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July 2006 Dear YLS Member:I am pleased to present to you the July issue of Electronically In Touch. In this issue, you will find: I would like to thank the young lawyers who submitted content for this issue. You perform such a valuable and important service to our Section by keeping our young lawyer and law student members informed of current topics and recent developments in the law, and by providing career and professional development advice that is useful, practical, and enjoyable to read. I would also like to take this opportunity to thank you, the membership, for allowing me to serve as the editor of this publication. With my new responsibilities as Chair of the Section, I have transitioned into a number of roles involving some exciting initiatives and activities that the Section will be undertaking in 2006-2007. Therefore, this will be my last issue. Seth Azaria, a young lawyer with a solo practice in Syracuse, New York has agreed to serve as editor of Electronically In Touch. Seth recently returned to New York after practicing with a Florida firm, and brings energy, fresh ideas, and a new perspective to the publication. I’d like to welcome Seth to the Section as the In Touch editor, and wish him well as he transitions and settles into his new role. Seth will begin his service as editor, beginning in August. Thank you to the many young lawyers whom I have had the pleasure of working with through the editing and production process of this publication. I have had such an enjoyable time getting to know you over the last seven months. You are truly a terrific group of young lawyers! I hope to stay in touch with each of you, and encourage you to contact me with any issues, concerns, questions, and/or comments you may have about the Section or the Association. One final note, if you are interested in sharing your ideas, advice, tips, and/or content submissions, please send them to us at yls@nysba.org or to Seth at seth@sethazaria.com for inclusion in the newsletter. Electronically In Touch is a monthly publication. The deadline for submissions is the 10th of the month. We hope that you enjoy the July issue and look forward to staying In Touch... Justina Cintrón Perino _______________________________ Federal Appeals Court Vacates the
Securities & Exchange Commission’s Hedge Fund Rule On June 23, 2006, the United States Court of Appeals for the District of Columbia Circuit in the case Phillip Goldstein, et al. v. Securities and Exchange Commission, No. 04-1434, slip. op. (D.C. Cir. June 23, 2006) vacated the Securities and Exchange Commission’s (the “Commission”) Rule 203(b)(3)-2 [17 C.F.R. § 275.203(b)(3)-2] (the“Hedge Fund Rule”), which required most hedge fund investment advisors to register with the Commission by February 1, 2006. Before the Commission promulgated the Hedge Fund Rule, most hedge fund investment advisors were exempt from filing with the Commission under the Investment Advisors Act of 1940(the “Advisors Act”) because they had fewer than fifteen “clients.” See § 203(b)(3). By rule, the Commission had interpreted “client” to refer to limited partnerships (a typical hedge fund structure) or other entities themselves as an advisor’s client. See Rule 203(b)(3)-1. However, the Hedge Fund Rule required investment advisors to register with the Commission if the funds they advise have fifteen or more “shareholders, limited partners, members, or beneficiaries.” See Rule 203(b)(3)-2(a). The Plaintiffs, who were comprised of an individual, an investment advisory firm, and a hedge fund, argued that the Commission had misinterpreted § 203(b)(3) by equating “client” with “investor.” The Court agreed with the Plaintiffs and vacated the Hedge Fund Rule by holding, among other things, that: • The Commission’s choice to equate “client” with “investor” where the term “client” was otherwise undefined by the Advisors Act was inconsistent with the statute and with the “statute’s place in the overall statutory scheme,” as well as with established Commission rules and policies; • Previous amendments to, and court decisions involving, the Advisors Act reflected Congress’s understanding that investment company entities, not their shareholders or investors, were the advisors’ clients; • The Commission’s definition of “client” for purposes of the Hedge Fund Rule was inconsistent with the definition of “investment advisor” as provided in § 202(a)(11) of the Advisors Act; and • The Hedge Fund Rule created inevitable conflicts of interest, particularly when considering fiduciary duties, between an advisor and the fund it advises and the advisor and the investors of the fund it advises. In its opinion, the Court seems to indicate that in determining a registration exemption for investment advisors, the Commission should focus on the amount of assets under management rather than the number of clients an investment advisor may have. Commission Chairman Christopher Cox released a statement in response to the Court’s Decision, which provided, in part, that the decision “requires that going forward [the Commission] reevaluate the agency’s approach to hedge fund activity” and that “the Commission will use the court’s decision as a spur to improvement in both [the Commission’s] rulemaking process and the effectiveness of [the Commission’s] programs to protect investors, maintain fair and orderly markets, and promote capital formation.” Special Legal
Protections for Your Client or the Other Side: The Servicemembers Civil
Relief Act of 2003 When you represent a client, it is important to inquire whether your client or the other side is in the United States Armed Forces. If they are, they and their spouses may be entitled to special legal protections under the Servicemembers Civil Relief Act (SCRA) of 2003 (50 U.S.C. App. §§501*596). The SCRA, which replaced the Soldiers' and Sailors' Civil Relief Act of 1948 in December 2003, protects members of the regular force, the National Guard, and other Reserve components as they enter active duty (beginning the date the active duty orders are received) and while they are on active duty. Key provisions of the Act include: Delay in Judicial and Administrative Proceedings The SCRA authorizes Servicemembers, who are unable to appear in a judicial or court proceeding due to their military duties, to postpone the proceeding for a mandatory minimum of ninety (90) days upon request. When a Servicemember has entered appearance, a minimum stay of 90 days may be granted under the Act (§ 522), if the application or request to the court meets the following criteria: 1) explains how the military service prevents the Servicemember from appearing, 2) specifies when the Servicemember will be able to appear, and 3) that military leave is not authorized for the Servicemember. Your client should attach a letter from his or her commander, stating that military service prevents him or her from appearing and that no leave is authorized. This provision covers all judicial and administrative proceedings, except criminal proceedings. While the 90 days stay is mandatory, additional requests for stays must be submitted with evidence that the Servicemember's service "materially affects" his or her ability to prosecute or defend the lawsuit. To prove that the Servicemember's ability to defend a lawsuit is "materially affected" by the lawsuit, the Servicemember should submit specific affidavits, addressing all of the relevant reasons (training periods, family emergencies, or deployment) and a copy of the LES (leave and earnings statement) showing accrued leave. The court may grant additional stays at its discretion. Courts, however, are often reluctant to grant long stays. Therefore, Servicemembers are expected to request stays only when they really need them. Maximum 6% Interest Rate Cap on Debts, Liabilities, or Obligations Under the SCRA, your client is entitled to an interest rate reduction to 6% if he or she incurred a debt, liability, or obligation prior to entering into military service, unless the creditor can prove in court that the your client's ability to pay was not "materially affected" by the military service. (§ 527) In order to obtain the interest rate reduction, you must submit a letter to the creditor with a copy of your client's military orders. The creditor must adjust the interest as of the date the Servicemember was called to active duty. This means that the creditor must forgive any interest charges in excess of 6% and decrease the amount of the period payments made by the servicemember. For purposes of the Act, service charges count as interest. Please note, however, that this cap does not apply to new debts incurred while on Active duty or to any guaranteed student loan. Reduction of Child Support Upon deployment or activation, your client may earn less than in his or her civilian job. If the Servicemember earns significantly less on active duty, then he or she can request a review of the child support amount by the state child support agency pursuant to the SCRA. This falls under the anticipatory relief part of the Act. (§591) Keep in mind that these protections under the Servicemembers Civil Relief Act of 2003 may also be waived. (§517). Tolling of the Statute of Limitations With the exception of the periods set forth in the Internal Revenue laws, statutes of limitations, prescribed by law or regulation, are tolled so long as your client is on active duty. (§ 526) However, the Act works both ways because this protection also applies regardless of whether the Servicemember is a plaintiff or defendant. The Act also stops periods of limitation for executors and administrators when the claim accrues prior to or at the time of the military service by the Servicemember. However, it must be noted that the Act does not stop any periods of limitation within a lawsuit, for example, timely motions to dismiss. The Act also covers mortgages, rental agreements, leases, evictions and many other matters. It is important to familiarize yourself with this Act when your client or the other side is a Servicemember. Standing Out in the Crowd—a
monthly column Achieving Balance More and more, lawyers are asking questions about how they can achieve a work-life balance. These questions are occasionally met with grumblings from old curmudgeons, who insist that back in their day, they didn’t need balance and that the kids these days, they just whine too much. Few can seriously argue that the hours that lawyers are working have dramatically increased—just as hours worked by American workers in all professions have increased. But, as much as we might not like to admit it--perhaps the curmudgeon has a good, if inelegantly expressed, point. Maybe “kids these days” DO complain too much. Young associates are very quick to point out the problems with their employers, and many times, the issues they indicate are serious problems. There is no reason associates should have to sit at their desks until midnight if there is no work that needs to be done. There is no reason associates should be made to research questions to which the partner knows there is no answer, just to see how they react under pressure. And there is certainly no reason—or excuse—for insulting or degrading young associates. I am thankful to be at a firm that treats associates with respect, allows us to take a significant role in the firm’s work, and permits us to manage our own workload. Work-life balance, however, is not a mystical thing that the firm deigns to give its associates. It is something that associates must work to achieve for themselves. As attorneys, we are paid by our clients to solve problems. It is shocking how many associates don’t understand that they can, and should, solve the problems that they perceive at their firms. It is absolutely up to you to stick up for your own needs and desires. For instance, single associates who are hoping to meet a significant other need to make the time to date. A tired, stressed-out associate may need to leave work for an hour during the day to get a massage, or to take a walk in the park, or to go to the gym. Every associate must take time to do the things that make them feel like themselves—otherwise we just end up as caricatures of lawyers. Doubting associates will argue “but my boss would never let me out of the office for a manicure!” If you went and asked your boss permission to leave for an hour to get a manicure, it’s true, she might well look at you in disbelief and horror. But most likely, these days, you have a cell phone and a blackberry. You can respond to your emails and your voicemails. If you’re not in your office, it’s just as likely you were in the bathroom. Duck out for an hour, and more than likely, your absence won’t be missed at all. Associates who need to make it to a date can duck out for an hour and come back to the office, if necessary. Associates who have young children can leave early and work from home. The most doubtful of associates will still quake with fear, worried that they might get fired. They may work at firms that really expect their associates to work twenty hours a day, and that really would take offense if their associates went to the gym for an hour. You could have a boss that believes that the world revolves around them, and who needs constant hand-holding. You know what? You might get fired. Weighing that risk is a decision that you need to make. But if you decide to stay at that kind of firm, and if doing so means that you really can’t take any time for yourself, staying in that situation was your decision. You decided not to interview for another job. You decided that sticking up for your own interests wasn’t important enough to rock the boat. And you shouldn’t be shocked when you don’t have a work-life balance. No one is going to take responsibility for balancing your life but you. An Update from the Torts, Insurance, and Compensation Law
(TICL) Section Now is a great time for any and all young lawyers who are representing plaintiffs or the defense in the litigation arena to get involved with the Torts, Insurance, and Compensation Law section (TICL). The highlight of the fall calendar for the section is the Fall Meeting 9/28/06 -10/1/06 at the Sagamore Resort in Bolton Landing, New York. The Fall Meeting is a great time to catch up on CLE credits, mingle with experts from around the state at dinner and cocktail receptions, or even enjoy a round of golf on a world class course. If you cannot make it to the Fall Meeting, there are many other upcoming opportunities to brush up on relevant issues. In the month of November, CLE programs will be offered around the state by the section on topics including: “Handling Tough Issues in Plaintiff’s Personal Injury Action,” “Trucking Litigation and DOT regulations,” and “Basic Workers’ Compensation.” Members of the TICL section should get in touch with the CLE committee if you are interested in speaking at these seminars. Contact information for the entire TICL executive committee is available through the State Bar website at: www.nysba.org. A hot issue in the TICL section and across the Association are the proposed new rules on attorney advertising. If you are unaware of the changes, you can learn about the new rules by visiting www.nysba.org and click on News, Notes and Notices on the home page, then select Proposed Lawyer Advertising Reforms. Significant changes are being pushed forward, which impact every attorney, even if you do not advertise on television. Of note is that under the proposed new rules, mailings from an attorney must be stamped in red ink that they are attorney advertising. For more details on the section, please visit the TICL site at www.nysba.org/ticl or feel free to contact me at jsnyder@binghamtonlaw.com.
YLS Fall Meeting, October 20-22, 2006 Please join us for our Fall meeting in Albany, October 20-22, 2006. We are planning an exciting program, which will include a number of breakout sessions on a variety of substantive, career, and professional development topics with a line up of guest speakers that you will not want to miss! The session will open with an afternoon Ethics program on Friday afternoon, followed by a welcoming reception, and dinner for attendees arriving on Friday. Saturday will feature our day-long CLE program, beginning with a general session on the use of electronic mail. Following the general session, eight one-hour breakout sessions are planned covering issues in intellectual property, real property, evidence, criminal law, trusts & estates, alternative dispute resolution, and commercial/federal litigation. One of the morning sessions will be devoted to a career topic. We will come together for lunch program where we will hear from a distinguished guest presenter. The afternoon session, like the morning session, will cover a number of additional topics in a breakout format, including a session on trial advocacy, business law, international law, and a professional development program. We will conclude our day-long education program with ethics. A number of social and recreational events are being planned for the weekend, including activities for guests, families, and friends not attending the CLE program on Saturday. The weekend will conclude with meetings of the Executive Committee and Section committees on Sunday morning. Program and registration materials are expected to be mailed out in August. Mark your calendars and save the dates! We hope to see you in Albany! _______________________________ * Gregory M. Weigand is a corporate associate with the law firm of Smejda & Associates, P.A. in Miami, Florida. Mr. Weigand is admitted to practice in New York and Florida, he holds an MBA in corporate finance, and he served as a legal intern with the United States Securities & Exchange Commission. This article was written for educational and informational purposes only, and it should not be in any way construed as legal advice or the provision thereof. Readers of this article should consult with legal counsel should they have any questions about the laws and other items contained herein. ** Captain Warner Kornacki holds a B.A. in Political Science, with a concentration in International Affairs from Pace University. He also received his J.D. from Queens College Law School. *** Christina H. Bost Seaton is a second year associate in the litigation and labor & employment practice groups at Troutman Sanders LLP in Manhattan, where she is constantly trying to “play rainmaker.” **** John H. Synder in an associate with the law firm of Levene, Gouldin & Thompson, LLP in Binghamton, New York. He currently serves as the Young Lawyers Section’s Liaison to the Torts, Insurance and Compensation Law Section.
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