Book Review: <i>The First Myth of Legal Management Is That It Exists</i>
January 27, 2005
Written by our new Board of Editors member, Ed Wesemann, and published in 2004 ' with profits donated to the ALA ' this collection of skillfully crafted essays provides illuminating observations and pithy advice on a wide range of challenges facing law firms and lawyers. The book's first chapter, on profitability problems larger firms have with small clients, was the springboard for this month's roundtable discussion
High Court OKs Double Tax on Some Contingent Fees
January 27, 2005
In a pair of cases with potential pocketbook impact on lawyers and their clients, the Supreme Court ruled on January 24th that the contingent fee portion of lawsuit settlements and awards is taxable to the client, even if the money goes directly to the attorney. But initial reaction to the 8-0 decision was more muted than expected because a law passed by Congress last fall limits the ruling's implications, and the decision won't doom the contingent fee system, which fuels a broad range of private litigation.
Tax Shelters: New IRS Disclosure Requirements Carry Serious Penalties
January 27, 2005
Touted as one of the most substantial overhauls of the Internal Revenue Code in years, the American Jobs Creation Act of 2004 was signed by the President on Oct. 22, 2004. Like any number of omnibus Congressional tax bills, the "Jobs Act" is a broad-reaching collection of miscellaneous tax provisions. <br>Title VIII of the Act, in Subtitle B ' "Provisions Relating to Tax Shelters," contains new provisions that limit the benefits of tax shelters. Among these new provisions are requirements that govern how certain transactions must be reported to the IRS. While reporting rules existed prior to the Jobs Act, these new requirements carry substantial penalties to encourage compliance and curb participation in abusive tax shelters.
A New World for Nonqualified Deferred Compensation Plans
January 26, 2005
Employment lawyers have been inundated in the last few weeks with calls from clients asking how and whether the new American Jobs Creation Act affects various severance pay plans and other deferred compensation plans. If you are still recovering from the recent presidential election, or are preoccupied by the pending elections in Iraq, this one may have slipped by you. The smart thing to do would be to consult your benefits partner, as I did. In this article, I explain this new law in layman's terms and help you respond to those callers clamoring for information about this creatively titled statute.
Second Opinion: New Tax Requirements for Nonqualified Deferred Compensation
January 26, 2005
The American Jobs Creation Act (the "Act") was passed by the House of Representatives on Oct. 7, 2004, and received final approval from the Senate on Oct. 11, 2004. President Bush was expected to sign the Act into law before the end of 2004. The Act enumerates an array of requirements intended to curb perceived abuses in the realm of executive compensation. In many ways, the thrust of the new requirements is to conform a number of aspects of the operation of nonqualified deferred compensation arrangements to those applicable to tax-qualified "401(k)" plans. Consequently, to be tax-effective under the new requirements of the Act, deferred compensation arrangements will need to operate in a fashion more akin to true retirement arrangements.
Dealing with the SEC's 'Up-the-Ladder' Reporting Requirements
January 26, 2005
The provision of Sarbanes-Oxley (SOX) that sets out the gatekeeper role for lawyers, Section 307, requires that lawyers report "up the ladder" (that is, to senior management and, ultimately, to the audit committee or the full board of directors) evidence of certain violations of the securities laws and breaches of fiduciary duties. While the SEC's rules implementing Section 307 became effective in August 2003, there remains much ambiguity in how the SEC plans to enforce them.
Restructuring AMERCO
January 25, 2005
When AMERCO, the parent company of U-Haul International, emerged from bankruptcy protection in March 2004, it secured an unusual place in history -- exiting Chapter 11 with a global capital restructuring that resulted in zero dilution in shareholder value. Alvarez & Marsal, which was retained as the company's financial advisors, executed one of the most successful restructurings on record by developing and implementing a complex and consensual plan that required significant negotiations with a diverse group of debt and equity holders. By the end of the swift process, AMERCO's common equity value had increased by over 350% and nearly $300 million in value was restored to the investments of preferred stock and unsecured debt holders.
Equipment Leasing as a Current Financing Strategy for Middle Market Companies
January 03, 2005
Equipment leasing remains a viable tool for middle market companies in today's environment. The Equipment Leasing Association of America (the "ELA") estimates that of the $668 billion spent by U.S. business on productive assets in 2003, $208 billion, or 31.1%, was acquired through leasing, and for 2004 the ELA projects that leasing activity will grow to $218 billion, or 30.7 cents of every dollar American businesses will invest in equipment.
Strengthening the Patent System
January 03, 2005
America's patent system is at a crossroads. There are many critics of the patent system; some have become increasingly vocal. Some claim the patent system is outdated. Others label it as a "threat to innovation." As fodder for their arguments, critics often tout examples of one or more patents that, in the words of one academic, are "not new, are obvious, are laughably insipid or sometimes all of the above" ("Patent Prescription: A radical cure for the ailing U.S. patent system," A. Jaffe and J. Lerner, IEEE Spectrum Online, Dec. 10, 2004).
