BLT: September 2020

     

    Featured Articles

    Business & Corporate

    Access to Justice in Light of COVID-19: Benefits, Burdens and Lessons

    Zhao (Ruby) Liu, Nicole McLemore, Kyla D. Wyatt, Alvin W. Thompson

    Delivering on the promises of the rule of law has been and will continue to be a great challenge during the COVID-19 pandemic and in its aftermath. As the world struggles to adapt to the evolving immediate consequences of this public health crisis, lawyers should be mindful of long-term consequences when providing legal advice and representation. This requires reflection on previous crises, a willingness to learn from the current pandemic, and use of acquired knowledge to navigate and prepare for comparable disruptions in the future. Business lawyers in particular should gain an understanding of how the pandemic affects their clients, the courts in which claims are brought by and against their clients, and the impact it has on lawyers in general.

    Business & Corporate

    Privacy Twilight Zone: Returning to Work in the Age of COVID-19

    Joan Wrabetz, John Isaza

    As organizations begin to reintroduce people back into workplaces and schools during the COVID-19 pandemic, they face a unique set of privacy issues that arise from the use of screening processes and technologies. Organizations must design and implement new procedures to protect the health and safety of workers, students, and staff, but these procedures, the technology deployed to implement them, and the data that is collected in support of them can run afoul of the legal protections set forth in privacy and security laws, not to mention labor and employment laws. The laws that impact each organization will also vary depending on whether the organization is a government or a private entity and in which jurisdiction(s) the organization operates.

    Business & Corporate

    COVID-19 is Not Color-Blind: Assessing the Legal and Equity Impact on Diverse Communities

    Maggie Cardasis, Carol Evans, Mauricio Videla

    On September 23, 2020, an esteemed panel will discuss how the COVID-19 pandemic is exposing and exacerbating existing social and economic inequalities affecting racial and ethnic minority groups in America, including higher infection and death rates, decreased access to adequate healthcare, increased educational achievement gaps, and higher rates of job losses. This panel includes Chris Brummer, Professor and Faculty Director of the Institute of International Economics Law at Georgetown Law; Dave Clunie, Executive Director at Black Economic Alliance; Patrice Ficklin, Fair Lending Director at the U.S. Consumer Financial Protection Bureau; Jenn Jones, Chief of Membership & Policy at the National Consumer Reinvestment Coalition; Robin Nunn, Partner at Morgan, Lewis & Bockius LLP; Anthony Sharett, EVP, Chief Legal and Compliance Officer, and Corporate Secretary at Meta Financial Group and MetaBank; and Odette Williamson, Director of the National Consumer Law Center’s Racial Justice & Equal Economic Opportunity Initiative.

    Business & Corporate

    Forever Again: Is Mall Owners’ Purchase of Forever 21 a Sign of a Trend?

    Steven Wilamowsky

    Forever 21 is well known as a “fast-fashion” mall retailer that grew quickly from its founding in 1984 through most of the past decade, appealing primarily to a young demographic whose preferences for cutting-edge fashion would otherwise exceed their budgets. In recent years, however, the retailer has been beset by a number of controversies and, more importantly, was a latecomer to the e-commerce revolution that changed the way the world shops and, in particular, the way Forever 21’s target demographic shops. Ultimately, the woes brought on by these challenges led Forever 21 to commence chapter 11 bankruptcy proceedings early in the fall of 2019 and to close over 100 locations quickly thereafter in an attempt to restructure its remaining operations.

    Business & Corporate

    Individual Chapter 11 Cases Under New Subchapter V

    William L. Norton III, James Blake Bailey

    The Small Business Reorganization Act of 2019 (SBRA),[1] effective February 19, 2020, has created timely opportunities for individuals to confirm a Chapter 11 plan. Prior to the enactment of this legislation, individuals who did not qualify for Chapter 13, generally because their debts exceeded statutory limits, were forced to use the business reorganization provisions in Chapter 11. These provisions subjected individuals to the cramdown requirements of the absolute priority rule and made it difficult for individual debtors to confirm a Chapter 11 plan of reorganization. Thankfully, however, mere months before the COVID-19 pandemic, Congress passed the SBRA and eliminated the absolute priority rule for qualifying small businesses, which can include individuals.

    Business & Corporate

    Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That the Former Cannot Do the Latter

    Thomas E. Rutledge

    A recent decision from a California trial court held that a Delaware choice-of-law/forum provision could not be enforced against a California resident because doing so would deprive him of his right to a jury trial as embodied in the California Constitution. This decision brings into question all manner of agreements, including operating agreements for LLCs organized outside of California, and the choice-of-law/forum provisions thereof.

    Business & Corporate

    The Reimagining of Business Law Today: A Retrospective, 2017–2020

    Jonathan Rubens

    Almost three years ago, the ABA Business Law Section launched businesslawtoday.org, the Section’s premier digital platform for timely content on business law topics. The launch culminated a two-year project, in which I was part of a task force assigned to “reimagine” the Section’s longstanding print magazine, led by indefatigable former Section chair Chris Rockers. Our project ultimately resulted in a complete overhaul of how the Section sources, distributes, features, and promotes articles and other content from across the Section’s committees, and thanks to the leadership of Chris and the hard work of the other members of the task force, we were able to launch an entirely new BLT website in the late fall of 2017. This is my look back at that project and my tenure as BLT Editor-in-Chief, along with some highlights of how BLT may develop further after I hand the job over to new Editor-in-Chief Lisa Stark this September.

    Business & Corporate

    How “Reasonable Cause” Sidesteps IRS Penalties

    Robert W. Wood

    Dear IRS, no penalties please! Taxpayers claim that penalties are not warranted for many reasons, but what actually works? One of the biggest, yet most misunderstood, is the defense that a tax position was based on reasonable cause.[1] Section 6664(c) of the IRC provides that “no penalty shall be imposed . . . with respect to any portion of an underpayment if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion.” How the IRS evaluates this defense depends on which penalty has been assessed, so you must first know that to determine whether you are, well, reasonable. In addition, on top of reasonable cause, certain penalty defenses involve other concepts, such as an absence of willful neglect. Isn’t that proving a negative? You bet.

    Business & Corporate

    It’s in the Mail: Issues Concerning Commercial Contracts in a Time of Delayed Mail

    Evan W. Bolla

    The mail is slowing down. Packages and letters that used to arrive in days are in some cases taking weeks. Data suggests that since the beginning of July, on-time rates for delivery of first-class mail has slipped by 10–30 percent depending on the area and region. Although much of the focus of the media’s coverage concerning these delays has centered around the upcoming 2020 election and questions surrounding funding for the United States Postal Service (USPS), such delays can create serious issues concerning parties’ commercial agreements. Despite the fact that unquestionably more and more transactions are completed through the exchange of scanned and emailed documents, mailing requirements in contractual agreements are still common and remain a part of how business gets done. Many attorneys may not have thought about the “mailbox rule” since their contracts class in law school, so it is worth reexamining during this period of postal uncertainty.

    Business & Corporate

    Virtual Section Annual Meeting Author Spotlight Series: Gregory Monday on The Lawyer’s Guide to Family Business Succession Planning

    Rick Paszkiet, Gregory F. Monday

    Gregory Monday, American Bar Association Business Law Section member and shareholder with the law firm of Reinhart Boerner Van Deuren, in Madison, Wisconsin, is the author of The Lawyer’s Guide to Family Business Succession Planning: A Step-by-Step Approach for Lawyers, Business Owners, and Advisors, which the Business Law Section published in June 2020. Gregory offers his insights and expertise on family succession planning in this Q&A.

    Business & Corporate

    Virtual Section Annual Meeting Author Spotlight Series: H. Ward Classen on A Practical Guide to Software Licensing and Cloud Computing

    Rick Paszkiet, H. Ward Classen

    Ward Classen is a member of the legal department of Discovery Education, Inc. He has over 35 years’ experience negotiating complex information technology agreements and has practiced with many of the world’s leading technology companies, including Computer Sciences Corporation (now DXC Technology Corporation), Accenture, and InterDigital, Inc. Ward is the author of A Practical Guide to Software Licensing and Cloud Computing. The seventh edition will publish in October 2020.

    Business & Corporate

    Virtual Section Annual Meeting Author Spotlight Series: Robert B. Dickie and Peter R. Russo on Financial Statement Analysis and Business Valuation for the Practical Lawyer

    Rick Paszkiet, Robert B. Dickie, Peter R. Russo

    Robert B. Dickie is the founder of The Dickie Group, which provides training in finance and accounting to most of the country’s leading law firms and to the in-house legal departments of numerous Fortune 100 companies. Peter R. Russo, retired from the Boston University Questrom School of Business in 2017, where he served for 15 years as Executive in Residence and Senior Lecturer. During that time, he served terms as the Faculty Director of both the Entrepreneurship Program and the Executive MBA Program. Bob and Pete have just published their third edition of Financial Statement Analysis and Business Valuation for the Practical Lawyer. Bob and Pete offer their insights and expertise on financial statements and business valuation.

    Business & Corporate

    Anatomy of an Earnout in the Era of COVID-19: Best Practices for Designing Earnouts to Avoid Disputes

    Paul Pryzant, Suzanne Saxman, Andrew Noble

    As we write this article mid-summer of 2020, with a resurgence in COVID-19 cases in the South, Southwest, and Western United States, uncertainty caused by the virus abounds, including in the world of M&A transactions. Due to the unpredictability caused by the pandemic, buyers and sellers of companies have less ability to predict the earnings and future performance of the target business. As either Mark Twain or Yogi Berra supposedly said, “it is difficult to make predictions, particularly about the future.”

    Business & Corporate

    ESG in the Time of COVID: Key Considerations for Investment Fund Managers

    Brooke Jamison

    Since June 5, 2019, the date on which the Securities and Exchange Commission (the SEC) published its interpretation regarding the standard of conduct for investment advisers under the Advisers Act[1] the world has changed dramatically. On February 3, 2020, Larry Fink, the Founder, Chairman, and CEO of BlackRock Inc., published his open letter to CEOs asserting that climate change “has become a defining factor in companies’ long-term prospects”.[2] The World Health Organization declared COVID-19 as a pandemic on March 11, 2020. The Black Lives Matter movement has gained increased prominence following the death of George Floyd in Minneapolis on May 25, 2020.

    Business & Corporate

    Liu v. SEC: The Supreme Court Limits the SEC’s Disgorgement Power and Sets the Stage for Future Legal Battles

    Neil T. Smith, David Peet, R. Nicholas Perkins

    On June 22, 2020, in a much anticipated decision, the Supreme Court held that the Securities and Exchange Commission (SEC or the Commission) can continue its longstanding practice of seeking disgorgement as an equitable remedy in judicial proceedings under section 21(d) of the Securities Exchange Act of 1934. In Liu, the court held that a disgorgement award that (1) does not exceed a wrongdoer’s net profits, and (2) is awarded for victims constitutes an equitable remedy within the scope of the SEC’s statutory authority.

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