December 2002

  1. Ten Malpractice Traps
  2. Gramm-Leach-Bliley Act again ... or Cyber Insecurity
  3. Beware: California's New Lactation Accommodation Law Is Here!
  4. End of Year Tax Tips: It's Never to Late to Start Planning


Articles

  1. ABA's Standing Committee on Legal Malpractice has developed this checklist for the
    Top Ten Malpractice Traps
    1. Missed deadlines
    2. Stress and substance abuse
    3. Poor client relations
    4. Ineffective client screening
    5. Inadequate research and investigation
    6. Conflicts of interest/matter
    7. Inappropriate involvement in client matters
    8. Lack of adequate documentation of work
    9. Zealous efforts to collect fees
    10. Turning a blind eye to the threat of malpractice

  2. Gramm-Leach-Bliley Act again ... or Cyber Insecurity

    I have been talking about the Gramm-Leach-Bliley Act for quite some time. My focus has been the disclosure requirements under the Act ... and the application of this Act to lawyers. According to several of you, your certified public accountants have disagreed with my interpretation of the difficulty -- the two-headed monster created by this Act for lawyers. Finally, the American Bar Association has stepped up and filed suit against the Federal Trade Commission and its interpretation of the Act vis-a-vis lawyers. The ABA joins the New York State Bar which had filed suit previously.

    But, Stephanie F. Cahill, in an article in the ABA Journal, points out another area which should concern lawyers equally... computer-security compliance. This area hasn't been discussed much and maybe off the attorneys' radar. See section 6801 regarding protecting the security and confidentiality our clients' records.

    Section 6801 of the 1999 law requires that financial institutions (which currently include lawyers dealing with many financial issues) have "administrative, technical and physical safeguards" to protect the security and confidentiality of client records by May 2003. Conviction under this provision carries with a fine of $10,000 per infraction for noncompliance with the law.

    The Federal Trade Commission has interpreted "financial institution" to include any business "significantly engaged in financial activities," such as leasing, debt collection, financial advice and tax work. That interpretation has pulled many law firms into the mix.

  3. California's New Lactation Accommodation Law Is Here!

    In January 2002, California enacted Labor Code Section 1030, et seq. mandating that every employer provide break time and space for mothers who desire to express milk for their nursing children. This section applies to every employer; unlike other statutes governing the workplace such as the American with Disabilities Act (ADA) or the Family Medical Leave Act (FMLA), Section 1030 applies to employers of every size, specifying no minimum number of employees. Law firms are particularly well advised to familiarize themselves with the new statute given the growing numbers of female attorneys and large number of women support staff with young children in the workplace.

  4. End of Year Tax Tips: It's Never to Late to Start Planning!

    Here are some thoughts we've suggested in earlier years about year-end tax planning, coming now at a time which is none-too-soon.

    Set a pattern for yourself that includes more than one year - thinking longer term will enhance your net cash flow. For example, the general rule is to defer income when legally permissible from one year to the next (and forever, if possible!) because you will be paying with "cheaper" dollars and because, in the meantime, you will earn interest (cash or opportunity income) on the sum you can pay later instead of today.

    But, if your income is expected to be larger next year, you may want to accelerate all the income permissible in the current year rather than delay its recognition. Pre-year-end tax planning is essential to optimizing one's net cash flow and lowest permitted taxable income.

    Take capital losses this year if you have high taxable capital gains this year. This can be a tricky area. Also note that you don't have a loss until you sell; if you expect the asset to increase in value in the future, you may want to hold on.

    Accelerate expenses. In the past, the IRS permitted the acceleration of more deductions (payments today for services to be delivered or obligations to be paid next year) than in the past. This is clearly one of the most often overlooked tax planning steps. It's simple, yet greatly ignored.

    Some itemized deductions may be paid in one year as opposed to the next. For example, review your charitable contributions, state and local taxes and mortgage interest expenses. You may be in better shape if you pay your January mortgage payment early enough to get the mortgage company to include this payment on your form 1098. If it doesn't, you may have a difficult time justifying a larger deduction ... and in any event, you may open yourself to an IRS inquiry, something no one wants.

    Donate appreciated assets held more than one year. There are likely to be no tax on the gains and you get the fully appreciated value of the asset as a deduction. This is a complicated area, but one that may result in tax benefits and worthy of consideration.

    Consider timing your billing statements so as to defer receipts until the next year. This is one piece of advice that I almost never would give ... and certainly do not advocate except to the most secure of client relationships. If there is any concern about getting paid ... or expecting a delay in payments, be sure to bill on time, if not early. I'd rather take the "sure income" (and include in my taxable income) rather than make the receipt "unsure" by virtue of delaying my billing. The tax benefit would never be so great as to cause an uncertainty in the ultimate collection of the billing.

    Finally, these comments are intended to be general in nature. Be sure to consult with your expert tax adviser before you take any action. And, as in everything I advise, planning is the key element. Again, to quote one of my heroes, John Wooden, former UCLA basketball coach, "If you fail to plan, you're planning to fail!"


Another Urban Legend?

Playwright Jim Sherman wrote this after Hu Jintao was named chief of the Communist Party in China:

HU'S ON FIRST

(We take you now to the Oval Office.)

George W Bush: Condi! Nice to see you. What's happening?

Condoleeza Rice: Sir, I have the report here about the new leader of China.

George: Great. Lay it on me.

Condi: Hu is the new leader of China.

George: That's what I want to know.

Condi: That's what I'm telling you.

George: That's what I'm asking you. Who is the new leader of China?

Condi: Yes.

George: I mean the fellow's name.

Condi: Hu.

George: The guy in China.

Condi: Hu.

George: The new leader of China.

Condi: Hu.

George: The Chinaman!

Condi: Hu is leading China.

George: Now whaddya' asking me for?

Condi: I'm telling you Hu is leading China.

George: Well, I'm asking you. Who is leading China?

Condi: That's the man's name.

George: That's who's name?

Condi: Yes.

George: Will you or will you not tell me the name of the new leader of China?

Condi: Yes, sir.

George: Yassir? Yassir Arafat is in China? I thought he was in the Middle East.

Condi: That's correct.

George: Then who is in China?

Condi: Yes, sir.

George: Yassir is in China?

Condi: No, sir.

George: Then who is?

Condi: Yes, sir.

George: Yassir?

Condi: No, sir.

George: Look, Condi. I need to know the name of the new leader of China. Get me the Secretary General of the U.N. on the phone.

Condi: Kofi?

George: No, thanks.

Condi: You want Kofi?

George: No.

Condi: You don't want Kofi.

George: No. But now that you mention it, I could use a glass of milk. And then get me the U.N.

Condi: Yes, sir.

George: Not Yassir! The guy at the U.N.

Condi: Kofi?

George: Milk! Will you please make the call?

Condi: And call who?

George: Who is the guy at the U.N.?

Condi: Hu is the guy in China.

George: Will you stay out of China?!

Condi: Yes, sir.

George: And stay out of the Middle East! Just get me the guy at the U.N.

Condi: Kofi.

George: All right! With cream and two sugars. Now get on the phone.

(Condi picks up the phone.)

Condi: Rice, here.

George: Rice? Good idea. And a couple of egg rolls, too. Maybe we should send some to the guy in China. And the Middle East. Can you get Chinese food in the Middle East?

Happy holidays ... and have a great 2003!

Published On: 
12/01/2002

This Monthly Format is listed under the following categories: