Altman Weil recently published its annual report on Law Firms in Transition. The takeaway: law firms are changing, but not fast enough. The report analyzes a recent survey Altman Weil conducted of nearly 800 of the U.S.’s largest law firms. Its findings starkly highlight the challenges faced by traditional law firms. It’s clear many are failing to deliver what clients need from their lawyer. Law firms must change their business model to be more client-focused. Yet resistance to change dominates most big law firms. Clients need practical and efficient solutions (i.e. technology-driven) to their problems. Seems simple.
In recent years, consumers and investors have demonstrated an increased preference for socially conscious companies. The natural outgrowth of this trend has been the rise of socially conscious companies like Tom’s, a shoe company that donates one pair of shoes to those in need for each pair it sells. On January 1, 2016, Indiana entered the fray as the 30th state to enact a benefit corporation statute. Benefit corporations are for-profit corporations formed with the additional purpose of providing a general public benefit. Under the statute, a general public benefit is a benefit creating “material positive impact on society and the environment,” as a whole, through a corporation’s operations. This ambiguous language provides flexibility to benefit corporations that have a variety of benefit interests.
As the New Year begins, we look ahead to new challenges and the opportunities they bring. 2015 quietly ushered in a new capital reserve rule for banks: a super capital charge for High Volatility Commercial Real Estate (HVCRE) loans. As the year closes, there are still many questions about this Rule and its effect.
The SEC adopted final rules, effective April 27, 2016, known as “Regulation Crowdfunding”, which greatly liberalize the manner by which companies privately raise money in small increments from a large number of investors, using the Internet. Regulation Crowdfunding also creates a regulatory framework for the intermediaries — broker-dealers and funding portals –which will facilitate the online transactions.
The Indiana Court of Appeals recently re-affirmed that the “first in time” rule determines priority between a mortgage and a mechanic’s lien on the same commercial property. Wells Fargo Bank, N.A. v. Rieth-Riley Construction Co., Inc. However, the mechanic’s lien holder continues to have the right to sell and remove the improvement it constructed.
The SEC recently adopted final rules amending Regulation A to permit eligible private (i.e., non-SEC-reporting) companies to conduct public securities offerings of up to $50 million in a 12-month period without Securities Act registration. The amendment, known as “Regulation A+”, was mandated by the Jumpstart Our Business Startups Act (the “JOBS Act”) and takes effect on June 19, 2015. Its aim is to promote small company capital formation by increasing the maximum amount which may be raised under Regulation A (from $5 million to $50 million), and by streamlining reporting and disclosure requirements.
In December 2014, the National Labor Relations Board (“NLRB”) issued what many call the “Quickie Election” Rule or “Ambush Election” Rule. In short, this new rule will decrease the period of time between a union election petition and the election itself from around forty-two (42) days to as few as fourteen (14) days. The rule is set to take effect today (April 14, 2015).
Canada recently adopted a new Anti-Spam Law (CASL), which will impact U.S.-based businesses that send electronic messages to recipients in Canada for commercial or promotional purposes. CASL went into effect on July 1, 2014. Unlike the general rule in the U.S., where a sender is free to send an unsolicited email as long as the recipient may “unsubscribe,” now, in Canada, the general rule is that a recipient must proactively “opt-in” prior to the message being sent. Failing to meet the new requirements of CASL can result in a fine of up to $1 million for individuals and $10 million for entities.
US persons and companies are prohibited from doing business with blocked persons. On August 13, 2014 the Treasury Department’s Office of Foreign Asset Control (“OFAC”) issued revised guidance on its 50% rule for Entities Owned By Persons Whose Property and Interest in Property Are Blocked. This new guidance dramatically increases the vigilance and diligence necessary to verify that you are not doing business with an entity that is a blocked person.
A recently issued SEC no-action letter provides further clarity on the applicability of broker-dealer registration requirements to merger and acquisition brokers (M&A brokers). The no-action letter is issued as Congress considers legislation to exempt certain M&A brokers from broker-dealer registration requirements. The Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2013 amends the Securities Exchange Act of 1934 to allow M&A brokers who perform services in connection with the transfer of ownership of smaller privately held companies to register with the Securities and Exchange Commission (SEC) by filing an electronic notice.