New Matter
THE AWARD WINNING PUBLICATION OF THE CHESTER COUNT Y BAR ASSOCIATION • CHESTER COUNT Y, PA www.chescobar.org
FALL 2015
What is the Law Related Education Program?
B.U.L.L. SESSIONS
Better Understanding of Lawyers' Lives
CCBF 30TH ANNIVERSARY October 29
New Matter CCBA Officers Craig Styer, President Bill Wilson, President-Elect Christine Zaccarelli, Vice President Mary-Ellen Allen, Treasurer Patrick McKenna, Secretary New Matter Committee Charles DeTulleo, Editor Rami Bishay Mark Blank, Jr. Keith Boggess Brian Doyle J. Stoddard Hayes Mary LaSota Andrew Lehr Deborah Lewis Shannon McDonald John McKenna Kim Denise Morton Mary Wade Myers Kevin Ryan Karyn Seace Alan Vaskas Bill Wilson
Content
FALL 2015
FEATURES
IN EVERY ISSUE
CCBA Membership Can Also Help Your Bottom Line!..................................... 6
President’s Message................................... 4
CCAA & Case Strategy................................ 7 PBA Happenings........................................ 8 Notice to the Bar From Family Court...... 8 What is the Law Related Education Program?................................ 10
Your Bar Foundation................................11 Save Our Environment.............................16 Featured Member Profiles William H. Lamb & James E. McErlane.......... 22 YLD Details.................................................23 Flying Solo..................................................24 From the Archives New Matter—November 1981.....................25 From the Bench.........................................26 The Blank Page..........................................28 Tech Tips.....................................................30
CCBA Staff Wendy Leeper Executive Director Emily Boulanger Communications & Event Manager The Chester County Bar Association’s quarterly publication, New Matter, has been provided to Bar Association members for four decades. A valuable aspect of CCBA’s membership, New Matter aims to provide our members with information pertaining to current issues facing the practice of law, historic legal issues, continuing legal education opportunities, Chester County Bar Association activities, programs, meetings and functions, practice tips and procedures for attorneys, and items of personal interest to our membership. The opinions expressed in this material are for general information only and are not intended to provide specific legal or other advice or recommendations for any individuals. The placement of paid advertisements does not imply endorsement by the Chester County Bar Association. All rights reserved. No portion of this publication may be reproduced electronically or in print without the expressed written permission of the publisher or editor.
I Live in Chester County & Need an Attorney…What Do I Do?...................... 12 When Partners & Colleagues Let You Down: It Can Happen to You..... 18
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If you have an idea for an article, or would like to submit content, please contact Emily Boulanger at eboulanger@chescobar.org or (610) 692-1889. PUBLISHER: Hoffmann Publishing Group 2921 Windmill Road, Suite 4, Sinking Spring, PA 610.685.0914 x201 • hoffmannpublishing.com FOR ADVERTISING INFORMATION: Tracy Hoffmann, tracy@hoffmannpublishing.com
President’s Message
B.U.L.L. SESSIONS
Better Understanding of Lawyers' Lives
Upcoming B.U.L.L. Session Dates: October 7th November 4th
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hope you are enjoying your summer and are able to find time away from the practice of law and relax with your family and friends. The Bar Association tends to slow down a bit in the summer as we all take a well-deserved break, but this year Wendy and the staff have been busy with extensive renovations to the second floor of our building. The staff spent the summer working close together in the conference room on the third floor of our building while the renovations were being completed. Please stop in to see the wonderful renovations to the second floor of our building!
As we enter the fall, programs at the Bar Association will be starting up again after the summer break. I’d like to highlight our B.U.L.L. (Better Understanding of Lawyers’ Lives) Sessions. This program was created under the leadership of former president Don Kohler, and is part of our Lawyers’ Quality of Life mission. The informative monthly sessions, led by Barry Rabin, are intended to enhance and improve the quality of life for the attorneys who practice law in our community and provide an outlet for open conversation about the stressful aspects of the legal profession.
Craig A. Styer, Esquire President
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The sessions have evolved over the past several years and now, in addition to providing insight on quality of life issues, also provide valuable information and tips on practice management and the business of the practice of law. Recent topics of discussion included: alternative billing; blogging and social media as a way to attract clients; legal research without breaking the budget; bookkeeping basics for lawyers; and dealing with negative internet reviews. In addition, many of the sessions feature knowledgeable presenters who educate and facilitate discussions among the participants. Meetings are held the first Wednesday of the month and CLE credit is offered for many of the programs. I encourage you to attend these valuable sessions, not only to improve your quality of life, but to enhance your practice. The Fall Bench Bar Conference is right around the corner on September 24-26, 2015 at Gaylord National Resort & Convention Center in National Harbor, Maryland. The Fall Bench Bar Committee has a fantastic program planned and I look forward to seeing all of you there!
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CCBA Feature
CCBA MEMBERSHIP Can Also Help Your Bottom Line!
By Barry Rabin, Esquire
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ost of you know that among the many benefits of being First, I realized recently that among the many excellent attorneys a member of the CCBA are access to great C.L.E., fun I refer cases to that are not within my practice areas, probably 90% social events, access to the Lawyer Referral Service, are friends I have made while attending CCBA section meetings and the chance to participate in various practice-area section and social functions, dating back as far as my participation in the meetings to interact with like-minded practitioners and stay up Young Lawyers Division eons ago. on the latest developments in the law. Next, when I attended the recent Spring Bench Bar Conference, But how many members realize that Bar Association member- I happened to meet a young attorney who was in the process of ship (and actually showing up at CCBA events) can also bring building up his own practice, much as I had done many years work (and money) in the door of your practice? ago. This fellow seemed pretty bright, and actually handled some practice areas that I don’t get into and don’t have many “go-to” This unheralded benefit occurred to me recently in a number attorneys to send work to. of ways. I immediately exchanged business cards with him, and set up a time to grab some lunch and find out more about his practice. Finally, an attorney friend of mine made an appearance at one of our monthly CCBA “B.U.L.L. Sessions” (the most fun and painless ways to get Ethics credit, or to just hang out and imbibe liquids, ever invented for local lawyers). This was someone whose work I respected, but who I hadn’t thought about recently since I hadn’t seen him. The next day, when I got a call from a client who needed some work done in that lawyer’s field of practice, I immediately referred him to that attorney. I myself have likewise been sent work many times from attorneys I know from attending CCBA functions. It was Woody Allen who once said that “Eighty percent of success is just showing up.” I think this principle more than applies to being an active member of the CCBA. If more members would not only join, but actually show up at Bar Association events for some “face time,” I believe that they would not only have fun and learn a lot, but also improve their bottom line. Look at it this way: Just one referral a year more than pays your Bar Association dues for the entire year (if not the next five or six!).
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CCBA Feature
www.chescobar.org
CCAA & Case Strategy By Larry Goldberg, Esquire
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he Chester County Advocacy Academy will present its first intensive trial practice program on October 15th, 16th, and 17th, 2015. This program will teach the essentials of conducting successful voir dires, openings and closings, and direct and cross examinations of parties and experts, as well as theme creation and the preparation of pre-trial memoranda. The classes will be nine hours each day, basically from 9a.m.–9 p.m. with food breaks in-between. Enrollment is limited to 15 lawyers. The faculty of this program is loaded with the most experienced litigators in Chester County and Philadelphia. Individual instructions for each enrollee will be provided by the faculty and by many of the members of the Chester County Bench.
case selection. It has long been my belief that the jury trial is won by the client, and the trial lawyer’s role is done best when he stays out of the way. This is not to say that famous litigators such as Melvin Bell, F. Lee Bailey, Nate Richter, and Jim Beasley did not bring much to the table, but as talented as these men were, their greatest talents were in selecting which clients would “wear well” with the jury.
and several liability with the Fair Share Act. You may be required to spend huge sums of money to put together a case against a “deep pocket” only to find that the verdict which was in your favor allocated a modest percentage of the liability against the “deep pocket.” For example, in an auto liability case against a poor and uninsured driver and against PennDot for a highway defect, which is likely to result in a $1,000,000 verdict yet Today the cost of litigation which seeks the jury allocates liability against PennDot the recovery of damages for personal inju- at 5%, the large sum you advanced in ries is very expensive. Physicians routinely costs will never be recovered. In addition demand thousands of dollars for reports, to losing money, you will also have a very depositions, and pre-trial meetings. Thus, unhappy client. it is an economic certainty that taking the wrong client to trial can be devastating to Case selection and trial strategy are Because of time limitations, topics for your practice. subjects that perhaps the CCAA will cover this program concern conduct in the courtat a later date. If you have any interest in Case selection is also more important enrolling in the October program, you room and are not intended to include the very important subjects of trial strategy and than ever since the replacement of joint can email me at lgoldberg@gmmlaw.net.
CCBA MEMBER MOMENTS
& Craig Styer, CCBA President, t iden Pres Hon. Jacqueline Cody, nty Cou ster Judge of the Che Court of Common Pleas
Law Day Poster Contest Winners
the Lisa Comber Hall, President of ion, ndat Fou Chester County Bar & Chuck Swope present the Swope Scholarship Essay Contest Winner Brynn Richter with her Scholarship Check
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CCBA Feature
PBA HAPPENINGS By Kim Denise “Deni” Morton, Esquire
the Zone Governors, the Board also consists of three at-large Governors as well as the Chair of the House of Delegates, the officers of the PBA and officers of the PBA YLD.
The House of Delegates holds regularly scheduled meetreetings from your Governor. No—not ings every May and November (and may hold specially called THAT Governor. I am the new Zone meetings, although that is rare). The meeting locations rotate 9 Governor for the Pennsylvania Bar between Philadelphia, Pittsburgh, Hershey and Harrisburg. Association (PBA). Since I will serve as the Zone (Would someone please explain to me WHY Pittsburgh has an 9 Governor for the next three years, I thought it might be infor- “h” and Harrisburg does not?) The Board of Governors meets mative to run this column to keep you apprised on “happenings” more frequently. within the PBA and other topics related to the PBA. The Board is also responsible for overseeing the PBA Sections I am starting with a short primer about the structure of the and Committees. In my next column, I will discuss the benePBA for those of you who are not familiar with its governance. fits of membership in the PBA, specifically the Sections and As the Zone 9 Governor, I serve on the PBA Board of Governors. Committees—the listservs are invaluable! The Board of Governors is the body that manages and carries You can always learn more about the PBA by going to its out PBA policies as they are established by the PBA House of website, www.pabar.org. Delegates. Pennsylvania is divided into twelve zones, each having a governor. We are in Zone 9, which consists of Bucks, Chester, I hope you will join me in this journey for the next three years. Delaware and Montgomery Counties. Due to its size (number of members), Philadelphia is its own zone. In Zone 9, we rotate I would love your comments, feedback and/or questions. Please the governor position between the four counties. In addition to email me directly at kdmorton@mortonfamilylaw.com.
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NOTICE TO THE BAR
You may file a custody complaint or include a custody count in your client’s divorce complaint but you should not request that a conference be scheduled until the physical separation date has been established in order to avoid a dismissal of the complaint or count for custody. If you are filing the complaint by mail, you should send a cover letter to the Prothonotary notifying Family Mediation Requirement Court that no custody conference should be scheduled at the The Notice and Order to Appear for custody complaints and present time because the parties continue to reside together. Once petitions to modify has been changed to require explicitly both the physical separation date has been determined, even if it is in the plaintiff and the defendant to contact the assigned mediator the future, you may request the conference to be scheduled. If at within three days of receiving the notice to schedule the mediation. the conference it is determined that no physical separation has or Copies of the revised Notice and Order to Appear are available on will occur by a date certain, then the custody complaint or count the chesco.org website (on the Custody will be dismissed. Requests to continue the custody conference Information page) and in the Family because the parties are still living together with no anticipated Court Administration office. date of physical separation will be denied.
From Family Court
Erroneous Divorce Captions
Conciliation Where Parties in Same House
In addition, pursuant to 23 Pa.C.S.A. §5323(h), no custody conciliation conference will be held where the parties live in the same residence unless there is a date certain on which one party will physically vacate the residence by agreement or court order.
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Finally, Family Court has received an uptick in requests to amend final decrees in divorce due to party names being spelled incorrectly or containing incorrect middle initials, etc. The information on the decree is pulled from the initial complaint. If the complaint is incorrect, the caption and, ultimately, the decree will have incorrect information. Please ensure that the parties’ names are correctly spelled on the divorce complaint and mirror the parties’ names as reflected in their marriage certificate to avoid having to file a motion to amend the caption.
Seamus Lavin & his family
en & Mary-Ellen All her daughters
Stephanie Deviney’s son
CCBA Family Picnic with the Reading Fightin’ Phils! JULY 16, 2015
Rami Bishay’s so n (center) & friends
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CCBA Feature The Law Related Education program currently covers the following topics: • Grade 2: Communities
• Grade 3: Going to Court
What is the Law Related Education Program?
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he Law Related Education Program (LRE) works in cooperation with the “Legal Education for Youth” program offered to schools throughout Chester County. The program is sponsored by the Chester County Bar Association, and through a partnership with the Chester County Intermediate Unit, attorneys volunteer their time to educate students on topics within various areas of the law according to appropriate grade level curriculum.
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• Grade 4: Personal & Real Property Law • Grades 7–9: Protecting Our Environment • Grades 9–10: Juvenile Law • Grade 12: Sexual Harassment
The demand for our program is tremen- • Grade 12: Stepping Out dous and attorney volunteers are needed! The time commitment is approximately one To volunteer for this program, contact hour and you will have the choice of which Emily Crocker at ecrocker@chescobar.org school(s) are seeking volunteers. The Chester or 610-692-1889. County Bar Association has offered this pro- (Please indicate which unit(s) you would be gram for over 20 years and is committed to interested in teaching) providing law related education to the youth Note: Some schools may require Act 34 (PA Criminal of Chester County. It is a very rewarding check), and Act 151 (PA child abuse history clearexperience for our attorneys and a valuable ance) and/or fingerprinting. You will be notified program for the youth in our community. of any requirements when asked to volunteer.
YOUR Bar Foundation
www.chescobar.org
CCBA MEMBER MOMENTS
Don’t Miss Our
“I Got You Babe”
Brian Nagle & Angela Halse
By Terri Smith CCBF Secretary & Key Gala Chair
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n 1985 a dedicated group of attorneys banded together to form the Chester County Bar Foundation. Today, 30 years later, the Foundation is living up to the original vision of the founders. Our Chester County Bar Foundation is the Key that opens the door so that Chester County Citizens can understand, gain access to and benefit from our legal system. Those original attorneys who were instrumental to the establishment of the Foundation, as well as today’s Foundation Fellows, are the Key to the Foundation’s ongoing accomplishments.
“No Court Today”
Services, and the Crime Victims’ Center of Chester County.
During recent renovations at the bar association building, the original Key to our county’s courthouse was discovered in a box of historic artifacts! Hopefully you’ve caught on to the theme by now. To celebrate its 30th anniversary, the Chester County Bar Foundation will host a gala event, The Key Gala, this fall. The Key Gala will acknowledge the powerful vision the founders had 30 years ago, as well as the ongoing commitment to our mission of our Foundation fellows, volunteers, donors, With our Endowment Fund now ex- and grant recipients. ceeding $800,000, the Foundation grows stronger financially with each passing year. Join with us at The Key Gala to celebrate And each year the Board bestows grants to our accomplishments and our 30-year herkey local organizations that both support itage. Together we will continue to unlock the mission of the Foundation and provide the door to the legal system for those who much needed services to our county’s might not otherwise have access. citizens. Organizations and programs that are supported include the following: Legal Aid of Southeastern Pennsylvania, Law Related Education for Youth program, SAV E TH E DATE: Elder Law Education programs, Charles E. Thursday, October 29th Swope Scholarship and Matching Grant & watch for more information on program, Domestic Violence Center of Chester County, Community Impact Legal
The Key Gala!
Rami Bishay, Marc Lieberman, Virginia Diaz, Chris Zaccarelli, Bruce Laverty, Michelle Bernardo-Rudy
2015 Legal Lemonade Day
CCBA Staff: Anne Comber, Stephanie Gibbs
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CCBA Feature
I Live in Chester County & Need an Attorney… What Do I Do? By Christine Zaccarelli, Esquire Pro Bono Director, Legal Aid of Southeastern PA
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s a resident of Chester County you are The Helpline’s five paralegals and three attorneys field and manage very fortunate to have access to justice calls from people in Bucks, Chester, Delaware and Montgomery and an attorney regardless of your income. counties who are seeking legal aid. Calls stream in Monday through First, Legal Aid of Southeastern PA provides free civil legal ser- Friday, 9 A.M. to 1 P.M., and cover a broad range of legal problems. vices to residents of Chester, Bucks, Montgomery and Delaware Questions about accessing benefits, retaining housing, and obtaining Counties to seniors, victims of domestic violence and residents protection from abuse orders are triaged by LASP’s paralegals who whose household income falls below 125% of the federal poverty must first determine if the callers and the legal issues are eligible for level. If you believe you may qualify for these free services the LASP’s assistance. first step to get help can be as simple as picking up the phone and calling LASP’s regional, toll-free Helpline. If you do not qualify for LASP services for a number of reasons you may be referred by LASP intake staff to the Chester County Bar Association’s Access to Justice Program. This program was initiated by John McKenna, Esquire, of MacElree Harvey approximately ten years ago and serves those “working poor” who make too much money to qualify for LASP services but realistically still cannot afford an attorney. The attorneys that handle cases for this program all volunteer their time to help this underserved population in Chester County. Due to the limited resources, this program is only open to Chester County residents who make under 200% of the poverty limit for their household and the referral must come from the LASP intake unit. For those who are unfamiliar with the court system, and who face a vital issue such as losing a child or a home, access to justice can seem despairingly unattainable. Without good legal advice, they are less likely to prevail, and may suffer significant, unnecessary harm. Programs like Legal Aid of Southeastern Pennsylvania (LASP) and the CCBA’s Access to Justice exist to meet the civil legal needs of those who could never afford a private attorney. The LASP Helpline narrows the justice gap for those who need it most but can afford it least. The toll-free Helpline number is 1-877-429-5994. If you do not qualify for one of the quality free programs available in Chester County you can contact the CCBA’s Lawyer Referral Service and they will point you in the right direction to a qualified lawyer to handle your legal issue. The Lawyer Referral Service can be reached at 610-429-1500, Monday through Friday from 9:00 a.m. to 4:30 p.m.
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Save Our Environment
EPA Issues Jurisdictional Waters Regulatory Definition: WOTUS Reaches a Rolling Boil
By John R. Embick, Esquire Chair, Environmental Law Section
In most situations, the determination of whether WOTUS is involved is not controversial. Navigable waters (and this includes some traditionally non-navigable waters) are widely understood to cover most: (1) inland seas, rivers, streams, and lakes that are used in, or could be used in interstate commerce; (2) interstate waters and wetlands; (3) the territorial seas; and (4) impoundments.
A controversy has arisen in determining federal jurisdiction n May 27, 2015, the U.S. Environmental Protection over isolated waters (which are not directly connected to naviAgency (“EPA”) and the U.S. Army Corps of Engineers gable waters) or wetland areas or waters which are adjacent to (“ACE”) announced final rule-making on a definition navigable waters. These latter two issues were presented to the of “Waters of the United States” (“WOTUS”). The final rule U.S. Supreme Court (“SCOTUS”) in two cases: Solid Waste was subsequently issued in the Federal Register on June 29, Agency of Northern Cook County v. U.S. Army Corps of Engineers 2015 (80 F.R. 37054-37127). The WOTUS rule is effective on (“SWANCC”), 531 U.S. 159 (2001), and Rapanos v. United States, August 28, 2015. 547 U.S. 715 (2006).
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The agencies dubbed the new rule “The Clean Water Rule.” At issue in SWANCC were isolated, intrastate wetlands which Opponents have called it a breathtaking (and unconstitutional) a group of local municipalities near Chicago, IL, had selected for regulatory overreach. Sixteen states have already filed suits construction of a municipal landfill. These wetlands clearly challenging the new regulation: one in Texas (State of met the biological definition of wetlands, but were Texas v. U.S. Environmental Protection Agency, No. not located in or adjacent to open waters tradi15-cv-162 (U.S.D.C. S.D. TX)), and the other tionally considered to be navigable waters of the in North Dakota (North Dakota v. U.S. EPA, United States. The wetlands had formed over No. 15-59 (U.S.D.C. N.D.). Farmers have time on the site of an abandoned sand and gathered pitchforks and torches, according gravel quarry site, and were home to a wide to the American Farm Bureau Federation. variety of migratory waterfowl. In a holding Environmental advocacy groups (including which turns on the statutory construction of a group of beer manufacturers!) have praised the term “waters of the United States,” the the new rule with messianic fervor. Court narrowed the Corps’ interpretation of the term “ waters of the United States.” What’s all the fuss about? The problem arises from the Clean Water Act, 33 U.S.C. §§ 1251 et seq. In Rapanos, the matter involved the filling of wet(“CWA”). When describing what waters are subject to fedlands that were located miles from traditional WOTUS. eral regulation (e.g., for the purposes of the National Pollution Justice Scalia’s plurality opinion decried ACE’s excessive and Discharge Elimination System (“NPDES”) permit requirements), over-broad interpretation of jurisdictional wetlands. In order to the CWA uses the term “navigable waters,” which the CWA be a proper subject for regulation, he said, a wetland had to be in turn defines as “waters of the United States, including the permanently and directly attached to traditional navigable waterritorial seas.” Unfortunately, the term “waters of the United ters. In an opinion concurring in the judgment, Justice Kennedy States” is not further defined in the CWA. outlined a “significant nexus” standard, which must be deterContinued on page 17
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www.chescobar.org Continued from page 16 mined on an ad hoc basis (hence his concurrence in the remand decision). The agencies ended up trying to use both tests on a water-by-water basis. After SWANCC and Rapanos, the agencies developed guidance (not rulemaking) documents (2003 and 2008) which were designed to explicate how the agencies would proceed in determining whether jurisdictional waters existed, and in complying with the High Court rulings. In an effort to clarify the scope and ambit of WOTUS, in 2011, the agencies published new draft guidance to help clarify the manner in which WOTUS jurisdiction would be determined. This proposed guidance was controversial and was never adopted. Several bills were introduced in Congress, which would have forbidden the agencies from implementing WOTUS (e.g., stormwater management structures and systems, the proposed guidance. water distribution structures and wastewater recycling structures, groundwater recharge basins, and “puddles”). On April 21, 2014, the agencies published a draft WOTUS definitional rule in the Federal Register, which also has proved With respect to “adjacent waters,” the new rule seems to to be very controversial. In the rulemaking process involved with define by rule these waters as a category of WOTUS based on the development of the new WOTUS rule, thousands of public distance limits. comments were received, and the EPA Science Advisory Board (“SAB”) reviewed hundreds of scientific articles and texts, in an With respect to “isolated waters,” the new rule appears to effort to evaluate the scientific basis for identifying and classify- express a protocol for determining whether the isolated waters ing WOTUS, and therefore for the exercise federal jurisdiction are WOTUS, and therefore is expected to reduce the number of over those waters. case-by-case investigations which would otherwise be necessary. The final rule identifies two sets of waters for which a site specific The scientific effort was aimed at understanding current of the “significant nexus” analysis to determine if CWA jurisdiction applies. connections (or lack of connection) of streams, marshes and wet- The first set involves five specific subcategories of waters (prairie lands relative to large water bodies such as rivers, lakes, estuaries, potholes, Carolina bays and Delmarva bays, pocosins, western and seas, as well as the factors which create the connections, such vernal pools, and Texas coastal prairie wetlands). The second set as frequency, duration, magnitude, timing, and rates of change of are waters located in the 100-year floodplain of a traditional water, material, and biotic fluxes to downstream waters. navigable water, interstate water, or the territorial seas, and within 4,000 feet of the high tide line or ordinary high water mark of In those cases where the extent of WOTUS is not clear, this a jurisdictional water. is a big deal since the regulatory consequences can be significant (and expensive). For example, the applicability of the Endangered The agencies estimated that the new rule will extend CWA Species Act (“ESA”) could be triggered, because the ESA requires jurisdiction over 3%-5% more waters, when compared to prior federal agencies to evaluate potential impacts to threatened or practice and experience. endangered species, when federal permits are required. In our current political climate there is a great deal of controversy about Farmers are upset because they assert that the rule adds unceralmost any proposed extension of regulatory control or power. tainty (and possibly regulatory control) over lots of agricultural activities (e.g., irrigation and run-off control). They (or their repThe result of this regulatory history is a new final rule which resentatives) say that farmers are already excellent stewards of their stretches for over 75 pages in the Federal Register. The agen- lands and additional control is not necessary. However, it is clear cies hope that the new definition, since it is based on extensive that agricultural run-off remains a significant problem and conpublic comment and scientific analysis, will help clarify the tinues to contribute to the contamination of many rivers, streams scope of WOTUS. and lakes. The development of the Chesapeake Bay TMDL permit certainly seems to confirm that this continues to be a problem. In the two key areas involving current political, legislative, scientific and jurisprudential controversy (isolated waters, and The new rule, if it survives, is not expected to cause many ripples adjacent waters), the new rule seems to expand federal jurisdic- in Pennsylvania, since the Commonwealth already exercises more tion and clarify what waters are WOTUS. In all other respects, extensive jurisdiction over the “waters of the Commonwealth,” the the rule does not change the regulatory landscape to any great latter which includes virtually all waters (surface and subsurface) degree, and in fact appears to expand the list of exclusions to in the state. New Matter
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CCBA Feature
When Partners & Colleagues Let You Down:
It Can Happen to You By Ellen Freedman, CLM
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t was a particularly difficult hot line call. Two or alcohol, gambling, criminal activity, dishonesty to the courts, partners conferred with me for well over an clients, or partners, depression or other mental illness, and more. hour. Toward the end of the call one of the These types of occurrences can leave a firm in turmoil; malpractice partners openly wept. “I just can’t believe this exposure, damaged client relationships, damaged firm reputation, has happened to us,” the partner managed to say, financial loss, and the most disabling: a deep feeling of betrayal “You always hear about these things happening at other firms, to by partners and/or colleagues. other people you know, but you never think it will happen to The partners of this firm were careful not to disclose the speyou. We’ve known each other since law school. We all shared a cific cause. And to be honest, it didn’t really matter much to me. vision of the type of law we wanted to practice, and the type of Because my advice would not alter one iota based on causation. firm we wanted to practice in. We built this firm together. We’ve The process of picking up the pieces and carrying on are usually been successful. We trusted each other beyond question. We feel not impacted by the cause. so totally betrayed. We don’t even know where to start picking up the pieces.” My very first question is what action the firm has taken, or could take, under its partnership or shareholder agreement. Fortunately If only this were a first-time call. Unfortunately it wasn’t. In the for this firm, they approached me for assistance when they became many years I have worked in and with law firms, I have witnessed, and sometimes experienced first-hand, the devastation and betrayal established. Back then we discussed what should be included that can be caused when one or more partners cross the line. The in a partnership agreement. I strongly recommended language causes are many. Sometimes there is more than one cause at play. for expulsion of a partner for cause. We discussed at length the Some of the causes I have witnessed include addiction to drugs types of things which would be included as cause for expulsion. We discussed, for example, whether arrest for a serious crime was cause, or only conviction. We discussed mental impairments which prohibited effective representation, whether resulting from physical causes, such as brain tumor, or from psychological cause such as severe depression. We discussed various ways expulsion could be handled. I had witnessed the havoc created by a partnership agreement which calls for a 100% approval vote to expel (excluding the partner in question) at more than a few firms. Equally difficult were firms which were totally silent on the expulsion question, or had no partnership agreement at all. In either instance the path became unclear and impeded a firm from taking decisive action when necessary. Continued on page 19
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www.chescobar.org Continued from page 18 For this firm there was a clear path. They handed a copy of their agreement to their accountant and asked, simply, “How much do we have to pay?” So the most potentially difficult part of the process became the simplest. And for that they were exceptionally grateful. They turned to me for advice on what to do next, and to be sure they missed nothing in the process. Here is a checklist of the major points which need to be addressed under these circumstances:
Inform the Client: Rule 1.4 (Communication) requires
that the firm advise clients promptly of anything which will affect the handling of their case. The firm must be careful to avoid disparagement of the lawyer who was handling the matter. It must inform the client as to where the lawyer can be reached and the client’s right to go with that lawyer, to remain with the firm (assuming the firm has the skill and expertise required to handle the matter), or to choose other counsel.
In this particular instance the expelled partner was not seeking to retain any clients or provide legal services, so there was no concern about the possibility of an impaired attorney attempting to continue to represent firm clients. What if the expelled partner wanted to continue to represent clients? What obligation would the remaining partners have to advise those clients accordingly? I attended an excellent seminar by a panel of employment law attorneys which covered this specific question. Under Rule 8.3 (Reporting Professional Conduct) a firm’s partners may be required to report an attorney who is unfit to represent clients to the Disciplinary Board. But the firm has no duty to disclose such impairment to clients. And in fact doing so may put the firm at risk for charges of defamation or breach of confidentiality requirements under ADA or other legislation.
Inform the professional liability insurance provider: It is
very apparent that the firm will need to disclose on its next insurance application undesirable information in response to the question, “Do you know of any act, error or omission which may reasonably give rise to a claim?” Failing to put the current carrier on notice could result in a gap in coverage for claims which arise under a later policy as a consequence of the expelled partner’s actions or inactions.
Ascertain the status of every matter: Depending on
case load, it isn’t always possible to review every single matter’s status before contacting the client. But the firm needs to do this as quickly as possible in order to properly catch any impending or missed deadlines, provide proper notification of change of counsel to all involved parties, and reassign urgent work to prevent further malpractice exposure.
This particular firm lacked the manpower to effectively review all the files. It was enough to keep the work moving for the existing partners, and take care of all the necessary client calls and hand holding. In this instance
the best thing to do is to hire a temporary attorney or paralegal to quickly review the files, create status reports, and create appropriate docket entries. I was able to refer the firm to a reliable agency for temporary attorneys.
Ascertain the status of files and financial information:
In some instances I have found that lawyers physically remove entire files from the firm, save critical documents on home computers, or leave important parts of the file in car trunks, or other locations. The firm must make sure it has complete files on site for all clients. Those files are the property of the client, and subject to Rule 1.15 (Safekeeping Property).
This particular firm determined quickly that there was a distinct possibility that some files were not housed at the office. We discussed appropriate strategies to keep relationships as mutually cooperative as possible, in spite of the feelings of betrayal, in order to help facilitate the delicate process of file and document retrieval.
Likewise, the firm has to quickly determine whether work performed was recorded, billed, and paid. Was there money in trust for this purpose? If the client chooses other counsel, the trust funds will need to be returned. But often in situations like this, it is difficult to reconstruct what has actually transpired. An impaired attorney may create false time records, or even send bills which he or she knows will never be paid, in order to avoid detection for some period of time. Depending on the underlying cause, trust funds may be found to be misused. In this instance additional work will be required to file an insurance claim, and restore the money to the client trust account.
Other communications: In many instances a firm will be
contacted by media, other lawyers in the community, and even prospects who want to know what’s happening. The firm should have a statement / explanation prepared in advance, and let everyone know who will be delivering it. Likewise, someone must be in charge of communicating inside the firm that the lawyer(s) is no longer with the firm, and provide whatever explanation is deemed appropriate. Again, disparagement should be avoided.
Continued on page 20 New Matter
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CCBA Feature Continued from page 19
If the attorney(s) in question had staff members assigned to them, these individuals should be approached privately first. They will want to know whether they will have a job with the attorney gone. They will want to know whether the attorney’s actions reflect on them in any way. Keep in mind that if handled right, they will be loyal to the firm and can be extremely helpful in locating information and determining what, if anything, is missing.
These are just some of the immediate considerations for the firm. And none are quite as simple as they appear here. With these partners it raised another question. How do they ensure it never happens again? Of course hindsight is always 20-20, but they were amazed that things had progressed to such an extreme point without their knowledge or even suspicion that something was amiss. They realized during our conversation that it all came down to the “trusted beyond question” comment. In reality, you have to trust your partners. But that doesn’t mean that you shouldn’t engage good business practices to ensure that if someone betrays that trust, you know about it before extensive damage is done. One thing this firm did not do was survey its clients to ensure satisfaction. Even a simple postcard sent out with monthly statements and bills would have revealed lots of angry clients of this
attorney who were not receiving responses to calls and emails, and from several who had already threatened to sue over missed filings. I’m also sure that the staff member assigned to this attorney was well aware of the situation, as he or she would have fielded many angry calls, and opened letters from angry or exasperated clients. Had staff members been empowered and encouraged to always report client dissatisfaction of any degree, this firm’s reputation and claim history would have been protected. Take a moment to read the title of this article once again. Remember that these things can and do happen to people like you. And it COULD be you. What will you do now to prepare for the unthinkable action of a partner or colleague? Remember that praying, while commendable, is not a strategy. © 2008 Freedman Consulting, Inc. The contents of this article are protected by U.S. copyright. Visitors may print and download one copy of this article solely for personal and noncommercial use, provided that all hard copies contain all copyright and other applicable notices contained in the article. You may not modify, distribute, copy, broadcast, transmit, publish, transfer or otherwise use any article or material obtained from this site in any other manner except with written permission of the author. The article is for informational use only, and does not constitute legal advice or endorsement of any particular product or vendor.
CCBA MEMBER MOMENTS The better way to play - Deborah golf Steeves, Ch ris Zaccar elli
Ready…
Aim…
Fire…
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The look of a winner - Bill Burke
shame The walk of
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CCBA Featured Member Profiles By Charles Gaza, Esquire
William H. Lamb Where do you live? Devon
What was your first job?
What is the last book you read? All the Best, George H.W. Bush
Law Clerk to Chief Justice John C. Bell of The PA Supreme Court
I would not leave home without my… iPad
What is your greatest extravagance? Outstanding wine
What honor are you most proud of? Lifetime Achievement Award from the Legal Intelligencer
What is the most important lesson you’ve learned? Things are not always what they seem to be—proceed cautiously
Who is the person you are most interested in meeting? Winston Churchill
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What was your first Job?
Optimistic
Where would we find you on a Saturday afternoon?
Enjoying our four grandchildren
Malvern (born and raised)
What word best describes you?
Loyal
What is your favorite way to spend free time?
Where do you live?
Newspaper delivery boy
What word best describes you?
Playing or watching golf
James E. McErlane
Where would we find you on a Saturday afternoon? What is your favorite TV show? Blue Bloods/NCIS
What has been your best, worst and toughest decision?
Best: To run for DA Worst: Too many to remember Toughest: Decisions while on the PA Supreme Court
What do you like best about your job? Working with young lawyers
Do you have any goals that have yet to be achieved? See my grandchildren graduate
What is a little known fact about you? I’m a shy guy
Taking a walk (hopefully)
What is your favorite way to spend free time? Reading, news junky, history buff
What is your greatest extravagance? Interest in politics
What honor are you most proud of? Being called Pop-Pop
What is the most important lesson you’ve learned? You get what you work for, and never give up
Who is the person you are most interested in meeting? Winston Churchill
What is the last book you read? George Kennan, A Study of Character, by John Lukacs
What is your favorite TV show? I don’t have one
What has been your best, worst and toughest decision?
Best: Coming back to Chester County after I left the Navy Worst: Working too many hours when my daughters were young Toughest: Haven’t made that one yet
What do you like best about your job? The people I work with
Do you have any goals that have yet to be achieved? To live to be 100 in good health
What is a little known fact about you? I like country and western music
YLD Details
New Birth Certificate Clinic
to be Launched in Chester County By Basel Frens, YLD Chair
T
he Young Lawyers’ Division (YLD) of the Chester County Bar Association is sponsoring a new clinic this year to assist homeless and low-income residents with obtaining birth certificates. The inability to present a birth certificate can be a significant hurdle in applying for jobs and obtaining government benefits. In conjunction with Safe Harbor and Legal Aid of Southeastern PA, members of the YLD and the Bar will be volunteering their time for the first free clinic at the end of July. The program is modeled after birth certificate clinics sponsored by the Homeless Advocacy Project in Philadelphia. The Philadelphia clinics fulfill a need that no other organization is currently equipped to handle. George D’Ambrosio, Esq., of Reger
www.chescobar.org
Rizzo Darnall and YLD member Eric Closs, Esq., attended a Homeless Advocacy Project clinic in March. Their experience will be invaluable in launching a similar program in Chester County. The YLD will be hosting a pilot clinic on July 29, 2015, from 10:00 A.M. to 1:00 P.M. at Safe Harbor in West Chester (20 N. Matlack Street). YLD members will assist attendees in applying to state vital records departments for issuance of birth certificates. The advertising for the pilot event has been limited, to test demand, and the pilot event will not cover birth certificate applications in every jurisdiction. The pilot clinic is sponsored by Buckley Brion, Fox Rothschild, Gawthrop Greenwood, Goldberg Meanix McCallin & Muth, MacElree Harvey, Reger Rizzo Darnall, Legal Aid of Southeastern PA, United Way, and Safe Harbor. The law firm sponsors have generously agreed to split the costs of the application fees in order to provide this service at no cost to the individuals. The YLD intends to later host a full scale event with extended advertising and the ability to apply to vital records departments in any state. If you are interested in participating in the pilot event or a subsequent event, please contact me or any member of the YLD.
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Flying Solo
Create a
by Choosing a Niche
Rewarding Practice
By Mary R. LaSota & Shannon K. McDonald, Esquires
T
he most stolen book out of law school libraries is the classic ABA best seller How to Start & Build a Law Practice, by Jay G. Foonberg. In fact, I have a well-worn copy (that I bought), and it sits in my topmost desk drawer. The book provides guidance on identifying the right location, finding clients, setting fees, managing your office, maintaining an ethical and responsible practice, and maximizing available resources. But there is one big area the book ignores… identifying a legal niche. In today’s tumultuous legal market finding a niche that works for you can be the difference between a successful solo practice, and returning to big law with your tail between your legs.
ball, and you’re determined to be a sports lawyer. If you decide to focus on sports law, you will need knowledge in specific areas of labor & employment law, antitrust law, The smart choice for most is to focus torts, contracts, and defamation and privacy their practice in one area. Lawyers who law as it pertains to sports. A niche practice focus on a single practice area, even as can also be more profitable than a general broad as “family law,” can focus their time, practice. To make money, you either need their energy and their marketing efforts on to raise your profit per client or increase a specific segment of the legal market. A your new client volume. Being the go-to niche practice also allows you to focus on person in your niche will help you do both. the law you love, the work that you enjoy, A niche practice is also easier to market and the clients you like. Choosing a niche than a general practice. You can focus your can be as direct or as roundabout as you marketing on a core message that appeals I won’t say that there is no room for a like. Direct can be matching your interest to specific clients in your geographical area. general practitioner in today’s legal market, and expertise with the market. Roundabout It may take time to develop a niche, but but I will say it’s tough. You may handle may come in a form as simple as getting you are in control, and you are building a a DUI on Monday, draft a Last Will on legal work and then determining what area more rewarding practice. Tuesday, and attend a support hearing on you actually work well in. I know a solo Wednesday. Being a general practitioner practitioner who is only doing divorce and is demanding. You will need to be versed support; he got there because as a general in multiple areas of the law such as tax, practitioner he discovered that he really property, criminal and family. You will liked family law, and then clients sought Shannon K. McDonald is an appeals and defense attorney. She has been flying solo need to learn the various rules of court and him out based on his reputation as a family since December 2011. She can be reached achieve a level of comfort in appearing in law attorney. at shannonk@mcdonalddefense.com. those courts. But beyond the extra nuances you may need to learn, you’re going to be in There are positive reasons for focusing on Mary R. LaSota is a sole practitioner focusing on estate planning and administration, competition with the mid-size to large law a legal niche. Focusing does not necessary tax, and business planning. Mary took her firms and, the biggest general practitioner, preclude you from other areas of the law. practice solo in October 2013. She can be the Internet. To be competitive, you’ll need For example, maybe you only like basket- reached at mlasota@lasotalawllc.com.
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to employ bundling service strategies, flat fee strategies, market yourself strategically and learn to pivot rapidly.
From The Archives ( New Matter — November 1981)
www.chescobar.org
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From the Bench
The Tipstaff Ye Short Historie
Methought, this staff, mine office-badge in court, was broke in twain. – Shakespeare, King Henry VI, Part II, Act One, Scene Two
By Hon. Mark L. Tunnell
English Origins
T
any outside contact, attending to the judge’s needs and escorting the judge when entering and leaving the courtroom. As Judge Futhey put it in his History of Chester County: In the early days, the judges were always escorted from their lodgings to the court-house and back again at each session of the court by two tipstaves, one going before and the other behind, carrying their insignia of office, the long pole. The one in advance, if the passage was obstructed, called in a loud voice, ‘Clear the way for the Honorable Court!’ This practice, derived from England, was abandoned in the early part of the present century as not suited to the genius of our people.” 2 Similarly, in Chambersburg, the county seat of Franklin County, in the early nineteenth century the sheriff would proceed with a drawn sword, followed by the tipstaves with long poles, and escort the enrobed judge from the hotel to the courthouse and back again. In Harrisburg, the president judge and the judge sitting in nisi prius would enrobe themselves at the hotel and march across the bridge to the courthouse at each session of the court with the sheriff, the tipstaves and the lawyers. In Bedford and Huntingdon Counties, the judge was escorted by tipstaves with poles, but was not robed. They also dispensed with the sheriff and drawn sword. “Somehow the robes and even the parade with tipstaves did not comport with republican institutions, and they long since fell into disuse.”3
he Court of King’s Bench, founded in the 13th century, heard certain criminal cases that were prosecuted by the Metal badges began to become popular on both sides of the Crown. The Marshall of the Court of King’s Bench acted Atlantic by the 1830s. During this time, the length of the pole as a warden of prisoners coming into the custody of the Court began to shrink until it resembled a baton or truncheon. Today’s and remanded to King’s Bench Prison. badge for the tipstaff in Chester County is the County seal impressed upon a plastic background. The Marshall of the King’s Bench originated the office of tipstaff. The tipstaff acted as a deputy officer Current Usage and took into his custody all prisoners either comIt would appear that Pennsylvania is one of the very mitted or turned over by the judges.1 few jurisdictions, perhaps the only one in the United States, where the office of “tipstaff ” continues. The like position is The name “tipstaff ” (pl. “tipstaves”) is derived from the elsewhere referred to as the “bailiff.” The tipstaff performs fact that the officer, charged as he was with apprehending escort, announcement and ceremonial work in a court to persons, enforced his duty as necessary with a tipped staff. ensure decorum and compliance with courtroom procedures. It was made of wood and tipped usually with a silver crown. He or she prepares the courtroom and opens the court by The crown could be unscrewed to reveal a space inside where crying “Oyez, Oyez, Oyez…” warrants could be carried. The staff became his badge of office. The position of tipstaff still exists outside of the United In The Early Commonwealth States in other common law jurisdictions. In Australia, the Chester County was established in 1682, one of the three Supreme Court of Victoria employs a tipstaff who works to original counties in William Penn’s new province. Many provide courtroom and administrative support to a judge. ancient practices and forms of the English judicial system His or her role is to swear in witnesses, open and close the were imported here. While the tipstaff still had his long court and ensure the maintenance of orderly proceedings. pole, also called a tipstaff, after the Revolutionary War this was tipped with an eagle, not a crown. The tipstaff ’s responsibilities had gradually become identified with maintaining order in the courtroom during trials, guarding juries from Continued on page 27
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www.chescobar.org Continued from page 26 Each judge in Ireland has a tipstaff who wears a black gown when he or she is in court. The tipstaff usually sits on a chair to one side of the judge. The tipstaff announces the arrival and departure of the judge from the courtroom, and to this day in the High Court the tipstaff holds a long wooden staff when he or she is bringing the judge from chambers to the court and back.4 In England, the High Court Tipstaff has jurisdiction that extends throughout England and Wales. They are authorized to use force and make arrests. The majority of their work involves taking abducted children into protective custody.5
The Return of the Wooden Pole in Chester County
Older practitioners in Chester County will recall the late Paul Hennessey who was regarded as the chief tipstaff half a century ago. Mr. Hennessey sat in an elevated chair just to the left of the entrance doorway to old Courtroom No. 1. He would open court by banging the arm of the chair with what resembled a large wooden thimble as the door cracked open ever so slightly from chambers. In a loud voice he sounded a very crisp, “All rise…Oyez, Oyez, Oyez” as the judge was seated. As Albert Massey, Esquire, recalled, “It was not just a spectacle, but set the stage in no uncertain terms that the Court of Common Pleas was indeed in session and God had better [darn] well bless this Commonwealth.” John Halsted recalled that “Paul Hennessey sang a ringing tenor in the Holy Trinity Church choir and brooked no nonsense from jurors, spectators or for that matter, young lawyers.” Mr. Massey summed up, “He was not a tipstaff, he was THE Tipstaff.”
Job Description for Tipstaff in Chester County • Unlock courtroom and jury room; check for security and cleanliness.
• Ensure availability of sundry supplies for judge’s use.
• Enforce courtroom rules of behavior and warn persons not to smoke or disturb court proceedings. • Maintain courtroom order, decorum and silence inside and outside the courtroom.
• Collect and retain unauthorized firearms from persons entering the courtroom.
• Stop people from entering the courtroom while judge charges jury. • Protect all seated jurors from outside influences at ALL times in order to prevent unauthorized contacts and a mistrial. • Provide jury escort to restaurants and other areas outside of courtroom to prevent jury contact with public. Order lunch and/or dinner for deliberating juries from approved vendor(s) and ensure correct courtroom/jury delivery. • Lock and secure courtroom during recess, as needed.
• Secure a jury room for deliberations, when necessary. • Guard lodging of sequestered jury.
• Report need for police or medical assistance to sheriff’s office. • Bring court to attention upon arrival of judge and announce entrance of judge.
• If an emergency or fire drill occurs, Tipstaves must assemble and escort the jury to a place of refuge outside of the courthouse precincts and remain with them at all times during the emergency. • Obtain parking receipts from jurors.
• Provide directions to all visitors to the courthouse, when requested. • Perform other duties, tasks and special projects, as required.
A tipstaff is one of the most important parttime positions in the court system, as it ensures proper liaison between the court and the jury.
More recently, Judge Mark L. Tunnell has re-imagined the long pole and, since 2012, his tipstaff, currently William Malarkey, has enthusiastically opened court with the aid of the same.
1 2 3 4
BLACK’S LAW DICTIONARY, “tipstaff” (Rev. 4th ed.). Futhey and Cope, HISTORY OF CHESTER COUNTY, 370 (Phila.: Everts 1881). 23 UNITED STATES LAW REVIEW 274 (1889). www.citizensinformation.ie/en/justice/courtroom/role_of_ the_tipstaff.html
5 https://anonw.wordpress.com/2010/07/11/
the-most-powerful-men-or-women-in-england/
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The Blank Page
BANKRUPTCY REFORM:
Ten Years Later
By Mark Blank, Jr., Esquire
T
his fall (October 17, to be exact) marks the tenth anniversary of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). BAPCPA has no legislative history. The bill was introduced on a Monday and passed three days later, with no discussion; therefore, there is nothing written to give us any hints as to the intent of Congress in its passage. Nevertheless, the purpose of BAPCPA is clear, that is, to make it more difficult for consumers to file for bankruptcy and, in particular, Chapter 7 (retaining all assets and being absolved of all unsecured debt). The banking, financial and credit card industry spent one hundred million dollars lobbying for the law. The chief proponent of the bill was Senator Biden. (His constituents were big banks and credit card issuers, many of which were based in Delaware). The primary opponent of the bill was Senator Kennedy, who stated that he thought the law would impose a burden on the poor as well as other unfortunate people who have run into financial difficulties. The heart of BAPCPA is known as “the means test.” If a petitioner’s debts are primarily consumer debts and his gross annual income (based on the previous six months) is above the median income for a household of his size, then he (referring also to “she” or husband and wife) must take the means test. The median income in Pennsylvania for household sizes is as follows: 1 person, $48,982.00; 2 people, $57,870.00; 3 people, $72,866.00; 4 people, $85,765.00; 5 people, $93,865.00, 6 people, $101,965; 7 people, $110,065.00; 8 people, $118,165.00; add $8,100.00 for each additional person above a household of 8. In the means test, the government gives the debtor certain allowed monthly expenses, which are based on IRS standards. For example, in Chester County, rent or mortgage for a household of four is $2,141.00 and the utility allowance is $717.00. The national living allowance (consisting of expenses for food, housekeeping, apparel, personal care, and miscellaneous) for a
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household of four is $1,482.00. The ownership allowance for two cars is $1,034.00 and the operating expense allowance for two cars is $598.00. There are certain expenses in which the sky is the limit; for example, mandatory payroll deductions (including retirement only if it is mandatory, such as is the case with state and county employees); medical and dental expenses; charitable contributions; cell phone; childcare expenses. If, after completing the means test, with the gross income and the allowed expenses, the debtor shows excess (available) income, then there is “a presumption of abuse” and the debtor must either convert to a Chapter 13 (in which creditors will receive dividend payments based on the gap) or the case will be dismissed. Note that the means test only applies to consumer debtors, that is, debtors whose debts are primarily consumer debts (i.e., debts incurred for personal and household use). If the debts are primarily business debts, then the debtor does not take the means test. Congress has only given us two categories: consumer debts, and business debts. To this writer, if the debts are not consumer debts, regardless of how they may be characterized, then the debtor should not be required to take the means test. All individual debtors, whether business or consumer, Chapters 7, 11, 12 or 13, must take a credit counseling class prior to filing. After filing, the debtor must also take a debtor education class. Both of these can be done live, via telephone or online. If the debtor fails to take the credit counseling class prior to filing, the case will be dismissed without notice or a hearing. If the debtor fails to take the debtor education class within 60 days from the date of the first meeting of creditors, then the case will be closed without a discharge. Now, has BAPCPA achieved its goal based on its purpose, that is, to make it more difficult to file and to give an advantage to credit Continued on page 29
www.chescobar.org Continued from page 28 card issuers, banks and financial institutions? Well, yes and no. It certainly is more difficult for a debtor to file bankruptcy, and the same goes for the lawyers handling bankruptcies. However, has the banking, financial and credit card industry seen any financial advantage? No. To this end, BAPCPA has been a failure. I have had 2 cases which had to be converted to a Chapter 13 for failing the means test. In one, it was a blessing in disguise, since the only creditors that filed claims were student loan creditors (which had to be paid anyway) and the IRS, the latter of which gave the couple a better deal than they would have had in a Chapter 7. In the other case, we voluntarily dismissed the converted Chapter 13, and all of the creditors but two (both of which I believe are debt buyers) have gone away and the statute of limitations for all of them has either passed or will soon expire. Yes, bankruptcy filings have been dropping each year since 2010. However, economists have attributed this to factors other than bankruptcy reform. For this reason and for others, many think that the means test is useless and a gesture in futility. (I will not comment.) However, as one of the United States Trustees (who, himself, has all but admitted the he does not like the means test, but is bound to enforce it) has stated, it is going to be with us for a long time. In conclusion, BAPCPA has been unsuccessful, however, has it been a total failure? I will leave that to the reader.
C H E S T E R C O U N T Y B A R A S S O C I AT I O N
Upcoming Events For more details on all upcoming meetings and events, go to: www.chescobar.org/events
September
Sept. 2 ��������������� B.U.L.L. Session Sept. 7 ��������������� Labor Day Sept. 17 ������������� Anniversary of the Signing of the U.S. Constitution Sept. 24 – 26 ������
Fall Bench Bar at Gaylord National Resort
October
Oct. 1 ����������������� YLD Happy Hour Oct. 7 ����������������� B.U.L.L. Session Oct. 12 ��������������� Columbus Day Oct. 15–17 ��������� Advocacy Academy at CCBA Oct. 29 ��������������� Chester County Bar Foundation Key Gala
November
Nov. 3 ���������������� Election Day Nov. 4 ���������������� B.U.L.L. Session Nov. 6 ���������������� Naturalization Ceremony Nov. 11 �������������� Veterans Day
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CCBA Feature Tech Tips
BITCOIN: Currency or Property?
By Mary R. LaSota, Esquire
Most governments, including the United States, do not consider Bitcoin “real” currency. For U.S. federal tax purposes Bitcoin is treated as property, not currency (IRA Notice 2014-21). This means that the general tax principals that apply to property transactions apply to transactions using Bitcoin.
Sale or Exchange of Bitcoin. So what does this mean? The character of gain or loss from the sale or exchange of Bitcoin s Bitcoin an online payment system? Is it a digital currency? depends on whether Bitcoin is a capital asset in the hands of a Is it a commodity or is it property? Is it all of these things taxpayer. If you are holding Bitcoin, you need to first determine or none of these? how you are holding it. Is it investment property? Or is it being held as Inventory in a trade or business? If you have ventured To understand Bitcoin, you need to first understand the dif- into buying Bitcoin, then you are likely holding it as investment ference between digital currency and virtual currency. Virtual property (think stocks or bonds). Let’s take a look at Joe Consumer currency encompasses digital currency, but digital currency does who buys one Bitcoin at the price of $25 back in 2010. Joe holds not necessarily include virtual currency. There is a distinction onto the Bitcoin for four years. He then sells it in 2014 for $250. between the two currencies and this distinction is important Joe will have a long-term capital gain of $225, which will be in understanding how each form of currency functions. Virtual taxed at Joe Consumer’s applicable capital gains rate rather than currency operates within a bounded, specified economic system his ordinary income tax rate. The gain is considered long-term such as on-line gaming (think Eve Online and the World of because Joe held the Bitcoin for more than one year. What if Joe, Warcraft). Virtual currency is essentially a good, and not a medium the Businessman, had purchased the Bitcoin as Inventory for sale of exchange because it exists within a confined system. Whereas, to the public in his business? Then Joe, the Businessman, would digital currency, such as Bitcoin, operates outside the boundaries have realized ordinary gains (or losses), rather than capital gains of a virtual world. (or losses) once he sold the Bitcoin. Keep in mind Bitcoin sold or used within a year of purchase is taxed as short-term gains (or So is Bitcoin currency? If you recall from your high school losses) and subject to ordinary income tax rates. economics class, currency has three functions or characteristics: Okay…makes sense, but what if Joe Consumer is not selling (1) a medium of exchange, (2) a store of value, and (3) a unit of his Bitcoin? Instead, he is using his Bitcoin as currency to buy measure. The first, exchangeability, involves the ability to switch something for a different currency or the ability to make payments. a product. It does not matter. A payment made using Bitcoin is The second is the ability to act as a store of value, meaning that an subject to information reporting to the same extent as any other asset will more or less hold its value over time without suffering payment made in property. If Joe Consumer uses his Bitcoin from massive fluctuations. The third, a unit of measure used to purchased at $25 in 2010 to buy a widget with a fair market value goods, services, assets, liability, income and expenses. Value value of $250 in 2014, Joe will still have a capital gain of $225. can be stored and then retrieved at a later date. It seems Bitcoin Likewise, if Joe bought a widget with a fair market value of $10, is slowly working its way to all three characteristics. So for the he will have a capital loss of $15. This is where Bitcoin differs time it’s still considered a digital currency “in waiting” meaning from regular currency. it has yet to achieve all three characteristics. Continued on page 31
I
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www.chescobar.org Continued from page 30
Wages & Self-Employment Income. What if Joe “mines” his own Bitcoin? Any new Bitcoin Joe generated as a result of mining is considered income. The taxable amount reported is the fair market value of the Bitcoin at that date. For example, if Joe successfully mines 5 Bitcoin in October worth $500 each, and then an additional 3 Bitcoin in December worth $300, Joe would report $3,400 as gross income on his tax returns for that taxable year. If Joe Taxpayer’s “mining” of Bitcoin constitutes a trade or business, and the “mining” activity is not undertaken by Joe as an employee, Joe’s net earnings from self-employment resulting from the mining activities is self-employment income and Joe is subject to self-employment tax. Likewise, if Bitcoin is paid to Joe, as an independent contractor for services performed, then Joe has self-employment income and Joe is subject to self-employment tax. The value of the Bitcoin is the fair market value as of the date received measured in US dollars. Alternatively, any wages paid to Joe using Bitcoin must be reported by Joe’s employer on Form W-2, and are subject to federal income tax withholdings and payroll taxes. Generally, it is immaterial the medium in which an employee’s wages or salary is paid. The fair market value of the Bitcoin paid as wages is also subject to federal income tax withholding and payroll taxes. Remember, Bitcoin may be defined as a digital currency, but in the United States it’s taxed like property. If you are unsure how to treat a client’s Bitcoin transactions, then visit the IRS website for an in-depth analysis.
BITCOIN FACTOIDS & TERMINOLOGY • What is Bitcoin? Bitcoin is money based on an open and transparent mathematical design. Bitcoin is decentralized; no single institution, government or person controls Bitcoin. • Where does Bitcoin come from? Bitcoin gets “mined” into existence. Miners use special software to solve math problems and are issued a certain number of Bitcoin in exchange. Mining Bitcoin serves to add transactions to the block chain and to release new Bitcoin. • What is Block chain? Block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending Bitcoin that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.
Mary R. LaSota is a solo practitioner focusing on estate planning and administration, tax, and business planning for startups and entrepreneurs. Mary took her practice solo in October 2013. She can be reached at mlasota@lasotalawllc.com. New Matter
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