Big Law's $1,000-Plus an Hour Club

Big Law's $1,000-Plus an Hour Club Article By VANESSA O'CONNELL Leading attorneys in the U.S. are asking as much as $1,250 an hour, significantly more than in previous years, taking advantage of big clients' willingness to pay top dollar for certain types of services. WSJ's Ashby Jones discusses how some of the nation's top attorneys are able to command huge fees despite the economy being weighed down by the recession. A few pioneers had raised their fees to more than $1,000 an hour about five years ago, at the peak of the economic boom. But after the recession hit, many of the rest of the industry's elite were hesitant, until recently, to charge more than $990 an hour. While companies have cut legal budgets and continue to push for hourly discounts and capped-fee deals with their law firms, many of them have shown they won't skimp on some kinds of legal advice, especially in high-stakes situations or when they think a star attorney might resolve their problem faster and more efficiently than a lesser-known talent. Harvey Miller, a bankruptcy partner at New York-based Weil, Gotshal & Manges, said his firm had an "artificial constraint" limiting top partners' hourly fee because "$1,000 an hour is a lot of money." It got rid of the cap after studying filings that showed other lawyers surpassing that barrier by about $50. See which attorneys had some of the highest-known hourly rates in 2010 and 2009. $1,000 an Hour: 'If You Can Get It, Get It' Today Mr. Miller and some other lawyers at Weil Gotshal ask as much as $1,045 an hour. "The underlying principle is if you can get it, get it," he said. "Not many attorneys can command four figures hourly, and I do have trouble swallowing that," said Thomas L. Sager, general counsel at chemical maker DuPont Co. Still, he added, DuPont pays more than $1,000 an hour to a "select few," particularly for mergers-and-acquisitions advice. Janine Dascenzo, associate general counsel of General Electric Co., GE -0.65% said that her company is willing to pay what it must when it needs a lawyer with "unique" expertise. "We'll keep paying them a lot of money, because they're worth that," she added. Industrywide, attorneys in finance-related practices such as M&A, bankruptcy law and taxes, tend to command a premium to their peers in other specialties. One of the priciest attorneys over the past year, according to court filings, has been Kirk A. Radke, whose specialty at Kirkland & Ellis LLP in New York is advising clients on leveraged buyouts and forming private-equity funds. As of early 2010, Mr. Radke, whose clients include private-equity firm Avista Capital Partners, had an hourly fee of $1,250. Mr. Radke and Kirkland & Ellis declined to comment, as did Avista Capital. [TOPRATESjp] Such rates are contributing to inflation across the $100 billion-a-year global corporate-law industry as the slow economic recovery has left many law firms struggling to finance the hefty pay packages they award their stars. Since most law partners bill roughly 2,000 hours, those asking $1,100 hourly will bring in $2.2 million, a few million short of the $3 million or $4 million in annual compensation star attorneys get at many big firms. To help fill the gap, the firms rely on the profit they often reap on the work of junior attorneys, or associates. Dozens of associates at a time can work on a single case, and some firms bill as much as $700 an hour for their time, according to Valeo Partners, a Washington consulting firm that maintains a database of hourly legal rates in fields such as litigation, corporate law and intellectual property. That strategy can fuel tensions with clients. "We are much less willing to pay an army of associates at the ever-increasing rate," said GE's Ms. Dascenzo. "Plenty of clients say to me, 'I don't have any problems with your rate,' " said William F. Nelson, a Washington-based tax partner at Bingham McCutchen, who commands $1,095 an hour, up from $1,065 last year. "But there is price pressure for associates, especially junior lawyers. A small but growing number of top lawyers are using other arrangements in place of hourly billing. David Boies, chairman of Boies, Schiller & Flexner and a prominent trial lawyer, charges $960 an hour, a spokeswoman for the firm said. But just a third of his time is devoted to matters that are billed hourly. More often his deals with clients involve alternatives such as pegging fees to his success, she said. More typically, big law firms' managing partners dictate hourly rates annually, often studying what their rivals charge, according to disclosures in their attorney-fee filings in corporate-bankruptcy cases, which provide a rare public peek at the industry. Such cases involve more than just bankruptcy lawyers; they frequently draw in a range of attorneys, including specialists in such areas as taxes, product liability and environmental and intellectual-property law. This year, top litigators at Morgan, Lewis & Bockius LLP, a Philadelphia-based firm, are asking as much as $1,200 an hour. A spokeswoman for the firm said "less than 1% of our partners are at rates of $1,000 or more." Gregory B. Craig, a former counsel to the Obama White House who joined Skadden, Arps, Slate, Meagher & Flom LLP a year ago as a Washington-based litigation partner, is asking $1,065 an hour, according to a court filing last month. Skadden Arps declined to comment. Mr. Craig didn't respond to a request for comment M&A lawyer John M. Reiss, from White & Case in New York, started billing $1,100 an hour last year. "Some clients do focus on the hourly rate, but in the end what really matters is their total cost and whether they got a fair price," said Mr. Reiss. In recent years, pressure from clients for discounts has made it increasingly difficult for law firms to increase their lawyers' fees across the board. Hourly rates for partners rose by an average 3% in 2009 and 2010, and 2.3% this year, compared with an 8% increase in 2008, according to Hildebrandt Baker Robbins. The average law-firm partner now asks $635 an hour and bills $575, the firm said. But a small group of attorneys in some specialties command significantly more. Nearly 2.9% of partners at a group of 24 large U.S. and British law firms asked for $1,000 an hour or more in U.S. cases last year, up from 1.5% in 2009, according to Valeo. London-based lawyers have tended to charge higher per-hour rates than their U.S.-based counterparts. However, London attorneys typically don't bill as many hours on a case as do U.S. attorneys, some lawyers say. "A thousand dollars an hour was a choke point for some clients," said Peter Zeughauser, a consultant to law firms. "I don't think there will be another significant psychological barrier until rates reach $2,000 an hour, which they will do, probably in five to seven years." Write to Vanessa O'Connell at vanessa.o'connell@wsj.com

Courtroom Drama: Too Many Lawyers, Too Few Jobs

Courtroom Drama: Too Many Lawyers, Too Few Jobs Published: Thursday, 21 Mar 2013 | 12:01 PM ET By: Mark Koba | Senior Editor, CNBC READ FULL ARTICLE Tonya Constantine | Blend Images | Getty Images Becoming a lawyer seemed to be one of those career moves that could stand up to any type of economic setback. The jobs would always be there, as most people, it was assumed, would need a lawyer at some point in their lives—and a downturn in the economy would likely last no more than it took to graduate from law school. That's no longer the case. Because of the recession of 2007-2009 and a still-struggling economy, the legal profession is under severe stress. Besides not having enough positions for current lawyers, there are too many upcoming law school graduates and too few jobs to employ them. "We never saw it like this just a few years ago, but now I've seen it first hand," said Ron Lieberman, a matrimonial lawyer the in New Jersey firm of Adinolfi & Lieberman in southern New Jersey. "There are too many lawyers and too few jobs. We just hired someone, but we didn't look very hard, and she was doing volunteer work." He added: "I'm not sure it's going to get better any time soon." The legal profession, like many others, has been downsizing. It's boosting productivity of current staffers, rather than hiring new employees, analysts say, and anyone newly hired is likely to be doing so at half the salary than that of a new hire just four years ago. "The recession has really changed the dynamics of the legal profession," said Fred Cheever, the associate dean at Sturm College of Law at the University of Denver, who noted the school has had to cut its class size from 380 to 290 this past year. "Other schools are doing the same. It's a way to respond to the recession and the job market." There are nearly one million people employed as lawyers in the U.S., and the rate of unemployment for lawyers is just around three percent. That said, the legal job market has slowed dramatically. The U.S. will have a 7.3 percent loss in legal employment for 2013, according to Bright.com, a research group. The greatest loss of jobs will be in insurance defense attorneys, and in areas of employment and commercial real estate. Going forward, the Bureau of Labor Statistics projects nearly 74,000 jobs new lawyer jobs created in the U.S. over the next seven years. The growth is expected in areas including health law, intellectual property law, privacy law, and international law. But American law schools will graduate about 44,000 students each year during that time, and in doing the math, that means six new lawyers — not including older graduates — will be fighting it out for just one new job.

I've Filed a Mechanic's Lien and Still Have Not Been Paid NOW What?

You have filed a mechanic's lien against the debtor and or the company that you provided construction and or design related services to. You and or your accounts receivable department might have filed the lien directly and or hired one of the popular lien filing services available to do it for you. You may have an in house attorney and or you may have hired an outside attorney to file the lien and begin collection strategies. Great you filed the lien on your own and or used a lien filing service and six months later you still have not been paid. You hired an attorney if it is an affordable situation for your firm (many small businesses cannot afford high hourly rate attorneys, a negotiated fee with a contingency or payment plan preferable). You hired the attorney but the attorney knows very little about construction law, does not have support staff that knows about construction law and rarely picks up the phone to begin any type of negotiations with the debtor party. You are frustrated because you did not run an accurate credit profile on the company that you now have done business with and or with the sluggish economy you have taken the risk because you need the business. A few facts, the longer the lien sits the more challenging it may be to collect. When the lien has been filed it is important to immediately be proactive in understanding the debtors situation and to gage whether or not they will pay within a specific timeframe and or if you have to proceed with further legal action. Working with a general contractor that has money mismanagement issues and you did not know it, thus the general contractors have spent the funds for the project completion another uphill battle. My mechanic's lien has been Bonded now what? If you have to move forward with legal proceedings on your mechanic's lien, it is important to work with legal professionals who understand construction law period? If it is a pure debt and or business collection matter it is important to work with legal professionals who are proactive, pick up the phone, do their research on the debtor and find every practical way of getting you your money! Lu'na Hernandez

I've Filed a Mechanic's Lien and Still Have Not Been Paid NOW What?

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The 6th Circuit splits with 2nd and 9th, lowers bar for securities claims

The 6th Circuit splits with 2nd and 9th, lowers bar for securities claims 5/24/2013 (Reporting by Alison Frankel) Federal courts in Kentucky, Ohio, Tennessee and Michigan may soon be seeing an influx of securities class actions claiming strict liability under Section 11 of the Securities Act of 1933, thanks to a ruling Thursday by the 6th Circuit Court of Appeals in Indiana State District Council of Laborers v. Omnicare. Judge Guy Cole, writing for a panel that also included Judge Richard Griffin and U.S. District Judge James Gwin of Cleveland, found that shareholders asserting Section 11 claims for misrepresentations in offering documents need not show that defendants knew the statements to be false. "Under Section 11," Cole wrote, "if the defendant discloses information that includes a material misstatement, that is sufficient and a complaint may survive a motion to dismiss without pleading knowledge of falsity." The panel explicitly noted that its reasoning is at odds with the 9th Circuit's ruling in the 2009 case Rubke v. Capitol Bancorp and the 2nd Circuit's oft-cited 2011 decision in Fait v. Regions Financial. But the court said it is bound only by the U.S. Supreme Court and insisted that high court precedent in the 1991 case Virginia Bankshares v. Sandberg is consistent with its Omnicare holding. "In the instant case, the plaintiffs have pleaded objective falsity," Cole wrote. "The Virginia Bankshares court was not faced with and did not address whether a plaintiff must additionally plead knowledge of falsity in order to state a claim. It therefore does not impact our decision today." The Omnicare class action has quite a convoluted history. The case began in federal court in Kentucky as a securities fraud class action claiming that the pharmaceutical distributor deceived investors when it concealed its supposedly illegal kickback and false billing deals with pharma manufacturers. Shareholders later amended the complaint to include Section 11 claims based on disclosures in a 2005 public offering. The entire case was dismissed in 2007, but in 2009 the 6th Circuit revived and remanded the Section 11 claims, instructing the district court to determine whether they "sound in fraud" and must meet a heightened pleading standard. Plaintiffs' lawyers at Robbins Geller Rudman & Dowd considered asking the U.S. Supreme Court to review the issue of scienter for Section 11 claims that sound in fraud, but instead amended their Omnicare complaint in an attempt to strip out hints of fraud, focusing only on the falsity of so-called "soft statements" about Omnicare's legal compliance in the offering documents. The district court nevertheless said shareholders failed to meet the requisite standard of establishing that defendants knew the statements were false. In Thursday's ruling, the appeals court said such a showing is not necessary for Section 11 claims, which entail strict liability for offering documents that contain material misstatements. "No matter the framing, once a false statement has been made, a defendant's knowledge is not relevant to a strict liability claim," the panel said. Omnicare counsel Richard Reinthaler of Winston & Strawn told me he believes the 6th Circuit is flat wrong. The Supreme Court's precedent in Virginia Bankshares, he said, holds that shareholders must establish "objective falsity and subjective falsity.... The knowledge requirement is imbedded in the materiality element for soft statements." According to Reinthaler, "If every statement of opinion or belief is actionable without knowledge of falsity, it will open the floodgates" for Section 11 securities class actions. He said that Omnicare hasn't made a final decision about its next step but is leaning toward asking the entire 6th Circuit to review the panel's ruling en banc. Ultimately, of course, the Supreme Court may have to take up the issue to resolve the circuit split. I left a message for Eric Isaacson of Robbins Geller, who argued for shareholders at the 6th Circuit, but didn't immediately hear back. (Reporting by Alison Frankel)

Tax Plan for New Firms Urged

May 22, 2013News Tax Plan for New Firms Urged University-Based Businesses Could Get 10-Year Tax Break PermalinkCloseFacebookTwitterExpand/Collapse New businesses on university campuses in upstate New York would be able to operate tax-free for 10 years under a proposal introduced Wednesday by Gov. Andrew Cuomo and legislative leaders. ALBANY—New businesses on university campuses in upstate New York would be able to operate tax-free for 10 years under a proposal introduced Wednesday by Gov. Andrew Cuomo and legislative leaders. The proposal, which requires legislative approval, would allow new businesses on the State University of New York’s 64 campuses to avoid sales, property and business taxes, and their employees wouldn’t be required to pay income taxes. Private colleges north of Westchester County would also be eligible for the program. As much as 200,000 square feet surrounding the campuses would be included in the tax-free region. –Erica Orden

N.Y. attorney general says more evidence banks violated mortgage pact

N.Y. attorney general says more evidence banks violated mortgage pact 5/24/2013 By Karen Freifeld NEW YORK (Reuters) - New York Attorney General Eric Schneiderman said there is mounting evidence that Bank of America Corp, Wells Fargo and Co and other banks violated the terms of a settlement designed to end mortgage servicing abuses. Schneiderman - who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal - said other states had found similar problems. "Several other states have identified similar recurring deficiencies by the participating servicers," Schneiderman said in a letter dated May 23 to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday. The $25 billion settlement was brokered last year between five banks and 49 state attorneys general. The other banks are JPMorgan Chase & Co, Citigroup Inc, and Ally Financial Inc. The banks agreed to provide relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct. In his letter, Schneiderman did not identify which other states had provided evidence of banks failing to abide by the settlement. Nor did he identify the banks with recurring deficiencies. He said receipt of his letter to Smith and a concurrent one to a monitoring committee would start the clock on a waiting period before lawsuits could be filed against the banks. The settlement authorizes the monitor to first work with a mortgage servicer to correct any potential violations and sue if the servicer does not fix the errors. Schneiderman said on May 6 he planned to sue Bank of America and Wells Fargo after the waiting period was over, although he did not mention the possibility of a lawsuit in Thursday's letter. At the time, Schneiderman said that, since last October, his office had documented 339 violations of standards - 210 by Wells Fargo and 129 by Bank of America - dictating the timeline for banks to process mortgage modification applications. In Thursday's letter, Schneiderman said the violations reveal the two banks "are engaging in much of the same misconduct that precipitated the National Mortgage Settlement." Smith said in a statement Friday he would review the violations Schneiderman shared. He also said he will issue a report on the banks' compliance in June. "I intend to use the full breadth of my power under the settlement to hold the banks accountable," he said. North Carolina Attorney General Roy Cooper, who is on the monitoring committee, said in a conference call on Tuesday that some banks have "fallen short" of complying with servicing standards. He did not name any banks. In Thursday's letter, Schneiderman said there had been "inordinate delays" in reviewing loan modification applications at Wells Fargo, so applicants had to resubmit documents. He cited evidence of piecemeal requests for additional documents in one modification application at Bank of America, and said more than three months passed without a request for more information or a decision on another application. Bank of America has said it did not commit any violations, and that it has provided more relief under the settlement than any other servicer. Wells Fargo has said it was committed to abiding by the settlement. Citibank said on Friday it remains committed to fulfilling the terms of the settlement. JPMorgan spokesman Tom Kelly declined to comment. Ally said its bankrupt mortgage subsidiary Residential Capital is responsible for the settlement. A spokesperson for ResCap could not immediately be reached for comment. On Tuesday, Smith reported that the five banks in the settlement had distributed $50 billion in direct relief to over 620,000 homeowners as part of the settlement.

N.Y. Assembly passes 'shadow docket' legislation

N.Y. Assembly passes 'shadow docket' legislation 5/24/2013 By Daniel Wiessner ALBANY, N.Y.(Reuters) - The New York State Assembly this week approved a bill designed to expedite residential foreclosure cases by requiring lenders to file mandatory paperwork earlier in the process. The proposed law would create a new section, 3012-b, of the Civil Practice Law and Rules that would require lenders to file "a certificate of merit," a sworn statement they have standing to foreclose on a home, at the start of an action, along with a summons and complaint. The bill also would amend CPRL Rule 3408 to require lenders to attach copies of mortgage documents to the complaint, and file proof of service within 20 days. Currently, lenders who bring residential foreclosure actions have 120 days to file a proof of service. They must simultaneously file a request for judicial intervention and the certificate of merit. Courts can then schedule a settlement conference. Supporters of the proposal, including Chief Judge Jonathan Lippman, say it would prevent cases from winding up on the "shadow docket" of foreclosure proceedings that have stalled because lenders have not submitted certificates of merit. The Democrat-dominated Assembly on Wednesday approved the bill 111-26. It could, however, face opposition in the Republican-led Senate, which blocked a similar measure last year. A second bill approved by the Assembly on Wednesday would create criminal penalties designed to deter foreclosure fraud. For example, employees of residential mortgage businesses who knowingly prepared or executed false documents in a foreclosure action could face a class A misdemeanor punishable by up to one year in jail. The bill, known as the Foreclosure Fraud Prevention Act, was proposed last year by Attorney General Eric Schneiderman. The assembly approved it in 2012, but it stalled in the Senate.

Mechanics Liens and … Criminal Law?

New York Mechanics Liens and … Criminal Law? By Elliot Singer on May 22, 2013 U.S. ex. rel Roberts v. Ternullo is an example in which falsely filing a mechanics lien — in this example, many mechanics liens — led to criminal charges and even jail time. David Roberts for many years operated a retail fence business under several corporate names. As the State of New York alleged, Roberts: “would frequently fail to deliver fencing contracted for by customers or deliver less than called for in the contract, and when full payment was not forthcoming, would file mechanics liens with the County Clerk …” As a result, Roberts was charged with multiple counts of forgery and the making of an apparently sworn false statement, amongst other charges. Interestingly, it was only after more than 200 unhappy customers complained about Roberts that the county District Attorney got involved. As a result of the charges lodged against him, the defendant was charged with between one and four years in prison. His conviction, after being reversed and remanded on the first appeal, was affirmed at the appellate level the second time around. As the federal court that heard Roberts’ writ of habeas corpus held, the false mechanics liens the defendant filed were admissible because they were available to the public and, of course, filed by the defendant himself. As the court noted, it would be completely illogical to bar the state from presenting evidence such as a mechanics lien that was already in its public record.

"Selecting A Business Entity" with David Sorin of SorinRand

With radical changes, law firms can beat recession, says Susskind

FINRA Rule 2210 - It is Finally Here.

FINRA Rule 2210 - It is Finally Here. By Chuck Lowenstein, Senior Editor, Securities On Monday, February 4, 2013, member firms and their representatives enter an entirely new world of regulations regarding Communications With the Public. That is the day that the new FINRA Rule 2210 takes effect. This post will try to explain, in plain English, the basic changes and how they will affect any student planning on sitting for a FINRA exam on which the topic is covered. This is not a complete explanation – for that, refer to the blog specific to the course you will be… View the full article FINRA Rule 5123 – Providing Additional Investor Protection for Private Placement By William R. James, Senior Securities Editor This fairly straightforward rule went into effect December 3, 2012. I say straightforward because this rule may seem oddly reminiscent of what the SEC has been trying to do all along. It seeks to ensure that investors in private placements are provided with detailed information about the intended use of offering proceeds, the offering expenses and offering compensation. So in order to make it more likely that this goal is reached, each FINRA member that offers a security in a private placement must do one of two things: submit to FINRA a copy of any PPM, term sheet or any other offering document including any amended versions within 15 calendar days of the date of the first sale or, indicate to FINRA that no such documents were used. What’s nice about this 15 calendar day requirement is that it dovetails the filing requirement for issuers of Reg D securities! As you can see from item second bullet above, not all offerings may be required to have a PPM. There are plenty of exemptions. See the Kaplan Series 24 blog site for additional details. http://www.kfeducation.com/blog/detail/sec/2085

The mechanic's lien discharge bond: What it is, and what it does

The mechanic's lien discharge bond: What it is, and what it does The primary reason for obtaining a mechanic's lien discharge bond is to remove the lien, and its accompanying headache, from the property. The key thing to remember is that bonding a mechanic's lien does not get rid of the lien. The name of the bond-a mechanic's lien discharge bond-causes a lot of confusion to those unfamiliar with the intricacies of the Lien Law. The discharge bond does not extinguish the mechanic's lien; it discharges the lien in the sense of removing it from the property. The lien itself remains alive and well. A bond to discharge a mechanic's lien serves one simple and particular purpose: it removes the mechanic's lien from a parcel of real property and, in essence, the mechanic's lien then attaches to the bond until it is vacated, satisfied or expired. Pursuant to Lien Law § 19(4), a mechanic's lien may be discharged by posting a bond equal to 110% of the face value of the lien. This answers one of the most common questions in the bond process: how much does it cost to bond a mechanic's lien? The answer is that it always depends on the amount of the lien, but always will require at least 110% of the face value of the lien. It does not matter what surety issues the bond; they all must issue a bond for 110% of the face value of the lien. The only area where the bonding cost can vary is in the premium that the surety charges the principal for the bond. The premium is based upon several factors, including the amount of the lien. While just about any insurance company licensed and authorized to conduct business in New York can issue a mechanic's lien discharge bond, there are certain sureties that specialize in this area and, therefore, are more familiar with the process. Most bonds can be paid for in one of two ways: cash or a letter of credit. Obviously posting cash moves the process along more quickly. This is because there is little risk to the surety as they are literally collecting the entire amount first and then holding it until the mechanic's lien is discharged. On the other hand, securing the bond with a letter of credit usually extends the process and the surety may be very selective in banks from which it will accept a letter of credit. Something to keep in mind is that the surety will require the principal to defend and indemnify it in any action that is brought to enforce the lien. After the bond is issued it is served upon the lienor and filed with the county clerk where the mechanic's lien was recorded. Some counties, including New York, will require the purchase of an index number and submission of an attorney affirmation requesting the discharge of the mechanic's lien. Once recorded, the bond now takes the place of the property and the mechanic's lien is no longer an encumbrance on the title. The mechanic's lien, having been removed from the property, is now attached to the discharge bond. Despite the bond, the lien will expire by operation of law in the same manner as it would expire against the property. Upon expiration, some sureties will require a court order explicitly cancelling and vacating the mechanic's lien before they release the bond collateral back to the principal. Other sureties will discharge the bond upon receipt of a letter from the attorney for the bond's principal stating that the time to foreclose upon the lien has expired and that no lien foreclosure action has been commenced. A mechanic's lien that has been bonded can be foreclosed upon in generally the same manner as a lien that has not been bonded. Notably, if a mechanic's lien has been bonded the owner is no longer a necessary party (Lien Law §44-b). But the surety that issued the bond is now usually named as a party, as is the principal under the bond. One important distinction is that no lis pendens is filed in connection with a foreclosure action upon a lien that has been bonded. Other than these differences, an action to foreclose upon a mechanic's lien that has been bonded will generally follow the same course as a lien that was not bonded. Most importantly, the lienor must still establish that its mechanic's lien was valid before recovery can be achieved and the owner has not waived any defenses by bonding the lien. Vincent Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC, Melville, N.Y.

The paralegal’s role in blue sky securities laws.

Blue Sky Forecast The paralegal’s role in blue sky securities laws. By Daniel P. McAndrews November/December 2005 Table of Contents “Blue Sky” is a term that brings a smile to most people’s faces with thoughts of sunny days and good weather ahead. However, to most corporate paralegals, it brings a look of horror to their faces. Why? One reason might be that, instead of contacting, researching and filing documents with one judge, one court or one governmental authority for a single matter, the paralegal could potentially be forced to contact, research and file documents with 50 states for one single offering of securities by a corporation, limited partnership, limited liability company or other entity. There are many variables that determine the number of states involved and the amount of work involved. The History of Blue Sky In 1911, Kansas became the first state to enact a comprehensive state blue sky securities law in response to its residents being taken by salesman selling worthless securities of fly-by-night corporations. Through this law, corporations were required to register their securities and the individuals who sold their securities with the Office of the Securities Commissioner in full detail before they could offer or sell in Kansas. By enacting this law, state residents gained additional protection because the Kansas Securities Commissioner reviewed the offering of securities, the corporation and the people selling the securities before any consideration was exchanged. The protection of purchasers is the fundamental purpose of state blue sky securities laws and the main reason corporate and securities paralegals work on blue sky filings in various states. Following Kansas’ lead, the other 49 states passed similar state blue sky securities laws to protect their residents. The laws at the time attempted to create a level playing field for issuers and purchasers. Eighteen years after the first blue sky law was passed, the great stock market crash of 1929 occurred, followed by the Great Depression. In response to these two events, an increased number of scams and lack of information about investments, the Securities Act of 1933 (the ’33 Act) was enacted. A Securities and Exchange Commission was created in 1934 to administer the ’33 Act on the federal level. The SEC added another level of registration of securities to the state blue sky securities laws by providing additional requirements for corporations offering securities and those selling the securities. More than 60 years later, the states’ powers were severely cut back with the enactment of The National Securities Markets Improvement Act of 1996. NSMIA was enacted due to the states’ failure to uniformly regulate certain types of national securities offerings such as those securities listed or approved for listing on the New York Stock Exchange, American Stock and Options Exchange and the Nasdaq/National Market, and those offerings complying with Rule 506 of Regulation D under the ’33 Act. The states still have the ability to investigate and prosecute fraud for such offerings. However, corporations are not required to register with state securities administrators for the previously described offerings. Continue Reading Here Helpful Web Sites • U.S. Securities and Exchange Commission — www.sec.gov • North American Securities Administrators Association — www.nasaa.org • SECLaw.com, an online guide to securities laws — www.seclaw.com • Consumer Action Web site, State Securities Administrators — www.consumeraction.gov/security.shtml • Practising Law Institute — www.pli.edu Resources • A Brief History of Securities Regulation Wisconsin Department of Financial Institutions www.wdfi.org/fi/securities/regexemp/history.htm • Exemption from Securities Registration Under Rule 701 The National Center for Employee Ownership www.nceo.org/library/rule701.html • “Introduction to the Blue Sky Laws: Yes, there are 50 other securities regulators other than the SEC” by Richard I. Alvarez, Esq. and Mark J. Astarita, Esq. www.seclaw.com/bluesky.htm • Securities Act of 1933 Securities Industry Association www.sia.com/capitol_hill/html/securities_act_of_1933.html • Uniform Securities Act The National Conference of Commissioners on Uniform State Laws www.nccusl.org/nccusl/uniformact_summaries/uniformacts-s-usa2002.htm

IRS High-Tech Tools Track Your Digital Footprints By Richard Satran | U.S.News & World Report LP – Fri, Apr 5, 2013 10:47 AM EDT The Internal Revenue Service is collecting a lot more than taxes this year--it's also acquiring a huge volume of personal information on taxpayers' digital activities, from eBay auctions to Facebook posts and, for the first time ever, credit card and e-payment transaction records, as it expands its search for tax cheats to places it's never gone before. The IRS, under heavy pressure to help Washington out of its budget quagmire by chasing down an estimated $300 billion in revenue lost to evasions and errors each year, will start using "robo-audits" of tax forms and third-party data the IRS hopes will help close this so-called "tax gap." But the agency reveals little about how it will employ its vast, new network scanning powers. Tax lawyers and watchdogs are concerned about the sweeping changes being implemented with little public discussion or clear guidelines, and Congressional staff sources say the IRS use of "big data" will be a key issue when the next IRS chief comes to the Senate for approval. Acting commissioner Steven T. Miller replaced Douglas Shulman last November. [Read: Are You Taking the Right Tax Deductions?] "It's well-known in the tax community, but not many people outside of it are aware of this big expansion of data and computer use," says Edward Zelinsky, a tax law expert and professor at Benjamin N. Cardozo School of Law and Yale Law School. "I am sure people will be concerned about the use of personal information on databases in government, and those concerns are well-taken. It's appropriate to watch it carefully. There should be safeguards." He adds that taxpayers should know that whatever people do and say electronically can and will be used against them in IRS enforcement. IRS's big data tracking. Consumers are already familiar with Internet "cookies" that track their movements and send them targeted ads that follow them to different websites. The IRS has brought in private industry experts to employ similar digital tracking--but with the added advantage of access to Social Security numbers, health records, credit card transactions and many other privileged forms of information that marketers don't see. "Private industry would be envious if they knew what our models are," boasted Dean Silverman, the agency's high-tech top gun who heads a group recruited from the private sector to update the IRS, in a comment reported in trade publications. The IRS did not respond to a request for an interview. In trade presentations and public documents, the agency has said it will use a massively parallel computer system that can analyze data from different networks to find irregularities and suspicious activities. CONTINUE READING ARTICLE

Credit Scoring Products and Emerging Modeling Techniques:

Credit Scoring Products and Emerging Modeling Techniques: black box method no longer acceptable, consumers demand transparency Press Release: Global Information, Inc FARMINGTON, Conn., April 9, 2013 /PRNewswire-iReach/ -- The financial reputation of a consumer in the U.S. essentially boils down to his credit score. There are the well-known factors that most people know about – large amounts of bad debt, late payments, cancelled credit cards, and an overall lack of borrowing and payment history. Yet, the majority of consumers continue to remain in the dark about the statistical science that determines the 3-digit number labels that communicate our level of risk or financial credibility to lenders. While consumers do have access to credit bureau information, the actual credit decision data lenders use to generate credit scores are hidden in a web of complicated custom scoring models and scorecards for every distinct product line. The credit scoring process was basically one big black box. However, new regulations are changing the way financial institutions make credit scoring decisions as demand for transparency swells. Trends in Credit Scoring and Model Development New research from Mercator Advisory Group's report will help payments industry participants understand the basics of credit scoring and scoring model development, as well as the best practices and evolving methods being used by lenders and scoring vendors for deployment of scoring products. Report highlights include: Overview of the credit scoring model development and implementation life cycle; Review of the credit scoring products available for use by participants in the payments industry; Discussion of trends in consumer credit and credit scores in the United States; Commentary on expanding regulatory oversight of credit reporting agencies and scoring model owners; Examination of best practices and evolving methods for credit scoring and using credit scores, as well as supplemental and alternative data, in lending risk decisions. More information about this report and a free sample are available at http://www.giiresearch.com/report/mag268425-trends-credit-scoring-model-development.html Banks: Global Industry Guide See Also Study and Report by the Mercator Advisory Group New Mercator Advisory Service report explores scoring products and emerging modeling techniques Boston, MA - April 4, 2013. A report by Mercator Advisory Group presents research that will help payments industry participants understand the basics of credit scoring and scoring model development, as well as the best practices and evolving methods being used by lenders and scoring vendors for deployment of scoring products.

Position Your Credit to be Approved for a Loan!

Position Your Credit to be Approved for a Loan! Posted on April 4th, 2013 by Susan in Real Estate Investing Tips Most mortgage lending companies will ask you to allow them to “run” your credit, meaning they will request information on your credit from various credit rating agencies. RFG uses what is called a tri-merge report, which gives credit scores from three different credit reporting agencies. The scores are called FICO scores and the score is derived from several different factors. The exact method by which FICO comes up with a credit score is one of the great mysteries of the universe, but some things are known and other things suspected to be factors in the credit score formulation. Even the mere search for credit will impact your credit score as it means you are looking to borrow additional money, to the detriment of all of your existing creditors. Each dollar you owe means that you could be closer to defaulting on all of your credit. Different types of inquiries, however, can have a different effect. Credit checks for a consumer credit card will have the most detrimental effect on your credit score, as you are applying for credit that will presumably increase your liabilities over time. The more credit card type checks you have, the greater the detriment, because the presumption is that you may be taking on several new credit obligations. Therefore, if you intend to be shopping for a mortgage loan in the foreseeable future, resist the urge to obtain additional credit cards, which will almost always involve a credit check, lowering your score each time that credit check is run. In addition, once approved for the credit card, the potential of owing money on that credit card, even if unused, will further lower your score. Credit checks for automobiles and mortgages are viewed differently by the credit reporting agencies. Multiple credit checks for this type of loan are generally viewed as “shopping around” for the best rate, and will only lower your score the value of one credit check, provided they are done within a very short period of time, usually fourteen days. The logic behind this is that even through multiple lenders may check your score, you are only going to take out one mortgage or car loan at a time, not multiple loans. Therefore, if you are applying for secured credit, make sure to do so within a limited period of time, to avoid each inquiry by competing lenders from lowering your score. In addition, auto loans and mortgages are debts that are paid down over time, they do not increase or have “limits” like credit cards do. Therefore, it is presumed that if you have had an auto loan or mortgage loan for a significant amount of time, you are likely to continue paying that loan, as it is constantly decreasing. Accordingly, if applying for a mortgage loan, make sure that all of your payments on this type of credit are made ON TIME for at least six months before you apply for additional mortgage credit. Further, an important factor is compiling your score is your payment history. Late payments on both revolving consumer credit and mortgage loans will hurt your score, but late payments on mortgage loans will hurt your score more. One of the best ways to increase your score is to create a history of timely payments on all outstanding credit. Another factor that can be detrimental to your score is habitually using your available credit, either credit card or lines of credit to their maximum value. Credit raters view these types of borrowers as those who may not be responsible in handling their debt. The lower your utilization rate of available credit, the better off your score will be. If thinking about applying for a mortgage loan, make a concerted effort to pay down your outstanding credit to below your credit limits. Lastly, the credit score is affected by the different types of credit that a borrower may have. A borrower with only credit cards will score lower than the same borrower with credit cards, mortgage loan and auto loan, all paid on time over an extended period of time. These types of borrowers are deemed to generally represent less risk to lenders. Getting your credit into shape in order to be approved for a mortgage loan may take some time and strategizing but can be done. Now that you know the important components, get to work making your score as strong as possible, so you can move forward with your loan approval soon!

Income Property Analysis 101 – Everything Real Estate Investors Need To Know

Income Property Analysis 101 – Everything Real Estate Investors Need To Know Posted by Darin Garman | April 9, 2013 | View Comments Property analysis is something I get a lot of questions on – especially from new real estate investors. Analyzing a real estate investment deal is an area that can be intimidating when getting started investing in apartment buildings or commercial real estate. Analyzing properties is as much a part art as it is part science. Yes, you can input your investment property data into a spreadsheet or property analysis tool – and that is a good start. However, there is some art involved as well. After all, one of best examples is Trump’s best selling book “The Art of The Deal”. Here are the most important things you need to keep in mind about income property analysis: Numbers are Most Important. The value of an income property is based on the return it can provide to the investor. I don’t care if it is a nice brick building in a college town. If the income does not support the project, it is probably not a winner for you. You must make sure that the numbers give a positive Net Operating Income, or essentially your return on investment. Know Your Market Cap Rates. Capitalization rates are a measure for the value of a property. Know the capitalization rates for similar properties in the area. You can find this out by contacting a reputable commercial broker, a commercial banker, and/or a commercial property appraiser. All of these professionals should have a good idea what the cap rates are going for in your area. Make sure you have correct numbers. Most brokers/sellers will present you with a pro-forma property analysis. Of course, this is typically not based on “real life” numbers, but “best case” numbers. Which would you rather use when buying? Be sure you are looking at accurate data when doing your analysis. The best way to get this is from the past 2 years property operating data. When you make an offer on a property, you will want to cross-verify this data against their income taxes, as well. Note that things will line up 100%, but they should be close- or it will raise a red flag in the buying process. Would You Buy the Property Again? Imagine if you will, buying the property again in 5 or more years from now. Is the area on decline? Is the area up-and-coming? Are the jobs in the area sustainable? Are there plenty of tenant conveniences nearby? What kind of development (if any) is going on in the area? These are all great questions to ask yourself when doing your property analysis. Asking whether you would buy the building all over again in the future is also a great measure of whether you should move forward on a property. To Your Success, Darin Garman

5 Things to Do Before You Leave the Office

5 Things to Do Before You Leave the Office By Robyn Hagan Cain on April 3, 2013 11:22 AM For some lawyers, the work day never ends. Twenty years ago, lawyers left their phones and computers at work. Thanks to increased mobility, lawyers now send email from their phones, read briefs and cases on tablets, and are rarely seen without a laptop. Unfortunately, the never-stop-working work ethic means that more attorneys are burning out. So how do you stop the vicious cycle? Try actively disconnecting from the office at the end of the day. Of course, that's easier said than done. If you're the type of person who can't rest until you've reached a proper stopping point, it may be helpful to start winding down your day approximately 30 minutes before you leave the office. Last year, Forbes' Jacquelyn Smith outlined 14 things you should do at the end of every work day. If you have time for a 14-step end-of-day ritual, check out her tips. If you're looking for an abridged way to end your day, we've refined some of her tips and added a few of our own to create a handy checklist of five things to do before you leave the office. 1.Input Your Billing. If you have to enter your own billing, do it at the end of each day instead of the end of each month. 2.Check Your Calendar. Sometimes filing deadlines can slip your mind; don't spoil a client's claim because you overlooked a date on the calendar. 3.Respond to Email. If there are unanswered messages in your inbox that needs attention, take care of them before you leave. What's the point of going home to your family/friends/pets if you're going to ignore them while responding to email? 4.Create a To Do List. Smith says that you should plan and prioritize what you will do tomorrow before you leave today. 5.Say Goodnight. While Smith claims that saying goodbye to colleagues can make you feel happier and more fulfilled, it's also practical to bid your law firm colleagues adieu. If your firm has an unspoken don't-leave-until-the-boss leaves rules, saying goodbye notifies those who report you that they can also leave. These, of course, are just a few suggestions. You should customize your end of day ritual with whatever steps help you disconnect. The important thing is that you find a way to leave the office at the office so you can avoid burnout. Five Ways to Irritate Opposing Counsel By William Peacock, Esq. on February 28, 2013 12:20 PM Everyone who has ever practiced law has opposing counsel horror stories. This shouldn’t be surprising. After all, you remember some of the weirdos from your law school class. How many of them are practicing attorneys? In hope that this will help you correct your bad behavior — or indulge in a misery-loves-company therapeutic rant — here are five ways attorneys irritate the other side. 1. Pass off case calls to a series of attorneys in the firm The attorney of record doesn't answer his phone. The next attorney knows nothing about the case. The junior associate knows nothing about the case, and nothing about the law. At this point, the caller will have to fight the desire to drive to the firm and insert the phone in someone's naughty parts. Is that really necessary? 2. Remind young attorneys of their relative lack of experience. Repeatedly. Yes, we're not all seasoned barristers. How about you ask us what it was like to graduate in 2011 again? You might also use age as a passive-aggressive way of intimidating less-experienced foes. "My goodness, you are young." "How old are you?" Young attorneys get it - we're younger and less experienced. 3. Return documents, correspondence slowly Get a stipulation in the mail? Why rush to respond? Sure, there isn't anything to do but sign-and-return. And it has been a freaking week. But why should lawyering be easy? Or quick? Except there's no reason to waste time. You stip. We stip. We all stip. Get it together, man. 4. Skip procedural steps Discovery? Nahhh. Case management conferences? Who needs 'em. Alternative dispute resolution and mediation? He'll be there, but he won't try. There's a reason why certain steps are mandates by the court. Skipping steps not only makes you look incompetent, it's a pain in everyone's buttocks as well. 5. Be OCD about Procedural Steps, Mistakes Then again, there's the converse of the step-skipper: The guy who makes a big deal because subsection 16 of Rule 57 wasn't followed. You forgot to discuss the cost of postage stamps! HOW DARE YOU! There's meaningful participation and fulfillment of procedures. There's also obsessive-compulsive disorder. Try to find a happy medium.

America Fast Forward Bonds

Posted January 23, 2013 by Steve Hymon America Fast Forward gets another thumbs up review; check out list of loan applicants First, a point of emphasis: the America Fast Forward program to expand federal funding to speed up the construction of transportation projects is very much a work-in-progress. Congress adopted part of America Fast Forward last year — an expanded federal loan program called TIFIA that backs loans with the big wallet of the federal government and helps secure low interest rates. To put it another way, Low Interest Rates = Lower Project Costs. The super-size version of TIFIA is so far drawing some pretty good reviews. The Brookings-Rockefeller Project on State and Metropolitan Innovation sung America Fast Forward's praises last week, saying it's one of the top programs of 2012 and poised to make a mark in the years ahead. “This metro-led reform signals a new bottom-up federalist approach that could be replicated to other economy-building efforts,” wrote the Project on its website (It's also on CNN's opinion pages). It's fair to say other regions are certainly trying to benefit from the expanded TIFIA program. Check out this list of applicants for TIFIA loans below on the Federal Highway Administration's website (the agency that administers the program) — looks like a lot of big asks from Red and Blue states alike. As I wrote above, America Fast Forward is not yet a complete program. While Congress expanded the TIFIA loan part of AFF last year, Metro is also advocating for an expanded federal bond program (called QTIB) that would supply more funds for transportation projects. More about that in this recent post. FY 2013 MAP-21 TIFIA Letters of InterestSubmitted through January 17, 2013(Amounts in Millions of Dollars) Continue Reading

Mechanics Lien Exaggeration: Grounds to Dismiss a Lawsuit in New York?

Mechanics Lien Exaggeration: Grounds to Dismiss a Lawsuit in New York? By Elliot Singer on March 24, 2013 Summary Judgment: An Introduction Most people think that if a lawsuit proceeds to trial, there’s only one opportunity to win or lose: When a jury issues a verdict. In civil trials, however, this scheme isn’t always true. Let’s say that you’re a property owner and that a subcontractor who performed work on your home filed a mechanics lien on the property and then sued to foreclose on it. As the property owner, however, you’re frustrated. Not only did you actually pay the subcontractor for the work he performed (and can document it), even if you didn’t pay him, the amount he claims that he is owed is much more than the two of you ever agreed upon. This is called lien exaggeration (a topic previously discussed on the PAID blog). Perhaps he’s saying that he’s owed $40,000 on a $10,000 kitchen installation. In civil trials, the plaintiff (the party that files the lawsuit) is permitted to make its case first. In doing so, the plaintiff may make an opening statement, call favorable witnesses, and introduce supporting exhibits. But what happens if the plaintiff’s case is so weak that there’s no way a jury could ever find in the plaintiff’s favor? Courts don’t like to waste time, so if the defendant believes that “no reasonable juror” could conclude that the plaintiff should win, even if the defendant doesn’t make its case. The defendant will do something called “moving for summary judgment.” In essence, the defendant is saying to the judge that since the plaintiff hasn’t presented enough evidence to win, the court should dismiss the lawsuit before the defendant presents any of its own evidence. This is actually a fairly common request. Summary Judgment for Lien Exaggeration Going back to our example above, are you, the defendant and property owner entitled to summary judgment in New York if you can show that the plaintiff and subcontractor who claims that he is owed $40,000 exaggerated the amount he is claiming in the lien? A recent case decided on March 14, 2013, On the Level Enterprises v. 49 East Houston, L.L.C., addressed this exact issue. Although it is short, the court’s opinion is actually rich in clarification of the law. Specifically, the court held that while it is possible for courts to issue summary judgment against plaintiffs who file exaggerated liens, in this case, summary judgment would be inappropriate.

Protecting Supplier Lien Rights in New Jersey - Follow the Money

Protecting Supplier Lien Rights in New Jersey - Follow the Money Posted by Daniella Gordon on January 02, 2013 By: Tony Byler and Daniella Gordon Suppliers frequently provide supplies on lines of credit to contractor customers who are involved in multiple construction projects. In an ideal world, both the customer and the supplier would maintain accounting records keeping each construction project and the payments attributable to those construction projects separate and accurate. Out of practical convenience, however, contractors and the suppliers sometimes lump projects and payments into a single account, making it difficult, if not impossible, for the supplier to determine which payments apply to each ongoing project, i.e., a task that is necessary for a supplier seeking to assert a mechanics’ lien claim against a particular project when its customer fails to timely pay. Several weeks ago the Appellate Division of the New Jersey Superior Court, in L&W Supply Corporation v. Joe Desilva, described the affirmative duty suppliers have to determine the source of its customers’ payments for materials, by requiring suppliers to ask. According to the Court, a supplier who fails to do so “sacrifices its rights under the Construction Lien Law.” A brief review of the evolving mechanics’ lien laws relating to suppliers helps explain the Court’s potentially severe ruling. New Jersey’s Construction Lien Law The New Jersey Construction Lien Law (“Lien Law”) allows contractors and suppliers who are owed payment for work or materials on privately procured projects to file a lien against the property where the improvements (labor and supplies) were constructed. The lien encumbers the property, which prevents the owner from selling or transferring the property without first dealing with the contractor’s or supplier’s payment claim. The purpose of the Lien Law is twofold: first, to secure payment of money due to contractors and suppliers; and second, to protect owners from paying more than once for the same work or materials. In order to protect owners from being forced to pay twice for the same work or materials, the Lien Law provides that the value of a lien cannot exceed the value of the “lien fund,” which, in the simplest terms, is the amount of money that remains unpaid on the job. CONTINUE READING ARTICLE

Non-profit credit counseling agency Take Charge America

Do’s and Don’ts for Managing Your Credit Score Non-profit credit counseling agency Take Charge America offers tips to boost your financial outlook, deal with credit card debt and build credit history PHOENIX--(BUSINESS WIRE)-- Few financial figures are as important as a credit score. The three-digit figure has a major impact on daily life – dictating what consumers can buy, how much credit they can obtain and even where they choose to reside. A credit score is an estimate of credit risk, which is based on a consumer’s credit report. Lenders use this number to determine how likely applicants will be to repay a loan or line of credit in a timely manner. The higher the score, the better interest rate they’ll receive. “Credit scores matter whether your credit history is pristine, new or needs some work,” said Mike Sullivan, chief education officer for Take Charge America, a national non-profit credit counseling and debt management agency. “Improving your score requires a regular effort. You need to continually be mindful of your purchases and your payments.” Sullivan offers five do’s and don’ts for managing a credit score and maintaining a positive credit history: •Don’t Miss Credit Card Payment Due Dates – Credit card companies set deadlines in stone. Missing just one payment – even by a day or two – can negatively impact your credit score. On the flip side, a history of on-time payments can help improve your credit score. •Do Pay More than the Minimum Amount Due – Submitting minimum payments can be a very slow way to pick away at your credit card debt. Bigger payments can make a big impact on your total debt level, plus they can help raise that score. •Don’t Apply for New Credit – If you are trying to improve your credit, applying for new credit could not only lower your score, but you’re more likely to get higher interest rates on the loan or line of credit. •Do Decrease the Total Amount of Debt Owed – Paying down your total debt, including credit cards and other personal loans, is among the fastest ways to improve your credit score. •Don’t Close Old Credit Card Accounts – Closing a credit card can lower your credit score – especially if it’s been open for more than three years – because it reduces your credit-to-debt ratio, a major factor credit bureaus use to determine your score. If you want to remove the temptation to spend, consider cutting or storing the card while keeping the account open. To keep tabs on credit history and ensure the data is correct, Sullivan recommends consumers check their credit reports at least once a year. A free credit report can be obtained annually from each of three credit bureaus at www.annualcreditreport.com. A credit score can also be obtained for a small fee. It’s common for the score to vary slightly with each bureau. For more financial tips, visit Take Charge America. About Take Charge America, Inc. Take Charge America, Inc., a non-profit financial education, credit counseling, housing counseling and debt management agency, is dedicated to helping consumers nationwide improve their financial futures. Founded in 1987, the organization has helped more than 1.6 million consumers nationwide manage their personal finances and debts. To learn more, visit www.takechargeamerica.org or call (888) 822-9193. THIS IS NOT AN ENDORSEMENT BY OUR BLOG JUST A LINK TO A RESOURCE GOOD LUCK!

Legal Mess Continues for Banks

Legal Mess Continues for Banks By Zacks Equity Research | According to Bloomberg, the U.S. Court of Appeals in Manhattan turned down the dismissal of a lawsuit by a lower court ruling on Friday. The lawsuit was filed by the New Jersey Carpenters Health Fund against The Royal Bank of Scotland Group plc (RBS), Deutsche Bank AG (DB), Wells Fargo & Company (WFC) and NovaStar Mortgage Inc. The lodged complaint claims that these banks misrepresented documents as an underwriter in the sale of over $1.3 billion in mortgage-backed securities in 2007. The fund alleged that the banks deceptively sold the mortgage-linked securities that gradually failed and also misrepresented the value of instrument by providing materially misleading statements. Moreover, the New Jersey pension fund alleges that the banks failed to expose NovaStar’s ignorance in complying with its own underwriting standards and the company’s use of overstated appraisals. The banks have been blamed for overlooking these issues while buying loans from NovaStar and selling them as securities to investors. Eventually, the market showed a downtrend, resulting in huge losses for common investors. Previously, the pension fund sued a larger group of securities in six offerings worth $7.7 billion. However, in 2011, U.S. District Judge, Deborah Batts dismissed the complaint, claiming that the fund invested in just one offering and therefore a lawsuit cannot be filed for the other five offerings. Moreover, the judge highlighted the absence of supporting documents related to the case. After the dismissal of the case, the pension fund again filed the lawsuit in 2011 over 2007 securities. Currently, the appeals court approved the allegations and regarded them as adequate for proceeding with the case. Moreover, the lower court has been intimated to analyze whether other offerings can be sued by the fund. However, spokesmen from the banks refrained from commenting on the issue. The continuously increasing number of lawsuits is apprehended to dent the reputation of the banks and financials. However, investors who lost their hard-earned money in such investments should get some reprieve. Among other banks, JPMorgan Chase & Co. (JPM) and Citigroup have also been legally accused of distorting documents related to mortgage-backed securities and other losses in 2011.

Advance Payment Retainers: Whose Property? What Account?

By Devika Kewalramani and Jordan Greenberger Contact All Articles New York Law Journal February 15, 2013 An advance payment retainer is a sum provided by the client to cover payment of legal fees expected to be earned during the course of a client representation; to the extent the legal fees advanced are not earned during the representation, the lawyer agrees to return them to the client. But to whom does an advance payment retainer belong: the lawyer or the client? To what account should the funds be deposited: the lawyer's or law firm's operating account or the client trust account? How the lawyer or law firm that receives the retainer treats it may vary from one lawyer or law firm to another. The New York Rules of Professional Conduct (the Rules) do not mandate what the lawyer should do with the funds although there are ethics opinions providing guidance. Regardless, some attorneys consider the funds to be the client's property (until the fees are earned) that should be deposited in the client trust account. Other attorneys view the advance payment as their own and place the funds in their operating account, not to be commingled with any client funds. And still other attorneys decide to open a separate sub-account in the client's name to avoid any confusion or issues should the client change his mind about the engagement soon after making the retainer payment. While none of these options are per se unethical, some present greater benefits to the lawyer or client, and all present ethical duties that the attorney and law firm should be aware of. Client's or Lawyer's Funds? What Were Drafters Thinking? N.Y. State Bar Opinion 570 (1985) noted that the drafters of the Code of Professional Responsibility1 did not consider advance payments of fees to be client funds necessitating their deposit in a trust account. The opinion observed that "Normally, when one pays in advance for services to be rendered or property to be delivered, ownership of the funds passes upon payment, absent an express agreement that the payment be held in trust or escrow, and notwithstanding the payee's obligation to perform or to refund the payment. The lawyers who drafted the Code should not lightly be assumed to have overlooked these fundamental principles in choosing the language of DR 9-102(A)."2 Rules Are Not Explicit. The Rules dealing with legal fees (Rule 1.5), holding funds as a fiduciary (Rule 1.15), and withdrawal from representation (Rule 1.16) do not specifically refer to advance fee retainers. Rule 1.5(d) prohibits a lawyer from entering into an arrangement to charge or collect a nonrefundable retainer fee. Rule 1.15 governs "funds…belonging to another person." Rule 1.16(e) mentions advance fee payments and imposes a complementary obligation by requiring a lawyer who withdraws from representing a client to "refund promptly any part of a fee paid in advance that has not been earned." However, that provision does not identify from which account the funds should be returned. Thus, the Rules are not explicit; the Rules do not require that the advance payment retainer be placed in the client trust account, but the Rules also do not prohibit the attorney and client from agreeing to treat the fee advances as client funds for deposit into the client trust account until the fees are earned through services rendered. CONTINUE READING HERE

5. Home Affordable Unemployment Program (UP)

5. Home Affordable Unemployment Program (UP) Obviously, having no job makes it much more difficult to stay current on mortgage payments. HUD developed the Home Affordable Unemployment Program (UP) specifically for homeowners who are unemployed. UP can lower mortgage payments to 31 percent of your income, or put a 12-month or longer freeze on them. UP Eligibility Eligibility requirements for the Home Affordable Unemployment Program include: You are presently unemployed and qualify to receive unemployment benefits. You live in your home and it’s your primary residence. You have never received a HAMP loan modification. You obtained your mortgage on or before January 1, 2009 and owe up to $729,750.

4. Home Affordable Foreclosure Alternatives (HAFA) Program

4. Home Affordable Foreclosure Alternatives (HAFA) Program For those who are unable to make mortgage payments on time, the Home Affordable Foreclosure Alternatives (HAFA) Program exists to help them transition to more affordable living arrangements without going through a foreclosure. It’s not as great as it sounds, though; participating in HAFA means losing your home, but through a short sale or deed in lieu. Even so, these are better options than foreclosure, and the HAFA program provides a number of really helpful benefits. For instance, homeowners who sell their property through a HAFA short sale are not responsible for the remaining mortgage deb. Additionally, HAFA may provide $3,000 in relocation assistance. HAFA Eligibility According to the Making Home Affordable site, you may qualify for the Home Affordable Foreclosure Alternatives Program if: Your financial hardship can be documents. You haven’t purchased a new home within the last year. Your first mortgage is less than $729,750 and was obtained on or before January 1, 2009. You haven’t been convicted of real estate-related felony larceny, theft, fraud, forgery, money laundering or tax evasion in the past 10 years.

3. Home Affordable Refinance Program (HARP

3. Home Affordable Refinance Program (HARP) Considering how low mortgage rates have fallen in the past year, it is especially frustrating for homeowners who could stand to benefit from refinancing their loans but can’t qualify. The Home Affordable Refinance Program (HARP) is a mortgage relief program for homeowners who are not behind on their mortgage payments, but have an underwater mortgage that has prevented them from qualifying for refinancing. The thought is that by bringing down the cost of financing a home loan, HARP can help underwater mortgage holders gain more control over their loans. HARP Eligibility The Making Home Affordable website states that homeowners may qualify for HARP assistance if they meet the following eligibility requirements: Freddie Mac or Fannie Mae must own or back the loan, or the loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. The mortgage holder has not already refinanced under HARP, unless it is a Fannie Mae loan that was refinanced under HARP between March and May of 2009. The current loan-to-value (LTV) ratio is 80 percent or more. The borrower has not missed a mortgage in the past 12 months and is current on the loan at the time of refinancing. 2013 is the last year the Home Affordable Refinance Program will be available, though a possible “HARP 3.0″ may be created once the current HARP program expires.

2. Home Affordable Modification Program (HAMP)

2. Home Affordable Modification Program (HAMP) Homeowners who are employed but can’t afford their mortgage payments should consider applying for the Home Affordable Modification Program. This loan modification program reduces the amount owed by mortgage holders so their debt is more manageable. The catch is that your mortgage servicer must have agreed to participate in HAMP, and you can only get relief through this program if they are participating. The pool of potentially eligible homeowners was expanded in June 2012, so it’s worth checking to see if you qualify for help. HAMP Eligibility If you meet the following eligibility requirements as per the Making Home Affordable website, contact your mortgage provider to find out if they are participating in HAMP: You obtained your mortgage on or before January 1, 2009. You owe up to $729,750 on your primary residence or single unit rental property; $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property. The property has not been condemned. You are behind on mortgage payments or in danger of falling behind due to financial hardship. Your income is high enough to cover the modified mortgage payment and you can prove it. You haven’t been convicted of real estate-related felony larceny, theft, fraud, forgery, money laundering or tax evasion in the past 10 years.

1. Mortgage Forgiveness Debt Relief Act Extension

1. Mortgage Forgiveness Debt Relief Act Extension One of the few silver linings of last year’s fiscal cliff ordeal, the Mortgage Forgiveness Debt Relief Act of 2007 was extended for another year as part of negotiations. This should come as a weight lifted from the shoulders of homeowners who are attempting to have mortgage debt forgiven this year. That’s because usually, debt that is written off by a lender or creditor is usually considered as income, and therefore, subject to income tax. In the case of mortgage debt, those who were forgiven tens or hundreds of thousands of dollars would still be responsible for a huge tax bill. However, in order to provide additional relief to struggling homeowners and protect them from this financial burden, the Mortgage Forgiveness Debt Relief Act was put in place — temporarily. Luckily, though set to expire at the end of 2012, it has been extended through 2013. Mortgage Forgiveness Debt Relief Act Eligibility The IRS explains that the act covers the following debt: Up to $2 million in forgiven debt, or $1 million if married filing separately. The discharge is due to reasons directly related to a decline in the home’s value or the taxpayer’s financial condition Cited from: http://www.gobankingrates.com/mortgage-rates/5-best-2013-mortgage-relief-programs-loan-modifications/#ixzz2KsWiitrJ

The 5 Best Mortgage Loan Relief Programs Available in 2013

The 5 Best Mortgage Loan Relief Programs Available in 2013 By Casey Bond • Posted in Mortgage Assistance , Mortgage Rates • February 14, 2013 Home > Mortgage Rates > The 5 Best Mortgage Loan Relief Programs Available in 2013 While the turmoil following the 2007 mortgage loan crisis has largely died down, there are still lasting effects — most notably in the form of mortgage holders who are struggling to pay their loans. Fortunately, the federal government has created a number of mortgage relief programs to aid those who are underwater, behind on payments and/or unemployed so they don’t lose their homes to foreclosure. While many federal mortgage relief programs have been criticized for not helping as many struggling homeowners as projected, there aren’t many other options out there. So if you’re currently behind on mortgage payments, or want to make your current loan more affordable so that you can stay current on payments, consider one of the five mortgage assistance options below.

Mechanics’ liens: Easy to file and a challenge to enforce or defend

Mechanics’ liens: Easy to file and a challenge to enforce or defend 10/20/2011COMMENTS (0) By Victor M. Metsch Your sub-contractor client has not been paid for work, labor and materials on a real estate construction job. She sends you copies of the sub-contract, a summary of the work done and the invoices. She asks you to prepare and file a mechanic’s lien. Seems simple enough - take a standard pre-prepared form, fill in the blanks and file the lien. Nothing to it! Of course, that was the easy part. Identifying possible defenses to a mechanic’s lien goes far beyond the narrow confines of the Lien Law. And defending the lien, if challenged, may give you—and your client—angina. How can anything that, at the outset, seemed so uncomplicated, become so complex, time-consuming and expensive from both a prosecution and defense vantage point? Let’s take a look at some recent decisions that sustained, vacated or otherwise adjudicated mechanic’s liens. A CHALLENGE TO ENFORCE OR DEFEND Once a mechanic’s lien is filed, an action to foreclose must be commenced before the time limit to do so expires. Then, if the property owner defends, the real action begins. For example, MCC Development Corp. v. Perla, 2011 N.Y. Slip Op. 00786 (1st Dept. Feb. 10, 2011), arose from an order granting a motion to dismiss the complaint and to discharge a mechanic’s lien. The underlying construction contract required an initial decision by the architect as a condition precedent to mediation and mandated that mediation was a condition precedent to arbitration. The causes of action for foreclosure of the mechanic’s lien arose out of the contract. Accordingly, in affirming, the First Department found that “Supreme Court correctly dismissed the complaint [and] discharged the mechanic’s lien… on the ground that plaintiff failed to satisfy the contract’s conditions precedent to commencing litigation.” EXHAUSTIVE AND EXHAUSTING The grounds to challenge a lien are exhaustive and can be exhausting. In Mahan Construction Corp. v. 373 Wythe Realty, Inc., 2011 N.Y. Slip Op. 21032 (Sup Ct. Kings Co. Feb. 4, 2011) the court (Demarest, J) addressed a motion to discharge three mechanic’s liens. The third lien was the subject of the court’s decision. The third lien in Mahan was challenged on five grounds, the last of which was that “[s]ervice of the notice of lien was insufficient[.]” The court summarily disposed of the first four grounds. However, the last objection was sustained. The lien in Mahan was “served” on the corporate owner of the real estate by posting a true copy on a conspicuous place on the property. Section 11 of the Lien Law requires that where a corporation is the owner of the property, service of the lien must be made by “leaving the same… personally” with one of several specifically-designated persons. If such a person cannot be found, service can be made by posting the notice on the property between 9 a.m. and 4 p.m., or by registered or certified mail to the corporation’s last known place of business. No evidence was supplied that service of the lien was attempted by any method other than posting. As a result, the Mahan court discharged the lien against the property “due to insufficient service of the notice of lien,” because the corporate owner was not served “by one of the three specified methods.” The court held that “[s]trict compliance with the statutory requirements is mandated and the court does not have discretion to excuse noncompliance.” The court may be called upon to determine whether the lien is facially invalid. In 8 Catherine Street, LLC v. NJC Constr., Inc., 2010 N.Y. Slip Op. 52189(U) (Sup. Ct. New York Co. Nov. 17, 2010), the court (Schoenfeld, J) addressed a motion for an order discharging a mechanic’s lien based upon claims, among others, that the lien related to work that was not done within eight months of filing and that the amount thereof was exaggerated. CONTINUE READING HERE

Big Banks Are Told to Review Their Own Foreclosures

Big Banks Are Told to Review Their Own Foreclosures By JESSICA SILVER-GREENBERG and BEN PROTESS Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices. In doing so, the regulators are trying to speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers, according to people briefed on the matter. But housing advocates worry that the banks, eager to end the costly process, could take shortcuts as they comb through loan files for errors, potentially diverting aid from the neediest homeowners. Regulators say they will check the work. And banks have already agreed to pay a fixed amount to troubled homeowners, creating another backstop. According to officials involved in the process, who spoke anonymously because the matter is not public, the regulators had few alternatives. Last month, the Office of the Comptroller of the Currency scuttled the foreclosure review by independent consultants because it was marred by delays and inefficiency. Instead, the regulator struck a multibillion-dollar settlement directly with the nation’s largest banks, a deal that includes $3.6 billion in payments to aggrieved homeowners. To accelerate the payments, the comptroller’s office decided to cut out the middlemen, the consultants, from the reviews. In a conference call last week, the government outlined a plan to use the lenders instead, according to people with direct knowledge of the discussion. Banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners. CONTINUE READING ARTICLE HERE

Piercing the LLC Veil

Piercing the LLC Veil Why LLCs Aren’t Bulletproof By Robert J. Mintz, JD. Many people use Limited Liability Companies to hold investment assets and real estate or to operate a business. LLC’s are generally easier to form than corporations, have fewer formal operating requirements and offer a greater variety of tax planning options. Limiting Personal Liability Most importantly for some, the basic tenet of LLC law is that members and managers of the LLC are not personally liable for the debts of the company. This is known in legal terms as limited liability and it prevents a creditor of an LLC (or a corporation) from pursuing the personal assets of an owner. The problem is that the purported protection of the LLC law is often and increasingly disregarded by the courts under a variety of legal theories leaving personal assets exposed and unprotected from business risks – exactly the result that the owner was attempting to avoid. In this month’s article we’ll address the reasons why the courts are reaching these surprising conclusions and what steps can individuals take to protect themselves from unexpected and possibly significant financial losses. This limitation on liability is a crucial factor in operating or investing in a business venture. An investor wants certainty that personal assets, not invested in the business, are free from any potential claims which might arise. The concept of limited liability permits an individual to calculate the extent of the financial risk which is being assumed in relation to potential profits from the business. If a particular project involves a fixed investment of $100,000 then the risk and potential returns can be estimated and a rational decision about the value of the investment is possible. Limitations on personal liability are a foundation of any market economy because no individual or company would knowingly make an investment if the total cost of the investment, including potential liabilities, could not be reasonably calculated in advance. For example, suppose that the initial $100,000 amount invested in the business was not limited in any manner and instead the total amount of the investors net worth – everything that the investor owned – was subject to a future claim of the business? That proposition is difficult or impossible to evaluate because in this case, the amount of the investment and potential liabilities cannot be accurately measured in advance and the value of the investment is uncertain. Individuals are justifiably reluctant to make investments which place all of their personal assets at risk and the typical solution is to use an LLC or corporation which is intended to limit this exposure. CONTINUE READING ARTICLE

Limits on Limited Liability Company Protections

Limits on Limited Liability Company Protections August 9, 2011 | Tyler J. Russell Since its inception, the limited liability company ("LLC") business form has provided owners with protection from the actions and the debts of the LLC and, to a point, a convenient shelter for storing particular assets out of the reach of their personal creditors. As a result, a creditor holding a valid judgment against an individual owner of an LLC (the latter being referred to in this article as a "Member- Debtor") often finds itself in a difficult position: the Member-Debtor's assets are titled in the name of the Member-Debtor's LLC and cannot be subjected to typical collection efforts. As creditors face more difficulty recovering on judgments, additional methods of collecting debts continue to arise under the law. Based upon those alternative collection methods, some of the asset protections afforded members by an LLC have been substantially weakened. Charging Orders More and more, creditors are resorting to "charging orders" and other remedies to collect their debts from individuals who have attempted to shelter their personal assets in an LLC. Charging orders provide creditors of the Member-Debtor with a right to collect distributions, not from the individual assets the Member-Debtor has placed in the LLC, but based on the Member-Debtor's membership interest in the LLC. To obtain a charging order, the creditor first must obtain a judgment against the member personally. After that judgment is entered, the creditor then must apply to a court for an order charging the Member-Debtor's membership interest with payment of all amounts due under the judgment. Once the charging order is entered, the creditor is entitled to receive and recover all distributions from the LLC to which the Member-Debtor would otherwise be entitled. Similar to corporate dividends paid to shareholders, LLC distributions are transfers of cash or other property to members of an LLC on account of their membership interests. If a distribution is made, the LLC must pay the creditor who has been granted a charging order all funds that would otherwise have gone to the Member-Debtor. Failure of the LLC to pay those funds directly to the creditor is a violation of the charging order and can result in varying degrees of liability being assessed to the LLC, including monetary fines. A charging order does not, however, entitle the creditor to collect all funds paid by the LLC to the Member-Debtor. Funds paid as compensation for employment or for personal services rendered in the operation of the LLC are arguably off limits from collection via a charging order. Instead, the charging order allows the creditor to collect only those amounts paid by the LLC on account of the Member-Debtor's membership interest in the LLC. Stated differently, only those "profits" paid to owners of the LLC are subject to the creditor's charging order. If the LLC makes no distribution of profits to its members, the charging order is rendered an ineffective collection tool. However, there are exceptions to this potential defense to a charging order. Single-Member Limited Liability Companies Typically, following entry of a judgment, creditors can "execute" upon the debtor's property, force a sale of that property, and recover the sale proceeds up to the amount of their judgment. Charging orders, however, are different. Many courts have expressly forbidden attempts by creditors to force the sale of a member's interest in an LLC to recover on a judgment against the member only. Courts have reasoned that to do so would prejudice the rights of other members of the LLC. However, where LLCs are owned solely by one person – dubbed "single-member LLCs" – the old rules are beginning to change. Although the issue has not been addressed directly in North Carolina, several courts across the country have ruled that the prohibition on forced sales of LLC membership interests to satisfy personal judgments of members is available only where there are two or more members in the LLC. Where the creditor obtains a charging order against the member of a single-member LLC, many courts have begun to allow the creditor to sell the member's membership interest and apply the proceeds toward satisfaction of the underlying judgment. Practically speaking, the sale of the ownership interest in that LLC produces a sale of the assets owned by that LLC. The reason for this change is relatively obvious. Where there is only one owner of the LLC, there are no other ownership interests that need to be protected. Because that one owner is liable on the underlying judgment and owns all interests in the LLC, courts are willing to lower the shield of protection flowing from the separate legal identity of the owner and the entity. Through effective advocacy, creditors of individuals who own single-member LLCs have created an acceptable avenue for recovering debts from assets previously ruled off limits. The Flip-Side: Planning Ahead by Member-Debtors Although effective under certain scenarios, successful collection efforts through charging orders and the single-member LLC issue described above are confined to a relatively narrow set of circumstances. Prudent planning by LLC members can often help to avoid a loss of assets. There are several inexpensive solutions that can be enacted in a short period of time. These may include paying the LLC members a reasonable salary and/or wage for their services rendered to the daily operation of the LLC or expanding the ownership base of the LLC to two or more persons. However, it is important to remember that there is no "one size fits all" solution when faced with these types of issues. Conclusion By virtue of charging orders, creditors now are sometimes successful in collecting personal debts from the distributions from, or even the assets of, unobligated LLCs owned, in whole or in part, by their debtors. But, with some planning, the effectiveness of charging orders can be blunted. Both the effectiveness of a creditor's charging order and the asset protection of the Member-Debtor will rest on specific factual conditions. Through careful planning and the assistance of knowledgeable legal advisors, it is possible for a creditor to reach heretofore unavailable assets, and for members of LLCs to avoid potential liability and to continue to enjoy the asset protection afforded by LLCs. © 2011, Ward and Smith, P.A.