Wood & Porter is one of the nation's premier boutique tax firms concentrating in areas of specific interest to trial lawyers, insurance companies and others concerned with tax issues related to settlements and litigation
In this weeks edition of Speaking of Settlements noted tax law expert Attorney Rob Wood of the firm Wood & Porter. Rob discusses a recent article by two university professors who have decided to create an intellectual argument that structured legal fees are "too good of a deal" for trial lawyers.
They published in Tax Notes just last week on June 2, 2009 a critique of the reasoning in the long settled Childs case, indicating that the trial lawyers have gotten too good of a deal and that in the interest of creating a more fair tax burden that this ability to structure income over time should be curtailed.
As you'll hear in this broadcast, the actual risk of a legislative reversal of Child's is pretty low, but the fact that there are academics out there looking at this as an equity issue in taxation indicates that we need to be both vigilant in making the case for the fairness of structured legal fees, but also promote them more heavily as the great deal that they are.
Check our side bar for pdf copies of this tax note case as well as other commentary by Rob Wood.
Brad Bannon's writes about the Sotomayor confirmation hearings in this commentary from US News and World Report:
Scott Drake interviews Brad Bannon in the accompanying video.
Brad Bannon is president of Bannon Communications Research, a political consulting and polling firm that works for Democrats, labor unions, and progressive-issue groups.
Sonia Sotomayor is exactly the person that the Supreme Court needs. She is a distinguished jurist and will be the first Latina to serve on the Supreme Court. As a bonus, she will improve female representation on the Court and, because of her background as a poor kid from the Bronx, she will give voice to the millions of Americans who are struggling economically to keep their heads above water.
President Obama's appointment of Judge Sotomayor to the vacancy on the U.S. Supreme Court will also begin the culture wars in earnest.
Actually, the first shot in the culture wars was President Obama's response to antiabortion advocates who boycotted his appearance at Notre Dame University's commencement ceremony. In his speech, the president tried to find common ground between the pro-choice and pro-life forces. His attempt to moderate the culture war contrasts with his economic program, where the president has gone full steam ahead without compromises that would lessen Republican opposition.
The contrast between the president's approach to social and to economic policy reflects Democratic confidence in its strength on bread-and-butter issues and a defensiveness on cultural issues.
Even though Democrats usually win battles on the economic front, their track record in culture wars are not nearly as good. Since the 1960s, Republicans have successfully used the social issues to drive a wedge between blue-collar union members and the Democratic Party with a steady diet of guns, God, and gays. And even now, after getting Congress to pass his stimulus program, the president not been able to prevent NRA supporters in the Senate from attaching pro-gun riders to important pieces of legislation.
But after three months of focusing on the economy like the proverbial laser beam, the Sotomayor confirmation hearings will force the president to fight the culture wars whether he wants to or not. Since Massachusetts legalized gay marriage four years ago, the focus of the culture wars has moved from abortion to gay rights.
This week, the California Supreme Court upheld the voter ban on gay marriage that passed last year. This case is likely to get to the Supreme Court, so the Republicans in the Senate will probably focus on Judge Sotomayor's positions on same-sex marriage. The judge will probably be noncommittal on the subject to avoid prejudicing future cases, but the left and right will press her on the ramifications of the California case.
The GOP is chomping at the bit for a fight over Judge Sotomayor, even though Republicans know they will lose the confirmation battle. They will fight the nomination anyway because it energizes the base, helps them raise money, and puts Democrats, including the president, on the defensive. So expect the Senate Republicans to fight Judge Sotomayor tooth and nail.
But the GOP should be wary of the demons that fly out of Pandora's box during the confirmation hearings. Although the culture wars have not been kind to the Democrats in the past, they may become an advantage for the party.
Support for gay marriage has increased significantly in the last few years and a clear majority of Americans under 40 support same-sex marriage. As the millennial voters make up more of the electorate, support for gay marriage will increase. Voters under 30 voted for Barack Obama last year, and the GOP is in danger of losing a group that could give Republicans fits for a whole generation. Young voters are very liberal socially and GOP opposition to gay marriage will drive a wedge between the party and the fasting-growing segment of the voter pool.
Gay marriage has been legal in Massachusetts for four years and it clearly has not shaken the cultural foundations of the state. As more and more states like Vermont and Iowa legalize same-sex marriage, more and more voters will get used to the idea.
Cultural issues have backed the GOP into a corner. The problem for Republicans is that the party's base is shrinking because of moderate defections. As moderates leave the party, it becomes even more conservative, which in turn causes the GOP to lose even more moderates. So the GOP's focus on cultural issues during Judge Sotomayor's confirmation battle will make the party appear even more conservative and drive even more millennial voters out of the party.
If Republicans don't stop this vicious circle and get their act together, they party will go into the wilderness where Democrats have spent most of the last 40 years. The GOP's challenge starts with its handling of confirmation battle over Judge Sotomayor.
Confirmation hearings are inevitably an invitation to behave badly. Something about the bright lights of the Senate judiciary committee brings out the worst in people. Legal thinkers who are otherwise reasonable and intelligent somehow become great big puddles of snarling, hateful id. I think Democrats made a mistake when they accused Chief Justice John Roberts and Justice Samuel Alito of being misogynists and racists at their confirmation hearings. And Republicans are poised to make the same mistake when they attack Obama's Supreme Court nominee, Sonia Sotomayor, as a "liberal judicial activist of the first order who thinks her own personal political agenda is more important that the law as written," as Wendy Long, of the Judicial Confirmation Network, did today. (Don't those phrases ever get old? Don't these people own a thesaurus?)
Undaunted by the hyperbole that festers beneath her hyperbole, Long then went on to condemn Sotomayor for somehow aiding and abetting the 9/11 attackers with her decision in the controversial New Haven, Conn., firefighters case: "On September 11, America saw firsthand the vital role of America's firefighters in protecting our citizens. They put their lives on the line for her and the other citizens of New York and the nation. But Judge Sotomayor would sacrifice their claims to fair treatment in employment promotions to racial preferences and quotas." So just to get this straight: Sotomayor isn't just a far-left activist, she's also out to destroy firefighting?
The case against Sotomayor—to the extent it's being made, is that her life is such a tumultuous blend of personal hardship and deep feeling that she cannot separate the law from her own agenda. In short, she feels too much.
Washington Post columnist Charles Krauthammer was also quick to condemn Sotomayor on Fox News today, warning that her "concern for certain ethnicities overrides justice." And even though Sotomayor has decided only a single abortion case (against the abortion-rights side), Charmaine Yoest, president of Americans United for Life, rushed to describe her as "a radical pick" who "believes the role of the court is to set policy which is exactly the philosophy that led to the Supreme Court turning into the National Abortion Control Board."
If the Republican attack on Sotomayor is really going to consist of scattershot claims that she is too female and ethnic to be truly fair or impartial, it will be a losing demographic battle. Recall that 67 percent of Hispanics and 58 percent of women voted for Obama in 2008, along with 96 percent of blacks. Folks across the political spectrum may wish that Obama hadn't opened the door to discussions of the complicated connection between experience and judicial "empathy." But now that we are there, it simply has to be a mistake for her opponents to attack Sotomayor as someone who is just too darn human to sit on a court.
For one thing, such outbursts tend to offend other humans.
Moreover, the case against Sotomayor on this front is so ideologically loaded, and selective, that it quickly starts to look hypocritical. Why did Republicans treat Samuel Alito's blue collar upbringing as a great humanizing factor in his confirmation hearings? Why did they deem Clarence Thomas' childhood poverty an advantage, whereas they now cast Sotomayor's as a handicap?
Instead of wading into a bruising identity politics war they cannot possibly win, conservatives—even the angriest conservatives—should wade into Sotomayor's vast legal writings. There are hundreds of cases for them to read and parse and quote out of context. Let's have this confirmation battle on the merits, rather than in the sinkhole of unfounded character attacks. The real problem for Sotomayor's opponents is that anyone who has closely read her opinions won't find much to build a case on. As the indefatigable team at SCOTUSblog has chronicled here and here, on the appeals court, Judge Sotomayor has taken a fairly moderate, text-based approach to the cases before her, placing her much closer to retiring Justice David Souter than to the late Justice William Brennan on the judicial activism spectrum.
She has been overturned three times at the Supreme Court, and may well be again soon.But she was also a state* prosecutor, a corporate lawyer, and a Bush I appointee to the federal bench. As the White House points out in its talking points today, "In cases where Sotomayor and at least one judge appointed by a Republican president were on the three-judge panel, Sotomayor and the Republican appointee(s) agreed on the outcome 95% of the time."
What evidence does anyone anywhere have that Sotomayor has spent her career departing from the letter of the law to impose her personal preferences? Her participation in the (poorly handled) decision in the New Haven firefighters case was anything but judicial activism, much as it will be spun as symbolic of her lifelong hatred of white men. On a conference call with reporters today, a senior administration official noted that in the New Haven case, Judge Sotomayor did nothing more than apply the case law: "You can't say she's a judicial activist and then criticize her for applying 2nd Circuit precedent." Her judicial record reveals a lot more humility than hubris.
Sotomayor will also draw heat in the coming weeks for a speech she made in 2002 at the University of California at Berkeley. Talking about the effect of race and gender on judicial decision-making, Sotomayor said, "I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn't lived that life." She also said that "the aspiration to impartiality is just that—it's an aspiration because it denies the fact that we are by our experiences making different choices than others. Not all women or people of color, in all or some circumstances or indeed in any particular case or circumstance but enough people of color in enough cases, will make a difference in the process of judging." That seems a particularly thoughtful observation, in the context of a long and thoughtful meditation on the role of personal experiences in judicial thinking. Sotomayor never pretends to know better than white men, and she doesn't purport to speak for all Latinos or all women. She merely believes that different judges make a difference in judging. And if you strip away all the rage of the identity politics wars, that point is irrefutable.
The angry screeching from the right that Judge Sotomayor is too emotional to fairly apply the law is already starting to sound, well, hysterical. And the fun is only just beginning.
In Maryland earlier this month, a Montgomery County judge in a powerful strike against Med Mal caps, declined to cap the non-economic damages in a multimillion-dollar medical malpractice verdict, saying the state's limit on such awards applies only to lawsuits that were first submitted to arbitration.
As any trial lawyer, particularly those involved in medical malpractice is aware, the wave of damage limits and med mal caps that swept through the states in the 1990s and early part of the new century profoundly impacted the types of cases attorney's would take on. The steady chipping away at these caps in court and in the legislature now that people see the impact it has on equitable reimbursement to injured parties for damages is a story we will be following for the rest of 2009.
Scott Drake talks with the plaintiff's attorney Patrick Malone about how this case was handled, the implications on medical malpractice in Maryland and whether or not this represents a major change in how the courts look at caps:
Renea Poppel, a passenger seriously injured in the Metra derailment in Chicago on September 17, 2005, received a $29,560,081.15 jury verdict after a two-week trial presided over by Cook County Circuit Court Judge Thomas H. Hogan. The verdict is believed to be the largest mass transit crash verdict in Illinois history. The plaintiff was represented by Chicago personal injury attorneys Thomas A. Demetrio, Daniel M. Kotin and William T. Gibbs of the Corboy & Demetrio law firm.
Metra Lawsuit
"Renea is one of the most extraordnary individuals I've ever had the pleasure to represent. It is professionally satisfying that the jury responded to her in such a favorable manner"
On September 17, 2005, a double-decker five car Rock Island Metra train was traveling from Joliet toward downtown Chicago with 185 passengers on board. At about 8:30 a.m., the train encountered a track crossover with a maximum allowable speed of 10 miles per hour (mph). The train entered the crossover at 69 mph, causing it to violently derail.
Renea Poppel, 25 years old and a graduate of Lewis University, was traveling downtown on the Metra Rock Island Line from her home in Midlothian, Illinois, to her new job as an admissions counselor at Kaplan University. She was 13 weeks pregnant at the time. As a result of the derailment, Renea suffered traumatic brain injury. She remained in a coma for several months. Renea's unborn child survived the wreck, and was born via emergency C-section on January 21, 2006.
According to Tom Demetrio, "Renea is one of the most extraordinary individuals I've ever had the pleasure to represent. It is professionally satisfying that the jury responded to her in such a favorable manner."
Dan Kotin stated, "This verdict exemplifies the fact that juries almost always do the right thing. This jury learned all about Renea before she was injured. They met seven of her treating doctors and heard about her future. By this jury verdict, Renea will be taken care of for the rest of her life."
Bill Gibbs added "Renea Poppel is a remarkable young woman whose life was forever changed by this derailment. The jury's verdict appropriately compensated her for all she has been through and all she will go through for the rest of her life."
Bank of America, N.A. and Geraldine Edmonds, Co-Guardians of the Estate of Renea Poppel, a disabled person, v. Northeast Illinois Regional Commuter Railroad Corporation, d/b/a/ Metra. Case number 200L010320 E
About Corboy & Demetrio Named as a Top Law Firm by Chicago Magazine in 2008, Corboy & Demetrio is one of the nation's premier law firms. The Chicago law firm represents individuals and their families in serious personal injury and wrongful death cases, and is renowned for its achievements in the courtroom and for its contributions to the community. The rights and concerns of its clients are at the core of Corboy & Demetrio's practice. That dedication, compassion and relentless drive has resulted in exceptional service and exceptional results for its clients. The Chicago based personal injury firm has acquired more than $3 billion in settlements and verdicts and has attained more than 500 settlements and verdicts in excess of $1 million.
Source: PRWEB
Scott talks with Thomas Demetrio about the verdict and some of the unusual aspects of this case.
Ex-Berkeley Law Professor Marjorie M. Shultz and Psychology Professor Sheldon Zedeck have come up with a new test they claim measures raw talent for being a lawyer. Professor Shultz and Professor Zedeck have developed a test that could be administered to law school applicants to measure their raw lawyerly talent.
Shultz has long insisted that the LSAT does a poor job of predicting how good a lawyer someone will be and also discriminates against minorities, so with some funding from LSAC, which administers the LSAT, she and Zedeck set out to identify important lawyer characteristics and formulate a test based on them.
The result is a test that presents hypothetical situations and asks test takers to respond. This new test was much better in predicting lawyer effectiveness than the LSAT but didn’t better predict how a student would perform in law school. Significantly, though, the newly formulated test didn’t result in score gaps among racial and ethnic groups. (Source: About.com)
Scott discusses the study with Professor Sheldon Zedeck
Attached in the link at the end of this blog post is the pdf. outlining the important seminar being held by Attorney Robert Wood in Phoenix, Arizona on April 17th at the Airport Marriott.
This seminar will cover all of the crucial elements of qualified settlement funds and 468B trusts such as:
When to Use a QSF ( To be covered by Robert W. Wood and Jan R. Schlichtmann )
How Forming QSF's early can influence litigation ( Covered by Jan R. Schlichtmann )
Administrating the QSF ( Robert Lopardo, ATG Trust Company )
Defendant Transfers and Tax deductions ( Robert W. Wood )
Distributions and structured settlements ( Mark Wahlstrom )
What to do about single claimant QSF's ( Robert W. Wood )
Round Table discussions, networking with experts and professionals and more.
The invited and confirmed speakers include the author of the new book from Tax Institute "Qualified Settlement Funds and Section 468B", Attorney Robert W. Wood, noted Civil Action Attorney and pioneer in the use of 468B settlement funds in complex litigation, Jan R. Schlichtmann; the President of ATG Trust Company, Robert Lopardo and Mark Wahlstrom, President of Wahlstrom and Associates and one of the industry experts in the use of 468B trusts to protect client assets and utilization of structured settlements.
This looks to be a high demand event given it's easy fly in location and ability to get in and get out the same day. Get your reservation in now, or if you can't attend order your copy of the book to learn more about this crucial area of settlements.
A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.
"It's a mob effect," one senior executive said. "It's putting people's lives in danger."
Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.
"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."
Scott Drake gets analysis from CNBC's Jordan Kimmel.
President Obama yesterday vowed to "pursue every legal avenue to block these bonuses." But that pledge might have come too late. About $165 million in retention payments started to go out Friday to employees at Financial Products, after numerous discussions with the Treasury Department and the Federal Reserve.
Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.
AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses -- more than $400 million for Financial Products alone -- had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation.
Pressure on the 370-person Financial Products unit, based primarily in Connecticut and London, grew even more intense yesterday when New York Attorney General Andrew M. Cuomo threatened to issue subpoenas if the company failed to provide details about recipients of the retention payments.
The payments represent only the most contentious of a larger group of bonuses being paid throughout AIG. The company's top seven officials, including chief executive Edward M. Liddy, agreed in November to forgo bonuses through this year.
After a Wednesday call between Liddy and Treasury Secretary Timothy F. Geithner, AIG agreed to restructure payments for the next 43 highest-ranking officers at the company, who are to receive half of their bonuses -- which total $9.6 million -- immediately, one-quarter July 15 and the rest Sept. 15. The last two payments would depend on whether the company makes progress in restructuring its business and paying back taxpayers. In addition, the company is set to pay another $600 million in retention awards to about 4,700 people throughout its global insurance units.
But each dollar remains in question after the president's reprimand yesterday and the deluge of rage from legislators and the American public. Government leaders already say they plan to recoup some of the bonus and retention pay while restructuring the company. In addition, administration officials said that the Treasury is planning to try to recover some of the bonus money by adding provisions to the additional $30 billion it gave AIG access to earlier this month.
The payment plan had been no secret.
Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.
At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves.
Moreover, Fed officials also hope to keep current employees with the company. The senior executives whose decisions caused the company's collapse are long gone. Most of those left behind are trying to unwind complicated derivative contracts. Completing that process correctly is essential to preserving as much value as possible for taxpayers, officials at both the government and AIG have argued. If it is mishandled, it could expose taxpayers to billions of dollars in additional losses.
Law professors agreed with the Fed's assessment but said AIG employees could still agree to reduce their own bonuses.
And the outrage expressed by the president and lawmakers was designed to put pressure on these officers to do just that, the legal experts said.
Jonathan Macey, a professor at Yale Law School, said it was unlikely that any AIG employees would end up suing the company for changing compensation contracts, mainly because their names would be revealed publicly in a lawsuit and they would then be excoriated.
Macey added that the government is caught in a difficult position, squeezed between public outrage over the bonuses and the need to keep AIG Financial Products going so the company can restructure and the government can recoup some of its money.
"What's good for AIG is definitely not good for the country," Macey said. "But now that the government is invested, it may have to do what's good for AIG."
Liddy is scheduled to appear tomorrow in front of a House financial services subcommittee.
As many of our news letter readers already know, there is going to be a major seminar held here in Phoenix, AZ on April 17th, hosted by the Tax Institute and featuring national tax expert Attorney Robert W. Wood on the topic of 468b trusts and Qualified Settlement Funds.
This event will be held at the beautiful Phoenix Marriott, literally 3 minutes from the Sky Harbor terminals and strategically planned to allow for either a quick and economical same day fly in to attend, or a quality weekend stay over if you want to enjoy some sunshine and fun a couple of days after April 15th.
The text book, which is included in the CE/CLE cost is 468b trusts and qualified settlement funds, authored by Attorney Robert W. Wood of Wood & Porter of San Francisco, CA. It is published by the highly regarded Tax Institute and is an exceptional resource. I've got a copy and it's about the size of the Gutenberg Bible and almost as authoritative! It covers every tax, regulator and procedural aspect of 468b trusts, qualified settlements funds and their use in both qualified and non-qualified cases. There is no finer expert then Robert Wood, he already wrote the text book used in most law and tax curriculums on taxable damage issues and now has written what I predict will become the standard of practice on 468b trusts.
What makes this seminar so unique is it is open to trial lawyers, tax lawyers and professionals, elder law and probate attorneys as well as structured settlement and life insurance company personnel. Perhaps no area of the settlement and legal profession holds more promise then the broad application of these trust, while at the same time facing unneccessary resistance as a result of a standard of how taxes and process is handled to make them understood to the every day planner, attorney or tax professional.
Listen to what the Tax Institute has to say about 468b trusts and Qualified Settlement funds:
"Qualified Settlement Funds (QSFs) are tax qualified trusts for litigation settlement proceeds. They are easy to set up, and offer unparalleled tax and structural benefits. Defendants get an immediate tax deduction and full release, but plaintiffs can defer their income, structure their recovery, etc. They are revolutionizing case settlements, from complex class actions to mom & pop litigation.
Plaintiffs love QSFs, for they can determine when and how to be paid, structure, cash or both.
Defendants love QSFs, for they get their tax deductions immediately!
Plaintiff Lawyers love QSFs, for they can structure their fees, or get paid immediately, even while their clients are still negotiating.
Settlement Administrators love QSFs, which are orderly, tax qualified, and advance settlement goals."
What this is NOT is a seminar on single claimant cases but a truly thoughtful look at the tremendous opportunity to revolutionize and improve the management of a huge area of litigation and settlements!
Featured speakers will of course be Attorney Robert W. Wood on the tax and procedural issues, famed environmental and Civil Action attorney Jan Schlichtmann on how the use of 468b trusts has revolutionized his environmental law practice, Mark Wahlstrom of Wahlstrom and Associates on the key planning and structured settlement opportunities for settlement professionals as well as other experts and providers who will be there for the breakfast, lunch and social hour functions that will give people an exceptional opportunity to network and meet other professionals who are working in this exciting area of settlement planning.
This is event is currently submitting for both CLE and CE credits and is being produced and filmed by The Legal Broadcast Network and it's production arm, LB Network Studios. This is going to be a high value, time and cost efficient event that can dramatically improve your practice and is open to everyone, from defense firms to plaintiff practices and all other disciplines.
(National Law Journal) Young attorneys are often led to the field of law because of a seductive proposition: You can do anything with a law degree. Unfortunately, a law degree does not even guarantee an opportunity in law, let alone an entree into a different field. For those law graduates who choose to pursue legal careers, many find that navigating the profession is far more complex than the bar itself, and while some learn to tread water and stay afloat, others tank.
A multitude of smart folks pass the bar, only to find themselves stuck behind prefabricated desks without much interest in the subject matter that fills their days. Their brains overloaded with statutes and data, many wonder why opportunities fail to abound.
Unfortunately, a critical message was omitted from the recruiting process: Although you may be able to do anything with a law degree, a law degree and solid experience alone will not do it for you. For those young attorneys who dream of becoming top lawyers, the key is to be three parts lawyer and one part marketing agent.
Thursday, June 11, 2009 at 04:55PM 
The Tax Law Channel
