer personal recommendations for an estate planning attorney, financial advisor, or trust and estates litigator, should you be interested. I would also welcome the opportunity to review your situation, provide thoughtful recommendations, and assist with implementation as appropriate. The potential significance and impact of a well-chosen trustee cannot be overstated. In short, there is no “one size fits all” solution, and, simply stated, a corporate trustee may not be right for your situation. A well-chosen trustee (corporate, professional individual, family member, or friend) can provide peace of mind. The wrong trustee choice could mean the dismantling of everything you’ve worked your entire life to accumulate and damn your loved ones to costly and frustrating litigation. Too dark? I wish. Trust management legal issues might account for only a small fraction of trust cases, but the actual percentage is of little or no consequence when 100% of the cases I’ve seen on a continuous basis for over 25 years involve some form of dispute with or over the trustee. “What about a ‘trust protector’ arrangement?” you ask. “Should I be insisting on one of those for my trust?” Next time!
July 24, 2025
Elder Law and Advocacy
Why Caregiving Matters More Than Ever in America
When Bradley Cooper released his new PBS documentary “Caregiving,” he didn’t just share a deeply personal narrative, he opened the door to a long-overdue national reckoning. His story of bathing his father, of holding his hand through cancer, of navigating a healthcare labyrinth with little support resonates because it is all of our stories. Whether we realize it yet or not. Caregiving is the invisible thread that holds my clients — the wealthy and not so wealthy — their families, and their communities together. This essential labor, both paid and unpaid, is finally stepping into the spotlight, demanding recognition, reform, and real support. The Growing Crisis The statistics are irrefutable: for the first time ever, Americans aged 65 and older are set to outnumber their children by 2034. Currently, 23 million care for older adults exceeding the 21 million caring for kids. It is important to note, however, that caregiving occurs at all ages and contributions. No one is immune from caregiving. Financial caregiving responsibilities can begin much earlier for a younger demographic if they are in a better financial position than their aging family members. Added to that, those who are having children later in life now care for their aging parents whom they presumed could help them raise their own young children. Unpaid family caregivers contribute nearly $600 billion worth of labor to the US economy annually, which is larger than the United States Department of Defense budget and a figure soon to hit $900 billion the next decade. Families, who represent the unpaid caregivers, absorb this enormous emotional, financial, and physical burden. As this author has written about in the past, caregivers generally must reduce work hours, give up career opportunities, or quit jobs entirely. These sacrifices lead to lost income, strained mental health, and mounting caregiving debt. Beyond the individual cost, caregiving faces much broader challenges, including the underfunding of resources, a fragmented health care system, policy neglect, and a lack of labor protections for professional caregivers. Millions of Americans, especially women, people of color, and low-income individuals are making impossible choices: career or care. Income or loved one. Sleep or safety. And while the dialogue surrounding caregiving has traditionally been viewed as a women’s or senior issue, it is clear that caregiving now touches every demographic and tax bracket. In fact, the recognition of today’s “Sandwich Generation,” adults caring for aging parents while raising kids, has been a topic of conversation, mostly because of the extreme pressure this generation feels with its caregiving responsibilities: even Gen Z is stepping in as caregivers, often for grandparents and disabled siblings. Most fall into caregiving during a crisis — an accident, a diagnosis, or a fall. Without a plan, the emotional, legal, and financial toll compounds quickly and sometimes in ways that cannot be controlled. Planning in advance provides options that planning during or after a crisis simply does not. The culmination of these issues leaves us all without robust systemic support, defining caregiving as a personal crisis rather than a shared responsibility. However, there is hope, and the way to hold onto that hope is through planning. Take Action Clarify wishes. Encourage your aging loved ones to clarify their wishes. Advance healthcare directives provide caregivers guidance and reduce stress of healthcare and end of life decision making. Ensure your Will or Trust is in place and up-to-date reflecting the beneficiaries chosen by the aging loved one, not by the state. Consider creating an ethical will to share with your family describing your hopes and wishes for their future and lessons you wish to impart long after you are gone. Protect assets. If your loved one’s assets are not infinite, it’s imperative to meet with an elder law attorney who can assess whether or not your loved one will qualify for Medicaid or Veterans benefits in the future to pay for long-term care. Determine if asset protection trusts can help your loved one qualify for benefits or resources in their area. If you still have time, speak with an insurance professional about qualifying for long-term care insurance. Organize roles. Nothing is more important than setting a plan in place. This means determining now who can help your aging loved one and contribute to their caregiving. Dividing and conquering roles like organizing medication, cooking meals, providing transportation to appointments, and managing finances can help caregivers avoid burnout and ensure that talents among all caregivers are utilized. Technology is even being developed to address the need such as software like Hero Generation which can make organization for the caregiver easier. Preserve dignity. Talk to your aging loved one about where they want to live as they age and, perhaps more importantly, where they do not want to live as they age. If your loved one is faced with a life-limiting condition, start the dialogue about what their idea of a “good death” looks like by consulting with organizations like Befriending Death or your local hospice agency. Thoughtful planning keeps care centered around the person’s needs, values, religious, and spiritual beliefs, not just the logistics of the end of their life. As caregivers, there is so much we can do beyond providing the care. We must acknowledge the heavy lift of caregiving: talking about it with family, co-workers, and friends to create community around the experience. We must offer respite to our friends who are caregivers and vote for public policies that support and expand care. And of course, elevate the conversation and share resources to make sure that it is easier for those who come after us. Roslyn Carter wisely said that “...there are only four kinds of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers." Caregiving is love in action and planning for it is essential. Wherever you are in your own caregiving or care receiving journey, ensuring a plan is in place is essential.
July 23, 2025
Labor and Employment
Travel Bans Are Back – Are Exemptions Possible?
Travel bans are back, with an initial list of 19 countries, and that list may be expanded to include an additional 36 nations. This latest round of travel restrictions find their basis in Presidential Proclamation 10949 “Restricting the Entry of Foreign Nationals To Protect the United States From Foreign Terrorists and Other National Security and Public Safety Threats” which has put in place visa and entry restrictions on citizens of Afghanistan, Burma, Chad, Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan, and Yemen. The proclamation also adds additional suspension of citizens from Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan, and Venezuela as visitors or students. Officials will consider additional restrictions for Egypt. Currently the administration is considering additional restrictions to a larger list of countries including: Angola, Antigua and Barbuda, Benin, Bhutan, Burkina Faso, Cabo Verde, Cambodia, Cameroon, Cote D'Ivoire, Democratic Republic of Congo, Djibouti, Dominica, Ethiopia, Egypt, Gabon, The Gambia, Ghana, Kyrgyzstan, Liberia, Malawi, Mauritania, Niger, Nigeria, Saint Kitts and Nevis, Saint Lucia, Sao Tome and Principe, Senegal, South Sudan, Syria, Tanzania, Tonga, Tuvalu, Uganda, Vanuatu, Zambia, and Zimbabwe. See Trump administration weighs adding 36 countries to travel ban, memo says | Reuters. History Repeating This is not the first set of travel restrictions that we have seen implemented. During the first term of the Trump administration, several travel bans were implemented for a variety of reasons, culminating with COVID-19 travel restrictions. What do the prior travel bans tell us about this latest proclamation? The administration has expanded its travel restrictions to include a broader set of countries, potentially including those that benefit from citizenship-by-investment programs, as well more than 20 African countries. The National Interest Exemption is Back Previous travel bans had allowed for travel in support of specific areas of national interest (NIE), which included crucial infrastructure. Authorities have reinstated the NIE as an option for obtaining an exemption from the travel restrictions. The wording of the current proclamation appears to severely limit NIEs in terms of requirements and processing. The “case by case” language suggests that NIEs will be significantly harder to obtain for individuals affected by the current restrictions. There is currently no procedure for advance application for NIEs; accordingly, they must be requested at an embassy appointment. Applicants must also qualify for the visa they are seeking before the NIE step, which raises the visa interview stakes. Accordingly, significant preparation is recommended for travelers affected by these bans, particularly in terms of visa qualification and NIE qualification. Finally, applicants must be prepared for significant administrative processing as NIEs are reviewed. Applicants seeking NIEs for visa issuance are recommended to consult immigration counsel to conduct an in-depth review of qualifications and supporting evidence. With the 2026 World Cup approaching, we can expect guidance on NIEs to evolve in the coming months.
July 18, 2025
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