Injunction is Back ON; CTA is OFF Again!!

In the “you can’t make this up” category, the Fifth Circuit Court of Appeals has just issued an order VACATING its stay of the injunction applicable to the enforcement of filing requirements under the Corporate Transparency Act.  You can read the order right here Texas Top Cop Shop v Garland 24-40792 (5th Circuit; Stay Vacated).

In other words, the original order enjoining the enforcement of FINCEN’s filing requirements is back on, pending a review of the merits!!

The appeal is now scheduled for oral argument in March (2025).

For reference see:  Injunction is ON; CTA is OFF

and then see:  Injunction is OFF; CTA is Back ON

Now read this post Injunction is Back ON; CTA is OFF Again!!

CTA Update

Following up on our recent posting concerning the CTA (see CTA On Hold in the US, But . . .   posted on December 9, 2024).

Earlier today (December 23, 2024), the United States Court of Appeals for the Fifth Circuit Order (24-40792) issued its order in response to the emergency appeal by the US government, concerning the nationwide injunction preventing the enforcement of filing requirements under the Corporate Transparency Act (CTA).

In short, the 5th Circuit Court held that since the government met its burden under Nken v. Holder, 556 U.S. 418 (2009), the government’s motion for a temporary stay of the district court’s order and injunction pending appeal was granted. In plain English, the order lifts the injunction imposed by the District Court.

Given the timing of this ruling, FINCEN issued an ALERT updating its Beneficial Ownership Information Reporting deadlines and providing some extensions:

  • The due date for pre-existing companies has been shifted from January 1st to January 13th;
  • For companies that had an initial filing due date while the injunction was in place, their initial filing deadline is now also January 13th;
  • For any company formed while the injunction was in place, FINCEN has allowed an additional 21 days to make their initial filing (i.e., the filing due day changes from 90 days to 111 days); and
  • For any company formed on or after January 1, 2025, the initial filing date will remain as 30 days from notice of formation.

While the 5th Circuit Court’s order lifts the injunction that was previously in effect, this doesn’t decide the matter on its merits and a full hearing and decision is still on the way.  Stay tuned.

 

 

CTA On Hold in the US, But . . .

Spoiler Alert: Federal Court Enjoined Implementation and Enforcement!

Additional Spoiler Alert: NY LLC Transparency Act Unaffected (so far)!

The US Federal Corporate Transparency Act (CTA) * was enacted into law in January of 2021, in an effort to bolster the ability of law enforcement and intelligence agencies, as well as financial institutions to be better able to identify and prevent the use of empty shell holding companies to disguise the movement of illicit funds (e.g., money laundering, financing terrorism, drug trafficking, etc.). The CTA requires certain business entities to report and file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN).

New York State has enacted a similar statute, which was amended on March 1, 2024. The New York LLC Transparency Act (NYLTA) was originally enacted on December 22, 2023, and amended by Chapter Amendment on March 1, 2024 [New York Limited Liability Company Law, Sections 1106-1108, effective January 1, 2026], requires limited liability companies (LLCs) that are or have been formed under New York law or are or wish to be qualified and authorized to do business in the State of New York to provide information to the New York Department of State disclosing the LLCs beneficial owners.  While there are certain exemptions and exclusions under both the Federal and New York State laws, there are some other key differences. The NYLTA:

Becomes effective January 1, 2026, not 2025 as the Federal law provides, and any LLC formed in or qualified to do business in New York after January 1, 2026, has 30 days from formation (or qualification) to file.  If your LLC was formed or qualified to do business in NYS before January 1, 2026, you will have until January 1, 2027, to make your initial filings.
Applies only to LLCs, not any other types of businesses, such as corporations, limited partnerships or statutory trusts.
On December 3, 2024, a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction: (1) enjoining enforcement of the CTA, as well as the implementation of the reporting requirements applicable to beneficial ownership information;  and (2) staying all deadlines required to comply with the statute’s reporting requirements.  You can read the amended order granting the injunction here: Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States (E.D. Tex., No. 4:24-cv-00478). The Department of Justice, on behalf of the Department of the Treasury, is appealing the ruling, but in the meantime FinCEN must comply with the order while it is still in effect.

Although this means that until the litigation is resolved or the injunction is lifted, companies otherwise required to file will not be subject to any liability if they fail to do so. That said, any company that wants to voluntarily file their beneficial ownership information reports may do so.

IMPORTANT NOTE: Although the NYLTA doesn’t come into effect until January of 2026, the Federal injunction does not appear to affect the NY Statute.

With thanks to James (“Jamie”) Ballard for keeping me up to date.

Stay tuned!

* (Public Law 116-283, Title LXIV of the National Defense Authorization Act for Fiscal Year 2021 (Division F) and is part of the Anti-Money Laundering Act of 2020 (AML Act). The substantive provisions of the CTA can be found in Sections 6401, 6402 and 6403 (this latter section adds § 5336 to Title 31 of the United States Code establishing the Beneficial Ownership Information Reporting Requirements).

Coffee Talk: Workplace Conflict

On 12:00 PM Eastern US Time, on Tuesday, November 19, 2024, Rimôn attorneys Jennifer Duffy and Scott Raber, along with Human Capital Business Advisor, Barbara DeMatteo, will be presenting “Workplace Conflict: Why It Happens and How to Address It Effectively.” The presentation will be monitored by Rimôn Senior Human Capital Business Advisor, Christine Wittneben.

This program will delve into the causes of workplace conflicts and focus on the role of HR and management in finding meaningful ways to resolve them, minimize potential liability, and foster a healthier, more collaborative workplace

If you are interested in attending, you can register or share the invitation using the following link:

Coffee Talk: Workplace Conflict – Rimôn Law

Marketing Sweats: Covering the Legal Bases

Recently, I had the honor and privilege of being interviewed by Misty Klobucher and Tim Leesman, both Principals of Simantel, a full service advertising, marketing and integrated communications agency based in Peoria, Illinois.  Misty regularly hosts a podcast called “Marketing Sweats” and I was more than happy to spend some time with them answering questions and providing insights on the subject of, as the title suggests,  “Marketing Law: How We Cover Our Legal Bases”

Feel free to enjoy all or as much as you can bear!

Thank you Misty, Tim and Simantel, “The Agency of  And.”

 

Amazon – U.S. CPSC Imposes Responsibility

In an order published this past Monday (July 29, 2024), the U.S. Consumer Product Safety Commission determined that, as it relates to products that are part of the “Fulfilled by Amazon” program, Amazon.com is a “distributor” within the meaning of the Consumer Product Safety Act. The “Fulfilled by Amazon” program includes over 400,000 products!

As a consequence of that determination, the CPSC held Amazon.com is legally responsible for safety and recall notices and required to take remedial action when products are found not to be non-compliant with US safety standards and requirements or are defective.

While Amazon.com argued it is not responsible for products sold by third-parties and is simply a logistics provider, the Commission disagreed and noted Amazon.com receives the products at its distribution centers, stores them and eventually delivers them to customers – activities the Commission believes demonstrate sufficient control to put Amazon.com squarely within the meaning of a ‘distributor’ as defined in the CPSA.

While Amazon.com plans to appeal the Commission’s order, the order requires Amazon.com to develop and submit plans to notify consumers of hazardous products (Section 15(c) of the CPSA), to “take remedial actions under Section 15(d) of the CPSA to incentivize the removal of these hazardous products from consumers’ homes,” and discontinue distribution of defective or non-compliant products.

A spokesperson for Amazon noted that when notified by the Commission years ago about certain third-party products with potential safety issues, Amazon.com promptly notified customers, advising them to stop using them and issued credits or refunds.

The order issued this past Monday, stems from an appeal of a decision of an administrative law judge.  You can read the entire order of the CPSC here: In the Matter of Amazon.com Inc. CPSC Docket No. 21-2.

 

 

How Would I Pick a Lawyer?

– Joe Rosenbaum

Just like any other business, lawyers and law firms try to determine how best to attract clients, win more business and expand the business they already have. Lawyers engage marketing professionals, hold internal caucuses and develop volumes of pitch materials – often segmented by industry, geography, size, diversity and scores of other ‘meaningful’ criteria. One thing lawyers rarely do is ask clients: What makes you satisfied with your lawyer? What does your lawyer do that you really like? What would encourage you to give your lawyer more business or recommend your lawyer to others – internally or externally?

So in that light, I’m going to pretend I’m a consultant, not a lawyer, and share with you the 10 most important things I would use to pick, keep, cultivate and recommend a lawyer!

1. Chemistry: Clients pick and work with lawyers, not law firms. Clients want lawyers who understand their business so there is context to the legal work and the relationship. Yes, it’s important for clients to have a law firm that can provide legal support in multiple areas, in multiple jurisdictions, with enough bench strength to handle large deals or multiple deals simultaneously. BUT, ultimately a client wants to feel comfortable with the individuals and their professional relationship.
2. Trust: Clients need to be able to freely exchange information with their lawyer – especially bad news. Success is easy to share, but clients need to feel comfortable that communicating bad news, mistakes, problems and concerns will not be met with judgment or disdain. They want someone with a desire to help resolve the issue or, at least, make the best of a bad situation. Clients want to know their lawyer is really on their side.
3. Professionalism: Clients want a lawyer that is a professional. That means not cutting corners on ethics or professional responsibility. Clients need to know integrity, like trust, is something their lawyer believes and values and behaves accordingly. Cutting corners may seem expedient in the short term, but does any client ever want to wonder what other corners their lawyer is cutting?
4. Quality: There is no substitute. True, not every lawyer will have the same experience, skill or expertise. But every lawyer should know when something is out of their depth or beyond their capabilities. Clients want to know the work their lawyer does, their lawyer does well. If the matter is outside their lawyers skill set, clients want to know their lawyer will find, recommend and, if necessary, supervise other professionals with an equal passion for quality work.
5. Responsiveness: Clients understand that lawyers aren’t sitting around waiting for the client to call. But clients do appreciate a phone call, email or text saying “I received your request, document or message and while I’m busy or away or lounging on a beach, I’ll get to it by [insert reasonable time frame].” Definitely better than not responding at all and having the client wonder if you received their message or imagine you aren’t paying attention to them.
6. Efficiency: Clients often speak about ‘efficiency’ as if it were speed or cost or both. In reality, efficiency is more a benchmark of productivity than how quickly the work is done. But real efficiency means getting the work done in the most economical way. Sometimes a client may be willing to sacrifice efficiency for speed. Clients want work done well and quality legal support shouldn’t be sacrificed for speed. Being efficient truly adds value!
7. Value: Clients want lawyers who are practical and add value. They assume you are good what you do. Albert Einstein once said, “The definition of genius is taking the complex and making it simple.” No client needs to read a fifty page legal research memorandum and become an armchair lawyer. Clients want a genius. So be a genius! Encourage understanding, not legal bravado. Describe the issue, the risks, the alternatives and if possible, make a recommendation. That adds value. Clients will ask for more information if they need or want it.

8. Proactive: Clients want lawyers who not only understand their business and are responsive, but proactive. When laws or regulations change; when client’s business or operations change; when there are new developments affecting the client, every client wants a lawyer to let them know. It’s never a good when a client calls their lawyer with “I heard this happened . .. how does it affect me.” Most clients (and I suspect, most lawyers) would prefer the call that says, “thanks for letting me know so promptly you’re very helpful.”
9. Team Player: Lawyers don’t work in a vacuum – neither do clients. There may be many stakeholders with an interest in what’s going on, involving many areas and people (and many personalities) that need to interact in order for a client to make the best decisions on an informed basis. Lawyers are not the only professionals feeding clients information. Be cognizant, and most of all respectful, of those other folks. Be mindful that if all the lawyers in the world disappeared, babies would be born, goods would be bought and sold and life would go on. But if all the clients disappeared, lawyers would be out of work.
10. Money: Last but not least, attorney-client relationships involve money. Clients want the most practical, highest quality, most responsive, value added professional legal support from a lawyer they trust and like to work with for the least amount of money possible. Of course! Clients are intelligent consumers; they have choices and they certainly aren’t looking to over pay. Lawyers want to maximize the profit they derive from the work they do. Clients understand. It’s a delicate balance and lawyers must be flexible in agreeing to find different ways to profit, customized to each situation if necessary. Clients need to rely on their lawyer’s ability to be adaptable and have open discussions about charges. Fixed fees, milestone payments, value-based billing, success fees – there’s no shortage of alternatives to hourly rates and billable hours. If a client calls to discuss fees after receiving an invoice, it’s not really a discussion. It’s a negotiation at best and an argument at worst – one that undermines all the other goodwill that may have been built in the relationship.

So that’s my list. That’s how I would pick my lawyer. How will you pick yours?

SXSW South by Southwest Conference

As some of you already know, South by Southwest ®(SXSW) is one of the world’s premier events showcasing music, film and interactive media. This internationally-recognized event has live panels, special events, cinema and combines entertainment and educational activities in a conference and festival atmosphere.  The event takes place annually in Austin, Texas in the United States – this year between March 8th and 16th, 2024.

I have made a proposal to participate by making a presentation entitled “Legal Implications of AI: The Good, the Bad and the Ugly” and voting by the online community is now live!  That allows the public to help the organizers decide on ideas that are the most creative, innovative, and relevant for 2024.  Starting today and until August 20th (11:59 PM PT), you can see my proposal and vote using this link: Legal Implications of AI: The Good, the Bad and the Ugly.  I hope you will vote to include my presentation in the event.

My objective is to make the presentation interactive and entertaining, including some potentially innovative uses of AI to make the point. What do I want to talk about? First, how does current law deal with the film, television, music, art, literary industries – what are the challenges and the opportunities. Second, how can celebrities, sports figures, creative artists and talented professionals protect themselves while also exploiting the evolving technology. Of course, last but not least, is it too soon to start regulating AI? If so, what are we waiting for? If not, how do we even suggest regulation when we can’t predict where we are going?

I won’t pretend to have all the answers, but I will try to provide an enlightening, stimulating and thought provoking presentation – and yes, entertaining!  Again, I would appreciate your vote:  Legal Implications of AI: The Good, the Bad and the Ugly.

Law Firm Bonuses and Profits

Interested in gaining perspective on where law firm bonuses and profits may be headed? Want to know whether we are in for more of the same or fundamental changes may well be ahead?

You can read my perspective, as well as the views of 8 other distinguished legal experts, in the latest report published by Henchmen.  You can also download a personal copy of my article to read at: “The Future of Bonuses and Profits at Law Firms“.

If nothing else, perhaps it will stimulate more conversations!!