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Supreme Court Rules that Attorneys Cannot be Awarded Attorneys’ Fees in Defending Their Own Fee Applications

Posted: June 22nd, 2015

Dating back at least to the 18^th century, the “American Rule” provides that each litigant pays his or her own attorneys’ fees, regardless of the outcome, unless provided otherwise by statute or a contract between the parties. Justice Thomas, writing for the majority in the Supreme Court’s June 15, 2015 decision in Baker Botts v. ASARCO, LLC, referred to this rule as a “bedrock principle” that would serve as the Court’s basic point of reference in evaluating this dispute from the Fifth Circuit.

The case stemmed from defense of a bankruptcy fee application by two law firms that had represented respondent ASARCO in its bankruptcy. Following the bankruptcy proceeding, the firms sought compensation under §330(a)(1) of the Bankruptcy Code, which provides that a bankruptcy court “may award . . . reasonable compensation for actual, necessary services rendered by” professionals. The firms also filed fee applications as required. The bankruptcy court eventually awarded $120 million in fees to the firms. While that fee may not have thrilled ASARCO, at issue was an additional $5 million in fees for time that the law firms spent defending their fee applications, which the bankruptcy court determined the law firms could recover. On appeal, however, the Fifth Circuit reversed, citing the American Rule and finding that the beneficiary of a professional fee application is the professional, not the litigant, and thus the professional is not entitled to compensation for defending a fee application.

The Supreme Court, in a 6-3 decision, agreed. The Bankruptcy Code authorizes compensation “for actual, necessary services rendered,” which the parties did not dispute equaled $120 million. But the bankruptcy rules “neither specifically nor explicitly authorize[] courts to shift the costs of adversarial litigation from one side to the other—in this case, from the attorneys seeking fees to the administrator of the estate—as most statutes that displace the American Rule do.” Defense of a fee application, the Court determined, is a separate activity that does not factor into the compensation authorized under the Code.

Joint Accounts May Be a Poor Estate Plan

Posted: June 22nd, 2015

By: Martin Glass, Esq. email

Tags: elder law, estate planning

Many of my senior clients see joint ownership of all their assets (such as investment accounts, bank accounts and real estate) as a cheap and easy way to avoid probate since joint property passes automatically to the joint owner at death. They feel that joint ownership can also be an easy way to plan for incapacity since the joint owner has the immediate ability to pay bills and manage investments. These are all true benefits of joint ownership, but there are a number of potential drawbacks that I feel greatly outweigh the benefits.

The first drawback is that there’s an inherit risk involved. You need to remember that each joint owner of each account has complete access and the ability to use the funds for their own purposes. It wouldn’t be the first time that I’ve seen children who are caring for their parents take money in payment without first making sure that their siblings are all on board. Or worse, they use the money for their own purposes. In addition, the funds are available to the creditors of all joint owners (such as in bankruptcy or in a lawsuit) and could be considered as belonging to all joint owners should they apply for public benefits or financial aid.

Another drawback is that there may end up a very inequitable distribution in the end. If you have one or more children on certain accounts, but not all children, at your death some children may end up inheriting more than the others. While you may expect that all of the children will share equally, and often they do, there’s no guarantee. Having several different children on different accounts becomes extremely difficult and confusing. You have to constantly work to make sure the accounts are all at the same level, and there are no guarantees that this constant attention will work, especially if funds need to be drawn down to pay for care.

Further, as silly as it sounds, you need to expect the unexpected. A system based on joint accounts can really become a mess if a child passes away before the parent. Take the example of someone putting their house in joint names (with rights of survivorship) with her son to avoid probate and Medicaid’s estate recovery claim. If the son died unexpectedly, the daughter‑in‑law or grandchildren would be left with only a small piece of what they were supposed to get. This non-probate asset just became a probate asset and would be (typically) divided up as per the Will, between all the children.

I will admit that joint accounts do typically work well in two situations. First, when you have just one child and everything is to go to him, joint accounts can be a simple way to provide for succession and asset management. It has some of the risks described above, but for many clients the risks are outweighed by the convenience of joint accounts.

Second, it can be useful to put one or more children on your checking account to pay customary bills and to have access to funds in the event of incapacity or death. Since these working accounts usually do not consist of the bulk of your estate, the risks listed above are relatively minor. I actually recommend this quite often to clients as banks prefer working with a joint account holder than a person with a power of attorney for everyday transactions.

For the rest of your assets, Wills, trusts and durable powers of attorney are much better planning tools. They do not put your assets at risk. They provide that your estate will be distributed according to your wishes, without constantly reassessing account values in the event of a child’s incapacity or death, and they provide for much simpler asset management in the event of your incapacity.

Common Myths About “Fair Use” of Copyrighted Works

Posted: June 22nd, 2015

Tags: intellectual property

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In general, fair use is the copying of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody a copyrighted work. Such uses are done without permission from the copyright owner. Therefore, fair use is a defense against a claim of copyright infringement. If your use qualifies as fair use, then it would not be considered an infringement.

There many myths and misconceptions about what constitutes copyright infringement and fair use. Below are some common myths and an explanation of the rules.

Myth 1: If a work does not have a © symbol, it is not protected by copyright.

Since 1989, a copyright notice is not required to protect a work. Even without a © symbol, the creator maintains all rights to the work. The work also does not need to be registered with the Copyright Office to be protected.

Myth 2: Works on the internet are in the public domain so it can be used without permission.

Copyright laws apply to everything posted on the internet, unless it is in the public domain or created by the U.S. Government. Copyright protection is not lost simply because the work is posted on the internet. Further, how a work is displayed does not impact whether it is protected by copyright.

Myth 3: Works can be used if I give credit to who the author or owner is.

Giving credit to the work does not render the use legal. Even if credit is given, if no permission is given, there is copyright infringement.

Myth 4: Minimal use of a song or a selection from a novel is allowed.

There is no bright line rule on what quantity of work is okay to use without seeking permission. In general, the analysis will turn on the portion used, its relation to the work as a whole, and the effect of the use on the potential market for the original work.

Myth 5: A documentary can use images and music without permission.

Regardless of whether someone is creating a documentary or a film for commercial purposes, permission must be obtained to use images and music belonging to someone else.

There are no hard-and-fast rules to what qualifies as fair use – there are only general rules and varied court decisions that are open to interpretation. Whether a use is fair will depend on the specific facts.

LIPA, SEQRA and Commercial Solar Power Plants in Suffolk County: Every Approval of a Power Purchase Agreement by LIPA Before the Lead SEQRA Agency Acts Is Null and Void

Posted: June 15th, 2015

On January 1, 2003, Article 10 of the Public Service Law, which provided a fast track regulatory system for the siting of major electrical generating facilities (i.e., those with a rated capacity of 80 MW or more), lapsed. Prior to that, to avoid having to go before a Siting Board and the extensive public review process required by Article 10, which included review of environmental impacts and required applicants to put up money to help the public intervene with expert help, private companies that wanted to construct so-called peaker plants (whose output would be used primarily during peak hours), would propose facilities which purportedly had a rated capacity of 79.5 MW. Exempt from the Article 10 Siting Board practice, LIPA’s approval of the peaker plants was subject to the State Environmental Quality Review Act (“SEQRA”). Invariably, LIPA would declare itself to be the lead SEQRA Agency, and would always issue a negative declaration (meaning that the project could be approved without first having to prepare a Draft Environmental Impact Statement). Much to the consternation of the public, LIPA would approve the location of these peaker plants wherever LIPA felt was a convenient location for LIPA, without any meaningful environmental review.

Because local municipalities could now directly control applications for the siting of electrical generating facilities, few if any base load power plants (which provide electricity 24-hours a day) were approved after Article 10 lapsed. On August 4, 2011, the Governor approved the Power New York Law of 2011, which he had proposed to provide one-stop review of any electrical generating facility with a rated capacity of 25 MW or more. New Article 10 is power neutral, meaning it applies to any electrical generating facility rated at 25 MW or more, regardless of the source of the proposed power (petroleum based, solar, wind; are all covered).

A little known provision of the Power New York Law is Section 173, which defines the applicability of Article 10 to Public Authorities like LIPA. Article 10 fully applies to all “major electric generating facilities which any such authority builds or causes to be built.” However, “For generating facilities which are not major electric generating facilities, none of the above named authorities shall be permitted to serve as lead agency for purposes of environmental review pursuant to the provisions of the environmental conservation law.”

Why did the Legislature declare that LIPA could no longer serve as lead SEQRA agency for minor facilities (i.e., those with less than 25 MW rated capacity)? The Assembly Committee debate (June 22, 2011) makes clear that the Legislature did not want LIPA to do what it did previously with regard to siting of peaker plants – declare itself lead SEQRA agency and approve them wherever LIPA wanted without requiring meaningful environmental review.

Does this mean that the Legislature exempted LIPA from SEQRA altogether when it adopted Section 173 in 2011? Clearly, it did not. Article 8 of the Environmental Conservation Law (SEQRA) was not amended to limit LIPA’s SEQRA obligations. Nor did the Department of Environmental Conservation (DEC) amend its SEQRA regulations (6 NYCRR Part 617) to change whatever LIPA’s SEQRA obligations may be.

Published elsewhere in this CMM Newsletter is the author’s Blog: “The Towns Must Step Up Environmental Review of Commercial Solar Projects in Suffolk County Because They Can’t Rely on LIPA to Do It [and LIPA Must Stop Approving Power Purchase Agreements In Violation of SEQRA]”. Briefly, even though LIPA cannot serve as lead SEQRA agency when commercial solar electric projects with a rating less than 25 MW are proposed, it remains an involved SEQRA agency. As such, LIPA may not approve Power Purchase Agreements for any such solar facility (a SEQRA action) until the Town, as lead agency, completes its SEQRA review and either requires preparation of a DEIS, or determines that a DEIS need not be prepared.

Unfortunately, LIPA ignores its SEQRA obligations, and approves Power Purchase Agreements for commercial solar electrical facilities without waiting for the lead agency to complete SEQRA review. As convenient as LIPA and the developers may find ignoring SEQRA to be, if anyone challenges the approvals by means of an Article 78 Petition, they run the risk that the approval will be declared null and void, and the application process will have to begin all over again.

Eisenbud quoted in Newsday article “Judge Temporarily Blocks Solar Farm in Shoreham”

Posted: June 10th, 2015

by MARK HARRINGTON / mark.harrington@newsday.com

A state court judge Tuesday issued a temporary restraining order blocking construction of a controversial solar farm in Shoreham despite claims by the project’s developer that delays were costing $15,000 a day in lost profits.

State Supreme Court Justice Andrew Tarantino Jr. issued the six-day order until a scheduled court appearance next week by attorneys for developer sPower and residents opposed to the project.

Shoreham residents who live near the proposed solar array have filed suit against sPower, alleging that proper environmental reviews were never conducted. Some who live near the proposed 60-acre, 9.5-megawatt array also say it will be an eyesore and will hurt property values.

Construction of the array, which sPower originally planned to begin last fall, received final approval last month after Brookhaven Town issued a building permit. The project will take up to six months to build, sPower said.

In an affidavit filed Tuesday, Christian Wiedemann, director of development at sPower, said the company already has spent $7.3 million on the project, which has a contract to provide power to LIPA. He said that if the project is ultimately terminated, the company would lose more than $39.3 million in expected net income over the next 19 years.

Wiedemann asked Tarantino to require residents to post an “undertaking,” or bond, to cover losses the company would sustain due to delays should residents’ request for a preliminary injunction ultimately be denied. Tarantino denied the request, leaving the decision for Justice William Rebolini, who is holding a hearing on the case next week.

Fred Eisenbud, an attorney for the residents, and Of Counsel to Campolo, Middleton & McCormick, LLP, said the request should be denied.

“We have no idea why it took them seven months to get a building permit,” Eisenbud said. “It’s not our fault.”

Morton Weber, an attorney for sPower, declined to comment.

The sPower affidavit noted that the company’s agreement with LIPA is subject to a project completion date of Dec. 30, 2015, after which LIPA can terminate the contract.

http://www.newsday.com/long-island/suffolk/judge-temporarily-blocks-solar-farm-in-shoreham-1.10525475

May 2015 Legal Brief – Firm Newsletter

Posted: June 1st, 2015

Joe Campolo on air with LI News Radio host Jay Oliver

Posted: June 1st, 2015

Joe Campolo, Managing Partner at Campolo, Middleton & McCormick, LLP talks with LI News Radio 103.9 FM host Jay Oliver about his latest article in the Long Island Business News, Note from my grandmother – Spit out the pacifier. Listen to the interview here.

Note from My Grandmother – Spit Out the Pacifier

Posted: May 29th, 2015

By: Joe Campolo, Esq. email

Published In: Long Island Business News

Tags: management

Lately, I’ve heard business leaders complain about the economy, trouble attracting high-paying customers, a lack of skilled workers, employees not pulling their weight and taxes as reasons for business not doing well.

It’s time for Long Island business leaders to realize that we – not the government or anyone else – are responsible for the future of work and life on Long Island. We must take action to protect the amazing ecosystem of resources available to the business community here instead of merely complaining and wishing for change. As my grandmother would have said: “It’s time to spit out the pacifier and get back to work.”

My grandmother grew up during the Great Depression. She raised my father on her own by working long days as a seamstress. She was paid pennies for each garment she sewed. She didn’t watch the clock. Instead, she stopped working when her fingers were raw and bleeding from being struck by the sewing needle. She never complained or blamed anyone else.

Eventually she earned enough money to purchase a Brooklyn brownstone. Some people say that it’s more difficult today. I don’t think that my grandmother would agree – I don’t either.

Long Island business leaders have access to better resources than almost anywhere else in the country. We have an educated, world-class workforce with access to universities, four-year colleges, community colleges and technical institutions. We have the ability to monetize our id Joe Campolo eas with access to capital and resources others only dream about. All we have to do is accept responsibility and take action to grow our businesses and train our employees.

Align yourself and your business with other growth-oriented business leaders, those who aspire to change the cult of negativity into a positive force for business transformation. It might be difficult; you may need to stop doing business with the complainers.

My grandmother would have said, “Stop hanging around with those boys, they’re nothing but trouble,” and she would have been correct. Instead look for business groups and organizations that have a vested interest in helping their members become stronger leaders. They are there, I promise, if you just look.

Long Island businesses are the keys to Long Island’s future and it is time to stop complaining and get back to work, smarter and harder, to build our future.

Campolo, an attorney, is managing partner of Campolo, Middleton & McCormick and chairman of Protegrity Advisors. He is also a proud U.S. Marine.

How to Negotiate Nicely

Posted: May 20th, 2015

By: Joe Campolo, Esq. email

Tags: negotiation

A successful negotiation in today’s business climate is more than walking away with the best possible outcome, it’s about maintaining and building valuable relationships that not only result in mutually beneficial agreements but, more importantly, lead to future deals.

Carolyn O’Hara offers her advice, in her article, “How to Negotiation Nicely Without Being a Pushover” published last month in The Harvard Business Review.

We all want it both ways: to get what we want from a tough negotiation and to walk away with our relationship intact. The good news is that kind of outcome is possible. But how exactly do you drive a hard bargain while also employing soft skills? How do you advocate for what you want without burning important bridges?

What the Experts Say

A negotiation is “a courtship, a dance,” says Michael Wheeler, a professor at Harvard Business School and author of The Art of Negotiation: How to Improvise Agreement in a Chaotic World. “But you don’t have to compromise and settle for less in order to maintain good relations.” Jeff Weiss, a partner at Vantage Partners, a Boston-based consultancy specializing in corporate negotiations and relationship management, and author of the HBR Guide to Negotiating, agrees. People think they either have to be nice in order to spare hard feelings, or overly tough in order to win, he says. But that’s “a false dichotomy and an incredibly dangerous one.” Here’s how to negotiate to produce a lasting relationship and an outcome that works for you.

Make small talk

“Don’t rush to the substance,” says Weiss. “Introduce yourself, and take a little time to get to know people, how they operate, and how they act.” This chitchat can often provide crucial information about the other side’s interests that might help you later. It also helps establish a rapport, and sometimes even trust: In a Stanford University study, students who were required to make small talk before a negotiation were significantly more likely to come to agreement than those students who weren’t. The conversation needn’t be personal, either. It could be about process — like how long the talks should take, and how the other side tries to involve stakeholders — which still gives you context that might prove useful. Making smart small talk “is where the great negotiators really shine,” says Wheeler.

Don’t try to buy love

When an important business relationship is on the line, there’s a tendency to cave to the other side’s demands in order to avoid tension or confrontation. But “money does not necessarily buy you love,” says Wheeler. Conceding on price or substance because you don’t want to upset the other party is a losing scenario, even if you think you’ve temporarily saved the relationship. “In reality, you haven’t gained anything, you didn’t build trust, and you’ve taught the other side to negotiate that way,” says Weiss. Pushing back in a professional way needn’t be seen as combative. You can “challenge people respectfully,” says Weiss.

Be creative

Try dropping the word “concession” from your thinking, because it often helps to create a confrontational and antagonistic mindset. “If you frame the negotiation as adversarial, you will ensure it becomes adversarial,” Weiss says. Instead, approach it as an act of joint problem-solving: What are the critical issues at hand, what are my interests and their interests, and what are some different possible options for satisfying those various interests? “Negotiation isn’t about conceding, it’s about being creative,” Weiss adds. That positive, innovative approach is not only far more likely to lead you to a beneficial solution, but also to a place of trust.

Stress “we” over “I”

Highlight what you have in common. Using “we” rather than “I” signals to the other side that there are areas of agreement and that you envision a future working together. “Be mindful about what draws other people out in a constructive way,” says Wheeler. And if you find the negotiation stalling over an issue, pause to sum up what you have already accomplished, advises Wheeler. “Say, ‘We have agreed on A and B. C is still provisional and D is in good shape. Now we’re having trouble with E. We’re most of the way up the mountain. It’d be a shame if this got us stuck.’”

Ask questions…and listen

Great negotiators don’t simply present their demands; they ask careful questions designed to better understand the other side’s interests. “Don’t just ask people what they want; ask why they want it, for what purpose,” Weiss advises. “Moving from the what to why gives you more grist for the collaborative mill.” Rhetorical questions are a no-no, Wheeler adds. Asking questions like ‘Don’t you think this is fair?’ simply “paints others into a corner,” he explains.

Walk in the other person’s shoes

Don’t assume that the other side’s positions are deliberate acts of provocation; they may have pressures of their own that aren’t immediately apparent. “When we have to be tough, when we can’t bend, it’s because our budget has been cut or we’ve got to hit our targets for the next quarter,” says Wheeler. But “when somebody else is tough with us, we assume it’s them. It’s who they are. We have to remember that they may be operating under constraints as well.” Preparation here can be very helpful. You may already know that the other side is under pressure because of supply-chain issues, or new leadership. Try to see the issue from their eyes.

Principles to Remember

Do:

Frame the negotiations as a problem-solving challenge.
Take the time to make small talk. It’ll build connections you can leverage later on.
Stress the areas on which you agree, and use words like “we” to signal you are invested in the relationship.

Don’t:

Reflexively cave on issues because you think it’ll win you favor. It’ll come back to haunt you.
Simply ask what the other side wants. Ask why they want it.
Mistake impact for intent. The other side may have their own unique pressures that restrict their ability to maneuver.

Case study #1: Pausing to inquire

Jeff Haydock was spearheading bidding negotiations on behalf of a solar energy company for a large installation project in a Massachusetts town. The winning company would not only design and install the project, but also finance it and own it for 20 years, selling power to the residents at a discounted rate. Because of the length of the contract, it was imperative that the two sides build and maintain an excellent working relationship.

The town had already rejected at least two vendors’ proposals before Haydock gave his pitch. So when preliminary talks began, he spent most of his time getting to know the stakeholders and asking them questions. “The more time you spend with a group of people, the better feel you can get for their interests, so, the first 20 minutes we spent talking about this guy’s golf game or someone’s granddaughter,” he recalls. “You finally get to that point where you feel everyone is being transparent.”

Haydock could then get honest answers to questions like: What were the hot-button issues that killed the first two negotiations? What were the residents’ primary concerns and what was their ideal outcome? “After I got a sense of what the problems and possible solutions were, I went and had a sit-down with my boss back at my office, and together we came up with a couple of creative solutions to fix these problems that the other vendors just hadn’t come up with.”

They won the contract, and Haydock, who has since launched ecoCFO, a company that provides CFO services to energy and environmental businesses, believes honesty, inquiry, and transparency were what sealed the deal. There was “no room for smoke and mirrors, or misdirection, or any of those other standard negotiation tactics that others might use,” he explains. “We all recognized that it was going to take not just any partner to get this done. It had to be the right partnership.”

Case study #2: The power of the personal

Royce Leather was entering reordering talks with a major American department store responsible for more than a million dollars of its annual revenue. But just prior to the negotiations, which involved a substantial, six-figure purchase order, the leather goods maker had to institute a price increase on many of its wholesale items, largely because of a crippling drought in Texas that dramatically increased the cost of American cowhide.

Not surprisingly, the department store pushed back strongly. William Bauer, managing director of Royce Leather, countered by explaining his position and emphasizing the companies’ long history of doing business together.

“I had to convince the other side that we were not trying to deceive or mislead them and that we were committed to their profitability,” he says. “I had to convince them we were united against a common challenge [and] take winning out of the equation.” He explained the current pressures on Royce’s supply chain, and noted that, while the company had protected its partner from earlier price increases in raw materials, it simply couldn’t this time.

To drive home the importance of preserving this lasting business relationship, Bauer brought along his father, a company founder who had first established relations with the store more than 40 years earlier. “His presence in the room reminded them that we’re a family business,” Bauer says, “and reaffirmed our dedication to their long-term business.”

The store agreed to the reorder at the new price, and the two companies continue to do business today.

https://hbr.org/2015/04/how-to-negotiate-nicely-without-being-a-pushover