Business Law Section eSource: February 2010 - Volume 8

Practice Points

Note from the Editor

eSource is interested in practice pointers that you want to share with the members of the Business Law Section, and so we are expanding the scope of this section of eSource to include member submitted practice pointers. These member submitted practice pointers will be in addition to featuring interesting and timely programs and materials produced by the committees of the Business Law Section. Please send your submissions to the eSource editor via email.

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All submissions must be through email and must include the author's full contact information and affiliations. The eSource editor has sole discretion regarding the decision to publish any member submitted practice pointer. Authors of selected submissions must sign the ABA's standard copyright release prior to publication.

1.	New York Amends Law Regarding Powers of Attorney.

In the Fall 2009 Issue of the Commercial Law Newsletter, the Commercial Finance and Uniform Commercial Code Committees presciently brought to everyone's attention a change in New York law regarding powers of attorney. On reflection, a number of law firms with offices in New York have authored a white paper discussing this change and the possibility that the new law has invalidated a wide variety of transaction-related documents commonly used by business lawyers. These include loan transactions allowing a creditor to exercise rights over collateral, stock powers, proxies, limited partnership, limited liability company and subscription agreements for investment funds that create powers of attorney in favor of the general partner or managing member, investment advisory agreements, and powers of attorney executed in connection with routine filings with the Securities and Exchange Commission or tax-related filings. Given the central nature of New York to many of the nation's commercial transactions, this is an important practical development that warrants close attention from virtually every business lawyer.

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Loan Restructuring: Let's Make a (new) Deal (Audio CD Package)
In this highly volatile marketplace, financial restructuring and other interested professionals face a daunting environment in restructuring the layers of financing that many distressed companies accumulated during headier days. This audio CD package includes two audio CDs and printed course materials.
Where Guarantors Meet Article 9: How Not to Mess Up Your Article 9 Enforcement When You Have a Guarantor (Audio CD Package)
Secured lenders under Article 9 have recently found themselves enforcing their rights more than ever before. Because times were often good in the past, many secured parties are not familiar with the foreclosure process and possible traps. One set of traps exists when there is a guarantee. A misstep can affect rights against the guarantor or against the borrower. This audio CD package includes two audio CDs and printed course materials.

2.	Crackdowns on Mortgage Rescue Schemes.

The Fall 2009 Newsletter of the Community Economic Development Committee features several articles that should be of interest to many business lawyers. The principal article describes how state attorneys general have attempted to thwart mortgage rescue scams where a scammer charges a borrower an upfront fee and promises to save the borrower's home from foreclosure, but expends little or no effort to do so. Rescue scams add to community decline by increasing the number of abandoned properties in communities, and is very important to states (like California) with high foreclosure rates since homeowners worried about foreclosure are often susceptible to scams. Indeed, the California Bar Association has attempted to discipline lawyers who have engaged in these predatory practices, and members of Congress from California have introduced legislation that would regulate lawyers as if they were a species of "bank." The other articles focus on pro bono community economic development opportunities for transactional lawyers, another terrific topic for business lawyers who are challenged to find good pro bono projects that fit their skill sets.

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Commercial Lending Law: A State-By-State Guide
Commercial Lending Law: A State-By-State Guide is a practical, easy-to-use compendium that outlines the essential information about commercial lending law in all 50 states. This is an especially valuable resource for lawyers negotiating or reviewing commercial lending laws outside their own jurisdiction. This compilation of state surveys covers all aspects of commercial lending laws for each state.

3.	Securitization in the Post-Crisis Economy.

The Securitization and Structured Finance and Banking Law Committees co-authored an important white paper analyzing the current legislative proposals to require those engaged in securitization to keep a piece of each transaction, or "skin in the game." It is understandable that Congress would seek to address the economic problems caused by some securitization pools, and it is relatively easy to understand the possible conflicts of interest in a "loan-to-sell" business model for those in the lending business that participated in the securitization deals. Nonetheless, there are a number of important issues that are raised by proposals that would require lenders to keep "skin in the game." The white paper authored by these two Committees was endorsed by the ABA Presidential Task Force on Financial Markets Regulatory Reform, and has been approved for submission to Congress with the ABA's imprimatur. A huge "well done" is due to these two Committees for creating a white paper that is a model for how to bring important issues to Congress's attention in a thoughtful and professional manner.

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4.	Developments in Legal Opinions Practice.

The January 2010 Edition of the newsletter of the Legal Opinions Committee is a magnificent, thoughtful read regarding that Committee's deliberations, programs, and thinking on a wide variety of matters that will be of interest to every business lawyer who has ever had to prepare and sign an opinion. There is also a charming description of the ceremony in which the 2009 Fuld Award is awarded to our own Donald W. Glazer for his lifetime achievements in the legal opinions vineyard.

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The Collected ABA and Tribar Opinion Reports 2009
The meaning of legal opinion letters delivered to third parties in business transactions ("closing opinions") and the work lawyers are expected to do to support them are based on the customary practice of lawyers who regularly give, and who regularly advise recipients regarding, opinions of the kind involved. The leading sources of guidance on what constitutes customary practice on a national level are the reports on closing opinions issued by the TriBar Opinion Committee and committees of the ABA Business Law Section whose reports are included in this volume. Those committees consist of lawyers from across the country whose practices cover a wide range of business transactions and practice settings.

5.	Tax News for Business Lawyers.

The December 2009 Newsletter of the Taxation Committee contains several articles that you may find useful for and relevant to your particular area of practice.

Table: A Year-End Update on Significant Business Tax Legislative Proposals During 2009, and an Outlook for 2010 covering: international tax proposals; taxation of carried interests; net operating loss; carryback expansions; capital gains tax rates, and general corporate reform.
Corporation's Transfer of Value to Shareholders Using Partnership, an analysis of a recent Tax Court case and planning techniques with respect to shifting the value from a corporation to shareholders in a tax-efficient manner.
Preparing for the IRS' National Research Project Employment Tax Audits,an article describing and analyzing the plan of the IRS to audit 6,000 businesses over three years, relating to employment taxes.
Where's Home? The Elusive Concept of Domicile in U.S. Estate Planning, an article summarizing relevant considerations in advising non-U.S. citizens with U.S. connections and interests with respect to U.S. estate, gift and generation skipping transfer taxation.
Comparing U.S. and Canadian Rules for Debt Forgiveness, a must-read for those intended to attend the Annual Meeting in Toronto in 2011.

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Fundamentals of Corporate Governance: A Guide for Directors and Corporate Counsel, 2nd Edition
Much has changed since 1996 and the first publication of Fundamentals of Corporate Governance, and the "good" news is that corporate governance has indeed emerged as a separate discipline, and experts in this field have emerged at a startling rate. From 1996, when there was emerging but scattered academic work in the field, to today, the quantity of work in the field has grown exponentially, and the quality of that work has improved as well.

6.	Investment Management Legal Review.

The Investment Companies and Investment Advisers Subcommittee of the Federal Regulation of Securities Committee has just published the inaugural edition of its Investment Management Legal Review, providing a survey of significant legal developments in the investment management field for the year 2009. This is a welcome addition to the literature, and of course 2009 was significantly more than just a mere "banner year" for developments in this area. The Review consists of a comprehensive list (with citations) of the most important SEC rule-making proposals, SEC no-action letters, SEC exemptive orders, and case law and SEC enforcement actions. This will be a very useful tool for practitioners in this area.

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February 2010 - Volume 8 - Number 3

Practice Points

Section News

Past Issues

Section-Sponsored Events

Message from the Chair, Nathaniel L. Doliner

Practice Points

Note from the Editor

Committee Spotlight

Section News