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Androvett Blog

by Robert Tharp at 3:29:18 pm

The IRS is trying to show its softer side when it comes to all the U.S. taxpayers out there who were swindled in investment schemes in 2008. The government is making it
easier for victims of shady financial advisors to get some tax relief from their losses, says John Eliason, a member of the Financial Crisis Recovery Team at Gardere Wynne Sewell. Under the IRS's safe harbor, losses from Ponzi schemes are considered theft losses, even if the culprit has not been convicted. Provided certain requirements are met, the IRS allows defrauded investors to deduct up to 95 percent of a loss, minus any recovered funds. "The IRS has always made it clear that these are considered ‘theft' losses," Eliason says.
"However, the new guidance provides an optional safe harbor allowing certain investors to report the loss without having to determine the full amount or the prospects of recovering these losses." To interview Mr. Eliason, contact Rhonda Reddick at 800-559-4534 or rhonda@androvett.com.  

by Robert Tharp at 2:17:13 pm

Digital forensics expert Erin Nealy Cox of Stroz Friedberg LLC says proposed legislation reflects policy makers' growing data-security concerns.
Whether it's computer viruses like the conficker worm threatening to turn your PC into a foot soldier in a vast drone computer army or the skyrocketing number of data breaches, the electronic age is constantly presenting new perils, and businesses, consumers and policy makers are still struggling to respond. Three separate bills under consideration by Texas lawmakers could strengthen statutes aimed at growing data security threats to businesses and individuals.

Senate Bill 28 would outlaw the creation and use of botnets in Texas. Under the proposal, those victimized by botnets, such as ISPs and businesses, or the Texas Attorney General could bring a cause of action and potentially recover up to $100,000 per violation, legal costs and treble damages. Senate Bill 327/House Bill 345 would require businesses to adopt e-commerce security standards already in use by the payment card industry. Senate Bill 962 would require businesses to use encryption software when dealing with sensitive personal information.

Erin Nealy Cox, a deputy general counsel at Stroz Friedberg LLC, an international digital forensics, cybercrime response and electronic discovery firm, says the legislation reflects the growing number of data security risks. "Lawmakers across the country are feeling pressure to respond to these dangers," she says. "For businesses operating in multiple states, the result can be a confusing patchwork of statutes from one state to another." To interview Ms. Nealy Cox, contact Robert Tharp at 800-559-4534 or robert@androvett.com.  

by Robert Tharp at 11:30:41 am

Revelations of the f'ight club' atmosphere within the Corpus Christi State School have certainly been one of the most disturbing letdowns of public trust in some time. According to police reports and news accounts, supervisors at the school for the mentally disabled routinely organized fights among disabled residents and filmed the violence for their own entertainment.

The mother of one of the victims, Inez Hernandez, has filed a negligence claim on behalf of her 21-year-old mentally disabled son, Armando Hernandez Jr., who was among those forced to battle. The lawsuit filed by Corpus Christi-based Hilliard Muńoz Guerra against the Texas Department of Aging and Disability Services charges that Mr. Hernandez suffered physical injuries and continues to suffer emotional trauma including severe humiliation, degradation and mental anguish as a result of the experience.

"These special-needs residents are some of the most vulnerable and fragile members of our community," says attorney Robert Hilliard. "To think that the protectors of their welfare were turning them into tools for their own sick entertainment makes my blood boil. I put this at the feet of the agency itself, an agency that, time and time again, throughout this state has allowed systematic abuse of every kind to go mostly unchecked."

For more information, contact Barry Pound at 800-559-4534 (office), 214-293-0860 (mobile) or barry@androvett.com.

 

by Robert Tharp at 11:49:09 am

With $80 billion in incentives in the stimulus package reserved for promoting energy efficiency and investment in alternative sources like solar, wind, geothermal and
biofuels, "green collar" entrepreneurs are poised for growth, says environmental attorney Scott Deatherage, who leads climate change and renewable energy projects at Dallas' Thompson & Knight. Emerging companies providing services in renewable energy like wind and solar power projects, greenhouse gas reductions and energy efficiency are becoming better positioned with lenders, who until recently have been holding onto funds as a result of the credit squeeze. "We're working with a number of companies that are now better positioned with lenders, investors and purchasers," Deatherage says. "These ‘green collar' entrepreneurs are gaining funding and looking at the best means to market the stimulus plan's incentives, just as their potential customers are looking at the tax credits and loan guarantees available to them." The stimulus package includes $80 billion in incentives that promote improvements in energy efficiency and investment in alternative sources such as solar, wind, geothermal and biofuels. To interview Mr. Deatherage, contact Barry Pound at 800-559-4534 or barry@androvett.com.

by Robert Tharp at 10:55:57 am

The approaching April 3 anniversary of the raid on the Yearning for Zion Ranch provides a convenient opportunity to step back and assess what, if anything, was learned
from the sweeping law enforcement action on the polygamist sect in a West Texas commune. Based on an anonymous outcry and opinions about the sect's belief system, authorities seized hundreds of children and placed them in the state foster care system. The unprecidented action overloaded the state's child welfare system and cost an estimated $14 million. The Texas Supreme Court later reversed after action, and accusations that the bulk of the children were in danger were never substantiated. Family attorney Betsy Branch of McCurley Orsinger McCurley Nelson & Downing says that while some of the teenage girls were abused and have been rightly removed from the environment, the rush to seize all of the children was premature. "The State had maintained that the ‘pervasive belief system' at the Ranch presented a danger to the children," says Branch, who represented several of the children on a pro bono basis. "The Supreme Court, however, concluded that the rush to remove all of the children was unwarranted based upon the evidence presented at the emergency hearing. In order to ensure the welfare of the children during the investigation, the Court instead directed the trial court to available statutory protections in lieu of placing them in foster care." To interview Ms. Branch, contact Scott Holcomb at 800-559-4534 or scott@androvett.com.  

by Robert Tharp at 4:40:46 pm

Pity all the bosses out there trying to clamp down on employees surreptitiously watching the March Madness NCAA basketball tournament. No longer a cable TV phenomenon, March Madness tournament coverage is now just a mouse click away on computer screens or streaming from any smart phone. Audrey Mross, who
heads the Labor & Employment section at Dallas' Munck Carter, reports that companies taking a hard line on employees tuning into the coverage should consider they may be fighting a losing battle. "Some employers have tried to ban web-watching, labeling it as a nonproductive activity," she says. "Increasingly, however, many employers are subscribing to the ‘If you can't beat ‘em, join ‘em,' theory, and are using the tournament to promote team spirit and to have some fun at work." To interview Ms. Mross about March Madness in the workplace, contact Mark Annick at 800-559-4534 or mark@androvett.com.

by Robert Tharp at 4:31:13 pm

Immigration attorney Irina Plumlee of Dallas' Gardere Wynne Sewell reports an interesting byproduct of the economic crisis related to educated immigrants with college-level or higher degrees. Immigration authorities are reporting that a growing number of these highly skilled workers are choosing to leave the country during this
downturn. Plumlee says the exodus is indeed troubling. "Many of those who are leaving are U.S.-educated professionals with college-level, or higher, degrees, often in the fields that we are most likely going to have to rely upon to get over the current economic hump," she says. "Add to this the fact that every immigrant contributes significantly to the tax pool and the line at the departure gate is suddenly a cause for serious concern." To interview Ms. Plumlee about immigration issues, contact Rhonda Reddick at 800-559-4534 or rhonda@androvett.com.   

by Robert Tharp at 4:28:16 pm

There's still lots to glean from the Obama stimulus package, but one potentially important tax break for business centers around the onerous tax implications when
lenders cancel a borrower's bad debt, says David Wheat, a tax attorney with Dallas' Thompson & Knight. Previously, the borrowers still faced significant tax hickies based on the outstanding amount owed on the loan. Under the stimulus package, the tax liability of having debt cancelled could be deferred. "Because of this, many struggling companies that have not yet reached insolvency or bankruptcy faced hefty tax consequences when they could least afford it," Wheat says. "Now businesses can elect to push back taxation of that income to a five-year period between 2014 and 2018. If eligible, this can help a company work out loans and negotiate discounted payoffs without facing short-term tax obligations." To interview Mr. Wheat about Cancellation of Debt issues, contact Barry Pound at 800-559-4534 or barry@androvett.com.

by Robert Tharp at 4:13:43 pm

Foreclosure is more complicated than it sounds. Before a lender can foreclose and evict a mortgage holder in arrears, some very specific steps have to be taken.
Property owners seeking to avoid home foreclosure also have a protocol that must be followed. Too clarify the process, real estate attorney Robert Miller of Dallas' Prager & Miller has created a foreclosure checklist that outlines the do's and don't's for lenders and homeowners in Texas. For example, lenders must state in their foreclose notices a specific reason for foreclosure - such as failure to pay mortgage, taxes etc. They also must outline steps that the property owner can take during a 20-day period to avoid being put out. Homeowners can stop a foreclosure by paying the amount owed, filing for bankruptcy or going to state court. "Foreclosures don't just happen," Miller says. "The banks have to follow the law, and if you want to stop one, so do you." For a copy of Mr. Miller's foreclosure checklist, contact Mark Annick at 800-559-4534 or mark@androvett.com.

by Robert Tharp at 4:35:00 pm

The music industry had poor results going after illegal file sharers with a big stick, threatening big civil penalties for those downloading music without paying royalties. As
Apple wrestles with the growing popularity of unauthorized iPhone applications, the company has fewer options for going after scofflaws since the civil penalty for the process known as "jailbreaking" may only be $2,500. But John Mockler, an intellectual property attorney at Munck Carter, says iPhone owners may be less likely to risk downloading unauthorized software of dubious origin that could damage their phones. "People may be less willing to take a chance with their iPhones, especially if downloading software someone literally made in their garage." To interview Mr. Mockler about iPhone jailbreaking, contact Mark Annick at 800-559-4534 or mark@androvett.com.

by Robert Tharp at 4:21:54 pm

The Obama stimulus package stands to have a dramatic impact on health care in the U.S., from health care subsidies for unemployed workers to incentives to promote

the use of health information technology and encourage the use of the most-effective medical treatments. Kathy Poppitt, a healthcare attorney with Thompson & Knight in Austin, says security and privacy rules known as HIPAA also get a shot in the arm from the stimulus package. Language in the stimulus broadens the reach of criminal penalties while establishing a tiered system of civil money penalties, she says. "State attorneys general now will have the authority to bring suit in federal district court against providers and business associates who violate the regulations. To date, there has not been a cause of action allowing an individual to receive damages for a HIPAA violation." To interview Ms. Poppitt about the plan's provisions or HIPAA, contact Barry Pound at 800-559-4534 or barry@androvett.com.

by Robert Tharp at 1:56:29 pm

As if mortgage problems couldn't get any more complicated, consider for a moment something called "Option ARMs." These adjustable-rate lending vehicles are often
sought by savvy borrowers with higher credit scores for a variety of specific purposes. Now there are real concerns that even these borrowers are at risk of defaulting. At stake is nearly $750 billion in such Option ARM mortgages, says  attorney Kenneth Johnston of Dallas' Kane Russell Coleman & Logan. "As this economy stalls further, and more adjustable rate loans recast during 2009 and 2010, we could see a re-do of the subprime problem," Johnston says. "The shock factor for most lenders and consumers may be gone as reality sets in. We'll have to see how the new foreclosure prevention plan will work as banks attempt to shore-up their balance sheets," he says. To interview Mr. Johnston, contact Barry Pound at 800-559-4534 or barry@androvett.com.

by Robert Tharp at 1:41:07 pm

White-collar defense lawyer Dan Cogdell says get ready for string of half-cocked probes
Stung by well-deserved criticism that the Securities and Exchange Commission was far too slow to act on the $50 billion collapse of Bernard Madoff's investment funds,
Houston white-collar defense attorney Dan Cogdell says get ready for the pendulum to swing the other way in terms of SEC probes. Cogdell expects overreactions and half-cocked investigations from the SEC as the agency tries to repair its reputation. The civil charges against Houston-based Stanford Financial Group show such signs, he says. "Like any bureaucracy that has been criticized for inaction, it is now far more likely that the SEC will overreact and be quick to presume misconduct," he says. Like Madoff but on a smaller scale, federal investigators say that Stanford misled investors with fabricated historical investment data and false promises. "Whether its actions were truly malignant or in fact benign, Stanford almost certainly will receive an initial diagnosis of cancer. Anyone who expects objectivity on the part of an investigating agency will be sorely disappointed." To interview Mr. Cogdell about the defense of financial fraud claims, contact Alan Bentrup at 800-559-4534 or alan@androvett.com.

 

by Robert Tharp at 1:33:39 pm

Family law attorney Mary Jo McCurley says key is to neither overblow nor ignore special day
The expectations of Valentine's Day can be a minefield for struggling couples who may be heading for divorce. Ignoring the special day can make a bad situation

unbearable. But going to the opposite extreme be an even bigger mistake, says family law attorney Mary Jo McCurley of McCurley Orsinger McCurley Nelson & Downing. "If you receive roses with a sentimental card filled with commitment, then three weeks later receive divorce papers, the entire process is going to start on a heightened emotional level that might be hard to temper," she says. "Not only might the divorce itself be more contentious, but it could play a role in the proceedings as the court will hear about it and draw its own conclusions as well." To interview Ms. McCurley regarding family law issues, contact Rhonda Reddick at 800-559-4534 or rhonda@androvett.com .

by Robert Tharp at 2:40:59 pm

Thompson & Knight attorneys orchestrate one of the biggest oil-and-gas deals in Peruvian history
So investors in Korea and Columbia put together a mammoth $900 million deal to purchase a Peruvian energy company. What's that got to do with Texas, you ask?

Well, Attorneys in Thompson & Knight's Houston office helped orchestrate the deal as outside counsel for the two buyers, Korea National Oil Corporation and Ecopetrol SA of Columbia. The two firms now each have 50 percent interest in Offshore International Group Inc and its subsidiary, Petro-Tech. Petro-Tech is engaged in the exploration, development, production, and processing of hydrocarbons and is Peru's third-largest crude-oil producer at 12,000 barrels per day.

This acquisition represents one of the largest Peruvian oil and gas deals in recent history and allows KNOC and Ecopetrol to greatly increase their production capabilities. The Thompson & Knight team advising on this project was led by Partner Jerry L. Metcalf and Associate Todd Chen, both from the Firm's Houston office. The team which assisted on this transaction included Sarah E. McLean, Louis J. Davis, Ben H. Welmaker Jr., Pablo C. Ferrante, John R. Cohn, Janet P. Jardin, C. Stoddard (Todd) Lowther II, Nicholas F. Tsai, Mayuca V. Salazar, and Iván Pérez-Arteche. The agreement between the companies was finalized on February 5, 2009.
KNOC is the national oil and gas company of South Korea and one of the most important industrial companies in the country. The company operates oil and gas fields around the globe and had a reported oil production of more than 860.2 million barrels in 2008.
Ecopetrol, the Colombian national oil company, is an integrated oil and gas company ranked among the world's 40 largest energy companies. It is also the largest corporation in Colombia as well as the principal oil and gas company in that country.

by Robert Tharp at 1:54:03 pm

Computer forensics expert Erin Nealy Cox of Stroz Friedberg says companies should have a plan, use common sense when dealing with spam e-mail and electronic threats
Those spam e-mails that bloat your Outlook inboxes aren't just annoying, they also threaten to propagate dangerous computer viruses. Even spammers know that love
can make people do crazy things, so it's not surprising that they've latched onto Valentine's Day to spread e-mail viruses. As snopes.com confirms, spammers are using e-mails with syrupy Valentine's messages in the subject heading to spread the "storm worm," just like they did in 2007. The same virus has been adapted for e-mail messages about the Obama inauguration and a range of other current events. It's not an elaborate ruse, but it's effective.

Erin Nealy Cox, a deputy general counsel and managing director at computer forensic firm Stroz Friedberg's Dallas office, says the potential for such e-mail viruses should serve as a reminder for businesses and individuals to bone up on computer security practices and review e-mail habits. "Computer viruses and electronic security pose enormous financial risks," she says. "Every company should have an information security plan, from defending against viruses to preventing data breaches and responding to litigation." The virus behind the Valentine's Day e-mails has subject lines including "With all my love" and "Me and you." To speak with Ms. Cox about computer forensics, contact Robert Tharp at 800-559-4534 or robert@androvett.com.

by Robert Tharp at 4:40:02 pm

As if we needed proof that worldwide financial markets are inexorably entangled, consider the collapse of the Madoff Ponzi scheme. The vaporization of as much as $50
billion invested in Madoff funds extends around the globe with concentrations of victims in unexpected places including Austria and South America. An international probe by New York-based Zwerling, Schachter & Zwerling, LLP, is focusing on whether major Austrian banks used financial funds to fraudulently funnel billions into Bernard L. Madoff's bogus investment enterprises. The New York-based law firm already is working with nearly a dozen individuals, partnerships and companies whose funds with Bank Austria and Bank Medici may have been improperly channeled to Madoff's firm. The firm also has been contacted by potential victims in Mexico, Argentina, Austria, Spain, Switzerland and Ireland.

"The auditors of these funds allowed this financial disaster to occur, and we think they have responsibility along with the banks and the feeder funds through which the banks invested in Madoff's firm," says attorney  Robert S. Schachter. "Our investigation has revealed that if financial advisors had performed basic due diligence, they could have spotted the ruse that Madoff was perpetuating with his scheme." To speak with Mr. Schachter about the Madoff investigation, contact Mark Annick at 800-559-4534 or mark@androvett.com.

by Robert Tharp at 10:45:25 am

Texas Attorney General Greg Abbott has filed suit against Houston's Memorial Hermann Healthcare System, charging that the hospital has violated state antitrust laws

by conspiring to restrain competition from a competing hospital. Attorneys Rusty Hardin of Houston's Rusty Hardin & Associates and Richard Zook of Houston's Thompson & Knight are representing  representing the doctors and physician partnership that started Houston Town & Country Hospital. The litigation contends that Memorial Hermann engaged in improper acts against the doctors and the hospital by coercing insurance companies to boycott the smaller, start-up hospital and, as a result, depriving many patients and their doctors from using the hospital.

The two attorney's praised the AG's action. "This is a huge victory for the doctors who built Town & Country Hospital, and for the general public seeking quality health care at competitive prices. The AG's office should be congratulated for taking such a bold, non-political action on behalf of consumers," says Hardin. 

Mr. Zook agrees, "Although the AG's findings validate our claims of unlawful conduct by Memorial Hermann, the doctors' civil case against Memorial Hermann is set for a jury trial in late March 2009," says Zook. "We look forward to showing the jury the entire story of Memorial Hermann's improper actions that damaged these doctors, their patients and the public at large." 

A copy of the final judgment and news release from the Attorney General's Office can be found at http://www.oag.state.tx.us/oagNews/release.php?print=1&id=2812. For more information, contact Barry Pound 800-559-4534 at barry@androvett.com.

by Robert Tharp at 10:01:24 am

There's a plot for a crime-thriller in here somewhere...Behemoth banks secretly taking out life insurance policies on their employees and collecting benefits upon their deaths. The practice is so common in the international high-finance world that there's even an acronym to describe it: BOLI, for "bank-owned life insurance."
The way banks are falling like dominoes lately, the conspiracy theorist in me wonders if current and former bank employees who have BOLIs are looking twice when they cross the street these days.

Attorneys from Houston's The Clearman Law Firm have begun a nationwide investigation into the practice. "It is ironic that thousands of bank employees have been laid off, yet banks still stand to benefit financially when those employees die," says class-action attorney Scott Clearman.  "These types of policies benefit only the banks, not their employees."

Many of the world's largest banks have taken out life insurance policies on their workers, including Bank of America, JP Morgan Chase, Bear Stearns, Citigroup, Wachovia, Washington Mutual, Wells Fargo and many others. Nearly half of all U.S. banks have reported owning BOLI policies at an estimated value of $120 billion. Ethics aside, the practice raises serious questions about unauthorized use of personal information. A bank purchasing a BOLI policy must provide the insurer with personal information belonging to each covered employee, including his or her name, sex, age and Social Security number. Employees' Social Security numbers are then used to conduct "death sweeps" where banks typically hire outside brokers to sweep public records in order to learn if an employee or former employee has died. A person whose life a bank insured without consent may have a right to sue for the bank's misappropriation of their identity, and may be able to recover profits made by the bank, broker and insurer. To interview Mr. Clearman about the BOLI investigation, contact Bruce Vincent at 800-559-4534 or bruce@androvett.com.

by Robert Tharp at 1:51:56 pm

Weeks after stepping down as United States Attorney for the Northern District of Texas, attorney Richard B. Roper, III, says he expects 2009 to bring a renewed emphasis on white-collar prosecutions and securities law violations. "To the extent that our current financial crisis can be tied to these types of crimes, the Justice
Department will likely have more resources and a broader mandate to pursue them," he says. "As a result, investigators and prosecutors will be able to move more quickly in detailing evidence of corporate fraud and seeking criminal penalties."  Roper previously served as United States Attorney for the Northern District of Texas from 2004-2008, and directed some of the most high-profile prosecutions in the country, including cases targeting international terrorism financing and exportation of sensitive technologies, public corruption, insider trading, tax, securities, mortgage, corporate and health care fraud, human trafficking, and international drug trafficking. He served on six Attorney General Advisory Committees, including White Collar Fraud, Cyber/Intellectual Property, Controlled Substances, Office of Management and Budget, Violent and Organized Crime, and Child Exploitation and Obscenity. In addition, he served as Co-Chair of the Department of Justice's Internet Pharmacy Working Group. As a Trial Partner in the Dallas office of Thompson & Knight, Mr. Roper will focus his practice on white collar criminal litigation. To interview Mr. Roper about the DOJ's focus on white-collar crime, contact Barry Pound at 800-559-4534 or barry@androvett.com.

by Robert Tharp at 4:19:08 pm

Economic bad news often feeds on itself, especially in the real estate world. Consider all those underwater homeowners out there(those who owe more on their house than its current market value). Beleagured homeowners may be motivated to sell for a variety of reasons, but they are often stonewalled from selling because mortgage
companies can't agree to sell a property at a loss. Even when mortgage lenders agree to such short sales, it's not an easy process, says real estate attorney, Jerome Prager of Dallas-based Prager & Miller. In the meantime, the market stagnates.

Enter the Texas Real Estate Commission, which is working to reduce the number of residential foreclosures by providing some much-needed uniformity for homeowners and mortgage lenders in these situations. Until now, mortgage agents often altered sales contracts to address the need to sell a home at a loss, but this created a new set of problems because the contract language was often inaccurate or exposed agents to allegations of practicing law without a license. Newly adopted contract language simplifies the process and could lead to more such short sales and fewer foreclosures.

"Essentially there have been situations in which these edits and insertions by a real estate agent in contracts may lead to disputes and could be deemed to be the unauthorized practice of the law" says real estate attorney Jerome Prager, of Dallas' Prager & Miller

"These are obviously difficult times for the real estate industry, as well as for homeowners and prospective buyers," says Mr. Prager, who as co-chair of the Commission's Broker-Lawyer Committee helped draft the language. "It's more important than ever that unambiguous closing documents are legally binding, enforceable and drafted to cover virtually any contingency."

To speak with Jerome Prager about the contract addendum concerning short sales of homes, please contact Mark Annick at 214-559-4630 or mark@androvett.com.

by Robert Tharp at 4:45:21 pm

Interesting perspective on the state of the legal industry from the Law360 Litigation Almanac: shrinking legal budgets have so far had no impact on case volume. In fact, litigation rose 9 percent last year. According to a news release on the findings:

Class actions hit a new peak in 2008, rising 8% from the previous year on the back of an increase in antitrust - and employment - related filings. -- The economic crisis sparked a surge in corporate bankruptcy filings in 2008, while credit conditions also forced more companies to resort to quick, nontraditional bankruptcies -- trends that attorneys predict will continue until at least 2010.

Other highlights from Law360:

  • Antitrust filings grew at a rate of 27%, extending a multiyear trend of dramatic increases as private plaintiffs firms closely track government investigations and prosecutions. A look at the dockets just for 2008 shows a slew of cases against chocolate makers, egg product processors, packaged ice distributors and many others, all filed soon after a government investigation was disclosed.
  • The number of federal environmental lawsuits filed in 2008 rose for the first time since 2005, suggesting that the Bush administration's drop in enforcement actions, growing state activism and the U.S. Supreme Court's ruling on greenhouse gas regulation have worked to drive litigation upward.
  • Employment litigation rose 6% in 2008, marking a reversal in the gradual decline in employment litigation seen over the previous four years.
  • Meanwhile, the number of intellectual property lawsuits declined 11% in 2008, thanks largely to a dropoff in copyright litigation instigated by the recording industry. The trend reflects the success of the recording industry in protecting its copyrights, leading the industry to bring fewer lawsuits in the past few years.

by Robert Tharp at 4:20:20 pm

A gloves-off legal fight questioning legal fees charged by a Boston-based law firm is headed for a Collin County jury trial. In an opinion released
New Year's Day, a Texas appeals court refused to dismiss fraud allegations that attorneys for Wilmer Cutler Pickering Hale and Door LLP submitted millions in questionable legal fees and expenses for its defense of a former executive of software company. Attorneys for Dallas-based  Rose•Walker, L.L.P., filed the lawsuit on behalf of software maker McAfee Inc., charging that dozens of different WilmerHale attorneys submitted millions of dollars in unjustifiable fees, including luxury hotel rooms, lavish meals and bar tabs in their defense of former CFO Prabhat Goyal. "This ruling says that if you defraud someone in Texas, you're going to be brought before a Texas court and held accountable," says Rose•Walker co-founder Marty Rose. To speak with Mr. Rose about the WilmerHale litigation, contact Mark Annick at 800-559-4534 or mark@androvett.com.

by Robert Tharp at 4:34:14 pm

Residential mortgage industry was one of the first dominoes to fall in the economic downturn. Now many believe the commercial real estate market is teetering. With
more than 500,000 U.S. jobs lost in December, the steep job losses are causing office vacancy rates to spike in cities across the country. As businesses shed workers and office space, fears that a wave of commercial property foreclosures is about to occur.  Real estate attorney Kathleen Wu of Dallas-based Andrews Kurth LLP predicts an industry shakeup that will affect everyone from office tenants to far-flung investors of securitized commercial real estate mortgages. "We are in the midst of a significant market correction," Wu says. "If there is a silver lining to this trend it's that the industry will experience some rightsizing and a greater focus on corporate responsibility. During this cycle, there are buying opportunities for those waiting on the sidelines with access to capital or credit." To speak with Ms. Wu about commercial real estate trends, contact Robert Tharp at 800-559-4534 or robert@androvett.com.

by Robert Tharp at 4:03:40 pm

Deep down in last summer's housing rescue bill lies a provision that is already causing heartburn among credit card payment processors and individuals who do a lot of
selling on eBay. According to the legislation, beginning in 2011 payment card processors like PayPal must keep tabs on online transactions and notify the IRS when individuals earn more than $20,000. Sure, individuals who use eBay to clean out their garage have little to worry about, and you could argue that eBay Power Sellers should be paying taxes already, but the changes will have major privacy implications and cause regulatory headaches for card processors. "This won't affect people cleaning out their garage, but if you're an eBay Power Seller making more than $20,000 annually, the tax man will know about it," says attorney Zahara Alarakhia of Dallas' Munck Carter. According to the Wall Street Journal, it also applies to intermediary banks that process card payments for restaurants and brick-and-mortar retailers. Congressional tax estimators predict the reporting change will help the IRS collect an additional $9.5 billion in taxes owed by online and traditional businesses over the next 10 years. The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. To speak with Ms. Alarakhia about payment card processing issues, contact Alan Bentrup at 800-559-4534 or alan@androvett.com.  

 

by Robert Tharp at 5:07:05 pm

A company drying to dig out of Chapter 11 might not seem like a good bet for lenders, especially in this tight credit market. But as the number of companies in Chapter 11 bankruptcy spikes, their prospects for digging out often depend on having access to operating cash. That's where debtor-in-possession financing comes in. Such loans to struggling companies in Chapter 11 provide struggling businesses with a chance to get back in the black rather than liquidating. "Debtor-In-Possession' financing is fairly common, and a good number of Chapter 11 cases would probably be impossible without access to capital through this framework," says Robert Paddock of Houston's Thompson & Knight. "A debtor company may have cash flow, but that revenue stream may be pledged to other secured creditors. Structured correctly, DIP or post-petition financing can be an attractive means for both a debtor and lender to fund the business through the bankruptcy proceeding." Such financing is harder to find in the existing tight credit market but it is still available, particularly for large-scale debtors willing to pay premium interest rates. To speak with Mr. Paddock about DIP financing, contact Barry Pound at 800-559-4534 or barry@androvett.com.



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