WESTCHESTER COUNTY BAR ASSOCIATION
NEWSLETTER www.wcbany.org
President’s Message
July 2012
Using Life Insurance to Meet Business and Personal Objectives An affordable, tax-efficient, and often overlooked financial strategy
BY Jerold R. Ruderman, esq.
Ode to
Golf In my hand I hold a ball, White and dimpled, rather small. Oh, how bland it does appear, This harmless looking little sphere. By its size I could not guess, The awesome strength it does possess. But since I fell beneath its spell, I’ve wandered through the fires of Hell. It has made me yell, curse and cry, I hate myself and want to die. It promises a thing called Par, If I can hit it straight and far. It hooks and slices, dribbles and dies, And even disappears before my eyes. Often it will have a whim To hit a tree or take a swim. With miles of grass on which to land, It finds a tiny patch of sand. Then has me offering up my soul, If only it would find the hole. Its made me whimper like a pup, And swear that I will give it up. And take to drink to ease my sorrow, But the ball knows … I’ll be back tomorrow. —Author Unknown (continued on page 2)
By Charles J. Newman CLU*
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s the owner of a business or professional practice, you know better than anyone that running your business seldom leaves you enough time to “take care of business” by addressing important financial planning questions such as: • Is my business moving in a direction with which I am happy? • Am I doing all I can for my key people? • Have I structured things so that my family will not be saddled with business debts if I die prematurely? Finding time to reflect on how you are doing, where you are going, how you are going to get there, (and keeping your key people happy along the way) is more than just important — it also may be critical to your business’ long-term success and your family’s financial security. Unfortunately, if you are like most business owners, in addition to feeling squeezed for time, you probably feel squeezed for money. And you are probably convinced that there is not a lot you can do to address the above questions until you have the funds with which to address them. The reality is — that is not true. You can get started. And the solution to the questions that are highest on your priority list may be a financial product you have not only overlooked, but possibly even avoided — life insurance. How can life insurance help? There are all sorts of ways. For starters, life insurance provides both lifetime and death benefits (continued on page 19)
Inside... Court Notices......................................... 2 Golf Outing Invitation............................. 3 Valuation of Law Firms.......................... 4 Sections & Committees...................... 6-7 Gagliardi Award Recipients................... 7 Meatballs & Martinis Photos.................. 8 Member Spotlight.................................. 9
CLE Center.......................................... 10 Save the Date: Bar After the Bar......... 11 Members on the Move......................... 12 Golf Fridays......................................... 13 From the Back Bench.......................... 16 Classifieds........................................... 20
President’s Message (continued from page 1)
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t age 50 plus I decided to become a golfer. Having given up pickup basketball, it was time to play a grownup sport which friends assured me was good for business and pleasure. I took several lessons and played sporadically for a few years, mostly at outings and with others equally new to the game. Eventually I ventured forth and made regular games with friends and established a handicap. The good news was that I was strong enough to hit the ball a long distance and could putt competitively. The bad news was that the ball all too often did not go straight, requiring shots from impossible positions on the golf course. The charity outings were fun and I discovered that if I teamed up with really good golfers, my teams often scored well and even won some tournaments in scramble format. The club where I play is flat so an added benefit is that my physical condition improved by walking four or five hours during a round.
All this information leads of course to a friendly plug for the WCBA’s annual golf outing and fundraiser on Monday, July 16, at the beautiful Mount Kisco Country Club. The day will include a buffet lunch from 11 a.m.–1 p.m., a shotgun start at 1 p.m., and a cocktail reception and dinner beginning at 6 p.m. with open bar and top of the line food. I hope as many members as possible will team up with Westchester County bar members, members of the judiciary, clients, friends or family to enjoy a day of golf, cocktails and dinner. Last year my team finished second in the scramble. I would like to report that I have recruited three Tiger Woods clones for my team but in fact I will play with my brother, my son-in-law and a partner at Wilson Elser. Three attorneys and an accountant will be on the course ready to compete and full of hope for a successful round ... and maybe even have the skill to break par and be competitive! I hope as many as possible will join us for this fun event. Last year over 100 golfers participated on a beautiful day and a good time was had by all.
Notices of Interest to our Members
COURT NOTICE TO THE BAR Change to Miscellaneous Fee Schedule: Exemplification Fee Increases to $21 as of June 1, 2012
The Judicial Conference recently approved a change to the miscellaneous fee schedule for the U.S. district courts, effective June 1. The fee for exemplification, set forth at Item 3 of the District Court Miscellaneous Fee Schedule, was raised from $18 to $21 as a result of inflation. Contact: Clerk of Court, 212-805-0136 U.S. Discrict Court Southern Disctrict of New York Court Hours Update Westchester Supreme & County Court 9th Judicial District
In the June issue of this newsletter we stated that the courts would close at 4:30 p.m. According to the 9th Judicial District website the court hours are now 9 a.m to 5 p.m., Mon.–Fri. For the most up-to-date information visit: http://www.courts.state.ny.us/courts/9jd/westchester/supremecounty.shtml)
Grow your clientele with WCBA’s
Lawyer Referral Service An affordable way to build your client base For more information call (914) 761-6965
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July 2012
You are cordially invited to the Westchester County Bar Association’s Annual
GOLF OUTING & Dinner Monday, July 16th, 2012 Mount Kisco Country Club Limited number of prime SPONSORSHIPS available! For sponsorship and registration information call or email: 914-761-3707 Bill Egan: ext. 16, billegan@wcbany.org or Donna Drumm, Esq.: ext 19, events@wcbany.org Registration forms MUST be received NO LATER THAN Friday, JULY 6th! No reservations or cancellations permitted after July 6th.
SPONSORSHIP & GOLF FEES n
Individual Golfer Fee ($395) / 4some Fee ($1580) Includes Golf, Putting Contest, BBQ Lunch, Soft Drinks on Course, Open Bar @ 6 p.m., Hors D'Oeuvres, Awards Dinner, Greens Fees, Golf Carts, Ranger, Locker Facilities & Prizes.
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Dinner ($125) - Includes 3 Hour Open Bar, Dinner and Door Prize Ticket.
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Hole/Tee Sponsorship ($250) To ensure that your name is printed on your sign, commitment must be made by June 26th.
Fill in name of Firm/Organization to be printed on the sign: __________________________________________________
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Promotional Gift Bag Item (Golf Polos, Golf Tees/Balls, Towels, etc.) All donated items must be delivered to the Bar Office on or before July 6th. Please call in advance (914) 761-3707 Ext. 19 or 10, or email events@wcbany.org, to let us know what you wish to donate.
REGISTRATION
Reservation and Payment Information Name __________________________________________ Email __________________________________________ Firm ___________________________________________ Bus. Phone ______________________________________
___ Golf & Dinner @ $395 Ea. ___ 4some @ $1580 Ea. ___ Dinner Reception @ $125 Ea. ___ Hole Sponsorship @ $250 Ea. ___ Sponsorship Contribution Golfer Name(s) Must be submitted by July 9th __________ Total Enclosed Name Phone Email
$ _ ________ $ _ ________ $ _ ________ $ _ ________ $ _ ________ $ _ ________
________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ n VISA n AMEX Method of Payment: Check/money order enclosed $ ____________or Charge to: n MC Card Number __________________________________________________ Exp. Date: __________ Sec. Code: ______ Credit Card Bililng Address: _________________________________________________________________________ Authorized signature: ______________________________________________________________________________
How to Submit this application and payment: There are 3 options for submitting the application and payment: Website: Go to the home page at www.wcbany.org, choose the “Golf Outing” under the Calendar menu & follow the directions. EMAIL: Fill out this form and email to: events@wcbany.org. Omit credit card information and we will contact you. Mail: Mail this form with check made out to “WCBA” to: WCBA, One North Broadway, Ste. 512, White Plains, NY 10601.
Westchester County Bar Association
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Valuation of Law Firms When Couples Divorce
... if you have the misfortune of going through the very unpleasant experience of a contested divorce sufficient understanding is always beneficial.
By Dennis B. Kremer, Esq.
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ttorneys in all practice areas experience divorce at least as often as the rest of the population, and some statistical information indicates that female lawyers may experience a higher divorce rate than women in other professions.1 In addition, your practices and licenses may be considered marital property and subject to equitable distribution. This article discusses various issues and methods surrounding law firm valuations, whether you are a sole practitioner partnership (LLP), P.C. or P.C. “S” Corporation. This article presents a very general approach to matrimonial valuation of law firms and does not purport to explain all unique or special situations which may affect a particular set of circumstances. However, if you have the misfortune of going through the very unpleasant experience of a contested divorce sufficient understanding is always beneficial. LAW FIRM VALUATIONS
Law firm valuations in a divorce provide unique and special problems. There are numerous valuation factors that define the scope of a law firm valuation pursuant to a divorce, most of which will also apply to other businesses. The issues discussed below are general, but I indicate which ones are particular to law firms. (See box on this page.) The valuation and written or oral report performed by a qualified appraiser who is also a CPA must be conducted in accordance with standards established by the American Institute of CPAs (AICPA), in accordance with 4
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its Statement of Standards of Valuation Services (SSVS). The valuation expert performs a detailed analysis of both financial and non-financial factors, including those previously discussed as well as: history and nature of the practice, financial performance and historical growth in revenues, billable hours, cross-selling history and opportunities and profitability. The financial analysis considers the economy; law firm practice issues in the marketplace within which it operates; the type of law practiced;
nuances with respect to certain practices previously mentioned, such as personal injury and trust and estate practices. The valuation of a law firm is considered an asset sale regardless of the legal form of the practice. This means that a hypothetical buyer is not acquiring all the assets and liabilities, and a separate calculation of assets retained by the hypothetical seller is added to the valued practice reduced by the liabilities similarly retained. What is value for a law firm? July 2012
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PLCSI has over 3 decades of professional liability experience and expertise and is a preferred provider of LPL Insurance for the Westchester County Bar Association.
LAW FIRM VALUE IS A PROPHESY OF ITS FUTURE INCOME!
The past may be indicative of the future, but if the valuation expert determines — based on his or her valuation procedures and judgment — that it may not be, or is not an indicator, the expert must look to projections of future earnings discounted to present value at the appropriate risk adjusted rate. See box on this page for some of these future indicators.
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TRADITIONAL VALUATION APPROACHES
Simplified definitions of various valuation approaches are described below. The methodology would be affected by whether the interest to be valued is controlling or noncontrolling, among other issues. Income Approach Discounted Cash Flow (DCF): A key income-based business valuation method that establishes the business value as a stream of future economic benefits discounted to their present value. The objective of the method is to determine what the expected economic benefits stream is worth
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in present day dollars, given the risks associated with owning and operating the practice within the current economy. Because of the method’s solid financial theory foundation, it is favored by many seasoned investors and business valuation professionals. This method is only as good as the projected earnings and the risk adjusted discount rate developed. Income Approach: A build-up of a capitalization rate (applied to a number representing and annual stream of
Westchester County Bar Association
future income) is developed starting with a risk free rate and adding additional premiums based on informed judgment as follows: Equity risk premium (Excess average risk over tax free treasuries) Small stock premium Specific risk premium Market Approach: The market approach is based on a comparison of the subject law firm to similar law (continued on page 14)
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Section and Committee Action
WCBA’s Ethics Game Show CLE Informative and fun Prizes, Drawings, games and 2 Ethics CLE credits? What could be better? The WCBA was fortunate to have top ethics speakers present a CLE in a gameshow format. Four contestants were in the hot seat, answering multiple choice questions from recent cases. Thanks to our host, BNY Mellon Wealth Management and LexisNexis. Lexis Nexis provided halftime entertainment with a drawing for gift cards, Mr. Royden Letsen was a winner. All the contestants left with a special prize for participating.The CLE will be available in webinar format.
Contestants: Linda Trummer-Napolitano, Esq.,Warren Roth, Esq., and Donna Drumm, Esq.
Real Property Short Sales CLE On June 14th, Thanks to the efforts of the new chairs, Jody Fay, Valorie Promisel, Christine Argentina and Stephanie Melowsky, and featured speaker, Marc Bergman, the Real Property Section put on a CLE to a standing room only crowd at Community Mutual Savings Bank. The format included hypothetical cases provided by speakers: Marc Bergman, Esq., Ira Clair, Esq., David Negrelli, Esq. and John Piazza with supporting materials and forms. The Real Property Section will be putting on another CLE in the fall on Commercial Purchases and Leases. Thanks to sponsors: The Kelsey Company and Community Mutual Savings Bank!
Speakers: Jeremy R. Feinberg, Esq., Deborah A. Scalise, Esq., Matthew Lee-Renert, Esq., and Hon. Edward Mevec
Congratulations to the New Officers elected for the Dometic Relations & Family Law Section
Hon. Francesca E. Connolly swears in the new officers for the Domestic Relations & Family Law Section
Chair 1st Vice Chair 2d Vice Chair Secretary Treasurer
Lydia Milone Ellen Jancko-Baken Tamara Mitchel James Nolletti Marianne Hoffman
Directors (1 year term) Sylvia Goldschmidt John Pappalardo Eve Bunting-Smith
Directors (2 year term) Robin Carton Erik Kristensen Frances DeThomas (continued on page 7)
Ira Clair,Esq. , John Piazza, Marc Bergman, Esq., and David Negrelli, Esq.
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July 2012
Four Middletown Court Officers and Karen M. Buddenhagen Win 2012 Gagliardi Award By P. Daniel Hollis, III, Esq.
T
he responsibilities of all of the Court Officers in the Ninth Judicial District require tremendous awareness of each and every situation that is presented to each and all of them every day. The actions of these Court Officers gives strong indication of the safe and efficient environment provided for all who enter the Courts throughout the Ninth Judicial District. This year, the prestigious Joseph F. Gagliardi Award for Excellence was given to four court officers assigned to the Middletown City Court in Orange County and Karen M. Buddenhagen a court officer assigned to the Westchester County Courthouse. The ceremony was presided over by the Hon. Alan D. Scheinkman on May 23, 2012 in the Gagliardi Courtroom of the Westchester County Courthouse. The Westchester County Bar Foundation, which sponsors and oversees the Gagliardi Award, is the charitable, non-profit arm of the Westchester County Bar Association. Officer Karen M. Buddenhagen, assigned to the matrimonial part in Westchester County Supreme Court, is known for her ability to deescalate the intensity of what can sometimes be a most tense environment in many parts of the Courthouse. Middletown city court officers Sgt. Robert W. Kowal, Michael D. Mathisen, Scott C. Truex, and Michele E. Lynch were all on duty on February 8, 2012, when a man opened fire with a 12 gauge shotgun blasting the entry door to the city court lobby. Sgt. Kowal and Officer Mathisen returned fire fatally wounding the gunman, while Officer Truex reached across the desk to protect a woman and baby
Sections & Committees (continued from page 6)
CLE on Power of Attorney: Practice and Litigation in the Guardianship Court On June 18th the Westchester County Bar Association’s Trusts and Estates Section presented a CLE entitled Power of Attorney: Practice and Litigation in the Guardianship Court. The Program Speakers were Patricia Bave-Planell, Esq., Gary E. Bashian, Esq., Nancy J. Rudolph, Esq., and Frank W. Streng, Esq. The CLE included an interactive fact pattern. Thanks to our hosts and sponsors: Bill Zeltner and Crista Tucker of Wells Fargo.
Westchester County Bar Association
Jerold R. Ruderman and P. Daniel Hollis, III, Esq. flank court officers Karen M. Buddenhagen, Robert W. Kowal, Michael D. Mathisen, Scott C. Truex and Michelle E. Lynch.
who were standing at the cashier’s window. Officer Lynch, who was in the courtroom, immediately cleared the room via an exit door in the front of the room. Miraculously, no one else was in the lobby at that time. The acute awareness of all of these officers to their surroundings and their lightening fast response resulted in the situation being resolved within a minute. As CPR was administered to the perpetrator and local police emergency personnel arrived, 40 rounds of ammunition spilled out of the gunman’s pockets. The Gagliardi Award committee members are: Hon. Fred I. Shapiro, Hon. Susan Cacace, Hon. Linda Jamieson, Lucille A. Fontana, Esq., James Garfein, Esq., P. Daniel Hollis, Ill, Esq., John S. Marwell, Esq., Professor Jay C. Carlisle, II, Mary Ellen Manley, Esq. and Robin A. Bikkal, Esq.
WCBA’s 2012 Winter/Spring
Bar Journal is now available! In addition to updates to our regular articles — 2010-2011 Survey of New York Tax Certiorari, Tax Exemptions and Eminent Domain Cases, and Estate Litigation Tidbits — the 2012 Journal contains articles in the following areas: analyzing interesting
caselaw, the latest in technology, ethics, fraud in the non profit sector, and litigation The Journal is a FREE benefit of membership
If you have signed up to receive your copy, it was mailed to you. If you would like to receive a copy please contact editor@wcbany.org. The Bar Journal will also be available online on the www.wcbany.org website. Go to Publications/Bar Journal.
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Meatballs & Martinis For the second year WCBA members and guests enjoyed great company along with abundant and delicious food and drinks at the popular Meatballs & Martinis Networking Event at Anthony’s Coal Fired Pizza on May 21. It was a fun scene. The place was packed and the ambience was relaxed and sociable.
Robert Danziger, Jerold R. Ruderman, Hon.Terry Jane Ruderman, Andrew Roth
Kevin Fennell and Lidor Almog
Stephanie Cornell, Steve Hoffman, Nancy Walsh, Lisa Cordasco Sean McGrath, Bill Egan, David Bruchman and Hope Feller check out the food bar that included barbeque wings, thin crust herbed pizza, meatballs and salad
Sponsored by
The Alliance of National Association of Insurance and Financial Advisors (NAIFA) Westchester Bankers Association The Westchester Chapter of the NYS Society of CPAs and Westchester County Bar Association
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David Bruchman, Robert Danziger, Hope Feller
Anthony’s Coal Fired Pizza provides a comfortable and spacious venue for a networking event
July 2012
Member Spotlight Anthony J. Enea, Esq.
Recently, the Diversity Committee of the Westchester County Bar Association presented a CLE entitled, “Straight Talk: Unlocking the Secrets to a Successful Legal Career.” I am confident that one of the most important secrets discussed was membership in the Westchester County Bar Association (WCBA). I can unequivocally state that any success I have achieved professionally can to a great extent be attributed to my becoming an active member of the WCBA some 26 years ago. Of course, there was also a great deal of hard work and good luck along the way. When I reflect upon all of the differing roles and responsibilities I assumed as a WCBA member, such as my service as editor of the Bar Journal, co-founder and chair of the Elder Law Committee, or my service as a member of the banquet committee, each task
I can unequivocally state that any success I have achieved professionally can to a great extent be attributed to my becoming an active member of the WCBA some 26 years ago. large or small helped mold and fashion my legal career in profound ways. For example, as a regular contributing author to WCBA publications, and eventually as the editor of the Bar Journal, I was able to improve my writing skills. If it was not for the WCBA I would never have had the opportunity at an early stage of my career to write about elder
law, an area of the law that was virtually unknown to the profession in the late 1980’s and early 1990’s. This led to my writing for other state Bar journals and my eventual role as editor-in-chief of the New York State Bar’s Elder Law Attorney. Additionally, each opportunity and role presented by the WCBA helped me develop my organizational and management skills. Balancing my work load as a young associate while remaining active in the WCBA was no small task, however, doing so kept me focused and organized. These are skills that I rely upon in my practice on a daily basis. Writing articles, preparing for CLE presentations and having Bar association responsibilities have become a routine part of my practice and life, in large part due to the opportunities (continued on page 17)
Sher, Herman, Bellone and Tipograph, PC is pleased to announce the relocation of their Westchester offices to
5 Waller Ave., Suite 303, White Plains, NY 10601 www . newyorkworkerscompensationlawattorney . com
914.358.9932
Our firm will continue to concentrate in the areas of
Worker’s Compensation & Social Security Disability. Referral fees paid as allowed by the Ethics rules.
Westchester County Bar Association
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CLE Center
Wednesday, Sept. 12, 2012
Save the CLE Dates . . .
The Trusts and Estates Section presents
Here is a taste of some of the CLE programs we have planned for September through December 2012. More information will be forthcoming as the dates get closer. We look forward to an active and informative season of fall and winter CLE programs at WCBA. Enjoy your summer!
Issues Involving Problematic Wills and Revocation of Trusts
Speakers Location Time Price CLE Audience To Register
Hon. Anthony A. Scarpino, Jr. Justice, Surrogate’s Court Joseph M. Accetta, Esq. Chief Clerk, Surrogate’s Court Surrogate’s Courtroom - Room 1800 111 Dr. Martin Luther King, Jr. Blvd. 18 Fl. White Plains, NY 12:00 pm–12:30 pm Networking/Registration 12:30 pm–2:00 pm CLE Presentation Free 2 credits: Professional Practice Trusts & Estates practitioners and court personnel See “Registration Box” on this page
Thanks to our sponsor: Tompkins Financial Advisors
Sept. 18: Technology Facilitated Personal Practice Tools Sept. 20: Taxation and Health Law Committee Oct. 11: Corporate and Commercial Law Committee Ethics Pitfalls Oct. 16:
Municipal Law Social Media
Oct. 30:
Family Law
Nov. 8: Taxation of Financial Instruments Nov. 13: Technology Assists to Office Management, Accounts Management, Electronic Billing Nov. 15:
Balancing Career and Life
Nov. 17:
18-b Panel Training (Misdemeanors)
Dec. 4: LPM Technology Tools for Client Communication, Business Development and Knowlege Sharing
Affilliate and Non-Lawyer Members
Sponsorships are still available! It’s a great way to reach lawyers in serving your business. For more information please contact Donna Drumm, Esq. or Bill Egan at sponsor@wcbany.org
✁ CLE and Event Registration Form Please register in advance whenever possible. Registration later than 12 pm 24 hours PRIOR to the CLE will incur a $10 late fee and applicants will be seated and provided written materials ONLY if space permits.
ONLINE: GO TO THE CALENDAR ON OUR WEBSITE: WWW.WCBANY.ORG, OR FILL OUT THE FORM BELOW AND: MAIL: MAIL FORM AND CHECK MADE OUT TO: “WCBA” TO: WCBA, ONE NORTH BROADWAY, SUITE 512 WHITE PLAINS, NY 10601 EMAIL scanned form to: cle@wcbany.org or FAX form to: 914-761-9402 CLE/EVENT TITLE:
Date
Fee
_______________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________ NAME(S): ______________________________________________________________________________________________________________ E-MAIL: __________________________________________________________________________ BUS. TEL. _____________________________ FIRM: _________________________________________________________________________________________________________________ METHOD OF PAYMENT: CHECK ENCLOSED $___________ OR CHARGE $_____________ m MASTERCARD m VISA
m AMERICAN EXPRESS
CARD NUMBER: ______________________________________________________________ EXP. DATE: _________ SEC. CODE: ______________ CREDIT CARD BILLING ADDRESS: _______________________________________________________________________ ZIP CODE: _____________ AUTHORIZED SIGNATURE: __________________________________________________________________________________________________
WCBA Member? m Yes m No
If not, would you like to join and pay at the member price? See our website www.wcbany.org
Copies of the WCBA CLE Rules and Procedures and the Hardship Policy may be obtained by emailing cle@wcbany.org or calling 914/761-3707 ext. 19. Your knowledge of the CLE rules and procedures is presumed when you register for a CLE. If you have paid for a program in advance and circumstances require cancellation, full credit will be applied to a future program, provided written notification (by mail/fax/email) is received by the WCBA at least 1 business day in advance of the program.
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July 2012
Save the Date . . . Thanks to our sponsor Captain Lawrence Brewing Co.
Bar Bar after the
July 25, 2012 4 pm–6:30 pm FREE TO ALL
Pace University School of Law:Tudor Room 78 N. Broadway, White Plains, NY
The Westchester County Bar Association and Pace Law School’s Office of Development and Alumni Relations invite
2012 bar examination takers To Celebrate At Our Annual “Bar After the Bar” Stop by to relax and enjoy some food and drink on us!!
Devoted to the Practice of Social Security Disability Law Handling Social Security Cases since 1981 Available for Consultation with the Bar Referrals Gladly Accepted
law students/2012 law grads Sign up for a FREE one-year WCBA membership at:
wcbany.org
560 White Plains Road, Suite 630 Tarrytown, NY 10591 Satellite offices in New Jersey, Connecticut, and Dutchess County
914-286-3030 www.nymetrodisability.com
Display Ads get noticed! For more information, contact editor@wcbany.org (914) 761-3707, ext. 18
Westchester County Bar Association
WCBA Member Benefit The White Plains YMCA is happy to offer Westchester County Bar Association members a group membership rate. • Receive 20% off the Adult and Household I & II membership rates and we’ll waive the Joiner’s fee. Simply bring your membership ID to the front desk to get started. For information: 914-949-8030 / whiteplains.ymca-cnw.org
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Members on the Move
Wilson Elser’s Katrine Beck, Esq. Named to Westchester’s 40 Under 40
WCBA President Jerold R. RUderman appointed to Pro Bono Panel
Jerold R. Ruderman Esq. has Wilson Elser et al. LLP is pleased been appointed by New York to announce that White Plains partState Chief Judge Jonathan ner, Katrine A. Beck has been selectLippman to the Advisory Comed as a Rising Star – Westchester’s 40 mittee that will study the New Under 40 by the Business Council of York State pro bono Bar admisWestchester. The award recognizes sion requirements. Starting next young Westchester business leaders year, prospective lawyers must who have achieved professional acperform at least 50 hours of pro complishments, leadership qualities and outstanding bono service before being admited to the bar. Judge success before the age of 40 Lippman stated “We [want] ... to make sure that we construct something here that can be a model for the country.” Hon. Daniel D. Angiolillo honored by Westchester County Columbian Lawyers Association
On June 15, 2012 Hon. Daniel D. Angiolillo was presented with The Hon. Richard J. Daronco Distinguished Service Award. Judge Angiolillo is Associate Justice of the Appellate Division, Supreme Court of the State of New York.
LEASON ELLIS ANNOUNCES THE ADDITION OF SENIOR PATENT ATTORNEY JOEL J. FELBER, Esq.
Leason Ellis LLP is happy to announce that Joel Felber has joined the firm’s Patent Practice Group. Mr. Felber’s experience includes a wide range of technologies and industries, including computer hardware and software systems, communication systems, mobile applications, social networking, financial and trading applications, printing and output systems, and business methods Jon A. Dorf, Esq. Receives 2012 Equal Access to Justice Award May 23rd given by Legal Services of the Hudson Valley (LSHV)
Anthony J. Enea Elected Elder Law Chair of New York State Bar Association
Enea, Scanlan & Sirignano, LLP is pleased to announce that managing partner Anthony J. Enea is the newly-elected chair of the Elder Law Section of the New York State Bar Association (NYSBA). Serving a oneyear term that commences June 1, 2012, Enea will oversee the activities of roughly 2800 member lawyers -all of whom practice various specialty areas of elder law including estate planning, guardianships, wills and trusts, special needs trusts, Medicaid and Medicare advocacy and other legal matters of importance to New York’s seniors and disabled populations. Dorf & Nelson LLP add Life Sciences Practice Area
Dorf & Nelson LLP is pleased to announce the addition of a “Life Sciences” practice area to be headed by partner and intellectual property attorney, Scott D. Locke. Mr. Locke has provided legal services to clients in the life science industry with respect to RNA synthesis, DNA synthesis, RNA interference, including siRNA, SNP technologies, gene therapy, cosmetic formulations, detection of diseases and disorders, pharmaceuticals and delivery systems.
Jon A. Dorf, Esq., County Executive Robert P. Astorino, Attorney General Eric T. Schneiderman and Chairman, Westchester County Board of Legislators, Kenneth W. Jenkins
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July 2012
Spotlight on . . .
Golf Hole/Tee Sponsor
WCBA Members Have you written a book? Published an article? Won a significant case?
Send us a short article outlining your achievements that would be of interest to our members. Contact: cle@wcbany.org See p. 9 for our first SPOTLIGHT feature.
Calling ALL GOLFERS From beginners to advanced! Join in a non competitive atmosphere and head to the driving range for GOLF FRIDAYS . . .
Need to get back into the “swing” of things? Want to practice for your upcoming Golf Outings? (WCBA’s Annual Golf Outing is Monday, July16th, at the Mount Kisco Country Club)
When: Every Friday in June and July, starts at 3:00 pm What to bring: Suitable clubs for hitting on the driving range. Price: Each person is responsible for their own purchase of a bucket (or more) of golf balls. $10 for medium bucket / $15 for large bucket. Festivities: Join the festivities after your hitting practice at Mulligans, “Westchester’s favorite outdoor bar and grill,” just footsteps away from the range. Where: Doral Arrowwood Hotel Conference Center 975 Anderson Hill Road, Rye Brook, NY 10573 New York Tel.: 914.939.5500 For more information please contact the pro at the golf shop: 914.939.5500.
Westchester County Bar Association
Check out your Member Benefits at wcbany.org/membership
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Law Firm Valuations (continued from page 5)
firms which have been sold in the same or similar markets. The exact similarities may be broadened to include an acceptable broader range in year of sale. Net Adjusted Asset Approach: The required approach when an entity’s orderly liquidation is worth more than the calculated value of the practice as a going concern. INCOME STREAM ANALYSIS
When the divorcing parties have minor children, frequently the valuation expert will be asked to produce an income stream analysis for a number of years. Domestic Relations Law 240 defines income (although not limited to the definition): n Total income that should be reported or should have been reported in the most recent Federal income tax return… n Net investment income (gross investment income reduced by related expenses) n Other income such as worker compensation, disability, unemployment,
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n
n
veterans benefits, pensions and retirement, fellowship and stipends, and annuity payments Imputed income from personal perks, employment fringes and funds, goods and services provided by friends and relatives Other items described in the law
From these amounts, the following shall be deducted: unreimbursed business expenses, alimony and child expenses paid to a former spouse or a spouse that is a party to the instant action, public assistance, supplemental security income, NYC and City of Yonkers taxes actually paid and FICA taxes. The adjudicated income stream is used as a basis for applying a percentage, based on the number of children, to calculate child support. NON-FINANCIAL FACTORS
Qualitative practice factors can be extremely important and either validate or refute some of the assumptions derived from the foregoing procedures. A law firm is a business providing personal services. It is one the oldest legitimate professions in the United States, if not the world, practicing professionally
and economically in a dynamic and changing environment. The paradigm for operations, ownership, succession, billing and coping with a changing world into the second decade of the 21st century alone adds a dynamic to its success, longevity and value. As Yogi Berra claimed, “the future isn’t what it used to be.” And no profession needs to adapt more quickly to the future in its present state than the legal profession. A law firm is a bundle of finite laborintensive hours that work primarily by leveraging the efforts of younger and less experienced professionals who want to become owners. To thrive and survive, the firm must grow faster than its present owners retire. This is the model with which the valuation expert works. What are some of the critical non-financial factors influencing the valuation of the law firm that a valuation expert may wish to explore? 1. Conduct, integrity, competence and reputation of the law firm, its reputation along with that of its partners, professional and non-professional employees 2. Avoiding confusion when providing
July 2012
non-legal services (New York Lawyers Code of Professional Responsibilities EC 1-9) 3. Contractual relationships with both lawyers and non-lawyers 4. Grievances which result in citation against lawyers and their firms THE LEGAL PROFESSION IN TRANSITION
The April 18, 2012 issue of Bloomberg Businessweek published a very interesting article on turmoil in the legal profession, including the number of lawyers v. the intuitive capability of law firms to maintain the spectacular growth to which they became accustomed.2 Some of the issues discussed are: 1. The economy and ability to continue to realize sufficient and profitable billing realization 2. Growth rates 3. Leadership and management — after all it is a business 4. Partner departures
Also an Altman Weill 2011 Flash Survey identified the following issues: • Economic recession—a game changer • Succession of baby boomers • Change in practice efficiency • Traditional law firm model under siege • Growth is no longer a given • Ownership propositions-non-lawyer owners SALE OF LAW FIRMS
Ne w Yo rk L a w ye r s C o d e o f Professional Responsibilities EC2-34 through EC2-36 allow that law practices and, particularly sole practitioners, should have the ability to sell their practices including goodwill as long as clients are appropriately protected. Although not relevant to valuation for divorce purposes, lawyers should consult with ethical specialists when contemplating practice sales. OTHER VALUATION FACTORS
If possible consult my article in the October 2011 of this newsletter on Social Media Risk Issues. This new
millennium game changer was expertly presented at a recent White Plains Bar luncheon by Deborah Scalise, Esq. I was surprised to learn that many attorneys are unaware of: • All the factors encompassing social media • Ethical laws about transmission of client information to both clients and non-clients • Associated risks and protection to reputation • The vast amount of information about attorneys and law firms on the Internet The foregoing should definitely be a part of the valuation process. VALUE TO THE OWNER
If valuation of the law firm (e.g., its large size) is impractical or difficult, or there is a remote possibility of the practice ever being sold or merged (a sole proprietorship where personal goodwill is just too integral to the practice), (continued on page 18)
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From the Back Bench 16
By Richard M. Gardella, Esq. Bill Press, a radio show host, comes to mind; “I do not reject peace, but I am afraid of gained national attention early war disguised as peace.” 2 last month when he criticized National sentiment expressed through patriotism, flag our national anthem, The Star waving and war memorial observance may aid in fightSpangled Banner, and called for ing a war, but it doesn’t cause war. The causes of war are its replacement. far more complicated. Economics, religions, intellectual, “I’m embarrassed every time I character, geographic, climate and traditional differences hear it,” he reportedly said. all feed world competition among people. That compeHis musical complaint and tition, often further fueled by envy, hate, corruption and his description of the anthem as “unsingable” are not the desire for power, can and has led to war. what drew the attention or sparked anger. It was his atThe first historian, Thucydides, said history is a natack on the lyrics that focused the wide response. tion’s philosophy taught by example.3 In other words, Calling the lyrics “inappropriate,” he criticized the our history is who we are. I believe that. As a result, in use of the phrase “home of the brave” and the anthem’s this space I have often promoted the study of history, especially for lawyers. reference to “bombs bursting in air.” While there are parts of our history that lead to shame The criticism reminded me of a sermon delivered on New Year’s Day at a church in Westchester. The pastor and embarrassment, that history also evokes pride bepointed out that Maryland was marking the bicenten- cause of its focus on individual freedom. That pride is nial of The War of 1812 in the new year with car license not “gloating” any more than memorial recognition of plates inscriptions. He blasted the license plate recogni- past sacrifice in defense of this country is war mongering. Maryland is right to remember the War of 1812 on tion as “gloating” over war. I better understood the pastor’s brief remarks when its license plates and The Star Spangled Banner helps give I later read the church bulletin. It contained an article life to that memory. It is history. Our history. by the priest on the War of 1812. He guessed that war would have been found unjust under church “critical Endnotes thinking” standards and mocked the war’s description as 1. See the “From the Back Bench” column in the August 2010 issue of this newsletter. a second war of independence. Both Press and the priest allow anti-war sentiments 2. See the “From the Back Bench” column in the December to cloud a view of this nation’s history and obscure that 2008 issue of this newsletter. history’s importance in forming who we are as a people. 3. See the Sixteenth Edition of “Bartlett’s Familiar QuotaThe War of 1812, stumbled into with ill-defined goals, tions” by John Bartlett, Justin Kaplan, general editor, pubended doubts about the continued viability of this young lished by Little, Brown and Company, in 1992 at page 100, nation. Naval victory on Lake Champlain saving Platts- note 26. burgh; the defense of Fort McHenry in Baltimore; the stunning victory at New Orleans, and the rebuilding of the Capitol eliminated any question about the nation’s Richard M. Gardella is counsel to Bertine Hufnagel, et al. He is a past independence on the world scene.1 The lawyer author of president of the Westchester County Bar Association and the Westchester The Star Spangled Banner actually saw “bombs bursting County Bar Foundation, the editor-in-chief of this newsletter, and curin air” as he viewed the defense of Fort McHenry from rently serves as the WCBA’s delegate to the American Bar Association. a ship in the harbor and was inspired to write what became our anthem. Ditching the current national anthem makes no more sense than closing Fort McHenry as a historic site. Both are part of our history. Such action would be akin to asking the French to honor Petain’s World War II efforts instead of DeGaulle’s and to celebrate the fall of Paris rather than its liberation. You cannot ignore history even if you are embarrassed by it. You cannot ignore history any more than you can turn your back on war. Cicero’s sage remark July 2012
Member Spotlight (continued from page 9)
given to me by the WCBA. As a result of my involvement with the WCBA I have had the pleasure to work with many of its leaders. From them I learned and developed the skills necessary to lead an organization. Many of these Past Presidents, particularly J. Radley Herold, Jack Geoghegan, John Marwell, the Hon. Adam Seiden and the Hon. Sam Walker all generously gave of their time to help mentor and guide me to become a future leader of the Association. They taught me the importance of giving back to the profession and of being a mentor to younger attorneys. Merely having the opportunity to sit in the room with the WCBA leaders was an experience of immeasurable value. The skills I developed eventually led to me having the opportunity to lead the WCBA as its president. However, most importantly I was given the opportunity to develop friendships that have endured for decades. The WCBA also helped me become a leader in other professional and charitable organizations. Without ever having had the experience of being an active member of the WCBA, I do not believe I would have ever had the opportunity to become the chair of the Elder Law Section of the New York State Bar in June of this year or an officer of the Clearview School of Sleepy Hollow.
The WCBA offers each and every member countless opportunities to enhance their professional careers. Whether serving as an active member of a Section or a Committee or merely attending its numerous functions, the opportunities are abundant. Each one of us will have a different experience, however, I am confident that your membership and service will yield positive results. The opportunities are there, you need to decide what you will make of them. In closing, I urge you to take advantage of your membership in the WCBA and if you are not a member to please join. Anthony J. Enea, Esq., is a member of the firm of Enea, Scanlan & Sirignano, LLP of White Plains, NY. Mr. Enea is the chair of the Elder Law Section of the New York State Bar Association. Mr. Enea is a Past President of the Westchester County Bar Association.
Member Spotlight Have you written a book? Published an article? Won a significant case? Send us a short article outlining your achievements that would be of interest to our members. Contact: cle@wcbany.org
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Law Firm Valuations (continued from page 15)
or one of the partners refuses to produce the required financial information required, another concept may consist of an argument that the partnership has a unique value to the partner and worth something to the marital estate. This will involve some measurement of the unique value of partner earnings relative to a market valuation of attorneys providing similar services. DOCUMENT PRODUCTION
Standard documents requested normally consist of five years of practice and personal returns, financial statements, and management reports: • • • • • • • • • • • • • • • •
client profitability realization partner billings billable hours unbilled hours accounts receivable client disbursements due business development expenses Minutes of Executive Committee Meetings fringe benefits partner perks memberships buy-sell agreements partner agreements major clients bartered transactions
Additional information that may be required consists of comparable compensation v. productivity of partners, empirical evidence and empirical reference studies, e.g., Altman Weill. Goodwill is the excess of value above the stated financial statement capital which values the brand, client loyalty, reputation for skill and performance (paraphrased from Justice Joseph Story, Holbrook v. Holbrook 103 Wis.2d 327, 309 N.W.2d 343 (Wis. App. 1981)). CONCLUSION OF VALUES DEFINED
Fair Market Value – IRS Ruling 59-60 defines as “the amount at which property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy, and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.” Fair Value – New York State represents fair market value with only a discount for lack of marketability. Discounts for lack of control not considered as this value is used primarily for Shareholder dissenting based on case law resulting there from. 18
Investment Value –Represents a value to a particular buyer as compared with a population of willing buyers. While no real value standard or formula has been generally accepted for law firms, the value for law firms should be higher when the attributes in this article are favorable. A sanity check for cash flow and returns should be used to justify the results. Endnotes 1. http://divorce.foryouworld.com/divorce-1/divorce-statistics-westport-women-cater-to-divorce-industry/ 2. http://www.businessweek.com/articles/2012-04-18/lawfirms-white-shoe-blues Dennis B. Kremer, CPA, ABV/CFF, CVA, CFE, FCPA, a partner at Gettry Marcus Stern & Lehrer, CPA, P.C. (GMSL). Mr. Kremer has recently been appointed by the Westchester County Executive to serve on the Westchester County Board of Ethics. In addition, he serves on the Westchester Medical Center Foundation Board and its Audit Committee. The opinions expressed in this article are his own and do not represent those of GMSL.
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Life Insurance (continued from page 1)
you can use to protect yourself, your key people, and your family, while simultaneously accomplishing important business objectives such as rewarding and retaining key employees, reducing income taxes, accumulating funds for retirement, and assuring an orderly succession of your business at death, disability, or retirement. In many cases, you can use business dollars, often on a tax-deductible basis, to pay for the policies. You can generally choose from a wide range of plans that allow you accommodate such variables as uneven (or seasonal) cash flow. And that’s just for starters. The following are just a few of the strategies that are available to you — right now, using life insurance — to meet your financial goals in a tax efficient and affordable manner. Qualified Retirement Plans
If your business offers a qualified retirement plan (for example a 401(k), profit sharing, or pension plan), your contributions/accumulations can be used to buy life insurance on the participants. Premiums would be income tax-deductible to your business, and participants would be taxed each year on a relatively small “economic benefit” provided by the death benefit. The immediate benefits to you include: a tax deduction for your business; the ability to provide an extra benefit to yourself and your employees; and protection for loved ones in the event of premature death. Westchester County Bar Association
Executive Bonus Plans
Under these plans, you and/or your key employees can purchase life insurance and your business can pay all or a portion of the premiums. The immediate benefits to you include: a tax deduction for your business; the ability to provide an extra benefit to key employees; and the potential for supplemental retirement income (via cash values) down the road. This option allows for restriction by employees to access the cash values for the future, creating an incentive to remain with your firm. While participants will owe income taxes on the amount of premiums paid by the business, you could elect to pay those taxes yourself via a bonus in the amount of taxes due. Split Dollar Plans
Split Dollar Plans allow you to share the cost and benefits of a life insurance policy with key employees to whom you want to extend an extra benefit. Depending upon how the plan is structured, your employees may have access to the policy’s cash value, either immediately or at a designated future time; they may be able to name the policy beneficiary; the death benefit could be used to purchase the business interest of a deceased partner or co-owner; and the business may be able to recover all of the plan costs at the death of a covered employee. If your business owns the policy and pays the premiums, the IRS taxes the plan under an “economic benefit regime.” Premiums are not tax deductible; the (continued on page 21)
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Albert & Albert
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White Plains Office Spaces One space has a windowed office and adjoining secretarial area. The second space has two adjoining interior offices. Newly-remodeled professional building off Exit 4, Route 287. Friendly suite includes parking, office furniture, conference room, receptionist, postage/copier/fax machines, high-speed internet, telephone system, water/coffee machines. Perfect for individual practitioner. Immediate Occupancy. Call Carol, 914-385-4100. White Plains Windowed office (14 x 9) in new state-of-the-art law suite, in recently renovated building. Fax, copier, conference room, phone and voicemail system. Office next to Workers’ Compensation Board. Walk to all courts, restaurants, and train. Call (914) 684-1200 x 101. White Plains Opposite No. White Plains RR Station. Large 7 windowed office with or w/o Secretarial Space; parking included. Phones answered, two large conference rooms, all office amenities available. Possible second inside office available for Associate. ELMSFORD, Exit 4, Knollwood Rd., (Rte. 100A) FOR RENT: Two beautiful windowed offices, (approximately 14’ x 10’ each) in newly furbished state of the art suite, Cat 7 cable installation, complete with secretarial stations in existing law office. Phones supplied for each office and secretarial station. Excellent access to highways and courts. Parking available on premises. 24 hour access. Call for information: (914) 946-7796, cell (914) 523-5273.
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July 2012
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Life Insurance (continued from page 19)
“economic benefit” of the death proceeds is taxable to the employee; but the employee names the beneficiary for the death proceeds in excess of the cash value. If your business pays the premiums, but your employees own their policies, the IRS taxes your plan in the “loan regime” category, and premium payments are essentially treated as a series of loans to your employees. Again, premiums are not tax deductible, but neither are they taxable as income to the employee. Employees, however, are responsible for loan repayment and interest on the loans. Under these plans, employees generally have full access to policy cash values for premium loan repayment. (Note: Withdrawals and policy loans will reduce the amount of the death benefit) Section 79 Plans
If your business is set up as a “C” corporation, the IRS allows you to provide your employees with “group term life insurance” using individual cash value policies. Premiums paid by your company are tax deductible and participating employees will be taxed on the value of any insurance protection in excess of $50,000 as well as all “permanent benefits” provided by the plan. A large portion of the premiums will be considered income taxable to the participants, but because they own their own policies, they retain access to cash values via income tax free loans, and they can name their own beneficiary for the policy proceeds. (Note: policy loans will reduce the amount of the death benefit) Westchester County Bar Association
Section 419 Plans
The potential benefits of a “419 Plan” are many, and include life insurance, disability protection, severance pay, medical benefits, long term care, or illness and accident benefits. Premiums paid by your company are income tax deductible and are not considered taxable as income to the employees. Death benefits are paid income tax free and, in certain cases (“multi employer plans”), there are no stated limits on contributions. (Note: Because of the significant tax advantages and benefits of these plans, they are receiving increased IRS scrutiny.) As a financial strategy, life insurance is often overlooked and sometimes even avoided. But in the right circumstances, it can be a tax efficient and affordable way to address the challenges you face in building and maintaining a successful business or practice. Whether it’s protecting your family, attracting and rewarding key employees, assuring business succession, or maintaining your business’ good credit rating, today’s life insurance contracts are worth a second look. * This information should not be construed as tax advice applicable to each individual. Please consult a qualified tax advisor regarding your individual circumstances.
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chuck@charlesnewman.com; www.charlesnewman.com Life, Disability, Health Insurance, Employee Benefits Registered Representative & Securities & Investment Advisory Services offered through Hornor, Townsend and Kent, Inc. Member FINRA/SIPC. The Charles J. Newman Co.,LLC is Independent of HTK. © 2011 The Penn Mutual Life Insurance Company, Philadelphia, PA
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Westchester County Bar Association
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WESTCHESTER COUNTY BAR ASSOCIATION
NEWSLETTER Published monthly by the WCBA One North Broadway, Suite 512 White Plains, NY 10601 Phone: 914.761.3707 • Fax: 914.761.9402 Email: info@wcbany.org www.wcbany.org ~ President, Jerold R. Ruderman, Esq. President-Elect, Jody Fay, Esq. Vice President, Jon A. Dorf, Esq. Vice President, Dawn Arnold, Esq. Secretary, Stephanie Burns, Esq. Treasurer, Hon. Arlene Gordon-Oliver Executive Director, William R. Egan Editor-in-Chief, Richard M. Gardella, Esq. Acquisitions & Articles Editor, Donna Drumm, Esq. Design & Production Manager, M.E. McCourt Submission of material to the WCBA for inclusion in the Newsletter, Bar Journal, Web site or other WCBA publication grants the WCBA limited copyright and full permission to reprint the material in any WCBA publication, on the WCBA Web site, or with Lexis or Westlaw at any time without additional consent. Please note that any opinions expressed in the articles contained herein are solely those of the author(s) and do not constitute positions taken by the WCBA.
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