January 2011 Headnotes

Dallas Bar Association

HEADNOTES January 2011 Volume 36 Number 1

Barry Sorrels to be Inaugurated as DBA’s 102nd President

the District Attorney’s office, Mr. Sorrels went into private practice You may recognize Barry Sorrels as a criminal defense lawyer.

Mr. Sorrels has practiced law because you’ve seen him around the Belo Mansion or maybe be- with the firm of Sorrels, Udashen cause you’ve watched him giving & Anton since 2001. He has spent legal commentaries on TV news a significant amount of his career programs such as CNN, MSNBC, defending federal cases ranging Fox News National or Court TV. from complex white-collar fraud As of Saturday, January 15, 2010, cases to multi-defendant drug conyou will recognize him as the face of spiracies.

He has been Board Certified in the Dallas Bar Association. That’s when he will be inaugurated as the Criminal Law by the Texas Board association’s 102nd president— of Legal Specialization since 1983, only the fourth criminal defense and is a member of the Texas Crimattorney to become DBA president inal Defense Lawyers Association and the Texas Board of Legal Spein the modern era. cialization Attorney Mr. Sorrels grew up and Advisory Ethics in the Lake Highlands Commission. neighborhood of DalDespite a very busy las and graduated from schedule, Mr. Sorrels Lake Highlands High also volunteers his School in 1970. Durtime every year to be ing his high school the Course Director of years, he played both a trial skills course for football and baseball, young lawyers at the but it was football that Center for American took him to Columbia and International Law. University, where he He is also a frequent played safety. His selecturer on federal and nior year, Mr. Sorrels Barry Sorrels state criminal law topwas named MVP of the Columbia football team, First ics.

Throughout his legal career, Mr. Team All-Ivy League and HonorSorrels has been active in the Dalable Mention All-American.

At Columbia, when he wasn’t las Bar Association. He served as out on the football field, Mr. Sor- President of the Dallas Associarels tackled the subject of political tion of Young Lawyers in 1987. He science—an interesting topic to served on the DBA Board of Direcpursue, as it was during a time of tors from 1987-1989, returning to anti-war protests and campus riot- the Board in 2002, where he was ing. The experience left a lasting appointed Vice-Chair of the Board impression and began a lifelong and later, Chair of the Board. In interest in political history and, in addition, he has served as DBA Second Vice-President, First Viceparticular, American presidents.

After graduation from Colum- President and President-Elect.

“I am excited to have the opbia, Mr. Sorrels returned to Dallas to attend Southern Methodist portunity to be president of the University School of Law. During Dallas Bar Association,” he said. law school, Mr. Sorrels worked “The DBA presents an environsummers and part-time during the ment of service to the profession school year at the Dallas County and to the community that is also District Attorney’s office, where fun and where all of the wonderful he observed, learned and helped people you get an opportunity to work with become your friends.” prepare numerous trials.

Mr. Sorrels said that most of the He was hired by the D.A.’s office upon graduation from law school people he cares about in the world in 1978. The toughness and com- are lawyers. “Lawyers are interestpetitive nature that was shown on ing, open-minded people who are the football field was a natural fit well-educated and trained to look for a career in law. After only one at issues from different perspecyear as a misdemeanor prosecu- tives,” he said. “People who practor he was prosecuting felonies in tice law have a wonderful sense the Honorable John Vance’s 194th of purpose that you do not find in District Court. During that time many other professions. These are he logged significant trial expericontinued on page 7 ence. After almost three years in

by SUZANNE RAGGIO WESTERHEIM

Focus Probate & Tax law

Leon Carter to Receive 2011 MLK Justice Award

by Anne Pohli

Each January, Americans celebrate the memory of Dr. Martin Luther King, Jr., whose aspiration was that one day our nation would realize true equality for all people. On January 17, 2011, the Dallas Bar Association honors Dr. King’s legacy by presenting the Martin Luther King, Jr. Justice Award to a local leader who epitomizes the values and ideals of Dr. King.

This year’s recipient is E. Leon Carter, an outstanding lawyer and community leader. Mr. Carter was 11 years old when he decided to become a lawyer, and he remembers the day clearly. He was with his mother, and she stopped the car at a service station for gas. He got out for a drink and was puzzled by a sign over the water fountain. It had been painted over, but the letters were visible through the paint—“colored only.” He questioned his mother, and at first she replied that he wouldn’t understand. But he pressed her, and she explained this relic was from the Jim Crow Laws. He wanted to know more: “How were these laws changed? How are such wrongs righted?” She speculated that it had to do with lawyers, and young Leon made his decision: “Then I’m going to be a lawyer.”

Born in Galveston, Mr. Carter is one of five children. He lost his father at the age of four, and his widowed mother moved the family to east Texas to be closer to family. Their circumstances were modest, but Mr. Carter speaks with pride of his mother’s success in raising her children.

After graduating from Carthage High School, Mr. Carter attended East Texas Baptist College in Marshall. He played basketball on scholarship and earned a degree in history and pre-law. He then taught school for a year, before pursuing his law degree at Texas Southern University’s Thurgood Marshall School of Law, which he received in 1986.

Mr. Carter began his legal career as an Assistant District Attorney and then Assistant Attorney General. Later, he joined Jackson Walker, L.L.P. and became a partner in the litigation section. Eventually, he founded his own firm, and five years ago, he merged his small firm into what is now Munck Carter, LLP, a mid-sized business, technology and litigation firm.

Throughout his career, Mr. Carter has given generously of his time to both the Dallas Bar Association and the Dallas community. He has co-chaired the Judiciary Committee, served as a DBA Director, been a board member of the local subcommittee on the unauthorized practice of law, and is a member of the Committee for a Qualified Judiciary. He is also a fellow of the Dallas Bar Foundation and a member of the executive committee of the Litigation Council of the State Bar of Texas.

His contributions to the community at large are equally impressive. He is a board

Inside

member of Camp John Marc and the Vickery Meadow Learning Center, and has served on the boards of the Martin Luther King Center, the Volunteer Center of Dallas and Big Brothers, Big Sisters.

Mr. Carter has served as an adjunct professor at SMU law school and often speaks on litigation topics. Texas Monthly has named him a Super Lawyer numerous times, and he is included in “The Best Lawyers in America, “and the Dallas Business Journal’s selection of the “Top 15 Business Defense Lawyers” in the metroplex. He is a member of the American Board of Trial Advocates and a fellow of the American College of Trial Lawyers, an honor reserved for no more than 1 percent of the lawyers of any state.

Mr. Carter and his wife, Deborah, have been married for 28 years and have a son and daughter. When he has some time away from his practice and volunteer activities, Mr. Carter enjoys reading, working out and watching classic movies with his wife.

Although his list of honors and accolades is long, Mr. Carter says family and faith keep him grounded. He makes time for church on Sunday and bible study during the week. With respect to the various “best lawyer” lists to which he has been named, he says, “I’ve been blessed. I can’t say I’m one of the best lawyers in America or Dallas. All I can do is be the best lawyer I can be, and the best person I can be, every day. That’s my philosophy.”

Members of the DBA and the community are invited to attend the Martin Luther King, Jr. Justice Award luncheon on January 17 to honor Mr. Carter. To make reservations for the luncheon contact Biri Avina at bavina@dallasbar.org. A plated lunch will HN be served ($12.76).

Anne Pohli practices estate planning and probate law and is a past chair of the DBA Committee. She can be reached at lapohli@sbcglobal.net.

DBA MEMBERSHIP DUES REMINDER

11 Going the Extra Mile When Drafting Wills

Your 2011 2ND NOTICE DBA DUES STATEMENT has been mailed. We will DROP any unpaid members on March 1, 2011.

Please send in your payment to continue receiving ALL of your member benefits.

13 Pursuing Claims Involving Estates: A Top 10 List

THANK YOU for your support of the Dallas Bar Association!

7 Making Sense of Special Tax Allocations 9 Codifying the Good Faith & Probable Cause Exception

2 He a d n o t e s l D a l l a s B a r A s s o ciation

Calendar

January Events

January 7– Belo Noon

January 2011

FRIDAY CLINICS

Visit www.dallasbar.org for updates on Friday Clinics and other CLEs.

“Legislative Update,” Lucas Meyers. RSVP to kzack@dallasbar.org. (MCLE 1.00)*

January 14– North Dallas** Noon

“The Best Defense Is A Strong Offense: Navigating Patent Litigation” Kacy Miller and Tonya Gray. (MCLE 1.00)* RSVP to kzack@dallasbar.org. At Two Lincoln Centre, 5420 Lyndon B. Johnson Frwy., Suite 240 Dallas, Texas 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre. There are several delis within the building. Food is allowed inside the Conference Center. Thank you to our sponsor, Griffith Nixon Davison, P.C.

January 21 – Belo Noon

“Proposed Changes to the Texas Disciplinary Rules of Professional Conduct,” Professor Linda Eads. RSVP to kzack@dallasbar.org. (Ethics 1.00)*

TUESDAY, JANUARY 4 Noon

Corporate Counsel Section “Employment and Labor Law Update,” Jennifer Youpa and Steve Rahhal. (MCLE 1.00)*

Government Law Section “Social Media and Government Employment Actions,” Terrence S. Welch. (MCLE 1.00)*

Tort and Insurance Practice Section “Settlement Issues in Multi-Party Litigation from the Plaintiff and Defense Perspectives,” Randy Johnston and Bill Cobb. (Ethics 1.00 pending.)*

“Annual Real Property Case Law Update,” David Weatherbie. (MCLE 1.00)*

Peer Assistance Committee

CLE Committee

TUESDAY, JANUARY 11 Noon

DAYL Board of Directors

WEDNESDAY, JANUARY 5 Noon

Employee Benefits/Executive Compensation Section “2010 Benefits Litigation Review,” James R. Raborn. (MCLE 1.00)*

Solo and Small Firm Section “Anatomy of a Traffic Wreck: From Choosing the Case through Trial,” William (Bill) Dunleavy and David G. Allen. (MCLE 1.00, including 0.2 Ethics)*

Public Forum Committee

5:15 p.m. Bankruptcy and Commercial Law Section

“Recent Developments: Bankruptcy Decisions,” Hon. Harlin D. “Cooter” Hale, Gerrit Pronske, Rakhee Patel. (MCLE 1.00)*

THURSDAY, JANUARY 6 Noon

Construction Law Section “Arbitration in Construction Disputes: Current Update from an Administrator’s Perspective,” Rodney Toben. (MCLE 1.00)*

St. Thomas More Society

Family Law Section Board

DAYL CLE Committee

FRIDAY, JANUARY 7 Noon

Friday Clinic – Belo “Legislative Update,” Lucas Meyers. RSVP to kzack@dallasbar.org. (MCLE 1.00)*

MONDAY, JANUARY 10

Business Litigation Section “Trial By Agreement: How to Reduce Stress and Improve Results Through Cooperation,” Steve Susman. (Ethics 1.00)*

Mergers and Acquisitions “M&A Market Outlook for 2011,” Orman Anderson. (MCE 1.00)*

Admissions and Membership Committee

Entertainment Committee

6 p.m.

Home Project Committee

1:30 p.m. Council of Corporate Counsel Section 6 p.m.

Legal History Discussion Group

Family Law Section “Borderlines, Narcissists, Histrionics: Helpful Ideas on How to Interact with Clients Who Have Personality Disorders,” Mary Sanger and Chris Jones. (MCLE 1.00)*

House Committee

DAYL Lunch & Learn. For more information, contact Cherieh@dayl.com.

5:15 p.m. LegalLine—Volunteers welcome. Second floor Belo.

THURSDAY, JANUARY 13 11 a.m. Federal Bar Association 11:30

DAYL Barristers for Babies

Noon

Collaborative Law Section Topic Not Yet Available

Publications Committee

Dallas Asian American Bar Association

Dallas Gay and Lesbian Bar Association

Christian Lawyers Fellowship

3:30 p.m. DBA Board of Directors

Noon

Alternative Dispute Section “Barriers to Settlement—Ethical, Legal, Practical,” Jeff Jury. (MCLE 1.00)*

6 p.m.

Real Property Law Section

Noon

Noon

Friday Clinic – North Dallas

Noon

Sports and Entertainment Law Section “The WNBA: A Case Study on the Launch of a Professional Sports League,” Val Ackerman.

(MCLE 1.00)

Trial Skills Section “The Jury Speaks: Post-Trial Interviews Tell You How to Win Your Next Jury Case,” James Stanton and Trey Cox. (MCLE 1.00)*

Juvenile Justice Committee

Legal Ethics Committee

DVAP New Lawyer Lunch. For more information, contact Chris Reed-Brown at reedbrownc@lanwt.org.

5:30

Transition to Law Practice Committee

Martin Luther King, Jr. Justice Award Luncheon. RSVP to bavina@dallasbar.org.

TUESDAY, JANUARY 18

Noon

Antitrust and Trade Regulation Section “Developments in the Antitrust Division at the Texas AG’s Office,” John T. (“Tommy”) Prud’homme, Jr. (MCLE 1.00)*

Dallas Hispanic Bar Assocition

WEDNESDAY, JANUARY 26

7:45 a.m. Dallas Area Real Estate Lawyers Discussion Group

ThursdaY, JANUARY 27 Noon

Criminal Law Section “Veterans Court and Problems Unique to Veterans in the Criminal Justice System,” Hon. Mike Snipes. (MCLE 1.00)*

International Law Section “State of the Mexican Economy,” Carlos J. Maron. (MCLE 1.00)*

Environmental Law Section “Significant Environmental Issues in Region 6,” Dr. Al Armendariz. (MCLE 1.00)*

Community Involvement Committee

Memorial & History Committee

Law in the Schools and Community Committee

Mentoring Committee

J. L. Turner Legal Association

Community Service Fund Board

WEDNESDAY, JANUARY 19 Noon

Energy Law Section “Dealing with Missing Persons and Holdouts— Operators’ Options for Urban Gas Development,” Eric C. Camp. (MCLE 1.00)*

Health Law Section “The State of Texas’s Implementation of Federal Health Care Reform,” Michelle Apodaca.

(MCLE 1.00)*

Law Day Committee

Pro Bono Activities Committee

DAYL Environmental Law CLE

Municipal Justice Bar Association Non-profit Law Study Group

5:15 p.m. LegalLine—Volunteers welcome. Second floor Belo.

THURSDAY, JANUARY 20 8:00 a.m. Federal Bar Association, Dallas Chapter Presents the 25th Annual Federal Civil Practice Seminar. (MCLE 4.5, including Ethics 1.00)* Must pre-register at www.fedbar.org. Cost: $45-Federal Bar Association Members; $60 Non-Members; $25 late fee (after January 5.)

For more information, contact Joe Griffith at joseph.griffith@sdma.com or (469) 227-4650.

Noon

J. L. Turner Legal Association

FRIDAY, JANUARY 14

6 p.m.

MONDAY, JANUARY 17

WEDNESDAY, JANUARY 12 Noon

“The Best Defense Is A Strong Offense: Navigating Patent Litigation” Kacy Miller and Tonya Gray. (MCLE 1.00)* RSVP to kzack@dallasbar. org. At Two Lincoln Centre, 5420 Lyndon B. Johnson Frwy., Suite 240 Dallas, Texas 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre. There are several delis within the building. Food is allowed inside the Conference Center. Thank you to our sponsor, Griffith Nixon Davison, P.C.

Appellate Law Section “Gould v. U. S.: How A Routine Pro Bono Criminal Appeal Resulted in a Trip to the Supreme Court,” David Horan. (MCLE 1.00) Minority Participation Committee Christian Legal Society

FRIDAY, JANUARY 21 Noon

Friday Clinic – Belo “Proposed Changes to the Texas Disciplinary Rules of Professional Conduct,” Professor Linda Eads. RSVP to kzack@dallasbar.org.

(Ethics 1.00)*

MONDAY, JANUARY 24 Noon

Computer Law Section “Business Trends and Case Law Updates in Software Licenses,” Gavin George. (MCLE 1.00)*

Securities Section “Antitrust Pitfalls in Doing a Merger or Acquisition,” Greg Huffman. (MCLE 1.00)*

Golf Tournament Committee

TUESDAY, JANUARY 25 Noon

Probate, Trusts & Estates Section “Case Law Update,” Gerry Beyers. (MCLE 1.00)*

Courthouse Committee

Summer Law Intern Program Committee American Immigration Lawyers Association

5:30 p.m. Labor & Employment Law Section

“Employment LItigation and Appeal: A Judicial Perspective,” Hon. D’Metria Benson, Hon. Don Bush, Justice Elizabeth Lang-Miers, Hon. Reed O’Connor, Hon. Craig Smith and Hon. Dana Womack. (MCLE 1.50)* $20 entry fee for all attendees. RSVP to lcarranza@gslwm.com.

FRIDAY, JANUARY 28 Noon

Intellectual Property Law Section “Update on current law regarding Standards and Patents,” Hope Shimabuku and Jim Harlan. (MCLE 1.00)*

Media Relations Committee

MONDAY, JANUARY 31 Noon No DBA meetings scheduled.

TUESDAY, FEBRUARY 1 Noon

Corporate Counsel Section Topic Not Yet Available

Government Law Section “U.S. Supreme Court Update, Cases Affecting Local Government Issues,” Edwin P. Voss, Jr.” (MCLE 1.00)*

Tort and Insurance Practice Section “Attorney Conduct and/or Activities That Rise to the Level to be Reported to the State Bar of Texas,” Suzanne Westerheim and Robert Hinton. Moderated by Al Ellis (MCLE 1.00)*

Morris Harrell Professionalism Committee

WEDNESDAY, FEBRUARY 2 Noon

Employee Benefits Executive Compensation Section Topic Not Yet Available

Solo and Small Firm Section Topic Not Yet Available

Public Forum Committee

5:30 p.m. Bankruptcy & Commercial Law Section Topic Not Yet Available

THURSDAY, FEBRUARY 3

Construction Law Section “Update on City of Dallas Construction Projects Including Woodall Rogers Park, Signature Bridge, Convention Center Hotel and Other Projects,” Dallas Mayor Tom Leppert. (MCLE 1.00)*

Dallas Women Lawyers Association

Noon

Lawyer Referral Service Committee

St. Thomas More society

Family Law Section Board

FRIDAY, FEBRUARY 4 Noon

Friday Clinic – Belo “Four Generations in the Workplace: Multigenerational Perspectives on the Practice of Law,” Luther Jones, Ike Vanden Eykel, Penny Blackwell, Erin Callahan and Cindy Pladziewicz. (Ethics 1.00)*

If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Cathy Maher at 214/220-7401 as soon as possible and no later than two business days before the seminar.

All Continuing Legal Education Programs Co-Sponsored by the DALLAS BAR FOUNDATION. *For confirmation of State Bar of Texas MCLE approval, please call Teddi Rivas at the DBA office at 214/220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact KZack@dallasbar.org.

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D al l as Bar A ssoci ati on l Headnotes 3

4 He a d n o t e s l D a l l a s B a r A s s o ciation

January 2011

Headnotes

President's Column

Published by: DALLAS BAR ASSOCIATION

Honoring the Profession

by BARRY SORRELS

I am delighted to serve the Dallas Bar Association as its 102nd President. From working within the organization for years, I have come to know that the DBA provides us with the ability to develop a strong legal community within our large city, and it also helps us to find ways to effectively serve the larger community.

Welcome to the Dallas Bar Association and the Belo Mansion

The Belo Mansion is an embassy where lawyers are welcome to meet, share stories and experiences and learn from each other. Once they are here, lawyers find camaraderie within the profession, but they also find that there are opportunities to positively impact a variety of people including children, impoverished individuals and families, and young lawyers through our many volunteer initiatives, legal services and mentoring programs. Because of the collective power of so many lawyers working together to achieve these goals, the benefits of their generosity and expertise reverberate throughout the city of Dallas and the surrounding area. The charitable work is rewarding and the results are inspiring. One of my personal goals for 2011 is to encourage your participation in the Dallas Bar Association and illustrate the benefits of participation both to you and to our community at large.

Honoring the Profession

My theme for 2011 is “Honoring the Profession.” I believe that the rule of law is the most important pillar of both our nation and state. Lawyers, judges and legislators have great responsibility to this rule of law, and to the citizens who rely on us, as we represent, protect, interpret and advocate. What we do for a living is important.

The DBA is in a very special position as a large, wellorganized, non-political, non-partisan, non-profit organization to enable our membership to become outstanding lawyers and to help our membership to contribute to our society. It is my hope that initiatives of the DBA in 2011

will “honor the profession” by providing exceptional services and events to the body of our membership so that our membership may provide exceptional services to the entire community. As our organization continues to grow and improve from within by educating, mentoring, and collaborating with other lawyers, we will continue to find ourselves in the position to collectively affect the quality of life throughout our city as only a group of lawyers can.

DBA Board of Directors

I am particularly excited to introduce you to the individuals who will comprise the Board of Directors with me during 2011. They have dedicated years of their time and energy to the DBA and its sister organizations; the importance of that contribution cannot be overstated. The Board provides the DBA with insight and understanding as it evolves and changes to meet the needs of its members and the community. In 2011, we will continue our work to enhance the experience being a member of the DBA. The officers for 2011 are Paul Stafford, President-Elect; Sally Crawford, First Vice President; Scott McElhaney, Second Vice President; Sean Hamada, Secretary-Treasurer; and Ike Vanden Eykel, Immediate Past President.

The Members of the Board of Directors are Jerry Alexander, Penny Blackwell (President, Dallas Association of Young Lawyers), Eric Blue (President, J.L. Turner Legal Association), Frank Carroll, Rob Crain, Laura Benitez Geisler, Honorable Martin Hoffman, Michael K. Hurst, Karen McCloud, Eunice Kim Nakamura (President, Dallas Asian American Bar Association), Mary L. Scott, Hon. Teresa Guerra Snelson (President, Dallas Hispanic Bar Association), Diane Sumoski, Brad C. Weber, and Michele Wong Krause. I welcome those of you who are new to the Board, and look forward to professionalism, collegiality and respect as we work together on behalf of this great organization.

My good friend, Executive Director Cathy Maher, and the exceptional DBA staff provide the stability, guidance and hard work which allows the DBA to continue its continued on page 6

Thank you 2011 Committee & Section Chairs 2011 Committee Chairs:

Admissions & Membership: Aubrey Connatser, Arturo Errisuriz Advisory: Ike Vanden Eykel Bar None Production Company: Martha Hardwick Hofmeister, Tom Mighell Bench Bar Conference: Steve Bolden, Dawn Estes, Hon. Elizabeth Frizell, Deborah Perry, Rudy Rodriquez Community Involvement: Paul Herring, Christina McCracken Continuing Legal Education: Diane Sumoski, Robert Udashen Courthouse: Peter Malouf Criminal Justice: Hon. Jeanine Howard Entertainment: Jennifer King Fee Disputes: Beverly Whitley Finance: Brad Weber Golf Tournament: Nelson Akinrinade, Lindsay Goodner House: Rob Roby Judicial Investiture: Tino Ramirez Judiciary: Sean Hamada, Monica Latin, Mary Scott Juvenile Justice: Hon. Mike Miller, Audrey Moorehead Law Day: Kirby Drake, James Holmes

Law in the Schools & Community: Mark Melton Lawyer Referral Service: Tom Lochry Legal Ethics: Martin Camp, Kelli Hinson Legalline: Eric Bowers, Angela Haugh, Jana W. Paul, Paul Vishushin Library: Lee Baldwin Media Relations: Lindsay Hedrick, Shannon Teicher Memorial & History: John Goren Mentoring: Everett New, Mary Nix Minority Participation: Tino Ramirez Mock Trial: Steve Gwinn, Hon. Lana Myers Morris Harrell Professionalism: Rhonda Hutner, Hon. Douglas Lang Peer Assistance: Cindy Pladziewicz Pictorial Directory: Shonn Brown Pro Bono Activities: Peggy Glenn-Summit, Amanda Todd Public Forum: Aaron Tobin Publications: Tim Ackermann, Vince Allen Senior Lawyers: Mike Prince Speakers: Michele Wong Krause Summer Law Intern Program: Ryan McFarlin, Erin Pierce

2011 Section Chairs:

Alternative Dispute Resolution: Mel Wolovits Antitrust & Trade Regulation: Aaron Davidson Appellate Law: Ben Mesches Bankruptcy & Commercial Law: Eli Columbus Business Litigation: Aimee Fagan Collaborative Law: Shannon Welch Computer Law: Andy Ehmke Construction Law: Misti Beanland Corporate Counsel: Russell Coleman Criminal Law: Gary Udashen Employee Benefits & Executive Compensation: James Deets Energy Law: Caroline Akers Peterson Environmental Law: Jon Bull Family Law: Alma Benavides Franchise & Distribution Law: Maral Kilejian

Government Law: Jennifer Richie Health Law: Eric Weatherford Intellectual Property: Max Ciccarelli International Law: Florentino A. Ramirez Labor & Employment Law: Ceclila Morgan Mergers & Acquisitions: David Babin Probate, Trusts & Estates: Michael Cohen Real Property: Peggy Heller Securities: Mark Girtz Solo & Small Firm: John Goren Sports & Entertainment: Sally Helppie Tax: Ron Kerridge Tort & Insurance Practice: Robert L. Tobey Trial Skills: Mike Sawicki

2101 Ross Avenue Dallas, Texas 75201 Phone: (214) 220-7400 Fax: (214) 220-7465 Website: www.dallasbar.org Established 1873 The DBAís purpose is to serve and support the legal profession in Dallas and to promote good relations among lawyers, the judiciary, and the community.

OFFICERS President: Barry Sorrels President-Elect: Paul K. Stafford First Vice President: Sally Crawford Second Vice President: Scott McElhaney Secretary-Treasurer: Sean Hamada Immediate Past President: Ike Vanden Eykel Directors: Jerry C. Alexander, Penny Brobst Blackwell (President, Dallas Association of Young Lawyers), Eric Blue (President, J.L. Turner Legal Association), Wm. Frank Carroll, Rob Crain, Laura Benitez Geisler, Hon. Martin Hoffman, Michael K. Hurst, Karen McCloud, Eunice Kim Nakamura (President, Dallas Asian American Bar Association), Mary Scott, Hon. Teresa Guerra Snelson (President, Dallas Hispanic Bar Association), Diane M. Sumoski; Brad C. Weber; and Michele Wong Krause.

Advisory Directors: Chip Brooker (President-Elect, Dallas Association of Young Lawyers, Victor N. Corpuz (President-Elect, Dallas Asian American Bar Association), Lori Hayward (President-Elect, J.L. Turner Legal Association) and Carlos Morales (President-Elect, Dallas Hispanic Bar Association).

Delegates, American Bar Association: Rhonda Hunter, Hon. Douglas S. Lang Directors, State Bar of Texas: Talmage Boston, Christian Melton Crain, Beverly Bell Godbey, Robert R. Roby, Frank E. Stevenson, II HEADNOTES Executive Director/Executive Editor: Catharine M. Maher Communications / Media Director & Headnotes Editor: Jessica D. Smith In the News: Judi Smalling Art Director: Thomas Phillips Advertising: Karla Howes PUBLICATIONS COMMITTEE Co-Chairs: Vincent J. Allen and Timothy G. Ackermann Vice-Chairs: Lea N. Clinton and Natalie L. Arbaugh Members: H. Joseph Acosta, Kevin Afghani, Nelson Akinrinade, Vance L. Beagles, Jason Bloom, Barbara Boudreaux, Jeremy Camp, Noel Chakkalakal, Y.W. Peter Chen, Ryan Cosgrove, Sally Crawford, Weston Davis, Pat Driscoll, David Drummer, Dawn E. Fowler, Jennifer Gajak, Constance Hall, James Holbrook, Dyan House, Victor Johnson, Harold Jones, Adam Kielich, Michelle Koledi, Cherika Latham, Jamie McKey, Patrick McLain, Thomas L. Mighell, Clay Miller, Jennifer Mitchell, Heather Bailey New, Emmanuel Obi, Jenna Page, Kirk L. Pittard, Elizabeth Pletan, Irina B. Plumlee, Laura Anne Pohli, Robert Ramage, Juan Renteria, Bryon Romine, John Roper, Gregory W. Sampson, Mary Scott, Barry Sorrels, Thad Spalding, Paul K. Stafford, John C. Stevenson, Amy E. Stewart, Scott Stolley, Roxana Sullivan, Sherry Talton, Peter S. Vogel, Suzanne R. Westerheim, Elisabeth Wilson, Sarah Q. Wirskye, Sarah Woodell, Angela Zambrano and Viktoria Ziebarth DBA & DBF STAFF Executive Director: Catharine M. Maher Accounting Assistant: Shawna Bush Communications / Media Director: Jessica D. Smith Controller: Sherri Evans Director of Community Services: Alicia Hernandez Events Coordinator: Rhonda Thornton Executive Assistant: Michelle Dilda Executive Director, DBF: Elizabeth Philipp LRS Program Assistant: Biridiana Avina LRS Interviewer: Marcela Mejia Law-Related Education & Programs Coordinator: Amy E. Smith Membership Coordinator: Kimberly Watson Projects & Communications Assistant: Kathryn Zack Publications Assistant: Judi Smalling Receptionist/Staff Assistant: Teddi Rivas DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Alicia Hernandez Managing Attorney: Michelle Alden Volunteer Recruiter: Chris Reed-Brown Paralegals: Whitney Breheny, Lakeshia McMillan, Andrew Musquiz, Jigna Gosal, Tina Douglas Data Entry/Office Support: Patsy Quinn Copyright Dallas Bar Association 2011. All rights reserved. No reproduction of any portion of this publication is allowed without written permission from publisher.

Headnotes serves the membership of the DBA and, as such, editorial submissions from members are welcome. The Executive Editor, Editor, and Publications Committee reserve the right to select editorial content to be published. Please submit article text via e-mail to jsmith@dallasbar. org (Communications Director) at least 45 days in advance of publication.

Feature articles should be no longer than 750 words. DISCLAIMER: All legal content appearing in Headnotes is for informational and educational purposes and is not intended as legal advice. Opinions expressed in articles are not necessarily those of the Dallas Bar Association.

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Headnotes (ISSN 1057-0144) is published monthly by the Dallas Bar Association, 2101 Ross Ave., Dallas, TX 75201. Non-member subscription rate is $30 per year. Single copy price is $2.50, including handling. Periodicals postage paid at Dallas, Texas 75260.

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D al l as Bar A ssoci ati on l Headnotes 5

DBA Lawyers Step Up To Help Bridge Justice Gap

by Alicia Hernandez

While lawyers develop new ways to market themselves to the community and attract more clients, the busiest offices, teeming with potential clients with legitimate legal concerns, are those that never have to do an ounce of publicity. These are the legal aid offices. With a pool of over 600,000 potential clients in Dallas County, the Dallas Volunteer Attorney Program (DVAP), a joint program of the Dallas Bar Association and Legal Aid of NorthWest Texas, struggles to serve those in need with 2,400 active volunteers. Legal Aid’s Dallas office also has 24 full-time staff attorneys who labor to serve the poor on some of their most complex cases. But, with the vast number of people who need and qualify for help, there simply are not enough attorneys to serve everyone.

These individuals and families lack access to our justice system and oftentimes suffer dire consequences because of it.

Dallas volunteer attorneys are doing things every day to help bridge this justice gap. Many provide free legal help to the poor through pro bono service. Others donate money to the cause. Some do both.

In September, the Dallas Bar Association and Legal Aid of NorthWest Texas kicked off their annual Equal Access to Justice Campaign which benefits DVAP, and major donors to this year’s Campaign will be recognized at the Inaugural of the DBA’s 102nd President Barry Sorrels on January 15. Since it began in 1993, the Campaign has raised more than $5.1 million. As of press time, the current campaign has raised over $575,000, which will be used in 2011 to provide legal aid to the poor.

The single largest donation in the history of the Equal Access to Justice Campaign was made by Lisa Blue Baron, who donated $100,000 to the cause in November. She, her late husband, Fred Baron, and her law firms, have donated over $440,000 to the campaign since 1994. Her extraordinary generosity is made in memory of Honorable Merrill Hartman who, having started the first legal clinic in our community in 1983 and championed pro bono for nearly 30 years, is commonly considered the father of pro bono in Dallas.

A major donor to the Campaign for 16 years, Koons Fuller contributed $30,000 to kick off this year’s campaign. The firm’s lawyers also volunteer for DVAP by serving as mentors, providing training to other lawyers, participating in legal clinics, and representing low-income clients in their family law cases. The firm has contributed more than $230,000 to the Campaign since it began.

Payne Mitchell Law Group donated $25,000 to this year’s campaign. Over the last four years, Andrew Payne and Jim Mitchell have donated over $76,000 to the campaign, and they have also extended their generosity to DVAP through its other fundraising efforts.

A donor for eight years, Honorable Deborah G. Hankinson continued her support of legal aid to the poor with a donation of $25,000. Since 2003, she has given $165,000 to the campaign. Justice Hankinson, a national and statewide leader in the effort to increase funding for legal aid to the poor and former chair of the Texas Access to Justice Commission, is committed to narrowing the justice gap.

Michael and Judy Keller Shore have been major donors to the campaign for 13 years and are supporting this year’s Campaign with a $15,000 gift. They have donated $320,000 to the effort since 1999.

Tireless advocates in their everyday practice for those who are oftentimes forgotten, they have steadfastly remained true to their passion by supporting DVAP and its clients.

AT&T made the first ever $15,000 corporate donation to the Campaign, and, over the last three years, AT&T has donated $35,000 to Equal Access to Justice. The corporation is also setting the standard for corporate pro bono work in Dallas through its financial contribution and by becoming increasingly active in pro bono, hosting pro bono CLE programs for its attorneys, working on pro bono projects with other firms, and representing pro bono clients.

A new Diamond Sponsor to the campaign is W. Ralph Canada, Jr. who donated $15,000. A lawyer for over 30 years who represents plaintiffs, Mr. Canada understands how the system is often stacked against the little guy and wants to help people have access to justice.

The generosity of Dallas lawyers, corporations, and firms continues with $10,000 donations to the Campaign from Frank L. Branson, Exxon Mobil Corporation, Jones Day, Locke Lord Bissell & Liddell LLP, Mike McKool and Patton Boggs LLP. The success of the annual campaign would not be possible without dedicated volunteers who have donated their time and fundraising expertise to help DVAP continue to serve the poor.

Jerry Alexander, a partner with Passman Jones, P.C. and a Dallas Bar Association and Community Service Fund board member, is the Chair of this year’s Campaign. Rob Crain, a partner in Crain Lewis,

L.L.P., and Brad Weber, a partner in Locke, Lord, Bissell & Liddell LLP, are Vice-Chairs of this year’s Campaign.

The Campaign Committee Members are 2011 DBA President Barry Sorrels, 2010 DBA President Ike Vanden Eykel, 2007 DBA President Beverly Godbey, 2010 First Vice President Paul K. Stafford, 2010 Second Vice President Sally Crawford, Mike Forshey, Deborah Hankinson, Michael Hurst, Christina McCracken, Greg Sampson, Lindsey Stengle, and Diane Sumoski.

DVAP clients reap the benefits of the Campaign and the outstanding efforts of volunteer attorneys who advocate for their clients to see that justice is served. To keep the interests of DVAP’s clients at the forefront of the fundraising effort and to help others understand the dramatic impact pro bono service has on the lives of the poor, this year’s e-mail campaign has highlighted a few of our many outstanding volunteers and their recent pro bono clients.

For example, Lance Currie and Prescott Smith of Carrington, Coleman, Sloman & Blumenthal, L.L.P. helped save a young child from abuse. Chris Boeck and Anthony Vecchione of Locke Lord Bissell & Liddell, LLP, and Chris Bass of Vericrest Financial rescued their clients, victims of Hurricane Katrina, from substandard living conditions created by a crooked contractor. Angela Boliver, Jodie Michalski and Jeff Orkin of Jones Day

helped their client maintain custody of her orphaned nieces, turning lives that had been filled with tragedy into lives filled with hope.

Star Carter, an associate and a DVAP Lenda-Lawyer from Weil, Gotshal & Manges, LLP, preserved her client’s right to section 8 housing, ensuring that he would have an affordable place to live. The outstanding work of more DVAP volunteers is highlighted on DVAP’s web site at www.dallasvolunteerattorneyprogram.org under award winning efforts.

“The Equal Access to Justice Campaign and the Dallas Volunteer Attorney Program are opportunities for attorneys to do what only they can do—provide legal services,” said Mr. Sorrels. “We hold the keys to our justice system and open those doors for our paying clients every day. Thank you to all who are helping us bring legal aid to the poor, change lives, and bridge the justice gap.”

Pledges to the campaign are still being accepted. Gifts of any size are important to the campaign and to helping DVAP fulfill its mission of providing legal aid to the poor.

For a full list of donor recognition opportunities and benefits or to volunteer, contact Alicia Hernandez at (214) 220-7499 or ahernandez@dallasbar.org.

HN Alicia Hernandez is the director of the Dallas Volunteer Attorney Program and the DBA director of community services. She can be reached at ahernandez@dallasbar.org.

Campaign for Equal Access to Justice Donors CHAMPION OF JUSTICE Lisa Blue Baron in Memory of Honorable Merrill Hartman PRESIDENT’S COUNCIL Koons, Fuller, Vanden Eykel & Robertson, P.C. CHAIRMAN’S COUNCIL Anonymous • Hon. Deborah G. Hankinson • Payne Mitchell Law Group DIAMOND SPONSORS AT&T • W. Ralph Canada, Jr. • Michael & Judy Keller Shore PLATINUM SPONSORS Frank L. Branson • Exxon Mobil Corporation • Jones Day • Locke Lord Bissell & Liddell LLP • Mike McKool • Patton Boggs LLP GOLD SPONSORS Akin Gump Strauss Hauer & Feld LLP • Baker Botts L.L.P. • Business Litigation Section • Carrington, Coleman, Sloman & Blumenthal, L.L.P. • Corporate Counsel Section • Crain Lewis, LLP • Diamond Apgar, L.L.P. • Energy Law Section • Fulbright & Jaworski L.L.P. • Half Price Books Community Service Fund • The Hartnett Law Firm • Haynes and Boone, LLP • Jackson Walker LLP • Mergers & Acquisitions Section • Neiman Marcus • Probate, Trusts & Estates Section • Barry Sorrels • Spencer Crain Cubbage Healy & McNamara PLLC • Thompson & Knight Foundation • Waters & Kraus, L.L.P. SILVER SPONSORS William A. Brewer, III • Bracewell & Giuliani LLP • Dallas Association of Young Lawyers • Construction Law Section • Securities Law Section • David W. Elrod • Frito-Lay, Incorporated • David Carl Greenstone • J. Mark Hollingsworth • International Law Section • K&L Gates • Lewis Sifford • Thompson West/Superlawyers • Vinson & Elkins L.L.P. • Joel & Terilyn Winful • Winstead PC BRONZE SPONSORS Jerry C. Alexander • Appellate Judges Education Institute • American Airlines Legal Department Employees • Kim J. Askew • Carlock, Gormley & Hight, LLP • William D. Cobb Jr. • Robert Cohan • Nina Cortell • Diane P. Couchman • Sally L. Crawford • Bankruptcy & Commercial Law Section • Intellectual Property Law Section • Robert Edwin Davis • Laura Geisler • Guida, Slavich & Flores, P.C. • Michael A. Krywucki • John H. Martin • Charles W. Matthews, Jr. • Tommy McBride • The McCracken Family in Memory of H.C. McCracken • E. Lee Morris • Timothy W. Mountz • Erle Nye • Jeffrey S. Patterson • John D. Solana • Frank E. Stevenson II • Ross W. Stoddard, III • Wesley Terrell • Peter S. Vogel • Robb Voyles • David R. Weiner SPONSORS Charla Aldous • Roger Bivans • William A. Brewer, III in Memory of Honorable Merrill Hartman • E. Leon & Debra Carter • James E. Coleman, Jr. • Criminal Law Section • Timothy S. Durst • Antitrust & Trade Regulation Section • Alternative Dispute Resolution Section • Appellate Law Section • Labor & Employment Law Section • John C. Eichman • Haseena J. Enu • Michael S. Forshey • Beverly Godbey • Goranson, Bain, Larsen, Greenwald, Maultsby & Murphy, PLLC in Memory of Judge Merrill Hartman • Randy Johnston • Darrell Jordan • Honorable Jim Jordan • Daniel W. Keene • B. Carl Klinke • Ted B. Lyon, Jr. • Abigail B. Moore • Munck Carter, LLP • Justice Mary L. Murphy in Memory of Judge Merrill Hartman & Judge R. Lewis Nicholson • Drew F. Nachowiak • Terrell W. Oxford • Erle Nye in Memory of Spencer C. Relyea • Pegasus Solutions • Florentino A. Ramirez • Alan H. Raynor • Brent Rosenthal • The Ruman Family in Memory of Saul I. Ruman • Karee & Greg Sampson • Mark Seeberger • Daniel J. Sheehan, Jr. • Honorable Craig Smith • Sorrels, Udashen & Anton • Paul K. Stafford • Joe A. Stalcup • Richard G. Stewart, Jr. & Sandra J. Stewart • Diane M. Sumoski • Taber Estes Thorne & Carr PLLC • Robert L. Tobey • Brad Weber • Justice Mark Whittington As of December 21, 2010.

6 H e a d n o t e s l D a l l a s B a r A s s o ciation

January 2011

DBA Loses Past President Spencer Relyea The Dallas Bar Association lost its 80th president on November 20, 2010.

Spencer Cone Relyea was born on April 20, 1931 in Dallas and graduated from the University of Texas with a B.A. degree in 1952. After graduation, he served in the United States Army. He then enrolled in the University of Texas Law School and graduated in 1959. He was employed by the Supreme Court of Texas as a Briefing Attorney to Chief Justice John E. Hickman and Justice Robert W. Calvert.

After a year’s clerkship, Mr. Relyea joined the firm of Burford, Ryburn & Ford, where he practiced for 13 years. In 1973, he was named Associate at Worsham, For-

sythe, Sampels & Woodridge, which eventually became Hunton & Williams, where he practiced until his retirement.

During his year as Dallas Bar Asso- Spencer Relyea ciation President, the association had a membership of 6,500. Under Mr. Relyea’s leadership, 1989 was a busy year. The DBA Securi-

Honoring the Profession continued on page 1

tradition of excellence. It will be an absolute privilege to work directly with them this year.

Join a Section or Committee

The Sections and Committees are essentially the arms and legs of the DBA. I am thankful to the capable, excellent lawyers who have agreed to chair the Sections and Committees during 2011. I know that it is an enormous commitment, and I appreciate you. I am very proud of the group we have assembled this year, and I am excited to see the results of their work as the year progresses.

The Sections are small groups categorized into specific fields of practice. They provide members with an invaluable service—a CLE program, usually once a month, on a specific and relevant topic area, for free, during lunch, close to home and presented by a local expert. They also have a number of outstanding social activities. Personally, I am a member of the Criminal Law Section. Every time I go to a Section meeting and hear a presentation from one of my colleagues, I learn something new about the law, I meet new lawyers and I leave with an appreciation for the opportunity to have such quality legal education so accessible. If

ties Law Section was created and the Dallas Bar Foundation established summer clerkships for the SMU Sarah T. Hughes Fellows. The National High School Mock Trial Competition was held in Dallas and the DBA earned several Certificates of Achievement from the State Bar of Texas. In addition, Mr. Relyea instituted the annual dinner honoring all DBA Past Presidents, an event that is still being held today.

Board members in 1989 included Mike Baggett, Jim Burnham, Al Ellis and Ralph C. Jones.

In addition to his DBA service, Mr. Relyea served as a member of the Board of

Directors of the State Bar of Texas and as a member of the House of Delegates of the American Bar Association. He was also a Fellow of the Texas Bar Foundation.

He was also active in the community, including serving a term as President of Our Friends Place, being an assistant chancellor of the Episcopal Diocese of Dallas and serving as chancellor of the Church of Incarnation.

Mr. Relyea is survived by his wife, Nancy; daughter and son-in-law Elizabeth and Jeff DeBord; son and daughterin-law Denny and Sheryl Relyea; and grandchildren Sarabeth DeBord and HN Scott Relyea.

DBA Holiday Party

you are not a member of a Section, I would strongly encourage you to find the Section that is right for you and join it. It’s not too late. If you send dues in to the DBA, and state which Section you would like to join, you will be included on that Section’s e-mail list with notices of meetings, CLE’s and social events. The Sections are an excellent, and relatively casual way, to become more involved with the Dallas Bar Association.

The Committees are purely volunteer-oriented groups. The Committees provide diverse services within the Dallas Bar Association and throughout the community. If you would like to become involved in one of these many Committees, please contact the Chair of the Committee that interests you and tell them you would like to be involved.

The success of the Committees is directly proportional to the commitment of its members, so I would encourage you to join a Committee that relates to an issue, group or activity which inspires you.

Inaugural

I hope to see many of you at the Inaugural Celebration on January 15, 2011. I look forward to sharing the evening with you, and I thank you for your involvement with the Dallas Bar Association and your commitment to “Honoring the Profession.” HN

On December 13, the DBA hosted its annual Holiday Party. More than 200 members and their families enjoyed holiday treats, photos with Santa, face painting and entertainment.

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J anu a ry 2 0 1 1

Focus

D al l as Bar A ssoci ati on l Headnotes 7

Probate & Tax law

Making Sense of Special Tax Allocations

by John Eliason

Nothing causes a non-tax lawyer’s eyes to glaze over like the special tax allocation provisions included in most limited partnership (and limited liability company) agreements. However, because these special provisions may alter the bargained-for economic agreement of the partners, transactional attorneys should acquire a basic understanding of the purpose and impact of these provisions as opposed to dismissing them as “boilerplate.”

Special allocation provisions exist to satisfy certain requirements of the partnership regulations promulgated under the Internal Revenue Code.

Specifically, while the Code provides flexibility in allowing partners to divide income and loss in any manner they choose, the IRS will not respect an allocation if it does not have “substantial economic effect.” This means that such allocations must be made to the partners who enjoy the benefit of the income or bear the economic burden associated with the loss.

If the IRS determines that an allocation does not have substantial economic effect, it will reallocate such income or loss to reflect what the IRS believes is appropriate considering the partner’s interest in the partnership.

The uncertainty as to how the IRS will make this reallocation underscores the importance of satisfying this condition.

For businesses structured as limited partnerships (or limited liability companies), limited partners generally will not have any personal liability for the partnership’s obligations. While attractive to limited partners, limited liability results in some allocations possibly not having substantial economic effect. However, rather than disregarding the allocation provisions in limited partnership agreements altogether, the partnership regulations provide a safe harbor that is satisfied if the partnership agreement includes the following special allocation provisions: Distribution-Triggered Special Allocations: These provisions ensure that a partner does not receive distributions in excess of the partner’s eco-

nomic interest in the partnership by allocating income and gain to such partner to offset any excess distribution: • Qualified Income Offset (QIO): A QIO ensures that certain unexpected allocations or distributions that cause a partner’s “capital account” (a measure of the partner’s economic interest in the partnership) to be reduced to a level in excess of the amount the partner is required to restore (i.e., causing a deficit balance) will not cause the allocation to lack substantial economic effect. The QIO accomplishes this by requiring a special allocation of income and gain to the partner in an amount sufficient to eliminate that deficit balance as quickly as possible.

Gross Income Allocation (GIA): Similar to a QIO, a GIA deals with expected and unexpected distributions not covered by the QIO. The GIA requires a special allocation of income and gain to a partner with a deficit capital account balance at the end of the year to eliminate such deficit balance as quickly as possible.

Non-Recourse Debt Allocations: These provisions ensure that allocations of deductions and other losses associated with non-recourse debtfinanced property have substantial economic effect: • Minimum Gain Chargeback (MGC): For partners that are allocated deductions or receive distributions associated with non-recourse debtfinanced property, a MGC requires a special allocation of income and gain to such partners equal to the increase in “minimum gain” associated with such property. “Minimum gain” is the amount by which the non-recourse debt at issue exceeds the sum of the partnership’s adjusted basis in the property plus distributions that are made from non-recourse debt proceeds.

• Partner Non-Recourse Loss Allocations: If a partnership has non-recourse liabilities with respect to which a partner or a related person bears the ultimate economic risk of loss–for example, because the person is the creditor or guarantor with respect to such liability–this provision requires losses or other deductions attributable to

Barry Sorrels to be Inaugurated continued on page 1

the kind of people I like to spend time with and there happen to be a whole bunch of them at 2101 Ross Avenue.”

In addition to holding several leadership positions with the DBA Board of Directors, Mr. Sorrels has also been active with a variety of DBA Committees and Sections, including the Criminal Justice Committee, the Criminal Law Section, the CLE Committee, the Judiciary Committee, the Trial Skills Section and the Bench Bar Committee, for which he received the Jo Anna Moreland Outstanding Committee Chair Award. He has also served as chair of the Annual Campaign for Equal Access to Justice and as President of the Community Service Fund. He is a fellow of the Texas Bar Foundation, Dallas Bar Foundation and the DAYL Foundation.

“When we work together, great things can be accomplished,” said Mr. Sorrels. He added that the DBA is an embassy of respect for the community and for visitors from all over the world.

He would like to expand that hospitality to an even higher level during his

presidency.

“One of the reasons the DBA is a very successful organization is that it has had effective leadership year after year,” he added. “That leadership has built a foundation for success that has grown stronger with each passing year.

I hope to continue to make that foundation a little bit better if I possibly can.”

Mr. Sorrels lives in Dallas with his wife, Brenda, who was his college sweetheart. His daughters, Quincy and Avery graduated from Southlake Carroll High School. Quincy, 26, lives in Dallas and is a hair stylist at Peyton Thomas Salon in Southlake and Avery, 24 a recent graduate of Columbia University, lives in Brooklyn, New York, and attends Parsons School of Design.

Mr. Sorrels and his family enjoy spending time on the east coast, are avid divers and enjoy taking scuba vacations in HN the Caribbean.

Suzanne Raggio Westerheim represents and advises lawyers and law firms on professional responsibility issues. Ms. Westerheim is the former Co-Chair of the DBA Publications Committee. She can be reached at suzanne@legallyethical.com.

such liabilities to be allocated to the partner(s) that bears such economic risk of loss.

• Partner Minimum Gain Chargeback (PMGC): Similar to a MGC, a PMGC deals only with non-recourse liabilities in which a partner or a related person bears the economic risk of loss.

A PMGC requires any minimum gain associated with such liability to be specially allocated to those partners that had been previously allocated deductions or losses attributable to such liabilities.

While partnership agreements may include additional special allocation

provisions to deal with particular tax situations (for example, if a partner has contributed appreciated property to the partnership), the provisions described above are the most common and arguably the most important ones encountered in a partnership agreement. As such, by gaining a basic understanding of these provisions, non-tax lawyers can better understand and explain the purpose of these tax provisions to their clients.

John Eliason, a partner in Gardere Wynne Sewell LLP, specializes in partnership structuring and tax matters. He can be reached at jeliason@gardere.com.

Four Generations in the Workplace:

Multi-generational Perspectives on the Practice of Law 1 hour Ethics (pending)

February 4, 2011 at Noon— Belo Hall Panel of speakers includes: Luther Jones, Attorney; Ike Vanden Eykel, DBA Immediate Past President; Penny Blackwell, DAYL President; Erin Callahan, Law Student, President of SMU Student Bar Association; and Cindy Pladziewicz, DBA Peer Assistance Committee Chair, Moderator Hosted by the Peer Assistance Committee

8 He a d n o t e s l D a l l a s B a r A s s o ciation

Focus

January 2011

Probate & Tax Law

Where There’s No Will, Is There A Way?

by Barkley T. Miller and J. Ellen Bennett

When handling a decedent’s estate where there is no will (intestacy) or where there is a will which fails to distribute all of the estate or perhaps fails to appoint an executor (partial intestacy), will you be able to find a legally effective way to proceed with such an estate? You will, but only after carefully reviewing the estate and applying legal procedures appropriate for the family dynamics involved.

First, examine estate assets and look for beneficiary designations and survivorship provisions. Under the Texas Probate Code (TPC), non-probate assets such as joint ownership accounts with right of survivorship, annuities, and life insurance death benefits payable to a third party other than the estate, are not assets subject to the jurisdiction of a probate court.

Next, rigorously examine the estate’s debts and determine whether the estate is solvent, the current status of estate indebtedness and the types of debts, such as secured or unsecured, federal or state tax issues, etc.

After reviewing available asset and debt documentation, assess whether the dece-

dent’s family is capable of working with you and with one another in a probate proceeding. Choosing the right probate procedure to fit your case facts often depends upon whether all interested parties can put aside interfamily conflict during the probate process.

The court-created independent administration procedure (TPC §145(e)) requires that all estate distributees agree to having the estate administered largely free of court control and to designate an independent administrator who is willing and able to so serve. In this connection, the independent administrator may be required to post a bond, so a financially solvent personal representative is a must.

On the other hand, dependent administration is the only viable probate option when it appears that a decedent’s family is dysfunctional. The court supervises and closely controls the dependent administrator’s actions. The dependent administrator must post bond. The obvious downside is that if no family member or friend is bondable, the court will appoint an attorney, often proving costly for the estate. The upside, however, is that there is a large degree of protection from creditors due to the technical and often onerous legal procedures required by law.

If there is no necessity for administration, three alternate probate options are: affidavit of heirship, small estate affidavit, and a proceeding to determine heirship.

The affidavit of heirship (TPC §52, §52A) option is available in narrow circumstances only, usually to transfer real estate; it does not allow administration of any property. The affidavit of heirship procedure may run the risk of omitting an heir, so exercise caution. Moreover, all heirs and two disinterested witnesses must sign the affidavit, so family agreement is important. On the plus side, the affidavit of heirship not only avoids the four year statute of limitations period from death applicable to administration procedures, but an affidavit of heirship that has been on file for five years or more in the deed records is prima facie evidence of heirship.

The small estate affidavit (TPC §137) is similarly available in narrow circumstances.

Estate assets cannot exceed known estate liabities, not including liabilities secured by homestead and exempt property. Also, the value of the entire estate, not including homestead and exempt property, cannot exceed $50,000. Family agreement is necessary: the small estate affidavit must be signed by all distributees and two disinter-

ested witnesses. The small estate affidavit can be used to transfer title to real property only if the real property is the decedent’s homestead and is the only real property in the decedent’s estate.

A proceeding to determine heirship (TPC §48) is an option to consider regardless of whether there is a necessity for administration. All heirs, including unknown and purported heirs, must be joined in the action. The proceeding may be brought by a personal representative of the estate, an estate’s secured creditor, an owner of at least part of a decedent’s estate or the guardian of the estate of a ward. An attorney ad litem will be appointed to represent unknown heirs, which is also the case in any intestate estate requiring administration.

Although an intestate or partially intestate estate presents many legal and familial issues, including heavy documentation requirements up front, your careful legal analysis of such a case will result in finding the right way for your client in the absence HN of a fully valid will.

Barkley T. Miller & J. Ellen Bennett handle estate planning, probate, and guardianship matters. They can be reached at barkleymiller@ sbcglobal.net and ellen@jebennettlaw.com.

Mock Trial Competition Judges Wanted The Texas High School Mock Trial Competitions in Jan., Feb., and Mar. 2011 are in need of attorneys to help critique. Teams are from DISD, Region 10 and across the State. Variety of dates available. Earn self-study CLE credit.

Sign-up online at www.dallasbar.org/thsmtc or contact Amy Smith at asmith@dallasbar.org.

J anu a ry 2 0 1 1

D al l as Bar A ssoci ati on l Headnotes 9

Ready for 2011: Bar Association Presidents Accept the Challenge

by Adam C. Gallegos

A

s we begin the year 2011, the sister bar organizations of the Dallas Bar Association will be welcoming new leadership—all of whom seek to raise the profile of their respective organizations by promoting the interests of their members, while sponsoring many programs throughout the year.

Eric C. Blue, an associate in the corporate section at Akin Gump Strauss Hauer & Feld LLP, will serve as president of the J.L. Turner Legal Association. Mr. Blue’s practice encompasses a wide range of corporate and securities work including mergers, stock and asset acquisitions, divestitures and restructuring. He is a graduate of the University of Texas School of Law where he earned multiple scholarships, and is a member of his firm’s committees on hiring and diversity.

Mr. Blue hopes to continue expanding the membership of JLTLA by focusing on high-caliber professional development and CLE programs, building on existing partnerships with the DBA and its sister bars, and fostering stronger ties to the Dallas community. Indeed, community service has long been a part of Mr. Blue’s life, as he currently sits on the board of directors of the Dallas Black Dance Theater and the Southern Dallas Development Corporation. “I have a heart for service,” says Mr. Blue, “and felt that [JLTLA] was a unique opportunity to work side-by-side with some of the brightest legal minds in Dallas.”

The incoming president of the Dallas Asian American Bar Association, Eunice Kim Nakamura, is a commercial and employment litigation associate with Vincent, Lopez, Serafino & Jenevein, P.C. Ms. Nakamura is a merit scholar from Texas Wesleyan University School

Focus

Penelope Blackwell

Eric Blue

Eunice Kim Nakamura

of Law and a former Law Review editor and moot court competitor. In her practice she focuses on a broad range of general and complex litigation matters ranging from breach of contract and breach of fiduciary matters to commercial torts.

Ms. Nakamura has served on the board of DAABA for the past three years, seeking to provide Asian American attorneys with a support network, as well as a connection to the greater Asian American community. Noting the significant growth of the Asian American population in Dallas-Fort Worth, Ms. Nakamura plans to focus DAABA on expanding its community outreach by partnering with other Asian American advocacy groups to create an annual clinic addressing issues affecting the Asian American community at large, including immigration and small business ownership.

The new president of the Dallas Hispanic Bar Association is Associate Judge Teresa Guerra Snelson. Judge Snelson, a graduate of the University of Houston Law Center, practiced in both the public and private sectors for over a decade

before accepting her appointment as an associate judge, assisting the judges of Dallas County’s 13 courts of general civil jurisdiction by presiding over hearings and, in some cases, trials.

Judge Snelson’s primary focus is on successfully hosting the Hispanic National Bar Association’s annual convention, coming to Dallas in 2011. In this regard Judge Snelson hopes to showcase the city of Dallas to the national membership and provide a source of outstanding educational and networking opportunities for DHBA’s membership. Additionally, Judge Snelson has expressed a desire to make DHBA more inclusive of criminal law practitioners through the establishment of an “innocence project” related initiative. “The main focus is to soar forward and raise the profile of DHBA on a national scale,” said Judge Snelson.

Penny Brobst Blackwell will be the new president of the Dallas Association of Young Lawyers. Ms. Blackwell is an associate in the Dallas office of Greenberg Traurig, LLP, practicing securities litigation with a focus on broker dealer repre-

Hon. Teresa Snelson

sentation. Ms. Blackwell is a cum laude graduate of Louisiana State University’s Paul M. Hebert Law Center and clerked for the Honorable Henry A. Politz of the United States Court of Appeals for the Fifth Circuit.

Ms. Blackwell’s vision for DAYL is the creation of greater opportunities for young lawyers who are learning to juggle their professional life with their family life. Additionally, she plans to focus heavily on building networking and professional growth opportunities for DAYL’s membership.

“Building a law practice is about relationships as much as skill, and I want to make sure DAYL is the best opportunity for young lawyers to start and foster those relationships,” said Ms. Blackwell. She also plans to focus on increasing opportunity and participation for young attorneys who work outside of the traditional law HN firm setting.

Adam C. Gallegos is an attorney with Dykema Gossett PLLC in Dallas. Mr. Gallegos’ practice focuses on commercial litigation, emphasizing consumer and financial matters. He can be reached at agallegos@dykema.com.

Probate & Tax Law

Codifying the Good Faith & Probable Cause Exception

BY Mark Sales, Christine Nowak and Philip Lindquist

Forfeiture clauses, also called “no contest” or “in terrorem” clauses, are, simply put, provisions that condition a beneficiary’s receipt of a gift on their acceptance of the remainder of a will or trust agreement.

The intended purpose of such clauses is to dissuade a beneficiary from contesting the will or trust. Texas courts have long recognized such clauses as valid and enforceable.

While Texas courts historically have recognized the legality of forfeiture clauses, the courts have avoided or limited their effect through strict construction and the application of certain commonlaw “exceptions.” The Texas Legislature recently “clarified” Texas law by codifying one such exception—the good faith and probable cause exception—by amending the Texas Probate and Trust Codes, effective June 19, 2009.

New Section 64 of the Texas Probate Code governs the enforceability of a provision in a will that would cause a forfeiture of a devise or void a devise or provision in favor of a person for bringing any court action, including contesting a will.

New Section 112.038 of the Texas Trust Code governs the enforceability of a provision in a trust that would cause a forfeiture of or void an interest for bringing any court action, including contesting a trust.

Under both sections, such provisions are unenforceable if: (1) probable cause exists for bringing the action; and (2) the action was brought and maintained in good faith. Notably, Section 112.038 cannot be waived, making it another exception to the rule that the terms of a

trust generally prevail over any provision of the Texas Trust Code. See Texas Trust Code §111.0035(b)(6).

Before these provisions were enacted, it was an open question whether Texas recognized a good faith and probable cause exception to enforcing no contest clauses. The exception was applied variably by state appellate courts, and the Texas Supreme Court had never directly adopted the “exception.”

That court had, instead, merely referenced it favorably in dicta: “The great weight of authority sustains the rule that forfeiture of rights under the terms of a will, will not be enforced [when] the contest of the will was made in good faith and on probable cause.” Calvery v. Calvery, 55 S.W.2d 527, 530 (Tex. 1932, opinion adopted). The 2009 legislation, therefore, makes express what Texas’ highest court had ostensibly (but without certitude) implied—that forfeiture clauses are subject to a good faith and probable cause exception.

While it is now clear that Texas recognizes the exception, neither the newlyminted statutes, nor any Texas courts, have defined what constitutes probable cause or good faith. In resolving the probable cause question, Texas courts may choose to look to the Restatement (Second) of Property: Donative Transfers §9.1 cmt.j (1981) which says “probable cause” means “the existence, at the time of the initiation of the proceeding, of evidence which would lead a reasonable person properly informed and advised, to conclude that there is a substantial likelihood that the contest or attack will be successful.” The standard for good faith similarly remains undefined, although the good faith pleading requirement under Texas Rule of Civil

Procedure 13 (and related case law construing it) may well provide some guidance regarding what it means to bring and maintain an action in good faith.

The statutes also do not specify who has the burden to plead and prove the exception. Relying on prior Texas jurisprudence, the burden of showing good faith and probable cause likely falls on the will or trust contestant. To employ or invoke the exception, which has been characterized as an affirmative defense, it is probably necessary for a contestant (1) to expressly raise the exception in its pleadings, and (2) to secure a finding (by the court or the jury) that the contest was in fact brought in good faith and with probable cause. See Hammer v. Powers,

819 S.W.2d 669, 673 (Tex. App. – Fort Worth 1991, no writ).

In conclusion, the legislative enactment of the good faith and probable cause exception, while “clarifying” that Texas recognizes the exception, leaves many other questions unanswered. Nevertheless the new statutes remain a potent reminder that forfeiture clauses should not be taken at face value by estate planners in advising their planning clients or by fiduciary litigators bringing and defending will or HN trust contests.

Mr. Sales is a member with Dykema Gossett, PLLC and Ms. Nowak is an associate with the firm. Mr. Lindquist is a partner with K&L Gates, LLP. They can be reached at msales@dykema.com, cnowak@ dykema.com and phil.lindquist@klgates.com, respectively.

10 H e a d n o t e s l D a l l a s B a r A s s o ciation

Focus

January 2011

Probate & Tax Law

Tax Issues in Succession Planning for a Family Business

by Andrew K. Jenkins

I

t’s an ordinary work week and your phone rings. Instead of your usual calls, it’s a wellrespected small business owner referred by a financial planner you know. She is planning to bring her adult child into the family business and turn it over when the time comes. Succession planning not being your bailiwick, you attempt to find another attorney to whom you can refer the matter.

To your dismay, you discover there is no one in your contacts that handles business estate planning matters within your client’s modest price range. Since you have a long-standing relationship with this referral source, you decide to handle the matter yourself.

Before entering this new legal territory, there are several tax matters that specifically apply to family business situations that you should know.

First and foremost, you must be aware that the IRS treats family businesses differently than other business organizations.

The reasoning for the IRS’s heightened interest can best be summed up in the following fact pattern: Wealthy Father starts up a business with Son. Father invests $3 million and Father and Son own equal shares. The business is a success, and Son buys out Father’s interest for a nominal amount.

Realistically, Father did not “invest” in Son’s business. Rather, he made a $3 million gift to Son. While the above facts may be exaggerated, it is important to recognize that succession planning for family businesses can draw the attention of the IRS and be classified as a wealth transfer device.

Subchapter 14 — Special Valuation Rules

The bulk of the rules governing the transfer of business interests between family members can be found in IRC §§ 27012704. The purpose of this subchapter is

DBA President Recognized

to ensure that when business interests are transferred between family members, the transfer is done for fair market value and on terms and conditions typically found in arms-length transactions.

These rules apply not only when a family member buys the business interest of another, but also when a business redeems an owner’s interest. In the case of the latter, a transfer that violates Subchapter 14 will be treated by the IRS as a transfer of wealth from the withdrawing family member to all other family members in the business.

Additionally, discounts for conditions such as lack of control and lack of marketability, while proper and allowed, should not be aggressively applied. The IRS takes a dim view of unreasonable attempts to diminish the value of a withdrawing interest below that interest’s pro rata share of the business as a whole.

Other Tax Issues of Note

Another hurdle in succession planning for family businesses stems from the reluctance of founding family member(s) to cede control. Although §§ 302, 303 and 318 do not specifically provide for divergent treatment of family businesses, these rules can have a significant impact.

When a corporation redeems its stock and the withdrawing shareholder remains with the corporation as a director, officer or employee, the purchase price is treated as a dividend rather than a capital gain. This means the entire purchase price will be subject to tax, rather than the amount in excess of basis. Also, depending on the treatment of dividends at the time of the transaction, it may be taxed at a higher rate.

Further complications can be found in § 7872, which penalizes loans made at belowmarket interest rates. Because most small family-owned businesses do not have sufficient cash to fund the transaction, the purchase of the withdrawing interest will need to be financed. If family members are reluctant to charge each other interest on loans, the IRS may impose imputed interest income to both the holder and the maker of the note.

Failing to charge market rate interest can also violate § 2703(b) because a bona fide arms-length business arrangement would ordinarily contain at least marketrate interest in any financing arrangement.

The note-holder’s failure to exercise remedies for default under the note would also endanger the scheme under § 2703(b).

Practice Tips and Considerations

While succession planning for family business is not excessively difficult, it does require additional attention and care. The standard set for transfers of interests in family businesses is the “bona fide business arrangement.” If the IRS challenges the purchase price for a withdrawing interest, formalities such as a comprehensive buy-sell agreement, valuation done by an expert, and documentation of the parties’ adherence to the agreement will be your evidence of a bona fide business arrangement. Absence of such for HN malities can be disastrous.

Andrew Jenkins is the President of the Law Offices of Andrew K. Jenkins, P.C. He has a transactional practice focused on the representation of family businesses. He can be reached at AndrewKJenkins@akj-law.com.

OPEN FORUM January 12, 2011, Noon

The Northern District of Texas is hosting a public forum to discuss expanding the appointment of attorneys to undertake pro bono representation of pro se parties in civil cases, and other means of increasing opportunities for lawyers practicing less than seven years to argue matters in federal court. Judges Fitzwater, Lynn, Boyle and Ramirez will host the forum in Judge Lynn’s courtroom on the 15th floor of the Earle Cabell Federal Building at 1100 Commerce Street. You may bring lunch if you wish.

Ike Vanden Eykel, DBA’s 2010 president, was recognized by the Board of Directors with an oil painting of The Belo Mansion by Texas artist Jerral Derryberry His work is currently represented and sold in fine art galleries and national exhibitions. More of his work can be seen at www.jerralderryberry.com.

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DVAP’s Finest Kristy Sims Piazza

Kristy Sims Piazza is an associate in the Plano office of the family law firm Koons Fuller.

Kristy is an aggressive litigator on behalf of the abused and abandoned. Working through DVAP, she obtained a divorce for one client, including the support needed to raise her three children. The order also provided protection for the children and client from a spouse/parent who was physically abusive and mentally ill. In every case she takes, Kristy recognizes the seriousness and takes the outcomes personally. An officer of the Texas Young Lawyers Association, Kristy has worked on many projects benefitting mothers and children and is a published author on child-related subjects. She co-wrote, “Texas Foster Children Need Your Help” in the October 2010 issue of the Texas Bar Journal. For everything you do for disadvantaged children and parents, good work Kristy!

Pro Bono: It’s Like Billable Hours for Your Soul.

To volunteer or make a donation, call 214/748-1234, x2243.

J anu a ry 2 0 1 1

Dal l as Bar A ssoci ati on l Headnotes 11

Going the Extra Mile When Drafting Wills

by Christian S. Kelso, Esq.

A professor in law school once asked me why I wanted to be one of “those willdrafting attorneys.” The implication was that will drafting is a simple task for any attorney. Although the basic requirements of a valid will in Texas may be straightforward, the reality is that a well-drafted will incorporates much more than the basic requirements. As attorneys, it is our responsibility to lead clients away from legal traps. But we are also counselors, and in this capacity, we are charged with digging deeper to provide our clients with the best possible legal service.

Many standard will forms address a few variables but ignore other, more specialized, issues. Failing to address these issues, however, can lead to unwanted consequences. Attorneys should be prepared to address them or refer the work to a colleague. Individually, these issues may be relatively uncommon, but the fact that there are so many of them increases the likelihood that a particular client will need specialized planning of some sort.

The following are just a few of these special issues: • Non-Citizen Spouse. The estate tax marital deduction is a key component of

testamentary estate tax planning because it allows for the payment of tax to be deferred until the surviving spouse dies.

One requirement of the unlimited deduction, however, is that the recipient spouse be a U.S. citizen. Otherwise, only a limited deduction is available. Even if only one spouse is a non-citizen, a qualified domestic trust, or “QDOT,” may be appropriate. If properly structured, such a trust will allow estate tax to be deferred until the surviving spouse dies and may also be drafted such that it can be converted to a typical marital trust, if the surviving spouse naturalizes.

• Pets. As a general rule, Texas law treats pets like any other personal property.

Many clients, however, view their pets much like children. Fortunately for them, a special provision of the Texas Trust Code provides that trusts may be established for the care of pets. The statute requires that such trusts be reasonably funded and assets remaining in the trust when the pet dies pass to human beneficiaries. Clients who are undecided about pet trusts should remember that the gift of a pet is the gift of something that eats and may need expensive veterinary care. Setting a little money aside in trust may ease this burden.

• Modern Families. It is no secret that

You are Invited!

Judicial Investiture for: Judge Tonya Parker Tuesday, January 11, at 3:30 p.m. at the Belo Mansion

the modern world is moving away from the traditional concept of family. More families are blended, with children of several marriages, and clients may not understand how failing to plan for such a scenario can lead to unfair treatment, animosity and costly legal battles. Additionally, more clients are seeking marriage-like relationships without the legal formalities. Whether by choice or due to legal prohibition, persons in such relationships should understand and address the legal implications of their status.

• Beneficiaries with Special Needs.

If a child or other beneficiary has special needs due to a mental or other disability, special planning can be very important. In particular, persons receiving Supplemental Security Income (S.S.I.) may lose their benefits because an inheritance can render them ineligible until it is exhausted, at which time the individual must reapply for benefits. Thus, attorneys should always ask clients whether any contemplated beneficiaries have special needs and be prepared to address the situation if they do. Additionally, it may be necessary to add special language to a client’s durable power of attorney.

• Firearms. Like several other assets, guns, particularly those covered under the

National Firearms Act, present a special estate planning issue because of ownership restrictions. With increasing gun control, trusts are becoming more popular for gun enthusiasts. This is even more important for beneficiaries who may be subject to the laws of other, more restrictive states.

Although by no means exhaustive, the list above illustrates how estate planning attorneys must develop relationships with clients and be prepared to address a wide array of dynamic circumstances. Fortunately, the ability to address these issues presents a win-win scenario. On the one hand, attending to them usually results in increased billing, while, on the other, clients usually appreciate the extra care and attention. It might cost a few dollars more up front, but getting the job done right is very important. Even in cases where no special planning is needed, clients will appreciate the service provided by the more thorough attorney who takes the HN time to inquire.

Christian S. Kelso was awarded his LL.M. in taxation from Southern Methodist University in December and has accepted an associate position at Winn, Beaudry & Winn, L.L.P. He may be contacted at csk@wbwllp.com.

CAR CLEANING AT BELO

If your car is at Belo and you want it cleaned or detailed, we now have a convenient service available to members beginning December 1. Services include basic hand wash and dry, beginning at $25 and go up to $45 depending on type of vehicle. Services also offered include express detail, deluxe and complete detail.

Contact Time2Shine Professional Mobile Detailing at (214) 205-0535 for an appointment.

12 H e a d n o t e s l D a l l a s B a r A s s o ciation

Focus

January 2011

Probate & Tax Law

IRS Guidance on Series Limited Liability Companies

by Kim Szarzynski and Troy Christensen

Series limited liability companies (LLCs) have been around since the state of Delaware created them by statute in 1996. Although various states (including Texas as of the last legislative session) have followed Delaware in providing for series LLCs, other than a Private Letter Ruling issued by the Internal Revenue Service in 2008, the IRS has never issued any formal guidance on the federal tax treatment of series LLCs. However, that changed on September 13, 2010, when the IRS issued Proposed Regulation Section 301.7701-1(a) (Proposed Regulations) addressing the treatment of these entities for federal income tax purposes.

Following is a brief description of series LLCs generally and selected highlights from the Proposed Regulations.

What is a Series LLC?

A series LLC is a form of entity that allows a single LLC to establish one or more series of members, managers, membership interests, or assets, each of which has separate rights, powers, or duties related to specified property or obligations of the LLC. For example, LLC X, with members A and B,

could form series LLC X-1 in which A and B share profits 60/40 from activity 1 and form series LLC X-2 in which A and B share profits 30/70 from activity 2.

A series LLC is expected to provide limited liability protection to the members of each series and eliminate the expense of forming multiple entities for members that want to segregate assets and liabilities of different activities. (In the example above, series X-1 and X-2 would not be liable for each other’s debts.)

What Guidance is Provided in the Proposed Regulations?

Entities to Which the Proposed Regulations Apply: The Proposed Regulations apply to series LLCs, partnerships and trusts, protected and segregated cell companies, and segregated portfolio and account companies, that are established under a state statute providing for such entities. In addition, the Proposed Regulations apply to foreign (i.e., non-U.S.) series entities conducting insurance businesses.

Separate Entity Status: Under the Proposed Regulations, each series of a series LLC will be treated as a separate entity for federal income tax purposes. As a result, each series

will be classified under the “check-the-box” regulations and may make any federal tax election it is otherwise eligible to make independently of any other series. For example, if LLC X has series LLC X-1 with a single owner and series LLC X-2 with two owners, LLC X-1 will be a disregarded entity and LLC X-2 will be a partnership, barring any affirmative elections.

Segregated Liability for Taxes (Hopefully): Because each series is treated as a separate entity, each series should only be liable for federal income taxes related to that series. However, the IRS reserves the right to impose liability for taxes upon another series within an LLC to the extent the debts of one series can be paid by another series under other provisions of local or federal law.

No Employment Tax Guidance: At this time, the IRS has not issued guidance on the federal employment tax treatment of series LLCs. As a result, it is possible that each series within a series LLC will be treated as a separate entity for federal income tax purposes, while the series LLC itself, as the only “employer” for state law purposes, will be treated as the only “employer” for federal employment tax purposes.

Transition Rule: A taxpayer that has been treating all series within a series LLC

as one entity for federal income tax purposes may continue to do so under the Proposed Regulations if certain requirements are satisfied. Generally, this transition rule will apply provided that: (a) the series was established and conducting business prior to September 14, 2010; (b) the series had a reasonable basis for the classification; and (c) neither the series nor any owner of the series or the LLC was notified as of September 14, 2010 that the classification of the series was under examination. Note, however, this transition rule will no longer apply if 50 percent or more of the ownership of such series LLC changes after September 14, 2010.

Annual Statement: The Proposed Regulations require an annual statement to be filed by a series LLC and each of its series to provide the IRS with certain identifying information to ensure the proper assessment and collection of federal income tax. The timing of and information required by this annual statement are still to be determined HN by the IRS. Kim Szarzynski and Troy Christensen are both associates in the Business Planning and Tax practice group at Haynes and Boone, LLP. Kim can be reached at kim.szarzynski@haynesboone.com, and Troy can be reached at troy.christensen@ haynesboone.com.

Carmen McTaggart: Dallas Lawyers Auxiliary President

by Elisabeth A. Wilson

Carmen McTaggart’s warm, gracious personality is being put to good use as she leads the Dallas Lawyers Auxiliary (DLA) in the organization’s service to the bar and the community. She is the 85th president of the DLA, a civic, philanthropic and social organization with more than 100 members that enjoys a rich history and treasured relationship with the Dallas Bar Association. The DLA strives to promote public awareness and appreciation for the American legal system and lends its support to educational and civic enterprises, particularly those that are law-related. The organization seeks to bring Dallas lawyers and their spouses into closer fellowship with one another.

Carmen is the wife of Robert McTaggart, an attorney with McTaggart & Associates in Dallas, who practices real estate law and is board certified in Commercial Real Estate. Carmen is a flight attendant with Southwest Airlines and the proud mother of a 9-year-old son. She enjoys cooking,

gardening and decorating. She has been a devoted member of the DLA for 23 years and has served on the organization’s Board of Directors several times.

Carmen is looking forward to her year as President of the DLA and has chosen “friendship” as her theme. She envisions the DLA members creating new friendships— and rekindling old ones— as they work together to encourage each other and serve Carmen McTaggart the community with a positive spirit. Her own positive outlook is captured in her explanation of her favorite accessory. “I always wear pearls,” she said. “Pearls were little aggravations

that turned out to be very beautiful. It’s a reminder of how going through difficult life experiences can make you grow into something beautiful.”

The DLA hosts many events and projects in which Carmen enjoys participating.

Carmen is most proud of the “Now You Are 18” pamphlet, which the DLA has published since 1987. “Now You Are 18” is a copyrighted legal education pamphlet that explains some of the new rights acquired as an adult, areas of the law that all adults should know about, as well as the legal obligations that accompany reaching legal age in the state of Texas. The pamphlet is distributed to high school seniors throughout Texas. Approximately 1.75 million free pamphlets have been distributed since the inception of the project in 1987. The pamphlet can be ordered on the DLA’s website at www.dallaslawyersauxiliary.org.

Each fall, the DLA awards law school scholarships funded by the DLA’s Southern Methodist University Dedman School of Law Endowed Scholarship Fund. This year at the September general meeting, two students were awarded scholarships based on academic excellence. Carmen relishes the DLA’s long-standing spring tradition of presenting the prestigious Justinian Award, which honors a member of the Dallas Bar Association for his or her superior volun-

teer commitment to the Dallas community.

The 2011 recipient will be honored at a luncheon on April 27, 2011.

Each year the DLA President chooses two charities as the focus of their philanthropic work. This year, Carmen has chosen the Ronald McDonald House and the SPCA. Members of the DLA are involved in many philanthropic activities and nonprofit organizations, including Dallas CASA (Court Appointed Special Advocates), Dallas Children’s Advocacy Center, Girls Inc. and Community Partners of Dallas.

One of the DLA activities that Carmen looks forward to the most is decorating the Belo Mansion in November for the holiday season. Her eyes shine with anticipation at the joy of applying her creative flair to the task of adding festive holiday cheer to the Belo Mansion, beloved home of our Dallas Bar Association. The DLA also hosted the Dallas Bar Association’s Family Christmas Party at the Belo Mansion each year.

Carmen is a warm and welcoming leader with a heart of gold whose year of service to the DLA will surely be marked with camaraderie and excitement as each HN project unfolds.

Elisabeth A. Wilson is an Associate at Winstead PC in the Business Restructuring/Bankruptcy group and is a member of the DBA Publications Committee. She can be reached at e.a.wilson@att.net.

J anu a ry 2 0 1 1

Focus

Dal l as Bar A ssoci ati on l Headnotes 13

Probate & Tax Law

Pursuing Claims Involving Estates: A Top 10 List

by Melinda H. Sims

Estate litigation can involve almost any area of the law. As such, many lawyers are faced with cases in which they are familiar with the substantive law, but unfamiliar with probate proceedings. The following is a top 10 list of items to address when pursuing claims involving estates. This list focuses on probate proceedings involving Texas law and courts; however, a particular case might involve the law and courts of multiple jurisdictions, in which case a lawyer must apply those laws and court rules.

Find out whether an estate administration is pending. Whether an estate administration is pending or closed will dictate to whom you must present your claim, or against whom you must file a lawsuit. If no estate administration is open, decide whether one needs to be opened.

If the estate representative has breached his or her fiduciary duties or is otherwise an inappropriate representative, consider seeking removal of that individual. If the claim involves out-of-state property, determine whether an ancillary probate proceeding is necessary.

Determine whether the claim is subject to special claims procedures. The Texas Probate Code contains requirements for presenting certain types of claims, including, for example, claims for money and secured claims. Understand which procedures apply to dependent administrations versus independent administrations. The procedures impact the approval or litigation of your claim and the running of statutes of limitations, for example.

Decide who are necessary parties.

The Texas Probate Code, Texas Trust Code, and Texas Civil Practice and Remedies Code contain provisions about who are necessary parties, as might other statutes applicable to your claim. Determine whether the doctrine of virtual representation applies.

In addition, a court might need to appoint an attorney ad litem and/or guardian ad litem to represent certain individuals. File claims against parties in their proper capacities (as a fiduciary or individually as a beneficiary, for example).

Determine who should be your client(s). Estate litigation often involves individuals acting in different legal capacities, and individuals without legal capacity. Determine whether a potential client has the capacity to hire you, and whether a conflict of interest, or potential conflict of interest, exists. Give particular attention to the potential parties’ capacities, relationships, motives, and possible case developments.

Select proper jurisdiction and venue.

The Texas Probate Code, Texas Trust Code, and Texas Civil Practice and Remedies Code contain mandatory and concurrent jurisdiction and venue provisions, as well as options for transferring venue. Determine which apply to your case, and whether other jurisdiction and venue statutes apply to the claim. Resolve any ambiguity or conflicts among the statutes as necessary.

Beware of in terrorem Clauses.

Texas Probate Code § 64 (applicable to the estates of decedents who died on or after June 19, 2009) and Texas Trust Code § 112.038 (applicable to trusts existing on or created on or after June

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19, 2009) contain a good faith/probable cause exception to the enforceability of in terrorem (no-contest) clauses. Analyze how any such clauses apply to your clients in their various capacities.

Apply the proper statutes and rules.

Probate litigation involves laws that apply specifically to trusts and estates, as well as other substantive areas of law. The statutes and court rules (including local court rules) contain many important provisions, including unique notice requirements. Also, conduct any necessary conflict of laws analysis.

Pursue appropriate claims and remedies. Recognize the rights and duties of beneficiaries, fiduciaries, and other interested parties in analyzing possible claims and remedies. Determine whether any immediate protection is required, such as through a temporary restraining order, and determine the ultimate relief desired. Follow the necessary court procedures and pleading

requirements to obtain such relief.

Avoid unintended tax consequences.

Arguments and settlements can unintentionally result in tax consequences, now or in the future. Consult the necessary resources to avoid adverse consequences, to the extent possible. Some cases will necessarily result in tax consequences, but be knowledgeable about them.

Know your appellate options. It is not always obvious which court orders are considered final or interlocutory for appellate purposes, and whether appellate remedies such as mandamus are available. If you or an opponent wants to challenge an order, conduct research to determine whether appellate remedies can or must be pursued shortly after the order is rendered, or whether the challenger can or must HN wait until orders are final.

Melinda H. Sims is an attorney with the law firm Glast, Phillips & Murray, P.C. She can be reached at msims@gpm-law.com.

DBA PARKING RATES GO TO $4 BUT YOU CAN PAY ONLY $3

Effective January 1, 2011, member parking at Belo will be $4.00. However, members may purchase a coupon book of 10 coupons for $30. Coupons are good through December 31, 2011, and may be purchased through the garage parking attendant or the Belo Mansion cashier on the first floor. Coupons must be used to exit the garage at the $3 rate, otherwise members must pay the $4 rate.

14 H e a d n o t e s l D a l l a s B a r A s s o ciation

In the News

January 2011

January

FROM THE DAIS

Chad Baruch spoke at the 2010 Appellate Judges Education Institute in Dallas.

Kenneth Johnston, of Kane, Russell, Coleman & Logan, P.C., was a speaker in a Webinar on Overdraft Fee and Credit Card Practices.

Tom Greenwald, of Goranson, Bain, Larsen, Greenwald, Maultsby & Murphy, PLLC, participated in a panel discussion at the State Bar of Texas New Frontiers in Marital Property Law Course in Scottsdale, Arizona.

Kathryn Murphy of the firm was the co-course director of the State Bar of Texas New Frontiers in Marital Property Law Course.

Scott Chase, of Law Offices of J. Scott Chase, participated in a panel discussion for the Sumner Scholars Public Policy Forum, sponsored by the National Center for Policy Analysis.

KUDOS

Adam W. Vanek has been elected President of the Texas Junior Chamber of Commerce.

Terry Oxford, of Susman Godfrey

L.L.P., has been awarded the Flame of Honor Award by the Southwest Jewish Congress.

Frank L. Branson III, of The Law Offices of Frank L. Branson, P.C., has been selected by the American Bar Association’s Tort Trial & Insurance Practice Section as a recipient of the “Pursuit of Justice” award.

Elisabeth Wilson, of Winstead PC, was elected an Associate member of the Patrick T. Higginbotham Inn of Court.

Brian Dethrow, of Jackson Walker L.L.P., took office as 2010 Chair of the Committee of the Energy and Natural Resources for the State Bar of Texas Tax Section.

George Kryder, of Vinson & Elkins LLP, received a 3-year presidential appointment to Chair the ABA’s Standing Committee on Lawyers’ Professional Liability.

ON THE MOVE

Nathan W. Blackburn has joined Brown & Hofmeister, L.L.P. as an Associate.

N. Henry Simpson has moved offices to Busch Ruotolo Simpson LLP, 100

Crescent Ct., Suite 250, Dallas, Texas 75201. Phone: (214) 389-2893.

Christine Nowak has joined Dykema Gossett PLLC as an Associate.

Jamie T. Katzen has joined Andrews Barth & Harrison, PC as an Associate.

Natalie Gregg and Kathleen Turton

have formed the firm Gregg & Turton, L.L.P., located at 8144 Walnut Hill Lane, Suite 1080, Dallas, TX 75231.

John P. Martin has joined The Hamm Firm as an Associate.

Jordan A. Miller has joined Burford & Ryburn, L.L.P. as an Associate.

. . . . . . DBA In the News . . . . . .

During the past two months, your DBA has been highlighted in the following media: Coppell Gazette: Legalline dBusinessNews: Law in the Schools program, Lisa Blue Baron Donates $100,000 to DVAP Dallas Business Journal: Jack Lowe Sr. Award recipient, Justice in Education Symposium Dallas Morning News: Justice in Education Symposium, Legalline, Law in the Schools Program, Legalline Dallas Observer: Justice in Education Symposium Denton Record-Chronicle: Pro Bono Week Focus Daily News: DBA Blood Drive, Justice in Education Symposium, CIC Food Bank event Fox 4 News: Law in the Schools Program Irvingblog: Legalline KTYL radio: Legalline North Dallas Gazette: Pro Bono Week; Veterans Legal Clinics; Pro Bono Awards; CIC North Texas Food Bank event Post Tribune: Veterans Day activities

Judicial Investiture For Family District Judges

State Bar of Texas Newspapersclips.com: Justice in Education Symposium, CIC North Texas Food Bank event

Judge James B. Martin and Judge Andrea Plumlee

Southeast Texas Legal Journal: Philbin Awards

Friday, January 21, at 3:30 p.m. at the Belo Mansion

Texas Lawyer: Pro Bono Award recipients WFAA: Veterans Legal Clinic

TH E

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APPELLATE

OPINIONS — AVA I L A B L E D A I LY ON T E X A S L AW Y E R .C O M Click on “Daily Case Alert” to see the most recent case law or click on “Appellate Court Opinions” to search by practice area.

J anu a ry 2 0 1 1

Classifieds

Dal l as Bar A ssoci ati on l Headnotes 15

January

OFFICE SPACE

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North Dallas/Farmers Branch Law Firm has space for one or two more. $400/month, 2nd office discounted.

Includes use of furniture, Internet, fax, parking, conference rooms and kitchen. Convenient location. No Lease required. Contact info: (972) 243-5297 or Ilene@texasinjurylaw. com.

Sublease. Huge, beautiful offices in law office in Richardson at Central/ Campbell. Two large window offices - $1000/mo./each; one large interior office - $800/mo.; and one legal assistant area -$600/mo. available. Office environment is quiet and friendly with new furnishings and updated technology. Receptionist, telephone system, Internet, three conference rooms, two kitchens, free parking with 24 hour access to building. Please e-mail Jennifer Som at Jennifer@baalegal.com or call (214) 570-0700.

Time is Money! 3 miles from County Courthouse – 2 miles to downtown!

Quality office space – off-price value. $18/sf. Includes electricity and free garage parking. 9 miles to Love Field Airport. Minutes to DART rail, Baylor University Medical Center, Dallas Arts District, SMU, Oak Lawn, West Village. Centrally located on major thoroughfares. Uptown Tower. 4144 N.

Walnut Glen Tower (Walnut Hill/ Central) Beautiful, new, spacious offices in Class A building with views of downtown over lake with fountains.

Lobby with glass elevators, 18-story atrium, waterfall, trees and true outdoors feeling indoors. Practice in a relaxed yet professional 4-lawyer environment which includes administrative stations, conference room, kitchen, copier, phone system, DSL, reserved garage parking, on-site restaurant and other amenities. Why not have quality of life while you practice?

Please call (214) 750-1600 for details.

High-rise views at low-rise rates.

Panoramic views from 63rd floor.

Class-A downtown space close to courthouse, AV-rated law firm. Access to large conference room, library, kitchen. Secretarial, clerical, reception available. Offices available with very nice secretarial stations. Negotiable. Call Kay (214) 761-6463.

Northpark/Central Expwy—Law firm has “turnkey” office for sublease in Class A building for $1200. Includes use of office furniture (if needed), telephone, high-speed DSL, fax line, parking, and large conference room and kitchen. Great location with downtown and Park Cities views, excellent finish out with hardwoods in lobby, elevator exposure, and easy access to/from Central Expwy. Call (214) 292-4202.

North Dallas/ Addison/ Carrollton/ Farmers Branch. Business, Real Estate, Estate Planning, Employment, Litigation Law Firm has lease space for one or two attorneys, or for one attorney and staff member. Available early

DAYL invites you to attend: “Some Like It Hot: Analysis of SEC’s Disclosure Requirements Related to Climate Change Risk” 1 hour CLE (pending) January 19, 2011 at Belo Panelists include: Stephanie Anderson, Kara Altenbaumer-Price and Larry Hagenbuch.

Moderated by Jennifer Edgeworth

Our trust is your trust...

The State Bar of Texas Insurance Trust specializes in helping all Bar Members and their Eligible Employees obtain complete insurance coverage at any point in their lives. From Health Insurance to Long Term Disability Insurance, the Trust has you covered.

State Bar of Texas Insurance Trust

800.460.7248 www.sbotit.com

Want to Refresh Your Spanish?

Sign Up Now! 10 Week Course Spring 2010 January 18-March 22. 6:00-7:30 p.m.

Beginning Level II-Tuesdays Beginning Level I-Wednesdays Beginning Level VI-Thursdays Class cost: $180.

Deadline to sign up: January 10 For more information, contact Teddi Rivas at TRivas@dallasbar.org or (214) 220-7447.

2011. Seeking compatible persons with similar or augmenting practices, preferably in an “of Counsel” role.

Contact Debbie at (214) 764-7978, or e-mail dwalton@metrocrestlaw.com.

Downtown AV-rated law firm has one new window office with a secretarial space on the 25th floor with a great view. Call Mark or Vicki at (214) 752-0400.

POSITION AVAILABLE

Oak Lawn firm seeks experienced civil litigation attorney with business and construction litigation experience. Requirements include minimum five years’ experience. This is a nuts-and-bolts trial position requiring excellent writing and advocacy skills, demonstrated leadership skills, and record of stability in prior positions.

Knowledge of family law and bankruptcy is desirable. Firm offers competitive compensation package and first-rate office environment. This is an excellent opportunity for the right attorney. Respond to Dallas Bar Association, Box 12-10A, 2101 Ross Ave., Dallas TX 75201.

Well established Texas law firm with offices throughout the state seeks commercial litigators and transactional attorneys, or practice groups, with 10+ years of experience. These positions are located principally in our Dallas and Houston offices. Mail resume, in confidence, to D Loyd Legal Recruiting, P.O. Box 251, Addison, Texas 75001, or e-mail your response to dloyd@dloydlegalrecruiting.com.

Medium size AV rated downtown Dallas law firm seeks partner level business lawyer with varied corporate

law experience. Candidate must have some portable business. Respond to Dallas Bar Association, Box 11–10B, 2101 Ross Avenue, Dallas, TX 75201.

27-attorney downtown Dallas firm seeks corporate/transactional associate with 2-5 years private practice experience in business acquisitions and divestitures, private offerings of securities, contract drafting and negotiation and general corporate work. Strong academic history is required. Please send resume to Hallett & Perrin, P.C., Attn: Recruiting Coordinator, 2001 Bryan Street, Suite 3900, Dallas, TX 75201 or to sgay@hallettperrin.com.

Glasheen, Valles & Inderman, LLP. Established 7 lawyer plaintiff ’s personal injury firm seeks litigation attorney in Lubbock, Texas. Actual litigation experience preferred. Ideal candidate should be aggressive self-starter with the desire and ability to manage own docket of cases. Salary and performance incentives plus benefits. Fax resume to (806) 763-2146 or e-mail to employment@glasheenlaw.com.

SERVICES

Mexican Law Expert—Attorney, former law professor testifying since 1997 in U.S. lawsuits involving Mexican law issues: FNC motions, Mexican claims/defenses, personal injury, moral damages, contract law, corporations.

Co-author, leading treatise in field.

J.D., Harvard Law. David Lopez, (210) 222-9494. dlopez@pulmanlaw.com.

PLACE YOUR AD HERE! For affordable classified advertising rates contact Judi Smalling at jsmalling@ dallasbar.org or (214) 220-7452.

16 H e a d n o t e s l D a l l a s B a r A s s o ciationâ€

January 2011