December 10, 2010

We here at the Indiana Law Update sincerely hope that none of our readers ever need to apply yesterday's decision from the 7th Circuit in In re Wick, Case No. D-10-0015 to their own practice. However, it is an interesting decision dealing with how the Court will treat a request to resign from its bar.
Lessons:

1. The Seventh Circuit will not allow you to resign from its bar in order to avoid attorney discipline.

http://indianalawupdate.com/entry/7th-Circuit-Will-Not-Allow-You-to-Resign-from-Its-Bar-to-Avoid-Disbarment

December 7, 2010

I.C. Chapter 32-21-5 abrogates the common law rule of caveat emptor with regard to representations made in a statutorily required Sales Disclosure Form. Yesterday, the Court addressed a related issue in Rex Breeden Revocable Trust v. Hoffmeister-Repp, Case No. 03A04-1003-CT-18 -- whether these rules apply to any residential real estate sale to a living trust. The Court found the statute ambiguous and limited its language to sales from one person to that person's own living trust.

In this case, a homeowner sold a home to a buyer. However, the buyer did not buy the property directly; rather, he purchased it using a living trust. A dispute arose concerning whether the seller had made misrepresentations about the residence and the buyers eventually brought suit. The parties filed cross-motions for summary judgment and the trial court granted the seller's motion. The buyers appealed.

At issue was whether I.C. Chapter 32-21-5 applied to the sale. I.C. § 32-21-5-1(b)(9) states that this Chapter does not apply to "[t]ransfers to a living trust." The buyer argued that this language clearly exempted this sale from the Act. The seller argued that this could be illogical. The Court found this language ambiguous -- arguably because the parties disagreed over its interpretation.

http://indianalawupdate.com/entry/Residential-Real-Estate-Disclosures-Must-Be-Made-in-Sale-to-Living-Trust

Outsourcing has become easier with modern technologies like the Internet.  I suspect outsourcing will become even more popular as businesses seek greater efficiency and as professional services become more specialized.

If you are a business handling confidential client information, outsourcing comes with risks and responsibilities.  The risks are fairly obvious.  Sensitive information in the hands of third parties presents opportunities for identity theft, fraud, and other illegal or unseemly activities.  In many cases, you cannot closely monitor third party activities or easily hold them accountable for mishandling information or breaking confidences.

Such risks probably do not outweigh the benefits of outsourcing, but they should perhaps inspire your adhesion to policies and procedures designed to minimize them.  For example, maybe all your clients should know about and give explicit written consent to your outsourcing, even if your outsourcing seems like a commonplace, obvious, or implied part of the service being offered.  Although you may have good relations with your third-party vendors, keep in mind that the good relations are yours, not your clients’.  Even if you regularly outsource to a firm which you know and trust and which has its own professional responsibilities, your clients may have personal reasons for avoiding contact with your vendors of first choice.

You may also wish to formally evaluate the credibility of third-party vendors you hire to perform outsourced work, perhaps maintaining a list of credentials for being eligible to handle confidential information.  Explaining these concerns to your clients, and the steps you’ve taken to mitigate them, will inspire confidence in your services.

Stephen Hudak of the Orlando Sentinel writes about the criminal tax conviction of Wesley Snipes tax advisor, Eddie Ray Kahn:

While Wesley Snipes fights to stay out of prison, a Lake County tax protester earned an additional 20 years behind bars for advising the movie star and 4,000 other clients how to beat the Internal Revenue Service.

Eddie Ray Kahn, 67, who operated a “tax defier” organization from a rented second-floor office in downtown Mount Dora, and three other Florida men were convicted of conspiracy in federal court in Washington.

All worked for Kahn’s American Rights Litigators, which prosecutors described in a sentencing memorandum as “the Walmart of tax fraud,” selling bargain-priced schemes to help people dodge tax obligations.

Kahn was convicted as a co-defendant in Snipes’ trial in 2008 and received a 10-year sentence in that case. But federal court records say his now-defunct organization, which operated for seven years as American Rights Litigators or the Guiding Light of God Ministries, had a presence in all 50 states and more than 4,800 paying members in the U.S.

http://blog.pappastax.com/index.php/2010/09/06/wesley-snipes-and-the-eddie-ray-kahn/

Just got back to our house (rather than stay on the Strip, we decided to rent a private home) from the first day of the ICSC RECon in Las Vegas.  Keeping in mind that I am a first timer, here are some initial impressions.

Thank goodness for the cool weather.  That made walking miles and miles easier.

The morning breakout sessions were even better than I thought they would be.  The panel on workouts gave good, practical advice for dealing with lenders in a variety of distressed situations. I learned some things I will use and I will also probably study up more and blog about what additional things I learn.

The legal special interest group session was also good with practical advice from in-house folks.  Some of the advice was fairly obvious -- keep in touch, let us know about changes, bill regularly and with sufficient detail.  The best advice I think was this: don't buy me lunch - make me want to use your firm.  I was somewhat miffed -- perhaps wrongly so -- by a large firm lawyer saying something like, "You can't compete with the guy working out of his house on price, so you have to develop expertise or make yourself stand out in other ways."  It made me feel cheap, until I learned my billing rates were higher than large companies want to pay for commodity work (not that I really do a lot of that).  It seems like law firms are racing each other to the bottom on hourly rates.  I will not do that. I charge a fair fee, be it hourly or an alternative fee arrangement; I work quickly and efficiently and make the client look good, thus adding value.  So I am comfortable with what I do, and I cannot remember the last time a client complained about my bill.  Like I say: try me once and you will not be disappointed.

http://dirtattorney.blogspot.com/2010/05/icsc-recon-day-one-thoughts-and.html

When parties settle a case, there are good feelings all around and relief that the dispute is over. However, parties who have been disagreeable prior to settlement often remain that way after they have compromised their dispute. A recent Fifth Circuit case makes the point that it is important to think about how the settlement will be enforced should the parties go back to feuding.

In SmallBiz Pros, the parties settled a dispute which required turnover of documents among other things. They entered a Stipulation of Dismissal pursuant to Rule 41(a)(1)(A)(ii). This was a non-bankruptcy case. However, the same provision would apply under Bankruptcy Rule 7041. The Stipulation referenced a "Stipulated Settlement Order." The Court signed the Stipulated Settlement Order. However, the order did not contain "so ordered" language and did not provide for the Court to retain jurisdiction to enforce the order.

Disagreements arose and SmallBiz Pros returned to court to have MacDonald held in contempt. The District Court obliged and MacDonald appealed. The Fifth Circuit reversed, finding that the District Court lacked jurisdiction to enforce the settlement.

http://stevesathersbankruptcynews.blogspot.com/