judiciary night 2010 - nassau county assigned … · 2010-11-23 · thurs. nov. 18, 2010 thurs.,...

THE JOURNAL OF THE NASSAU COUNTY BAR ASSOCIATION

An attorney is habitually late coming to work.Lately he looks messy and unkempt, and hiswork product is off. He may be missing importantdeadlines. You can clearly see that something isamiss, and you suspect an addiction problem orother impairment difficulty. What can you donow before clients are negatively impacted?

It may help if you have a specific employeepolicy in place. Continuing with its strong tradi-tion of supporting attorneys who need assistance,last month the Nassau County Bar AssociationBoard of Directors approved a resolution sup-porting the Model Policy for Law Firms/LegalDepartments Addressing Impairment, developedby the New York State Bar Association’s LawyerAssistance Committee, and is encouragingNCBA members to adopt the policy and incorpo-rate it into their firm employee policy.

“This policy recognizes the pink elephant inthe living room. It gives a law firm or legaldepartment a way of dealing with issues of animpaired attorney, no matter what the cause,”said Annabel Bazante, chair of NCBA’s LawyerAssistance Program Committee. “If there is asmoking gun, where an attorney clearly is unableto function properly and may have a problem,you can use the Model Policy to start a discus-sion.” Bazante added that everything remainsconfidential.

Marian Rice, NCBA First Vice President,added that she found insurance carriers are gen-erally pleased with the Model Policy. “Insurancecarriers are pleased to see law firms adopt theModel Policy as it is evidence the law firm is sen-sitive to the problem, but the carriers will wantto see the policy actually implemented and notjust added to a firm’s existing manual,” Ricenoted.

Employers are encouraged to adapt the ModelPolicy to augment their own employee policies andprocedures. It can be modified to also include para-legals and other key staff positions. A copy of theNYSBA Model Policy may be downloaded at theNCBA website, www.nassaubar.org.

Board supports policyto help employers dealwith impaired lawyers

November 2010 www.nassaubar.org Vol. 60, No. 3

By Valerie Zurblis

For the first time, in an effort to better serve thelegal needs and protect the rights of Nassau Countyresidents who bravely serve or have served in theU.S. military forces, the Nassau County Bar Association Military Law Committee has com-piled federal and state laws, regulations andresources that directly or indirectly affect mem-bers of the armed forces, veterans and reservists.The “Federal and State Laws Affecting Active DutyService Members and Veterans” can be downloadedfrom the NCBA website, www.nassaubar.org,>Lawyer Referral> Veterans Advocacy Project page.

“There are a vast number of laws and regulations of

which many attorneys may not be aware,” notedCommittee Chair Daniel Campbell. “We decided to compile this guide to highlight various statutes, offer citations of further research and generally providean overview of the expanse of relevant provisions.”

A copy of the handbook was sent to every judgein Nassau County. Campbell added that theCommittee plans to update the guide every yearwith current laws.

Contributors to the booklet include NCBAmembers Christine Connolly Bingham, SusanBruno, Lynn Capuano, Alyce Goodstein,Professor John Gresham, Linda Nanos, FeliciaPasculli, Gary Port, Ann Powers and Hon. JohnReali.

OF NOTE

NCBA Member Benefit – I.D. Card PhotoObtain your photo for court identificationcards at NCBA Tech Center. Cost $10. Dec. 7, 8 & 9 • 9 a.m.-4 p.m.

The Lawyer Assistance Program provides confidential help to lawyers and judges for alcoholism, drug abuse and mental health problems. Call 1-888-408-6222. Calls are completely confidential.

FOCUS: CORPORATION, BANKING,SECURITIES LAW & BUSINESSMANAGEMENT

Outsider Trading: Lawyers’ Liabilityfor Securities Fraud

Page 3

Nathel v. Commissioner:Recent Case Provides Guidance forS Corporation Losses

Page 3

How to Get Paid: Collecting Fees inTough Times

Page 5

Corporate Governance and theFamily Business

Page 7

Managing Your Practice From AfarPage 9

GENERAL ARTICLES

Consular Notification Under theVienna Convention

1

Preparer Tax Identification Number(“PTIN”) – Attention: Estate, ElderCare and Other Attorneys

Page 14

WHAT’S INSIDE

Lunch with the Supremes!(Justices, that is)Tues., Nov. 16, 201012:00 p.m. at DomusSee insert

LI Council of Bar Leaders:Creating Opportunities for SuccessMon., Nov. 22, 20105:30 p.m. at DomusSee page 2, 4

WE CARE presentsGingerbread UniversityTwo SessionsSat., Dec. 4, 2010 at DomusSee page 18

78th Traditional Wassail CelebrationThurs., Dec. 9, 20106 p.m. at Domus

EVENTS

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Although the sky openedup, the heavy rainfall didn’t prevent the eveningfrom being a success.More than 250 bench andbar members returnedhome to Domus for anevening of food, drink, networking and socializing.Special thanks to all thosewho braved the weather.

Judiciary Night 2010

UPCOMING PUBLICATIONS COMMITTEE MEETINGSThurs. Nov. 18, 2010 ● Thurs., Dec. 9, 2010 – 12:45 at Domus

New guide to laws affecting those in military service now available By Valerie Zurblis

2 ■ November 2010 ■ Nassau Lawyer

By Valerie ZurblisSome of Long Island’s most prominent

attorneys will come together on Monday,November 22 to assist their colleagues in finding successful employment in thefirst part of a new 3-part program thisyear, “Creating Opportunities forSuccess,” presented by the Long IslandCouncil of Bar Leaders.

Participants for Part I, “Getting theJob – What Do You Want From Me?” onNovember 22, 5:30-8 p.m. program readlike a Who’s Who of Long Island lawyers.Sharing their personal stories of howthey became successful are Meyer SuozziEnglish & Klein Managing Partner LoisCarter Schlissel; Nassau County DistrictAttorney Kathleen Rice; Nixon PeabodyPartner Joseph Ortego; and FrederickBrewington, Law Office of FrederickBrewington. Law firm associatesChristina Sittner at John P. DiMascio &Associates and Christopher Clarke atMorritt Hock Hamroff & Horowitz willdiscuss their current career paths.NCBA President Marc Gann is moderat-ing the panel discussion.

Afterwards, seminar participants canlearn more details at smaller breakoutdiscussion groups. NCBA TreasurerJohn McEntee, partner at Farrell Fritz,and NCBA First Vice President MarianRice, partner at L’Abbate, Balkan,Colavita & Contini, will explore hiringpractices at large and small law firms.

Those who want to learn more about lawcareers in the public sector can meetwith NCBA Secondnd Vice PresidentPeter Mancuso, Assistant DistrictAttorney with the Nassau CountyDistrict Attorney’s Office, Martha Krisel,Chief Deputy County Attorney forSpecial Projects for the Office of theNassau County Attorney; and Helen

Voutsinas, law secretary to Hon. StevenM. Jaeger and former president of theNC Women’s Bar Association.

For the nuts and bolts of resumebuilding and what headhunters look forfrom job candidates, Michael Ende,Hofstra Law School Career Counselorwith years of experience as a legal

recruiter will be able to share recruit-ment methods. The fourth group willlook closely at labor law, humanresources, and what is legally requiredby employers and employees during thejob search process, with Rick Ostrove,partner and lead trial counsel at LeedsMorelli & Brown.

Participants in the November 22 pro-

gram can earn one CLE credit in lawpractice management.

In addition to NCBA, the Long IslandCouncil of Bar Leaders is composed ofthe presidents of the Amistad Black BarAssociation of LI, The Catholic Lawyers’Guild, Columbian Lawyers’ Association,Criminal Courts Bar Association,

Federalist Society, Fellowship ofChristian Attorneys, Former Asst.District Attorneys Association, GreatNeck Lawyers’ Association, JewishLawyers’ Association, Long BeachLawyers’ Association, Long IslandHispanic Bar Association, NassauCounty Magistrates’ Association, NassauCounty Women’s Bar Association, TheNassau Lawyers’ Association,Nassau/Suffolk Trial Lawyers, New YorkFamily Law Inn of Court, TheodoreRoosevelt American Inn of Court, andYashar.

“Getting the Job – What Do You WantFrom Me?” is free, but reservations arerequired. If you plan to attend, pleasesend your name, address, phone and twochoices for discussion groups [email protected], or download aform at www.nassaubar.org.

Create Opportunity for Success seriesLI’s top attorneys to share

their stories of success on November 22

MARK YOUR CALENDAR!Creating Opportunities

for Success Presented by the Long Island Councilof Bar Leaders at the Nassau CountyBar Association

Part I – Getting the Job – What Do YouWant From Me?

● November 22, 2010, 5:30 – 8 p.m.

Part II – Suddenly Solo: What Do I Need?● February 1, 2011

Part III – Rainmaking: How Do I Bring inClients?

● April 27, 2011

John McEntee Marian Rice Peter Mancuso Martha Krisel

Lois Carter Schlissel Kathleen Rice Joseph Ortego Frederick Brewington

The sequel to Wall Street having been released, itappears appropriate to reflect that insider trading scan-dals are not only a vestige of the 1980’s but are as activeas ever. Gordon Gecko may be wavering on if “greed isgood,” but the SEC certainly continues to fight theMartha Stewarts of this world.

Through their positions of trust, corporatelawyers are not immune to the siren song ofgreed. On occasion they find themselves insituations that present a lucrative yet illicitinvestment opportunity. Such opportunitiesplace the attorney at a crossroads as aguardian of insider information versus liabil-ity for breach of an ethical duty. Federal reg-ulation, common law, and corporate policiesare all mechanisms to combat the increasingamount of insider trading by attorneys,including a probe at the SEC in 2009 of itsown attorneys.1 Attorney liability for insidertrading may result in imprisonment, a per-manent injunction against future violationsof securities laws, disgorgement of profits or lossesavoided, a permanent ban against serving as an officeror director of a public company, and/or revocation of aprofessional license.2

Two Theories of LiabilityUnder Section 10b of the Securities and Exchange

Act of 1934, 15 U.S.C. § 78a et seq., fraud in connectionwith the purchase or sale of a security is illegal. UnderSEC Rule 10b-5, 17 C.F.R. § 240.10b-5,3 the SEC or theplaintiff in a private action must establish the elementsof materiality and scienter.4 Nonpublic information isdeemed material if there is “a substantial likelihoodthat a reasonable shareholder would consider it impor-tant.”5 To prove scienter under Rule 10b-5, the defen-

dant must have acted with the intent to deceive. Thereare two primary theories of insider trading liability: theclassical theory and the misappropriation theory.

The classical theory is based on liability for corporateinsiders – officers, directors and owners of at least 10%

of a company’s equity securities – who know-ingly trade company stock based on materialnonpublic information or tip others to tradeon such confidential information. In SEC v.Texas Gulf Sulphur, 401 F.2d 833, 848 (2dCir. 1968), the Second Circuit interpretedRule 10b-5 to require that anyone in posses-sion of material nonpublic informationeither: (1) disclose such information to theinvesting public; or (2) abstain from tradingor recommending the securities while suchinside information remains undisclosed. Theduty to disclose or abstain flows naturallyfrom Rule 10b-5 since it maintains the spiritof the Rule that all investors act on an equalplaying field.

The misappropriation theory invokes insider tradingliability to individuals who are not corporate insiders.This liability is based on a duty owed to the source ofinformation not to trade on confidential information.Unless the corporate attorney is an insider or an insid-er as defined by the SEC as a 10% owner of the compa-ny, attorneys generally come into conflict with insidertrading under the misappropriation theory.

In the leading case, United States v. James O’Hagan,521 U.S. 642 (1997), the defendant was a partner at thelaw firm of Dorsey and Whitney LLC, which represent-ed Grand Metropolitan PLC (“Grand Met”). O’Hagannever worked on the representation of Grand Met, yetdiscovered that the firm’s client intended to purchasePillsbury Corporation. O’Hagan purchased Pillsbury

stock and call options. Following Grand Met’s publicannouncement of its tender offer, O’Hagan sold hisshares for a four million-dollar profit.

O’Hagan was convicted of securities fraud in viola-tion of Rule 10b and Rule 10b-5, fraudulent trading inconnection with a tender offer in violation of Section14(3)3-a, and violations of the federal mail fraud andmail laundering statutes. The Eighth Circuit over-turned O’Hagan’s convictions on the grounds that Rule10b and Rule 10b-5 violations cannot be based on themisappropriation theory. The Supreme Court reversedthe Circuit Court’s decision, however, and affirmedO’Hagan’s Rule 10b-5 convictions by adopting the mis-appropriation theory.

Following the O’Hagan decision, the SEC adoptedRule 10b5-2 to create a non-exclusive definition of

See SECURITIES FRAUD, Page 22

Stanley H.Fischer

Nathel v. Commissioner:

Recent case provides guidance for S corporation lossesNathel v. Commissioner1 provides a

good review of S corporation loss utiliza-tion, open account debt issues and lossrecognition for payment of shareholderguarantees. In the current economicdownturn, these are all extremely impor-tant issues confronting tax return pre-parers.

Ira and Sheldon Nathel organizedthree corporations, all of which elected tobe taxed as Internal Revenue Code (IRC)Subchapter S corporations (hereinafter

referred to as “S corporations”), whichelection generally permits income to besubjected to only one level of taxation.They personally guaranteed $2.5 millionin loans made by two banks, and theyeach made substantial personal loans tothe food distribution businesses operat-ing pursuant to the corporation’s purpos-es. The business experienced losses, andunder the S corporation rules, these loss-es were passed through to the sharehold-ers.2 In order to prevent the doublededuction of losses, any losses that arepassed through from an S corporation toshareholders first reduces the sharehold-ers’ basis in their stock.3 Stock basis can-not be reduced below zero. Deductionswhich exceed such stock basis thenreduce the shareholder’s basis in anyindebtedness owed by the S corporationto the shareholder, and losses whichexceed these limitations may not bededucted by the shareholders, but arecarried forward.4 As the story develops,the importance of the technical basis uti-lization and restoration rules willbecome evident.5

As of December 31, 2000, the Nathelseach had a zero basis in their stock and abasis of only $112,547 in the loans theymade to one corporation, and a basis of$3,603 in loans to another corporation.

They had no basis by reason of theirguarantees to the bank.6

Loan RepaymentThe problem arose in February 2001,

when their personal loans were repaid inadvance of corporate reorganization andrestructuring. After receipt ofthe loan repayment, theNathels then made capitalcontributions back to the cor-porations. The Nathels re-ceived a total of $1,622,050 incombined loan repaymentsand, in turn, made a combinedtotal of $1,437,248 in capitalcontributions. The partiesstipulated in Tax Court thatthe capital contributions weremade to secure release of theirrespective guarantees.

Repayment of a loan withreduced basis gives rise toordinary income if the debt is not evi-denced by a note.7 The Internal RevenueService said that the Nathels thereforemust report ordinary income on theexcess loan repayment over loan basis.

In an apparent desperate attempt toavoid this income, the taxpayers cleverlyasserted that their contribution to S cor-poration capital increased their loan

basis. They asserted that this should betreated as tax free income, and wouldtherefore increase basis under InternalRevenue Code § 1367. As one might sus-pect, the IRS viewed the situation quitedifferently, and stated that a capital con-tribution is not considered income and

would not therefore increasethe loan basis. However, capi-tal contributions wouldincrease the basis in their Scorporation shares resulting ina long term capital loss on thecorporate redemption. The TaxCourt and the Second Circuitagreed with the IRS.8

This was the worst resultfor the taxpayers – ordinaryincome, loss of an ordinarydeduction and long term capi-tal loss. Tax practitionersshould take careful noticebecause these situations are

not unusual in today’s economic climate.Although the decision is not necessarilysurprising, perhaps the result mighthave been different if the transactionwas altered somewhat. For example,what if the third shareholder or the cor-poration made a payment directly to thebank in order to obtain the releases

See S CORPORATIONS, Page 16

Robert S.Barnett

Nassau Lawyer ■ November 2010 ■ 3

Outsider trading –Lawyers’ liability for securities fraud

Corporation, Banking Securities Law & Business Management Focus


It’s a Tuesday afternoon at Domus and the joint is jumping.The probonothon for Nassau/Suffolk Law Services VolunteerLawyers Project is in full swing. But more significantly, thesounds of intense conversation and children playing can be heardthroughout the building. The dining room is full of people andcommotion. A group of kids are playing games at a table in thecenter of the room apparently unaware of their surroundings, asadults are meeting at tables set up throughout therest of the area. It has the appearance of a party, butit is FAR from it … it is a monthly session of theMortgage Foreclosure Clinic.

The work of our volunteers is a sight to behold butit’s also enough to make you cry. As a criminaldefense attorney, I often encounter people in distress,at a difficult time in their lives, and I help them getthrough it. There is often a clear basis for and accept-ance of responsibility for their circumstances.However, that does not compare to what I witnessedat a recent mortgage foreclosure clinic.

The faces in the room are not what you wouldexpect. They are recognizable as those of your par-ents, brothers, sisters, cousins and friends. They areoften educated but out of work and are, in manyinstances, overqualified for the employment theynow have. Such employment is insufficient to covertheir monthly expenses. Many have used unemploy-ment benefits, savings and retirement funds com-pletely. It’s enough to make a grown man cry.

In the center of the storm are the employees of NCBA and ourvolunteer lawyers who have given so much of themselves that youactually get a feeling of warmth in this den of despair. Our ownCaryle Katz, Val Zurblis and Gale Berg greet the 60 or so litigantsas they came through the door, trying to provide some comfort,

directing them to the various services that we have organized atDomus. These include real estate lawyers, bankruptcy lawyers,borrowers’ advocates, tenants’ advocates and Nassau/Suffolk LawServices. As they leave Domus, each and every person has someweight lifted from their shoulders; you can see it in their faces andhear it in their voices even if their problem remains unresolved.They express gratitude to these volunteers for easing at least a

part of their burden and making them more knowl-edgeable and understanding of the process.

Aside from our staff members, I want to applaudthe following volunteers: Harold Somer, MarcusMonteiro, Jon Michael Probstein, George Frooks,Russ Burcheri, Adam Browser, Will Sparks, DavidGreen, Eric Rosenblum, Vince Scula, KarenSchwimmer, Patrick Busse, Deborah Chadow, DavidSmith, Janet Eshaghoff, Paul Devlin, Nitin Sain,Michael Wiguton, Keiko Cervantes-Ospina, JasminePerez and William Roche. These individuals havegiven so much of themselves that I cannot put it intowords. They deserve a standing ovation and they arenot alone; many others do so on other days of theweek and at other foreclosure clinics.

This is truly what makes Domus so special. Out ofthe darkness comes the light provided by our staffand members on a daily basis without desire for thespotlight or accolades. It is no easy feat to give ofone’s time in this way. For those who can’t do it in the

Foreclosure Clinic, the Senior Clinic, WE CARE or student men-toring, please consider a financial gift to WE CARE orNassau/Suffolk Law Services through our Pro Bono solicitation.There are so many in need and so much for each of us to bethankful for. It will truly help, it will make you smile and it willhelp keep grown men from crying.

It’s enough to make a grown man cry!

PresidentMarc C. Gann, Esq.President-ElectSusan Katz Richman, Esq.First Vice PresidentMarian C. Rice, Esq.Second Vice PresidentPeter J. Mancuso, Esq.TreasurerJohn P. McEntee, Esq.SecretaryHon. John L. KaseExecutive DirectorDeena R. Ehrlich, Ph.D.

Managing EditorsNancy E. Gianakos, Esq.Gail Jacobs, Esq.Editor/Production ManagerMindy SantaMariaAssociate Managing EditorDeanne M. Caputo, Esq.Assistant EditorValerie ZurblisPhotographerHector Herrera

Focus Editor of the MonthAllison Shields, Esq. Corporation, Banking, Securities Law & Business Management

December – Deborah S. Barcham, Esq.Trusts & Estates, Elder Law, Hospital & Health Law

Upcoming 2011 Focus IssuesJanuary – Personal Injury & Workers’CompensationFebruary – Immigration LawMarch – The InternetApril – General Interest/OCA Issue

Committee EditorsSuzanne Avena, Esq.Deborah S. Barcham, Esq.David Blansky, Esq.Richard D. Collins, Esq.Christopher J. DelliCarpini, Esq.Nicole Di Girolamo, Esq.James Fiorillo, Esq.Avrohom Gefen, Esq.Charles E. Holster III, Esq.George M. Kaplan, Esq.Martha Krisel, Esq.Kenneth J. Landau, Esq.Douglas M. Lieberman, Esq.Bret L. Mercuris, Esq.Lisa M. Petrocelli, Esq.Lisa Ross, Esq.Daniel W. Russo, Esq.Shobhna Saini, Esq.Meryl D. Serotta, Esq.Rita Sethi, Esq.Wendy Sheinberg, Esq.Allison Shields, Esq.Stephen C. Silverberg, Esq.Andrij V.R. Szul, Esq.Howard Wexler, Esq. Chris Wittstruck, Esq.

Published by Long Island Business News (631) 737-1700; Fax: (631) 737-1890

PublisherJohn L. Kominicki

Associate Publisher Kathleen GobosGraphic ArtistNancy Wright

Nassau Lawyer (USPS No. 007-505) is publishedmonthly, except combined issue of July and August,by Long Island Commercial Review, 2150 SmithtownAve., Suite 7, Ronkonkoma, NY 11779-7348, underthe auspices of the Nassau County Bar Association.Periodicals postage paid at Mineola, NY 11501 andat additional entries. Contents copyright ©2010.Postmaster: Send address changes to the NassauCounty Bar Association, 15th and West Streets,Mineola, NY 11501.

The Official Publication of the Nassau County Bar Association

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Phone: (516) 747-4070Fax: (516) 747-4147www.nassaubar.org

E-mail: [email protected]

NassauLawyerNassauLawyer

From thePresident

Marc C. Gann


Cash flow is always an importantissue for law firms, but this economy andthe availability of online and “do it your-self” options has put additional pressureon lawyers. What should you do toimprove the chances that your clientswill pay you in full and ontime?

Talking to Clients About Fees

Every problem with fees,billing or getting paid, relatesback to the initial meeting withthe client. That meeting iswhere you determine whetherthe client is a good fit for yourpractice, which may includerejecting clients who areunwilling or unable to pay atthe outset – before work isbegun. The initial meeting setsthe stage for the entire engagement, andlawyers should be careful not to glossover financial matters.

Most people are uncomfortable talk-ing about money, including clients. Butwhether they want to talk about it or not,clients will certainly be thinking aboutmoney and how much everything you aretelling them is going to cost. Take thelead and address the issue of fees upfront with your clients – do not makethem ask first. Clients want to knowwhat they are getting and what they aregoing to pay for it.

Set the tone by addressing fees based

on the factors that are most important tothe client. Discuss total costs, not justhourly rates. Include fees and costs paidto others (filing fees, expert witness fees,deposition transcripts, outside evalua-tors, etc.). Most importantly, discuss how

your fees are tied to theresults1 the client can expectand the type of service you willprovide.

The Fee ProcessThere are nine steps in the

fee process. Step 1, as notedabove, is to identify the client’sdesired results – what is theoutcome they would like to see?What does the client want toaccomplish? How important isthis to the client? What out-comes are acceptable, if notideal? The remaining steps are:

• Step 2: Manage the client’s expecta-tions

• Step 3: Establish value• Step 4: Define the scope of the en-

gagement• Step 5: Identify variables• Step 6: Set the fee• Step 7: Establish billing practices• Step 8: Document it in writing – de-

velop you retainer agreement• Step 9: Manage the engagement on

an ongoing basisThis article will focus on steps 2, 3, 4,

5 and 7, where lawyers can head off themajority of their billing headaches.

Manage the Client’s ExpectationsYour client’s expectations will control

the engagement and the perception ofvalue that you provide. But as thelawyer, you must play a role in definingand re-shaping what some of thoseneeds, wants and expectations are andshould be. Just because your clientdesires a specific outcome does not meanit can be accomplished.

Temper the client’s expectations, goalsand desired outcome with your ownexpertise and experience. This must bedone not only during the initial consulta-tion, but throughout the process (seeStep 9, above).

Remember that clients have expecta-tions about outcome and services. Besure to discuss the client’s expectationswith regard to communication (methodand frequency) and other aspects of yourservices.

Establish ValueClients don’t really care how much

time you spend on a task. Clients careabout the result that is obtained, theyway they are treated and the total fee forlegal services. Clients do not alwaysknow what they are going to need orwhat services will be necessary. As thelawyer, you are the expert. It is your jobto educate your clients about the essen-tial features of your service and how yourservices benefit the client or help them toreach their stated goals.

In order to obtain the client’s agree-ment to perform your services, the clientmust understand why those services areimportant – from their perspective, notyours. Always tie value and fees to thebenefits received by the client, not thework performed by the lawyer.

Never “low-ball” the estimate.Estimating low on purpose creates a poorattorney-client relationship and is boundto mean more time and money spentchasing clients for fees and “justifying”your services after they have been per-formed. Clients that are truly shoppingonly on price are not the best clients tohave anyway; it is better to eliminate theprice-shoppers that do not value yourservices before they become problemclients. Not getting the client is betterthan getting the client, doing the workand not getting paid. If the client doesnot want to pay, either they are not theright client for you or you have not doneyour job of establishing value.

Define the Scope of the Engagement

Clients do not like surprises. Manylawyers run into fee problems withclients because the client requests addi-tional services or because unanticipatedcircumstances arise which lead to addi-tional work. Lawyers frequently tell methat in these situations, it is difficult toget the client to understand that an addi-tional fee may be required for the addi-

How to get paid: Collecting fees in tough times

See COLLECTIONS, Page 17

Corporation, Banking, Securities Law & Business Management Focus

Allison C.Shields

By Joseph W. Ryan, Jr.“The only person who can’t daydream

in the courtroom – is the court reporter,”quipped Chief Judge Raymond J. Dearieat the Grand Opening of The Gallery ofShorthand at the Central Islip FederalCourthouse on September 30, 2010. The opening reception was sponsored,in part, by the Nassau County BarAssociation.

The Gallery is the brainchild of feder-al court reporter Dominick M. Tursi, andthe product of investment by the Boardof Judges for the Eastern District of NewYork. The Gallery chronicles the origin ofshorthand from 63 BC, when Romanstatesman-philosopher-lawyer MarcusTullius Cicero invented a shorthand sys-tem. It continues through ten epochs,concluding with today’s “realtime” simul-taneous reporting of the spoken word.There are artifact replicas, 30 stenotypemachines, 50 books and 20 illustrationsof historic trials and events, includingthe Nuremberg prosecution of the Naziregime. Also prominently displayed arethe works of Sir Isaac Pittman andRobert Gregg, founders of the morerecent methods of shorthand.

Attended by more than 150 people,including Judges, lawyers, historians,and court reporters who travelled fromall parts of the U.S., the Gallery drewwaves of praise. Ms. Melanie Humphrey-Sonntag, President of the National CourtReporters Association, addressed theaudience: “There is nowhere a testamentof this magnitude – a permanent exhibitto the importance of the court reportingprofession.”

After conducting lectures and tours ofthe Gallery before the ceremony, Mr.Tursi addressed the audience andexpressed his deep gratitude to theBoard of Judges for affording him theopportunity to build a “shorthand muse-um” – believed to be the only one of itskind. The audience applauded Mr. Tursifor his work with a standing ovation.

The Gallery is open to the public duringregular court hours, and is located at therotunda entrance of the Courthouse. Moreinformation can be obtained through itswebsite: galleryofshorthand.com.

Don’t miss it!!

Mr. Ryan was Project Coordinator for theGallery, and served as Past President of theBar Association of Nassau County.


A GRAND OPENING –

The Gallery of Shorthand

COUNSEL TO THE PROFESSION

• DEPORTATION• EXCLUSION• REMOVAL• APPEALS• EMPLOYER SANCTIONS

• POLITICAL ASYLUM• WORK PERMITS• VISAS• “GREEN CARDS”• CITIZENSHIP

250 Fulton Avenue, Suite 200 • Hempstead • NY 11550(516) 489-8786 • FAX (516) 486-4933

Spanish SpokenMember: American Immigration Lawyers Association

Lecturer & Panelist: Nassau County Bar Association, Suffolk County Bar Association

• IMMIGRATION LAW •

LAW OFFICES OFHOWARD R. BRILL, P.C.


Corporate governance and the family businessClients who own small and family

businesses, particularly in these tougheconomic times, are often resistant tothe suggestion of spending money onlegal fees to document the ownership ofthe corporate entity, draft ashareholders’ or operatingagreement and/or documentthe responsibilities of key per-sonnel. The mere suggestionby counsel that the time andmoney be expended to proper-ly document the ownershipand operations of the businessimmediately becomes scruti-nized by the business personas just another self-interesteffort by counsel to churn fees.However, the small and familybusiness owner is oftenunaware that the legal feesassociated with such preventive meas-ures likely will be far lower than thefinancial and emotional cost of futurelitigation. This article addresses theneed to document ownership and tooutline the duties and responsibilitiesof key employees in small and familybusinesses.

It is usually not until a moment ofurgency, frequently occasioned by abreach of the trust between friends orfamily members, that the small busi-ness owners realize that there is aneed to definitively know who owns theshares of the corporate entity, or whothe officers and directors are, or who is

responsible for certain liabilities of thecompany. Now that a crisis has arisen,there is a mad scramble to locate theCorporate Kit, only to discover thatshares have never been issued and/or

there is no Shareholders’Agreement or OperatingAgreement. With no docu-mentation to support theowners’ respective claims,the corporate attorney mustinform his or her client thatit is too late to begin observ-ing corporate formalities,and that the business willlikely incur thousands of dol-lars in litigation fees andexpenses to determine theownership and/or responsi-bility for liabilities of thebusiness through litigation.

So how does it come to pass thatshares of stock are not issued when thebusiness entity is formed? Althoughthere are probably too many situationsto elaborate upon, a few scenarios cometo mind. It may be that the corporateattorney was involved at the inceptionand told not to do any work or put offby the client. The business entity mayhave been formed by an accountant orother non-lawyer. Perhaps the businessperson did not have the funds suffi-cient to pay his or her attorney to doanything other than form the corporateentity and order a Corporate Kit, orperhaps the business person impru-

dently believed that an oralunderstanding was sufficient.

Small businesses areoften informally startedbetween friends or familymembers with an idea, adiscussion and a hand-shake. In many instances,the business owners arebusy getting theirbusiness opera-tions up and run-ning and justwant to maketheir business “official” with the leastamount of time, effort and money. Sothe owners will quickly form a corpo-rate entity, obtain a tax identificationnumber and then store the unopenedCorporate Kit on an out-of-the-wayshelf to collect dust, while they focuson operational issues like financing,production and sales. However, oncethe often chaotic period accompanyinga business start-up is over, small andfamily business owners rarely returnto the Corporate Kit to issue shares ofstock or draft an operating agree-ment. Rather, they simply continue tooperate in reliance on the trustbetween family members or friendswithout taking the time to documentownership or enter into operationalagreements, exposing not only theirbusiness, but also their personal rela-tionships to damage and dissolution.

For example, ABC Corp., a thriving

family business, is owned by sec-ond and third generation fam-

ily members, Father A, SonB and Daughter C. ABCCorp. exercises its leaseoption to purchase themulti-million dollar ware-house complex where itsbusiness operates and

advances ten percentof the purchaseprice as a downpayment. Justprior to closing,

the corporate attorney for ABC Corp.forms a holding company, DEF Corp.,for the purpose of holding the realproperty separate and apart from ABCCorp.’s other business activities. Ofcourse, the shares of stock for DEFCorp. are never issued, and there is noshareholders’ agreement or other docu-ment which definitively identifies theshare owners. Unbeknownst to theshareholders of ABC Corp., the Son B,who has been acting as President ofABC Corp. begins to hold himself outas the President, sole owner and share-holder of DEF Corp. in correspondenceand financial statements, and files taxreturns on behalf of DEF Corp., inwhich he indicates that he is the soleshareholder. When confronted, Son Brefuses to acknowledge the other fami-ly members as owners of DEF Corp.and claims that it was the understanding

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See FAMILY BUSINESS, Page 17


Member ActivitiesSteve Eisman and Sam Ferrara,

both partners at Abrams, Fensterman,Fensterman, Eisman, Greenberg,Formato & Einiger, LLP, have beennamed to this year’s New York MetroSuper Lawyers 2010, a honorwhich only five percent of thelawyers in the New York metroarea receive. Mr. Eisman is sen-ior partner and the firm’s seniorlitigator and has been designat-ed as a Super Lawyer for thethird consecutive year. He over-sees both the Divorce andFamily Law and Civil Litigationand Appeals practices withinthe firm. Mr. Eisman hasreceived numerous awards,including an AV rating byMartindale Hubbell and selec-tion as one of the “Top TenLeaders in Matrimonial and DivorceLaw” by Digital Press. Mr. Ferrara is theco-chair of the Matrimonial and FamilyLaw practice. He concentrates his prac-tice on matrimonial and family lawissues, as well as transactional, corporateand commercial matters. Mr. Ferrara wasrecently named one of the “Top 10 Matri -monial and Family Attorneys Under theAge of 45” by the Ten Leaders programand for the third consecutive year desig-nated as a Super Lawyer. In addition, Mr.Eisman and partner Allan E. Silverwere recently recognized as “Top LegalEagles by the Long Island Pulse.

Farrell Fritz, P.C. partners John J.Barnosky, Ilene S. Cooper and JohnR. Morken (Estate & Trust Litigation);and John P. McEntee and James M.Wicks (Business Litigation) were select-ed for inclusion in 2010 New York SuperLawyers. Mr. Barnosky earned his LL.M.

in Taxation from New York UniversitySchool of Law and his Juris Doctor fromSt. John’s University School of Law. Ms.Cooper earned her Juris Doctor fromHofstra University School of Law. Mr.McEntee earned his Juris Doctor fromSt. John’s University School of Law.

Mr. Morken earned his JurisDoctor from New YorkUniversity School of Law. Mr.Wicks earned his Juris Doctorfrom St. John’s UniversitySchool of Law.

Jaspreet S. Mayall, apartner in the Telecommuni -cations, Bankruptcy andLitigation Practice Groups atCertilman Balin Adler &Hyman, LLP has been namedto the 2010 New York SuperLawyers List. The SuperLawyers review and selectionprocess includes a statewide

nomination process, peer review by prac-tice area and independent candidateresearch. In 2007, the AppellateDivision, Second Department of theSupreme Court of the State of New Yorkappointed Mr. Mayall as a member ofthe Committee on Character andFitness for the Second, Tenth andEleventh Judicial Districts, for a four-year term. He earned Juris Doctor fromthe Hofstra University School of Lawand was previously honored by NassauCounty as an Indian American Leader.

Robert J. Kurre was also named tothe 2010 Super Lawyers List as an elderlaw attorney. Mr. Kurre was selected forinclusion in New York Super Lawyers in2009 as well. He is certified as an elderlaw attorney by the National Elder LawFoundation as accredited by the

Hon. Stephen L.Ukeiley

IN BRIEF

COMMITTEE REPORTS

Joint Meeting of Sports,Entertainment & Media Law andIntellectual Property LawMeeting Date: 10/26/10Linda G. Fox, ChairAimee L. Kaplan, Chair

Joint committee meeting,and first meeting of the yearfor the Intellectual PropertyLaw Committee. Jill Newfield,Esq., spoke regarding intellec-tual property issues in the fieldof entertainment law. Since2002, Ms. Newfield has been asolo practitioner representingentities ranging from majorcable networks to new mediaventures, distribution compa-nies, talent and advertisingagencies, and producers, talentand entertainment industryexecutives. Immediately prior, Ms.Newfield served as Senior VicePresident, Legal and Business Affairsand General Counsel for VH1 and CMT,MTV Networks, a division of ViacomInternational Inc., and been providing inhouse counsel services since 1986.

Military Law Meeting Date: 10/12/10Daniel T. Campbell, Chair

Committee member Gary Port, Esq.,contacted the Matrimonial LawCommittee to hold a joint program. Thecommittee will also conduct a joint meet-ing with Labor & Employment LawCommittee on the Staub v. Proctor mat-

ter to be argued before United StatesSupreme Court on November 2, 2010.The committee will have a speaker at theNCBA Community Relations PublicEducation Committee program onNovember 1, 2010. Linda Nanos, Esq.,discussed changes in immigration law

which are favorable for activeduty members.

Labor & Employment Law Meeting Date: 10/12/10Rick Ostrove, Chair

Alyce Goodstein, Esq., andCarol McMahon from the U.S.District Court for the EasternDistrict of New York spokeabout the operation of thecourt clerk’s office, as well aspro bono work for the EDNY.

Construction Law Meeting Date: 10/14/10Adam L. Browser & Edmond D. Farrell, Co-Chairs

The committee discussed the recentlyenacted Construction Industry Fair PlayAct, and recent cases concerning therequirement of a home improvementlicense. Pia Riverso, Esq., led a discus-sion concerning the right to demand ajury trial in a mechanics’ lien foreclosureaction. Brief discussion held regardingthe distinction between general contrac-tors and construction managers, and itwas agreed that this topic should be apanel discussion at a future meeting.

Michael J.Langer

See COMMITTEE REPORTS, Page 19

See IN BRIEF, Page 20


Everyone needs to get away, whether it’s just for afew days or several weeks. The grind can be relentless.During these periods of respite we are able to clear ourminds and refresh ourselves both in body and soul.However, there are both pragmatic and ethical chal-lenges to be met in order to grant oneself this time torejuvenate.

For an attorney with a busy practice, allocating timeoff is not an easy task. Calendar calls, clientdemands and a workaholic mentality make itdifficult for attorneys to pry themselves awayfrom their offices and leave things in thehands of other competent people. Somebreaks are voluntary and by choice: a longneeded vacation, or perhaps several days offto take a college-bound child to see universi-ties. However, some time off from work maybe involuntary and for unhappy occasions:sickness, accident related injuries, emergencysurgery or a death in the family.

Careful planning for your chosen timeaway from the office should also address eth-ical considerations. This will enhance thepotential for a relaxing and enjoyable vaca-tion.

Make a plan and keep it. Plan your voluntary time awaywell in advance. Thereafter, be disciplined enough toschedule your calendar, court appearances, client meet-ings and trials around your planned time away. Self discipline regarding scheduling is sometimes difficultdue to the demands of individual cases and clients.However, it is important that this block of time that youare going to be away is kept unfettered by appoint-ments that will be difficult to change as you get closerin time to that date. Some attorneys schedule in abuffer day at the beginning of the vacation time to havean extra day to work in peace just in case emergencies

arise before you leave. It is also wise to plan an extraday at the end so you can reappear at your practicecalm and rested, not right off the plane!

Also, make sure that you and your partners staggeryour vacation time so that the office is always managedby the appropriate leadership. In this way, knowledge-able attorneys will always be available to speak withclients and handle emergencies.

Introduce co-counsel. In cases where courtappearances must go forward while you areaway, make sure a trusted partner, associateor co-counsel will be aware of your absence,and given the file with enough time to pre-pare adequately and to discuss the case withyou. If possible, include this other attorney insome discussion with the client. For instance,it would be disconcerting to a client to attenda deposition or other court proceeding, andupon arrival meet a different attorney for thefirst time. This might lead to a lack of confi-dence in your firm and a basic mistrust ofhow the case is being handled, despite thefact that you know that his or her case will behandled expertly by the attorney that has

appeared in your place. At the very least that attorneyshould make arrangements to speak to the client inadvance so that the client is comfortable with hisappearance in your place and with the matter movingforward as scheduled.

Master technology and use it to your advantage. Availyourself of the latest technology that can be of greatassistance to you in your firm. While out of the office,you may want to use a BlackBerry or other device tokeep you updated on your emails and phone messages.Also, using a netbook or laptop and being logged intoyour own office software, enables you to check in atwork if you deem it necessary while lounging at the pool

at some vacation hideaway. Groom your support staff. Make sure that your staff is

aware of the exact dates of your vacation. Secretaries,paralegals and receptionists alike can make your lifemuch easier when you are away. As most attorneysknow, the secretarial staff probably knows more aboutthe day to day inner workings of your office than theactual attorney who is focusing on the cases at hand.Many items about which clients call, may be handledadequately by your support staff. Allow your staff theopportunity to grow in their positions: show confidencein them and allow them to handle some tasks in servic-ing your clients. (Of course, within the parameters ofethically acceptable non-legal practice.) Many non-legalquestions that clients have need attention immediatelyand those questions can be answered by your compe-tent support staff, lightening your burden when youarrive back from your vacation. For while you may berefreshed in returning from a well deserved getaway,the burden of coming back to a mountain of work on

Managing your practice from afar

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See PRACTICE, Page 19



By Terrence TarverAmid the nice, sunny day and cool

air of autumn, the Battle of the LawSchools, which is the annual softballtournament between the NassauCounty Bar Association, HofstraUniversity School of Law, Touro LawSchool and St. John’s UniversitySchool of Law, got under way on thefields of Hofstra.

In the first game between theNCBA and Hofstra, the Bar had atough first couple of innings. Despitethe best efforts of the team, lead by Past President ChristopherMcGrath, the win fell to Hofstra.However, the NCBA rallied in thesecond game, taking care of Touro.Because St. John’s was unable tomake it this year, Hofstra took onTouro for the championship in thefinal game.

After a strong rally by Touro tomake the game 6-3 in the 5th inning,Hofstra responded in the 6th and 7thinnings, putting the game out ofreach and taking back the title fromthe NCBA.

Congratulations to a tremendouseffort by this year’s NCBA team:Christopher McGrath, TerrenceTarver, Brian Sullivan, JeffreyBromfeld, Kim Garelick, ErikGonzalez, Steve Rodway, JonathanTand, James Iannone, JonathanBartov, Michael Scarpa, JeffHalbreich and Ben Kestenbaum.

Hofstra Law wins battle of Law Schools Softball Tourney

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McDonough and McDonough, LLP1400 Old Country Road, Ste 102, Westbury, NY 11590

516-333-2006

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Named Best Disciplinary Defense Firm in New York in the 2010 New York Law Journal Poll


On Thursday, November 18th, theNassau Academy of Law (NAL), will pres-ent a Dean’s Hour entitled “Requirementsof Foreign Consulate Notification Uponthe Arrest/ Detention Of A ForeignNational.” The Dean’s Hour will addressthe unique challenges facing the CriminalDefense and Immigration Bars concerningConsular Notification1 mandates underU.S. and International law. If not handledproperly, Consular Notification cases mayraise profound constitutional questionsgiven the U.S. Supreme Courtdecision in Sanchez-Llamas v.Oregon (548 U.S. 331), in whichthe high court held that statecourts did not have to excludeevidence admitted into court inviolation of Article 36 of theVIENNA CONVENTION ONCONSULAR RELATIONS(1963; U.S. 1960 at 21 UST 77;TIAS 6820; 596 UNTS 261). Atissue are key concerns of evi-dentiary exclusion or prosecuto-rial preclusion, and violationsand sanctions underInternational Law affectingrelations of the U.S. with other countries,the fundamental compromising of aclient’s constitutional right to a fair trial,or even potential civil, criminal or politicalpost-deportation retributions in theclient’s home country. For all its goodintentions, the legal implications ofConsular Notification may emerge as adouble edged sword against client andattorney alike, with attorney errors com-promising clients’ liberties or life, andpotentially triggering ethical, misconduct,or even malpractice liability.

Legal practitioners do not have occa-sion for any but the most general encoun-ters with International Law. Imperativesof International Law apply when a “for-eign national”2 is a party in a legal matterin this country, yet is subject to multiplejurisdictions, i.e., that of the U.S. (“hostcountry”) and a foreign country (“sendingcountry”). When a foreign nationalbecomes involved in a criminal, civil orimmigration matter, federal and interna-tional laws may act as competing forcesaffecting the outcome, sometimes eventrumping the basic liberties of the respon-dent detainee/arrestee. Moreover, ele-ments of cross-border legal principles maycountervail, complement or conflict eachother. Hence, U.S. counsel should acquiresome appreciation of the dynamics of thisinteraction.

This country has entered into myriadinternational agreements whose princi-ples and protocols were mutually agreedupon with other sovereigns, and then rati-fied by the Senate.

In legal practice, the landscapebecomes more convoluted when anothercountry, such as Ukraine (U.S.S.R. 1964)has laws devolving from predecessor sov-ereigns, while the legal principles of thesuccessor sovereign have been radicallychanged. For example, when Ukraine

finally declared its independ-ence on August 24, 1991 (as didthe other vassal states of theSoviet Empire in that generalperiod), some of the Ukraine’slaws and international agree-ments to which earlier theUkrainian Soviet SocialistRepublic was a signatory, effec-tively, have remained in place todate. Since such legal devolu-tion-by-default is not uncom-mon in Interna tional Law,counsel should be particularlyattuned to this variable whenanalyzing the legal implications

of a criminal, immigration or businesscase in the operative context of a foreigncountry’s current juridical status as a sov-ereign. This applies even more so withrespect to international treaties that tiedthe U.S. to the current sovereign’s prede-cessor state. Applicable derivative legalelements of the foreign states’ laws andregulations must be considered, given thepotential for episodic modifications in thecourse of the sovereign’s successive itera-tions. Such iterations, whether in intent,spirit or letters, also may have some bear-ing on a case.

Since precepts of International Laware also encountered when U.S. Lawinterfaces with that of another nationaljurisdiction, counsel must be acutelyattuned to such nuances. Otherwise,complications can emerge if a foreignstatute confers some controlling effect.Hence, in cross-border business practice,the attorney needs to have sufficientfamiliarity not only with relevant U.S.laws and procedures, but also with for-eign legal requirements entailing evenbasic conceptual definitions. For exam-ple, when entering into a contract-basedtransaction involving a counterpart for-eign jurisdiction whose prevailing linguafranca entails a sui generis definition,construction or enforcement of what is

Consular Notification underthe Vienna Convention Appellate Counsel

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Nassau Academy of Law with Bold (Bridge Over Language Divides) and NCBA Criminal Court Law and Procedure Committee present

“Requirements of Foreign Consulate Notification Upon the Arrest/Detention of a Foreign National”

Thursday, November 18, 12:30-2 p.m. at Domus• Brief Background Of The Vienna Convention On Consular Relations,

Article 36, Andrij Szul• Procedures And Requirements For Foreign Consul Notification,

Paul R. Delle • Consequences In Criminal Proceedings Of Foreign Counsel Notification

Or Failure To Notify, Peter Tomao• Consequences In Immigration Proceedings Of Foreign Consul

Notification Or Failure To Notify, Howard R. Brill

High level Consulate Officials from Columbia, Jamaica, Russia and Ukraine will be in attendance.

To reserve, go to www.nassaubar.org>MCLE>Calendar/Reservations, or call the Academy at (516) 747-4464.

Andrij V.R. Szul

See CONSULAR NOTIFICATION, Page 20

DEAN’S HOUR DODD, FRANK, AND REFORM----OH MY !!!!

ANNUAL SECURITIES ARBITRATION UPDATE

Monday, November 22, 2010 12:30 - 2 p.m. Lunch & Discussion

With Alternative Dispute Resolution, Commercial Litigation & Corporations, Banking, and Securities Committees

Wall Street in turmoil, Congressional probes, angry investors. It’s a jungle out there. And who’s in the middle of it all? You and FINRA.

FINRA, the Financial Industry Regulatory Authority, is the nexus where all these combative forces come together to hash out their difficulties by means of arbitration. Whether you prosecute cases for aggrieved investors or disgruntled securities industry employees, defend industry players accused of wrongdoing or serve as an arbitrator or mediator (or both) at FINRA, this program will appeal to you. Whether you are an experienced practitioner, a new or diversifying attorney, this program will provide valuable insight to this vibrant and booming practice area.

Anticipated topics include: Latest global developments in arbitration,

particularly the leading cases on judicial intervention, arbitrability, and arbitrator authority.

The “manifest disregard” standard for overturning an arbitrator’s decision---alive and well or dead and buried?

The Dodd-Frank Reform Act’s new statutes that affect the process and ongoing studies that may yet lead to new laws).

Handy practice tips, including Q & A

Keynote Speaker J. Scott Colesanti, Associate Professor of Law Hofstra University School of Law Former NY Stock Exchange Division of Enforcement

Moderator Anthony Michael Sabino, Esq. Sabino & Sabino, P.C. Professor of Law, St. John’s University Tobin College of Business 1.0 Credits in areas of professional practice

NASSAU ACADEMY OF LAW

NCBA Tech Center Westlaw Seminars

Never a charge! All seminars 1 CLE Credit Nov. 17 10:00 AM Westlaw Next

Tech Center Seminars Still $45 per session /1.5 CLE Credit Each Intro to Time Slips 8:30 AM Nov. 16, Dec. 14 Intro to Time Matters 8:30 AM Nov. 18, Dec. 16

At NCBA Headquarters, 15th & West Streets, Mineola

Please register in advance or classes may be cancelled. To register call 516-747-4464 x228

DEAN’S HOUR

REQUIREMENTS OF FOREIGN CONSULATE NOTIFICATION UPON THE ARREST/DETENTION OF A FOREIGN NATIONAL Thursday, November 18, 2010 12:30 - 2 p.m. Lunch & Discussion

With the Criminal Law & Procedure Committee and BOLD (Bridge Over Language Divides)

Brief History Of The Vienna Convention On Consular Relations, Article 36 Andrij Szul, Esq., Bellmore Procedures And Requirements For Foreign Consul Notification Paul R. Delle, Esq., Hempstead Consequences In Criminal Proceedings Of Foreign Counsel Notification Or Failure To Notify Peter Tomao, Esq., Garden City Consequences In Immigration Proceedings Of Foreign Consul Notification Or Failure To Notify Howard R. Brill, Esq., Hempstead Moderator: Howard Brill, Esq., Hempstead 1.0 Credit in areas of professional practice

DEAN’S HOUR WHAT YOU SHOULD KNOW ABOUT THE

2006 PENSION PROTECTION ACT

Wednesday, November 10, 2010 12:30 - 2 p.m. Lunch & Discussion On January 1, 2010 a new provision of the 2006 Pension Protection Act created what has become a “Linked Annuity,” a combination of an Annuity combined with a Long Term Care Insurance rider.

The NEW law created several new and significant planning opportunities for your clients. Learn about:

basics of the 5 types of Annuities including the “Linked Annuity” benefits of each type of Annuity planning strategies they offer when they are and are not appropriate Three types of Long Term Care Contracts

Guest Speakers: Vincent J. Russo, Esq., Vincent J. Russo & Associates, PC, Westbury Henry Montag, CLTC, Henry Montag Associates, Jericho

Moderator: James R. Klein, Esq., Floral Park 1.0 Credit in areas of professional practice

Meet High Level Consulate Officials

from Columbia, Jamaica, Russia,

Ukraine..and more!

BANKRUPTCY ROUNDTABLE 2010

Monday, November 15, 2010 5:30 - 8:30 p.m. Light Supper

A panel discussion on recurring issues affecting bench and bar, and recent case developments. Hon. Dorothy T. Eisenberg, Hon. Robert E. Grossman and Hon. Alan S. Trust, Judges, U.S. Bankruptcy Court, Central Islip, will be joined by Bankruptcy Law practitioners. Moderator: David A. Blansky, Esq. LaMonica, Herbst & Maniscalco LLP, Wantagh 3.0 Credits: .5 ethics, 2.5 professional practice

FORENSIC EVALUATIONS &

MENTAL HEALTH IN FAMILY COURT MATTERS

Wednesday, November 17, 2010 5:30 - 8:30 p.m.

This program will discuss forensic evaluations and trial techniques in custody, visitation and termination of parental rights proceedings involving mental illness.

Defining Forensic Psychiatry and selecting an expert Effective use of the Psychiatric Forensic Evaluation Direct examination expert witness View from the Bench

Speakers: Carolyn R. Wolf, Esq., Abrams Fensterman, Esq., Lake Success Julie Y. Low, M.D. , New York Moderator: Hon. Edmund M. Dane, Judge, Family Court, Nassau County 3.0 Credits: .5 ethics, 2.5 professional practice

18B*

DEAN’S HOUR

BUILDING GREEN ON LI: DEVELOPMENT &

TRANSACTIONAL ISSUES Friday, November 12, 2010

12:30 - 2 p.m. Lunch &Discussion With NCBA Environment, Construction and Real Property Law committees Issues related to green development and building projects, the model green building code, local code requirements, negotiating leases in green buildings.

Recommended for attorneys, architects and real property developers.

Moderator: Lilia Factor, Esq. Chair, NCBA Environmental Law Committee Law Office of Frederick Eisenbud, Commack 1 Credit in areas of professional practice


November - December 2010 MEDICARE LIENS, MEDICARE

SET-ASIDES in PERSONAL INJURY

LITIGATION (the next major issue!) and MEDICAID LIENS

Tuesday, November 30, 2010 5:30 - 8:30 p.m. Light Supper

In recent years, few issues have been more confusing and contentious than Medicare and Medicaid related matters in the field of personal injury litigation. This vital area of the law is still unsettled and all lawyers must know the significance of the impact of a potential lien before finally settling any personal injury case. Do you know when and how litigants must take Medicare’s interest into account to ensure compliance with the statutes? This program is designed to give you up to date practical advice on how to deal with these important issues. Panel: Joan Lensky Robert, Esq., Kassoff Robert & Lerner, Rockville Centre

Brett Newman, The Lien Resolution Group, Bardonia Moderator: W. Russell Corker, Esq., Shayne Dachs Corker Sauer & Dachs, Mineola 3.0 Credits: .5 ethics & professionalism and 2.5 areas of professional practice

DEAN’S HOUR

THE NUTS AND BOLTS OF REPRESENTING PARENTS

AND CHILDREN IN ARTICLE 10 PROCEEDINGS

Wednesday, December 1, 2010 12:30 - 2 p.m. Lunch & Discussion

Overview of Article 10 of the Family Court Act Role of the Judge, Deputy County Attorney, Case

Worker, Attorney for the Parents and Attorney for Children

Hearings and evidentiary standards Statutory requirements for achieving permanency

for children in foster care The Family Treatment Court

Guest Speakers Hon. Hope Schwartz Zimmerman Supervising Judge, Nassau County Family Court Hon. Robin M. Kent Presiding Judge of Family Treatment Court Nassau County Family Court 1.0 Credit in the areas of professional practice

PREPARING FOR TRIAL: AN EXPERT’S POINT OF VIEW

Wednesday, December 15, 2010

5:30 - 8:30 p.m. Light Supper Attendees will hear from a panel experts on what is necessary to prepare an expert for trial. These well-qualified experts will offer practical advice, tips and strategies as to what it takes to win your case.

3.0 Credits: .5 ethics & professionalism and 2.5 areas of professional practice

OUR PANEL Roy Lubit, M.D., Ph. D., Forensic Psychologist, NY

Nicholas Belizzi, Accident Reconstruction/Traffic Engineer/Civil Engineer, Holmdel, NJ Richard Obedian, M.D., Orthopedic Surgeon Island Spine and Sports, Hicksville

Moderator Deanne M. Caputo, Esq. Sullivan Papain Block McGrath & Cannavo P.C., Mineola

Mark Your Calendar! BRIDGE THE GAP January 22 & 23 2011 16 CLE credits 7 Professional Practice 6 Skills, 3 Ethics

Nassau Academy of Law TO REGISTER OR ORDER: Circle your selections in the correct columns and total amount due.

•By Check: Make checks payable to NAL and mail with form to NAL, 15th and West Streets, Mineola, NY 11501

•By Credit Card: FAX completed form with credit card information to 516-747-4147

•Order Online: www.nassaubar.org >MCLE>Calendar, Reservations

Seminar Reservation Form

Date Seminar Name P E

TOTAL Credits Member Non-

Mem 5 Session

Ticket 18b Nov. 10 DH- 2006 Pension Protection Act 1.0 1.0 $38 $55 No

Nov. 12 DH-Building Green on LI: Development & Transactional Issues 1.0 1.0 $38 $55 No

Nov. 15 Bankruptcy Roundtable 2010 2.5 0.5 3.0 $110 $145 Yes

Nov. 17 Forensic E valuations & Mental Health in Family Court Matters 2.5 0.5 3.0 $100 $135 Yes Yes Nov. 18 DH-Consular Notification 1.0 1.0 $38 $55 No

Nov. 22 DH-Annual Securities Arbitration Update 1.0 1.0 $38 $55 No

Nov. 30 Liens & Medicare Set-asides 2.5 0.5 3.0 $110 $145 Yes

Dec. 1 DH-Representing Parents & Children in Article 10 Proceedings 1.0 1.0 $38 $55 No

Dec. 15 Preparing for Trial: An Expert's Point of View 2.5 0.5 3.0 $110 $145 Yes

FALL 2010 CD and DVD Order Form

Area of Law Seminar Name

P E

TOTAL Credits

CD/DVD Member

CD/DVD Non-

Member Seminar Code

Business/Corp DH-Annual Securities Arbitration Update 1.0 1.0 35 /40 50 /60 DH112210

Civil Litigation Annual CPLR Update-w/ Profs. Alexander & Simons 2.5 0.5 3.0 105/150 120/160 0CPLR118 Preparing for Trial: An Expert's Point of View 2.5 0.5 3.0 105/150 120/160 OPREP1215 DH-Your "First" Car Accident Case 1.0 1.0 35 /40 50 /60 DH101210

Criminal Law Annual Criminal Law Update 18B 2.5 0.5 3.0 105/150 120/160 0CLU1029 DH-Animal Cruelty Law & Enforcement 1.0 1.0 35 /40 50 /60 DH101310

Estate/Elder Law

DH- 2006 Pension Protection Act 1.0 1.0 35 /40 50 /60 DH111010 DH- Estate Planning Malpractice 1.0 1.0 35 /40 50 /60 DH93010 Health Care Decision Making 2.5 0.5 3.0 105/150 120/160 0ADV1006

Environmental DH-Building Green on LI: Development & Transactional Issues 1.0 1.0 35 /40 50 /60 DH111210

Family Law/Mat Forensic E valuations & Mental Health in Family Court Matters 2.5 0.5 3.0 105/150 120/160 0BNKTBL1115 "New" Matrimonial Rules - It's Happening in NY! 2.0 2.0 70 /80 100 /120 0NEWMAT1004 DH-Representing Parents & Children in Article 10 Proceedings 1.0 1.0 35 /40 50 /60 DH120110

General Practice

DH- Your "First" Landlord/Tenant Case 1.0 1.0 35 /40 50 /60 DH110410 Guardian Ad Litem 2.5 0.5 3.0 105/150 120/160 0GAL0920 Improving The Performance Of Your Law Firm 2.0 2.0 70 /80 100 /120 0FIRM0927 Practicing Law in a Fragile Economy 2.5 0.5 3.0 105/150 120/160 0FRAG1028

Immigration DH-Consular Notification 1.0 1.0 35 /40 50 /60 DH111810 Subtotal (Shipping & Handling Included)

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Preparer Tax Identification Number (“PTIN”) – Attention:Estate, elder care and other attorneys

If you expect to sign any (and I do meanANY – there is no de minimus rule)Federal tax return for which you receivecompensation, you need a PTIN (PreparerTax Identification Number) from theInternal Revenue Service(“IRS”). If your answer is ‘no,’you can skip the rest of thisalert.

Certified Public Accoun tantsand non-licensed storefront taxpreparers seem to be aware ofthis new IRS initiative but myexperience over the last monthfrom speaking with fellow attor-neys is that many never haveheard about a PTIN (which hasbeen in existence for manyyears but was not required fortax preparation) and the rulesannounced by the IRS onSeptember 28, 2010 requiring all compen-sated tax preparers (and, in many cases,many of their employees such as parale-gals) to register with the IRS before thetax preparer signs and files his/her firsttax return on or after January 1, 2011.

This author has had a PTIN for manyyears from the time that it replaced theneed to include a tax preparer’s socialsecurity number on the income tax return.There is no telling how many clients havetheir tax preparer’s social security numberon tax returns prepared in the pre-inter-net age. You still may be using your socialsecurity number when you sign off on theFederal Estate Tax Return (706) or

Federal Gift tax Return (709) prepared byyou or someone in your office. Well, thatera is closing fast.

While you are encouraged to continuereading this article, here is the IRS link for

you to obtain your first (andonly) PTIN or ‘refresh’ (a newIRS term) an existing PTIN.You are not required to enteryour current PTIN when regis-tering but ‘refreshing’ profes-sionals will be assigned thesame number they have hadproviding all of the newly submitted informa-tion matches what the IRS already has on file.http://www.irs.gov/taxpros/ arti-cle/0,,id=210909,00.html

Since you can’t copy andpaste the above unless you’re

reading an online version of this article,you can go you www.irs.gov; click on thetab that says “Tax Professionals;” and drilldown and around until you find the “SignUp Now” information. I’ll call some oddi-ties to your attention later in this articlebut otherwise it’s a pretty easy procedure.You will need to have certain informationavailable before you go through theprocess but you’ll be alerted to that factbefore you begin. If you choose not to fileonline, you can access new form W-12 (IRSPaid Preparer Tax Identification Number(PTIN) Application) which was issued inSeptember and (already) revised inOctober. Make sure to use the October

2010 edition if you are doing a paper appli-cation. Did I mention that I have four inch-es of material since this process began?That’s the thickness as I write what youare reading. The IRS alerts you that apaper application will take 4-6 weeks toprocess. For some readers, that may be toolong to wait. I registered on the first daythat it could be done online – September28th. The online process should be instan-taneous although for me, who was ‘refresh-ing’, it took the IRS six days to compare mysubmission to what it already had on filefor me. My approval arrived, via email, onSunday, October 3rd. I suspect that lengthof time to dissipate as the process evolves.On October 15th, I received a postcardfrom the IRS (not that envelope with theeagle on the front connoting an audit orunexpected assessment) saying that if itwasn’t me who created my PTIN onlineaccount, I should immediately contact thePTIN telephone hotline (see below). This isjust an IRS precaution to make sure thatit was really me who applied for the PTINand not some nefarious prankster whohad all of the necessary information toapply in my name.

Well, I’m all set come January 1st. Nowlet me help you get set.

Here is what you’ll need to begin:• Your Social Security Number. • Personal information (name, mailing

address, date of birth). • Business information (name, mailing

address, telephone number). This line iscompleted only by self-employed practi-

tioners or individuals who are owners,partners or officers of a tax preparationbusiness.

• Your name, address, and filing statusEXACTLY as it appears on the mostrecent individual income tax return filedby you.

• Explanations for any felony convic-tions in the past 10 years (Hopefully youcan check ‘none’).

• Explanations for problems with yourU.S. individual or corporate tax obliga-tions.

• Credit or debit card for the $64.251

PTIN user fee (When the author applied,AMEX was not accepted. That still may bethe case when you apply. Have your Visa,MasterCard, or Discover or debit cardavailable.)

• Your CAF (Central Authorized File)number. That’s the number that you puton tax powers of attorney. If you do notknow this number, it should not preventyou from obtaining a PTIN but if you thinkthat you have one, it’s best to include it.

• If applicable, any U.S.-based profes-sional certification information (CPA,attorney, enrolled agent, enrolled retire-ment plan agent, enrolled actuary, certi-fied acceptance agent, or state license)including certification number and state ofissuance. If you don’t list your professionallicense number, you will be treated as a taxpreparer who is subject to the new IRStest-taking and continuing education

See PTIN Page 22

Alan E. Weiner


The following is the address given by Hon. Andrew M.Engel during Pro Bono week.

Shortly after I agreed to speak here today, I was athome thinking about what I might say to a room full ofpeople who serve their community, when my daughtercame home with her new boyfriend, with his purpleMohawk haircut, his pierced eyebrow, pierced nose ringand tattooed arms; and, I heard my wife say to her, “Hedoesn’t look very nice,” to which my daughter indignant-ly replied, “Oh, he’s nice. If he weren’t nice, why would hebe doing 500 hours of community service.” But that’s notthe type of community service we are recognizing today.

Actually, when I think about pro bono service, volun-teerism and the practice of law my mind immediatelygoes to one of my personal heros and inspirations –Atticus Finch – the protagonist attorney in “To Kill AMockingbird.”

Now, it’s been some time sinceI last read the book; so, just tomake sure I was not romanticiz-ing the character or imaginingthe relevance of Finch to this dayI googled “Atticus Finch” and “probono” and found a couple of inter-esting things: First, this year isactually the 50th anniversary ofthe first publication of HarperLee’s only novel; Second, I am notalone in my admiration forAtticus Finch and the things forwhich he stands. I found thatover the course of the year, therehave been dozens of articles writ-ten and speeches given express-ing many of the same sentiments I express today.

So, why Atticus Finch? Well, I assure you, that what Isay now cannot do justice to the eloquence of the depic-tion provided by Harper Lee; but, if you have read thebook, or have even seen the movie, I think you under-stand the full flavor of the man and what he represents.If you have not read the book you really should. Let megive you a few examples from the book

In one passage Finch’s children, his son Jem and hisdaughter Jean Louise, a/k/a “Scout” are reading theevening newspaper when they see a caricature of Finchshowing him chained to a desk, diligently writing whilesome “frivolous-looking girls,” I just love that descrip-tion, but I’ll leave it to you to imagine what a “frivolous-looking girl” is, are calling to Finch, who ignores themand keeps writing. Scout is offended by the cartoon; but,Jem, explains to her that the cartoon is actually a com-pliment because it shows that Finch, in Jem’s words,“spends his time doin’ things that wouldn’t get done ifnobody did ‘em.” This character trait is confirmed else-where in the book by Miss Maude, one of Finch’s neigh-bors, who explains that many in the town trust Finch todo the right thing, which they may not. Like the timethere is a rabid dog walking down the street, endanger-ing the neighborhood, and the sheriff, Sheriff Tate, isstanding in the street with Finch as the dog approach-

es. Now, Sheriff Tate has his rifle and could shoot thedog, but he hands his rifle to Finch to shoot dog, whichhe does. There is also the time Finch is asked to defendTom Robinson, a black man accused of raping a whitewoman, in rural Alabama in the 1930’s; a case Atticusknows he can’t win even though his client is innocent.When asked by his daughter why he took such a case,Finch tells her that there were a number of reasons;but, in his words, “The main one is if I didn’t I couldn’thold my head up in town.”

While the Robinson case lies at the heart of the book,it is clear that it is not the only pro bono case handled byAtticus Finch. It’s not that he is unconcerned with pro-viding for himself and his two children, in fact Leedescribes him as earning “a reasonable income from thepractice of law.” Its that he recognizes the professionaland personal importance of assuring that even the less

fortunate have appropriaterepresentation. Like whenWalter Cunningham, a dirtpoor farmer from MaycombCounty, comes to Finch’s homeone night seeking legal assis-tance and advises Finch thathe did not know when hewould ever be able to pay, andFinch’s response was, “Let thatbe the least of your worries,Walter.” Similarly, followingthe guilty verdict in theRobinson case, Finch comeshome to find that members ofRobinson’s church sent himchickens, rolls, pork, tomatoes,

beans, pigs knuckles – “enough food to bury the family,”as Harper Lee describes it; and, Finch’s tearful responseis to instruct his housekeeper, Calpurnia, who is a mem-ber of the same church, to tell them that he is grateful,but “they must never do this again.”

For me the most telling and poignant moment involv-ing Atticus Finch comes at the courthouse, immediatelyafter Tom Robinson is found guilty, and is now facing thedeath penalty. As Finch collects his papers and placesthem in his briefcase he turns to walk down the centeraisle of this small country courthouse, towards the exitdoor; the down stairs of the courthouse, which was occu-pied exclusively by the white residents of the county isempty, but the segregated upstairs gallery is filled withmembers of Mr. Robinson’s church and neighborhood;and, as Atticus walks down the aisle they silently rise inunison; and the Reverend, Reverend Sykes, tells Scout,who is sitting upstairs in the gallery, “Miss Jean Louise,stand up. Your father’s passin.” And you just know thatFinch is shown this profound respect, not just because hefought hard to defend an innocent man, or becausealthough he lost he helped peel back the veneer andexpose the evils of bigotry and segregation, but becauseof the dignity and humanity with which he treated allmembers of this society, particularly the less fortunate.

Now I am well aware that Atticus Finch is a fictional

character; but as I regularly come into this building, andI see the work that is done here and, I look out at all ofyou, knowing everything you do, I see that he is alive andwell in each of you.

I am always pleasantly amazed each month readingthe Nassau Lawyer to see the extraordinary work doneby the pro bono attorney of the month, knowing thatthere are many more who have done the same thatmonth. The members of the BOLD task force provide aninvaluable service helping to extend legal services to thenon-English speaking members of our county. In thesetroubled times, the members of the Mortgage ForeclosureTask Force have put forth a Herculean effort to help keepstruggling residents in their homes. Members of theAssociation’s mentoring program give selflessly of theirtime just to touch the life of a troubled young teen. Themembers of We Care work tirelessly all year long, raisinghundreds of thousands of dollars, every penny of whichgoes to clothe, feed and house truly needy residents of thecounty. Members of the Young Lawyers’ Committee, withhelp from some of us older lawyers, work to refurbish ahome in the county each year. There is so much more; thisbarely scratches the surface.

In truth, after rehearsing this list of selfless activities,I realize that neither I nor anyone else needs to beinspired by a fictional character, when you all representthe very best our profession has to offer, and provide thatinspiration every day through the commitment of yourtime, knowledge, heart and humanity.

Our Association and our community is a better placefor your significant contributions; and, I am honored torise in recognition of you and all of your; and, I am confi-dent, given all that you do, that when you pass others riseas well. Congratulations.

Hon. Andrew M. Engel, Dean, Nassau Academy of Law

Now I am well aware that AtticusFinch is a fictional character; but as I regularly come into thisbuilding, and I see the work thatis done here and, I look out at allof you, knowing everything youdo, I see that he is alive and wellin each of you.

Nassau Bar to distribute Cyber Bullying Prevention DVDMore than 150 parents, teachers and

community leaders crowded into Domuson October 7 to attend Nassau CountyBar Association’s Community Relationsand Public Education Committee semi-nar, “Cyber Bullying and Sexting: TheNew Games of Youth.” In an effort toreach even more people with importantinformation to help protect children fromharmful “cyber bullying,” NCBA will dis-tribute the recorded seminar on DVD tolocal school districts.

Cyber bullying is defined as when theInternet, cell phones or other devices areused to send or post text or images intend-ed to hurt or embarrass another person.On the DVD, a distinguished panel ofattorneys, police officials and communityleaders discuss the nature and dangers ofcyber bullying and sexting, social andlegal consequences of cyber bullying, andnew approaches to address the issue.

“There is a growing concern amongparents and educators to prevent abuse

by cyber bullies, which is why we decid-ed to present this program, and to recordit to help spread the word,” noted NCBACommunity Relations and PublicEducation Committee Chair Gale D.Berg. NCBA’s Hector Herrera recordedthe seminar and edited the DVD.

A panel of distinguished experts addressesa packed house at Domus on the dangersof cyber bullying and texting at the recentpublic education seminar. From left areBrian Herrington, Assistant Director ofIntergovernmental Affairs, NYS Office ofthe Attorney General; Mindy Perlmutter,Director of Education at the Nassau CountyCoalition Against Domestic Violence; UdiOfer, Advocacy Director for the New YorkCivil Liberties Union (speaking); ProgramChair Lois Schwaeber, Director of LegalServices for the Coalition AgainstDomestic Violence; Nassau County PoliceOfficer John Dockswell, and AssistantDistrict Attorney Brian Heid, NassauCounty District Attorney’s Office.

Hector H

errera

On heroes and inspiration – Atticus Finch and you

sought by the Nathels? Perhaps anoption could also have been granted tothe other shareholder to purchase theNathels’ shares at the current fair mar-ket value, which would have likely beena modest amount due to the corporateloss history and debt obligations. Thefacts of the case do not indicate that theNathels were aware of the likely tax con-sequences, and that indicates a possiblepractice liability risk for the attorneysand accountants involved.

Payment to Secure ReleaseAn alternative approach advanced by

the Nathels was that they are entitled toan ordinary loss under IRC § 165(c)(2),which provides a deduction for lossesincurred in a transaction entered into forprofit. Such deductions and losses havebeen allowed for payments made tosecure a release of a personal guaran-tee.9

The Second Circuit clearly stated thatin order to utilize a § 165(c)(2) deduction,the taxpayer must meet two tests. Thetaxpayer must not only show that thetransaction was entered into for a profit,but must also prove that the “primarymotive” must have been a profit motiveand release from the personal guaran-tee.10 Although the Court noted that insome jurisdictions the taxpayer mustprove that the “sole purpose” of the pay-ment must be to secure a release fromthe loan guarantee, such was not therequirement in the Second Circuit.Therefore, because a case in New York isappealable to the Second Circuit, the pri-mary motive test applies.

After correcting the Tax Court regard-ing the proper standards, the SecondCircuit held that the Nathels failed tomeet the test. The stipulation was foundto be insufficient. Although the stipula-tion with the IRS before the Tax Courtstates that the capital contributionswere made in order to secure the release,the stipulation did not state that thiswas the primary purpose. The Court heldthat multiple purposes were present andit was not possible to determine whatportion, if any, of the taxpayers’ capitalcontributions were primarily made inorder to obtain the release of personalliability.

The taxpayers were unable to provethat the capital contribution was madein order to obtain the release, despite thefact that the redemption or sale was atfair market value. The IRS did not dis-pute that a profit motive was present,

but that the taxpayers failed to showthat the primary purpose of the capitalcontribution was the release of liability.

Again, this seems to be an example ofpoor planning and poor documentation.It is hard to imagine a more “primary”motive for the contributions to capital, asthese seemed to be required by the thirdshareholder to grant his release. The factthat the redemption was transacted atthe full fair market value of the corpora-tion also reinforces this conclusion.However, the Second Circuit requiredmore direct proof. A statement to thateffect in the agreement might have savedthe day.

ConclusionIn today’s economic climate, many cor-

porate transactions are developing inwhich shareholder losses and guaranteesare present. Tax practitioners need to beever vigilant of the S corporation basisand loss utilization rules and limitations.Shareholder guarantees do not providebasis for loss utilization and that repay-ment of reduced basis loans may giverise to ordinary income. Payments tosecure the release of personal obligationsmust be carefully structured. In Nathel,better planning and documentationmight have resulted in a more favorableoutcome for the taxpayers.

Robert S. Barnett, CPA, JD, MS (Taxation) is afounding partner of Capell Barnett Matalon &Schoenfeld LLP, Attorneys at Law, in Jericho,NY and heads the Tax and Estate Planningdepartments. He can be reached by phone at(516) 931-8100 or by e-mail at [email protected].

1. 105 AFTR 2d 2010 (2d Cir. June 2, 2010)2. IRC § 1366(a)(1)(A).3. IRC § 1367(a)(2)(B).4. IRC § 1366(d); IRC § 1367(b)(2)(A). Any net

increase in basis in a subsequent year will beapplied to first increase and restore the basis inshareholder debt before it is applied to increasethe shareholder’s basis in stock. IRC §1367(b)(2)(B).

5. Id.6. See Maloof v. Commissioner, TCM 2005-75 (April

6, 2005).7. Treas. Reg. § 1.1367-2; Cornelius v.

Commissioner, 494 F.2d 465 (5th Cir. 1974).8. The Court stated that they were not aware of a

single case supporting the Taxpayer’s positionthat a contribution to capital would be treatedas income, and that IRC § 118(a) specificallyprovides that “[i]n the case of a corporation,gross income does not include any contributionto the capital of the taxpayer.”

9. Duke v. US, 39 AFTR 2d 77-847 (S.D.N.Y.January 31, 1977); Shea v. Commissioner, 36 T.C.577 (1961) aff ’d, 327 F.2d 1002 (5th Cir. 1964).

10. See, Ewing v. Commissioner, 213 F.2d 438 (2dCir. 1954). The Court refused to follow contraryand more lenient guidance described by the10th Circuit in Condit v. Commissioner, 333F.2d 585 (10th Cir. 1964) (the Court found noprimary purpose but nevertheless allowed adeduction under IRC § 165(c)(2)).


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tional work. Believe it or not, this prob-lem also relates back to the initial con-sultation with the client and the mannerin which you have defined the scope ofthe engagement.

The New York Code of ProfessionalResponsibility, Rule 1.5(a)2 specificallyaddresses scope, and acknowledgeschanges in scope arise during the courseof legal engagements:

A lawyer shall communicate to aclient the scope of the representationand the basis or rate of the fee andexpenses for which the client will beresponsible. This information shall becommunicated to the client before orwithin a reasonable time after com-mencement of the representation andshall be in writing where required bystatute or court rule…. Any changesin the scope of the representation orthe basis or rate of the fee or expensesshall also be communicated to theclient.

Some lawyers are afraid to giveclients too many specifics about whatmay happen during the course of theengagement and what additional feesmight be incurred because they do notwant to chase client away. They areafraid if they discuss these issues, theclient will feel overwhelmed, particularlyif another lawyer down the street is will-ing to simply quote one fee. But considerthe alternative: Is it better to do the workand have the client walk away withoutpaying, fight you on the fee, or tell othersthat you performed a “bait and switch”

on them? Defining the scope of the engagement

includes detailing the typical steps orstages which the engagement will movethrough, and the work that will be per-formed by your or your firm. What does

lease negotiation entail? Is your repre-sentation limited to one controversy?Spell out the work that you will performfor the client under your engagementagreement. Consider creating options orlevels of service at differing fees, whichinclude some of the more commonadjustments that might arise during anengagement.

It is easier for clients to adapt to andaccept the unexpected if the initial scopeof the engagement is well defined andagreed upon in advance.

Identify VariablesOne of the scope-related mistakes

lawyers make when talking to clients isthe failure to identify the variables thatmay cause result in a change in scopeand an increase in fee. Even when thescope is well defined, it is advisable to bespecific about what is not included and todiscuss what might go wrong and whatconstitutes additional services. Identifythese variables up front for the clientand how the client’s behavior might con-tribute. For example, if your fee assumesthe client will be obtaining documenta-tion, let them know that if they do not doso and you are required to obtain the doc-uments yourself, an additional fee will berequired.

These variables may differ from clientto client. Even clients who appear tohave identical problems may have differ-ent wants and needs or different expec-tations regarding service which mayaffect the fee. For example:

• Does the client want something in arush?

• Does this client require additionalreporting?

• Will you be dealing with one personwithin the organization or more thanone?

• Will working for this client meanthat you have to forego other business orpostpone other work?

You do not need to anticipate everypossible scenario, but you should articu-late the kinds of problems or contingen-cies that may arise in order to avoid sur-prises.

Establish Billing Practices – TrainYour Clients and Make it Easy to Pay

Your actions set the tone for yourclients and how they will treat you

throughout the engagement. It isincumbent upon you to explain thesepractices and procedures and get yourclient to acknowledge and agree tothem at the outset. If you are consis-tent, your clients are much more likelyto be consistent. Let your clients knowwhen to expect your bill, what the billwill contain, and when and how theclient is expected to pay. Then followthrough. If you do not respect your ownprocedures, clients will not respectthem either.

If you are hesitant, unsure or unclearabout your fees, the method or timing ofpayment or other terms, clients will nottake your fees seriously.

Of course, the best billing practice ofall is to deliver an exceptional clientexperience and follow through on all ofthe promises you make to a client. Whenyou do that, collecting your fee will bemuch easier.

Allison C. Shields is President of LegalEase Consulting, Inc. a practice manage-ment and business development consultantwho helps lawyers create productive, prof-itable and enjoyable law practices anddevelop fee structures that work forlawyers and their clients. Contact her [email protected] or at631-642-0221, or visit her website,www.LawyerMeltdown.com, or blog atwww.LegalEaseConsulting.com.

1. Ethically, lawyers cannot guarantee results, butyou can and should discuss the client’s desiredoutcomes and what will be required to reach theclient’s goals.

2. Fees are addressed in the New York State Codeof Professional Responsibility, Rule 1.5, Fees andDivision of Fees, which can be found at:http://www.nysba.org/Content/NavigationMenu/ForAttorneys/ProfessionalStandardsforAttorneys/RulesofProfessionalConduct.pdf.

COLLECTIONS ...Continued From Page 5

in the family that he would be the sole owner of thewarehouse complex, despite ABC Corp. paying thedown payment and mortgage on the property. Onecan easily imagine that besides the raging indiges-tion at the next family Thanksgiving dinner, the sub-stantial financial cost to unscramble this matterthrough the court system could have been avoidedhad the family simply expended a relatively smallamount of money in legal fees to document the own-ership when DEF Corp. was formed.

Whether dealing with an existing client or a newone, when no shares of stock have been issued andthere are no shareholders’ or operating agreements,how does the corporate attorney determine what theownership percentage is or who is entitled to assetsand responsible for the liabilities of a small business?

In New York State, the Courts have recognizedthat closely-held corporations and small and familybusinesses often rely on family bonds and trust, andcorporate formalities are frequently neglected. Thus,the Courts can look to other evidence of ownership inthe absence of issued shares of stock and sharehold-ers’ agreements. Kun v. Fulop, 71 A.D.3d 832 (2dDept. 2010) leave denied, 15 N.Y.3d 701 (2010). Themost significant factor which will be considered isevidence of payment or an obligation to make pay-ment for the shares of the stock of the corporation as,pursuant to Business Corporation Law §504, pay-ment of consideration for shares of stock is requiredto attain shareholder status. United States RadiatorCorp. v. State, 208 N.Y. 144, 149-50 (1913); Heisler v.Gringas, 90 N.Y.2d 682, 688 (1997); LaRosa v.Arbusman, 74 A.D.3d 601, 604 (1st Dept. 2010).

But what about the tax returns? Are the taxreturns a definitive indicator of the ownership of thecorporate entity? It is clear that a party will bestopped from taking a position which is contrary to aposition taken on his or her tax returns, and thus, thesigner of the tax return will be held to the designationof ownership set forth in the return. Friedman v.Ocean Dreams, LLC, 15 Misc. 3d 1146(A), 2007 N.Y.Slip Op. 51188(U), at 11-12 [2007], aff’d, 56 A.D.3d719 (1st Dept. 2008). But what about the non-signingparty? If the non-signing party received either a copyof the tax returns which contained the ownership des-ignation or a K-1 without objecting to an inaccurate

designation of ownership, it can be argued that thenon-signing party is precluded from his or her laterobjection. See, e.g., In re Rivera, 9 Misc.3d 1102(A),2005 N.Y. Slip Op. 51378(U) at 7-8 [Surr. Ct., NassauCo., Sept. 1, 2005]. But what if the non-signing partydoes not receive copies of the tax returns, does notreceive a K-1 (where he or she is unaware that theyare entitled to a K-1) or where the corporate entity isa C-Corp? How then will ownership be determined? Aprudent attorney will consider equitable ownershiparguments, including the imposition of a constructivetrust, if the facts so warrant.

Another important matter which should beaddressed and documented at the earliest point intime is the duties and responsibilities of the keyemployees. In the context of a small or family busi-ness, this would mean documenting the duties andresponsibilities of the owner/employees. The client’sresponse to this suggestion is usually, “we have anoral understanding of who is going to do what.”However, when asked to describe the duties andresponsibilities of each owner/employee, either theclient is unable to do so or the respective owners

have a drastically different version of this “under-standing.”

It is important not only have a written description ofthe duties and responsibilities of each key employee,but also to tie the performance of those duties andresponsibilities to compensation. Understanding thatbusiness is dynamic and things do change, this pro-posed written guideline should be revisited and updat-ed at logical intervals and/or annually.

For example, the owners of a successful widget fac-tory bring their respective sons into the business,both earning the same compensation. The son of thefirst shareholder works endless hours managing theproduction line and logistics, and the other share-holder’s son joins the USTA and travels for ninemonths every year to play competitive tennis, withthe dream that somehow his tennis prowess willtranslate to the sale of millions of widgets to thelinesmen. This is clearly a formula for disaster forthe business down the line. However, by enumeratingthe duties and responsibilities of each son, as well astying compensation to some objective criteria, suchas production of widgets and widget sales, this dys-functional situation can be avoided. So if, in fact, thetennis linesmen do have a need for widgets, and salescan be generated while on tour, any disparity in com-pensation between the two sons can be appropriatelyproportioned.

Although it is quite easy to provide criticism afterthe fact, the point here is that as counsel for a smallor family business, it is important to stress the needto document corporate ownership at the earliest pos-sible occasion, with at least annual meetings withthe corporate attorney to document any anticipatedchanges. Likewise, and equally important, smallbusinesses should document the duties and responsi-bilities of its key employees and tie the performanceof such duties and responsibilities to the employees’compensation – even if the key employee is an owner.The prevention aspect can be best summed up by theslogan of the Midas Muffler commercial in which themechanic states “you can pay me now or pay melater,” thus implying that the costs associated withprevention are substantially less than the later costto cure. So the message to the small and family busi-ness owners is – it’s your choice.

Richard G. Gertler, Esq. is a partner of the firm Thaler &Gertler, LLP, which concentrates its practice in the areas ofcommercial litigation, bankruptcy, and corporate gover-nance.

FAMILY BUSINESS ...Continued From Page 7


Contributions may be sent to: NCBA, Attn: WE CARE, 15th & West Streets,Mineola, NY 11501 or at: www.nassaubar.org

Donors In Honor OfFranchina & Giordano, PC Happy ThanksgivingMarilyn K. Genoa Birth of Matthew & Charlotte, grandchildren of Estelle &

Gene GinsbergDouglas J. Good Judge Marano’s Recognition by the Jewish Lawyers’ Kathleen Roll Judge Denise Sher’s BirthdayDeena R. Ehrlich Birth of Molly Kate daughter of Bob Colleen SchalkPhilip Milone Norman’s Janowitz’s election to the Supreme Court

Donors Speedy RecoveryCollins McDonald & Gann Helen PhillipsJudy & Marc Gann Helen Phillips

Donors In Memory Of

Marilyn K. Genoa, Esq. Lester Chase Kathryn D.Hopkins Antonius Brandveen, father of Hon. Antonio BrandveenSusan Katz Richman Nancy DeeganSusan Katz Richman Phillip Aldridge, husband of Eleanor & father of Tim Aldridge, Esq.Ellen Rosen Wanda HipolitHon. Denise Sher Rosalie TrovatoHon. Denise Sher Eve Nadel, mother of Retired Judge S.Michael NadelHon. Denise Sher Hector Juan Bahamonde. Brother of CharlesHon. Peter B. Skelos Rosalie Trovato, mother of George Trovato

WE CARE

Hon. Ruth C. BalkinKenneth L. Marten

Susan Katz RichmanHon. Denise L. Sher

In Memory of Paul Zsuffa, Husband of Pina

In Memory of Susan Levering

In Memory of Gustave Lemke, Father of Dennis Lemke

In Memory of Paul Muscarella, Brother of Nate Muscarella

In Memory of Arline Besunder, Wife of Harvey Besunder

In Memory of Ruth Lieberman, Mother of David Lieberman and Mother-In-Law of Susan Katz Richman

Hon. Ruth C. BalkinCollins McDonald & GannDeena & Jerry EhrlichFranchina & GiordanoJudy & Marc Gann

Marilyn K. GenoaHon. Frank & Joanne Gulotta Jr.Hon. John L. KaseBarbara & Artie KrautElaine Leventhal

Hon. Peter B. SkelosHon. Elaine Jackson StackHon. Ira WarshawskyWE CARE Advisory Board

Hon. Pauline BalkinHon. Ruth C. Balkin

Elaine Miller Hon. Denise Sher

Collins McDonald & GannJudy & Marc Gann

Hon. Steven Jaeger Hon. Denise Sher

Franchina & Giordano Hon. Fred & Mindy Hirsh Hon. Denise Sher

Emily F. FranchinaHon. Denise Sher

Hon. Elaine Jackson StackHon. Frank E. Yannelli

Deena R. Ehrlich

We Acknowledge, with Thanks, Contributions to the WE CARE Fund

Kenneth L. MartenWE CARE Advisory Board

Deena R. EhrlichElaine Leventhal

Stephen Gassman

In Memory of Paul Barbara Brother of Dominic Barbara


your desk, some of which could havebeen handled by support staff, makesyou question why you went away in thefirst place.

When your absence from work is notvoluntary, but is instead due to a per-sonal emergency such as an accident, ill-ness, or death of a family member, youhave limited opportunity to plan inadvance. When that happens, you mustbe able to deal with the emotionalupheaval in your own life as wellas adjust your practice onthe fly. The voluntaryplanning you havedone for your vaca-tion can be yourfall-back position inan emergency. A well-trained, responsiblesupport staff and firmlawyers who have metwith your clients – evenon a limited basis – willgo a long way to helpalleviate problems associated with yourimmediate departure.

Your absence from your practice canlead to some ethical issues which mustbe dealt with in a prudent and profes-sional manner. Absences from your prac-tice because of your own or family illnesscan still unintentionally lead to theappearance of neglect of your files. Inthat case an attorney may face discipli-nary and grievance action. This scenariobegs the question: When does an extend-ed illness or an absence due to a familyemergency act as mitigating circum-stances against a client’s claim of neglectof his case? Grievance committeesthroughout the State of New York havewrestled with this complex issue.

Because the attorney is a fiduciary forhis client, Second Department courtshave been unwilling to completely dis-miss charges of misconduct except inunusually well-documented cases wherethe totality of the circumstances showedthe attorney to be honest and concernedabout his client but overwhelmed by hisown medical or emotional hardships.

For example, in In re Goodman, anattorney faced disciplinary charges andgrievances for neglect of legal mattersentrusted to him. Despite the testimonyof the attorney’s psychiatrist that theconduct was a result of suffering from an“adjustment disorder,” the AppellateDivision was not persuaded. The SecondDepartment held that the attorney mis-conduct was just plain negligence, rootedin his status as a sole practitioner with aheavy case load and busy trial schedule.Despite the attorney’s remorse and com-

pliance with his interim suspension, theSecond Department suspended him fromthe practice of law for three years.1

Similarly, in In re Berkowitz, an attor-ney was charged with neglect of clientmatters. The attorney cited as mitigatingfactors his remorse, the absence of venalintent, and commencement of psy-chotherapy to combat his depression andemotional turmoil generated by thegrave illnesses of his wife and son.Despite those mitigating circumstancesand based on the totality of all the oth-ers, the Appellate Division, SecondDepartment suspended the attorneyfrom the practice of law for five years.2

In addition, in In re Berkman, anattorney was charged with failing to

adequately supervise thoselawyers in his firm who were

handling particular mat-ters on behalf ofclients. The chargedattorney cited as mit-igating circum-

stances the illnessand eventual demise of

his wife, who also acted as officemanager for his practice. Even underthese circumstances the court deter-mined that he should be suspended forthree years.3

In contrast, in In re Easton, theAppellate Division, Second Departmentwas persuaded by the submission ofreports and affirmations from the attor-ney and court appointed psychologiststhat established that the attorney’s ill-ness was a substantial factor in thebehavior pattern which resulted in thegrievances filed against him. On thatbasis, as well as other mitigating andextenuating circumstances, the attorneywas only publicly censured.4

Clearly, each individual case standsand falls on its own merit. However, theSecond Department courts have shownthat they will only be sympathetic to apoint, but not to such a degree as to ulti-mately jeopardize clients’ cases.Therefore, it is essential to have a busi-ness structure in place to be relied uponin your time of need.

Anthony J. Emanuel, Esq. is on the Board ofDirectors of The New York State TrialLawyers’ Association, President of TheColumbian Lawyers’ of Nassau County, Inc.,and a Senior Partner in the law firm ofBornstein & Emanuel, P.C. in Garden City, afull service plaintiff's personal injury law firmthat represents parties who have been seri-ously injured. Mr. Emanuel can be reached [email protected].

1. In re Goodman, 904 N.Y.S.2d 455 (App. Div.2010).

2. In re Berkowitz, 730 N.Y.S.2d 118 (App. Div.2001).

3. In re Berkman, 863 N.Y.S.2d 701 (App. Div.2008).

4. In re Easton, 858 N.Y.S.2d 332 (App. Div. 2008).

PRACTICE ...Continued From Page 9

Anna AcquafreddaBridgette Marie CafaroAmanda CarlsonKaren CharringtonFrank C. Dell’AmoreShana L. DouglasRosemarie IaconisMargaret D. KranzJonathan B. MarinRobin E. NackmanSimona Papazian

Kimberly C. PrestonChristina Antonina RalloBrooke SanteramoLori A. WaxmanDavid N. WechslerHeather Lara WintersMadelin Zwerling

Students

Allison E. BedermanMatthew S. BlumJose F. Canosa

Eric P. DawsonGeorge J. EmbrianoClarence C. GrayCatherine N. Jones-HankinsGreg MannVictoria MauriBrooke NuofferKatharine E O’DetteSudhir SachdevJoshua D. SeidmanDaniel StrassmanMegan M. Tomlin

We welcome the following new members

NCBA New Members

William H. Englander Susan Dworkin Levering Paul Joseph Muscarella

Attorneys

COUNSEL TO THE PROFESSION

AV RATED LAW FIRM ESTABLISHED IN 1954Representing Clients In The Areas Of:

GRIEVANCE COMPLAINTSGRIEVANCE PROCEEDINGS

Edwin J. Mulhern, Esq.

Former Chairman of Nassau County Bar Assn. Grievance CommitteeFormer Member of the Grievance Committee For The 10th Judicial District

Past President Criminal Courts Bar Assn. of Nassau County

One Old Country Rd. • Carle Place • New York 11514 • 516-294-8000

Edwin J. Mulhern, Esq.

Young LawyersMeeting Date: 10/19/10Brian P. Sullivan & Terrence Tarver, Co-Chairs

At the meeting, topics discussedincluded Battle of the Law Schools,Judiciary Night, Lunch with theSupremes, and next month’s speaker,Past NCBA President Christopher T.McGrath, who will be speaking on“Rainmaking: How to bring in Business.”The meeting was well attended by 23committee members.

The focus of the meeting was a CLEprogram headed by Honorable ElizabethPessala, Acting Village Justice ofWestbury, and Sarika Kapoor, Esq., aSenior Court Attorney in the NassauCounty Supreme Court LawDepartment. Lecture included “the do’s

and don’ts” of motion practice and a fullquestions and answer session.

Senior AttorneysMeeting Date: 10/26/10Joseph Canzoneri, Chair

Rita Stein, Esq., spoke on the recogni-tion of elder abuse and what remediesare available where elder abuse occurs.

Appellate PracticeMeeting Date: 10/27/10Lauren Bristol, Chair

The committee discussed future plansfor the year ahead including CLE programs.Michael J. Langer, an associate in the LawOffices of Kenneth J. Weinstein, is a formerlaw clerk in the United States Court ofAppeals for the Second Circuit, and a formerDeputy County Attorney in the Office of theNassau County Attorney. Mr. Langer's prac-tice focuses on matrimonial and family law,criminal defense and general civil litigation.

COMMITTEE REPORTS ...Continued From Page 8

In Memoriam

an “agreement,” the foreign jurisdictionmay well refer to the agreement as a “con-tract” even though it might not be enforce-able by a U.S. court if it lacks a commonlaw contract’s fundamental requisites. Insuch a case, the preferred choice of juris-diction may also need to be established.Counsel should approach the transactionby distinguishing between legal systems,especially in light of such common con-flicts as parameters of dispute resolution,enforcement of remedies, counsel’s ethicalobligations and other responsibilitiestoward adverse parties. Even as founda-tional a precept in the U.S. as the pro-scription against ex parte communicationis not universally acknowledged.

Likewise, in cases entailing rights orliberties of a client subject to cross-borderlegal authorities, counsel must discernvarious portal determinants:

1. Interface of U.S. vs. foreign laws, andwhich of the these infer dominance in thisdichotomy;

2. Resulting touchstone variable thatwould affect a case’s outcome;

3. Tactical decisions to avoid trapsbetween these layers not only of conflict-ing laws, but perhaps some concomitantinternational political pressures thatcould affect U.S. enforcement;

4. Where certain national laws wouldprevail over others, their residuary strate-gic ramifications as provoked by discretelegal variables that could arise as

immutable factors in the case.In the practice of Criminal Law or

Immigration Law, the confluence of pre-vailing law enforcement practices vis-à-visthe adjudicatory process (whether incourts or in administrative law proceed-ings, such as U.S. Immigration Court), a

criminal case with a predicate trackinvolving Immigration Law is especiallyfraught with peril. Because a foreignnational is also subject to the laws of hissending country, counsel must considerwhich laws would drive the case’s strategy.In other words, what could be the desiredripple effect of “stacking” applications fromdivergent cross-jurisdictional codicestoward the most effective outcome?

Another case variant tugging at thedelicate articulation between U.S. andsending countries’ laws derives fromoverarching international agreements(treaties, compacts, conventions, etc.)when defending a U.S.-credentialed for-eign diplomat (“consular officer”)3 enjoy-ing diplomatic immunity. The operativecomplication is that, in contrast to a for-eign national who is not a bona fide

diplomat, a foreign diplomat possessingthe requisite statutory diplomaticaccreditation by the U.S. Department ofState still is not considered subject per seof U.S. jurisdiction, but only of the send-ing country.

Yet the physical premises and com-pounds (i.e., aggregated premises orareas), together with their curtilages,regardless of whether owned or leased,and used to conduct a foreign sovereign’sofficial business, must be assured protec-tion from harm by the U.S. insofar as thisterritory is deemed the discrete “soil” ofthe foreign country. Foreign diplomatsare not entirely exempt from U.S. crimi-nal and other statutes, especially when amatter entails public safety and welfare.So when defending a foreign diplomat inany proceeding, counsel must learn towork within the limitations imposed byU.S. and international protocols. Evenwith their diplomatic immunity, foreigndiplomats entering into a contractualagreement in the U.S. are subject to localcivil and criminal penalties for certainviolations or breaches, with two mainexceptions (standing and enforcement ofremedies)

The defense and transactional lawbars need to recognize these overlappinglegal boundaries, since counsel must fac-tor in the contradictions flowing from thestatus of a foreign national, whetherdiplomat, temporary or term-specifiedvisitor, legal invitee, or documented orundocumented resident alien. When rep-resenting a foreign national detailed orarrested in the U.S., a particularly

volatile yet lesser known issue involves“Consular Notification” provisions underthe Vienna Convention. Further compli-cation may entail varying U.S. enforce-ment practices concerning suchNotification, depending on where the vio-lation has occurred (charging jurisdic-tion) vs. the background of the sendingcountry’s statutory engagement.Depending on the foreign country, itsnotification requirement upon the U.S.may be mandatory, optional or silent(nullity).

The Dean’s Hour will address many ofthese important questions.

Andrij V.R. Szul, Ph.D., J.D., has practiced andlectured in the area of International andBusiness Law for more than 30 years, repre-senting and consulting international and diplo-matic entities and sovereigns. He has alsoserved as a NYS Administrative Law Judge,Senior Attorney, Child Abuse Prosecutor, andCommercial Court Law Arbitrator. While a LawProfessor at St. John’s University College ofBusiness, he published two e-books (onContracts and Business Organizations), andhas served on the undergraduate and graduatefaculties of Penn State University, StateUniversity of New York, and universities inUkraine and Germany.

1. CONSULAR NOTIFICATION AND ACCESS (3rdEd., Sept. 2010), U.S. Department of State, Officeof the Legal Advisor and Bureau of ConsularAffairs; www.travel.state.gov/consularnotification;http://travel.state.gov/law/consular/consular_753.html.

2. The term foreign national does not imply that theperson necessarily is a citizen of the sending orany other country.

3. See various consular officers’ rankings at CON-SULAR NOTIFICATION AND ACCESS, ibid.,Part 3.


CONSULAR NOTIFICATION ...Continued From Page 11

Foreign diplomats arenot entirely exempt fromU.S. criminal and otherstatutes, especially whena matter entails publicsafety and welfare.

American Bar Association and is a former chair of theElder Law, Social Services, and Health AdvocacyCommittee of the Nassau County Bar Association.

Thomas F. Liotti, an attorney in Garden City;Village Justice in Westbury and an Adjunct Professorin the subject of Litigation in the Legal StudiesDepartment of Nassau Community College, wasrecently named Special Counsel for Legal Services byNassau County in the following areas of law: federallitigation, municipal law and appellate practice. Hewas also recently a guest speaker at SyracuseUniversity School of Law on the subject of ProfessionalEthics: Fighting Against Attacks By Judges,Prosecutors, Fellow Attorneys and Former Clients. Mr.Liotti is the author of a Practice Guide to Village, Townand District Courts. Mr. Liotti previously served asGeneral Counsel to the Wyandanch Union Free SchoolDistrict and as Special Counsel to the Town ofHuntington. He has been a Village Justice for twentyyears and previously served as the Village’s CodeReview Commission. He is also a former President ofseveral legal and community organizations includingthe Kiwanis Club International and the ColumbianLawyers’ Association, and a recipient of the MartinLuther King, Jr. Award from Nassau County.

Mark S. Mulholland, managing partner and asenior member of the Litigation Department ofRuskin Moscou Faltischek, P.C., was selected toreceive Long Island Business News’ 2010 “Fifty or SoAround 50 Award.” The award recognizes and honorsindividuals for their leadership in business, support ofprofessional and not-for-profit organizations and acommitment to the needs of the local community. Mr.Mulholland was elected a Board Member ofBrookhaven Memorial Hospital Medical Center in2008 and has served as a Trustee and Vice Presidentof the Board of Education in his town and wasappointed a Public Member of the New YorkMercantile Exchange Adjudication Committee. Helectures and writes often on litigation topics, is a fre-quent contributor to the New York Law Journal andserves as a mediator in the Eastern District of NewYork’s Federal Court Mediation Program.

Jennifer B. Cona, managing partner of theMelville based elder law and estate planning firmGenser Dubow Genser & Cona (GDGC), has been

appointed to the Long Island Alzheimer’s Foundation(LIAF) Board of Trustees. For the past decade, Ms.Cona has served on the LIAF Legal Advisory Boardand will continue in that capacity. Located in PortWashington, the mission of LIAF is to improve thequality of life for those living with Alzheimer’s diseaseand related dementia. In 2007, Ms. Cona establishedGDGC Charitable Events, a not-for-profit organizationthat has sponsored many programs including the LongIsland Fight for Charity, Midnight Run, and “SeniorDreams Come True” project serving low-income sen-iors. She is also a New York State Certified Guardian,Court Evaluator and Counsel to incapacitated personsand is accredited by the Department of Veterans Affairsfor the preparation, presentation and prosecution ofclaims for Veterans benefits and on the advisory boardof the Legacy of Love, an organization dedicated to lifeplanning for children with autism. Ms. Cona has alsobeen the recipient of Long Island Business News’ “Top50 Most Influential Women in Business” award, the “40under 40 Rising Stars on Long Island” award and theOutstanding Pro Bono Attorney award from Touro LawSchool as well as being named in “Who’s Who in Womenin Professional Services.”

Richard G. Fromewick, the Chair of the TaxCertiorari and Condemnation practice of Meyer,Suozzi, English & Klein, P.C., was appointedSecretary of the Executive Board of the FriedbergJCC in Oceanside. Friedberg JCC provides social andeducational programs and services in addition to oper-ating programs for individuals in need of all ages andeconomic levels.

Regina Brandow, was recently asked to partici-pate in a Three Village Septa panel discussion titledTeamwork Approach to Providing a Program forFamilies with Special Needs. Ms. Brandow’s topic con-centrates on Supplemental Needs Trust that coincidewith SSI benefits, Guardianship & Special Needs &Estate Planning.

Brian Andrew Tully has released a guidebooktitled How To Plan For Aging Parents 2010. Mr. Tullyis certified elder law attorney by the National ElderLaw Foundation and a member of the Board ofDirectors of the Life Care Planning Law FirmsAssociation. Earlier this year, he received accredita-tion from the United States Department of VeteransAffairs to represent and assist veterans and theirspouses in the preparation, presentation and prosecu-tion of claims for benefits, including the Aide andAttendance Pension. Mr. Tully is also the founder of

ElderCare Resource Center, Inc.Joseph Trotti recently formed Star 50 Creative

LLC, a film company to produce and release a new doc-umentary about the Defense of Marriage Act. The filmis titled Left Out in America: Legislating Life, Loveand LGBT. Mr. Trotti concentrates his practice on fam-ily law. Joseph Milizio was a producer of the film.

David S. Feather, of the Law Offices of David S.Feather located in Garden City, New York, recentlyparticipated in a panel discussion at the first annualLong Island Veterinarian Owners’ meeting inFarmingdale. Mr. Feather spoke about employmentand labor issues as they relate to such businesses.

James P. Joseph, a partner at Joseph & Teeter,P.C., and Thomas Foley, a partner at Foley, Griffin,Jacobson & Faria, LLP, are co-Chairs of the first annu-al Massapequa Turkey Trot to be held Thanksgivingmorning. All proceeds will benefit the Leukemia &Lymphoma Society where James serves on the Boardof Trustees.

New Partners, Of Counsel and AssociatesJack L. Libert has rejoined Forchelli, Curto,

Deegan, Schwartz, Mineo, Cohn & Terrana, LLP asCounsel in the Firm’s Real Estate department. Hisarea of concentration is co-op and condominium offer-ings, finance, administrative law, zoning law, land useplanning and related litigation. He was a foundingpartner in the law firm of D’Amato, Forchelli, Libert,Schwartz and Mineo. Mr. Libert served on the Town ofOyster Bay Board of Zoning Appeals from 1993through 2005. In 1997 he became Chairman of thatboard and served in that capacity until 2005.Thereafter, he became Commissioner of Planning andDevelopment of the Town of Oyster Bay and thenCommissioner of the Town Department of PublicWorks. Mr. Libert served as counsel to the NassauCounty Board of Supervisors (which became theCounty Legislature). He has an “AV” rating in legalability and ethics was featured in Long IslandBusiness News “Who’s Who in Law on Long Island”and has also appeared as a legal commentator onCablevision News Channel 12.

The In Brief section is compiled by the Honorable Stephen L.Ukeiley, Suffolk County District Court Judge. Judge Ukeileyis also an adjunct professor at the New York Institute ofTechnology and an Officer of the Suffolk County BarAssociation’s Academy of Law.

PLEASE E-MAIL YOUR SUBMISSIONS TO Nassau Lawyer:[email protected] with subject line: IN BRIEF

IN BRIEF ...Continued From Page 8


Change of command atSecond Department

By Charles Holster

James Edward Pelzer, the Clerk of theAppellate Division, Second Department,since 1999, retired at the end of August,after 39 years of distinguished service tothe Court.

A graduate of St. John’sUniversity School of Law, hebegan his career with theSecond Department in 1971as a Law Assistant, writinginternal reports for theJustices on civil and criminalcases. In 1978, he became thefirst reporter of motions, andalso worked in the DecisionDepartment editing motiondecisions. Later that year, Mr.Pelzer became Princi pal LawClerk to Appellate DivisionJustice Vincent D. Damiani.

In 1983, Mr. Pelzer becamean Editor in the Decision Department,drafting memorandum decisions andopinions of the Justices for conformitywith the court’s style, for grammaticaland legal correctness, and for consisten-cy with prior decisions of the court; per-formed assigned research tasks; andwrote confidential reports.

From 1985 to 1999, Mr. Pelzer servedas Supervisor of the DecisionDepartment, where he oversaw a staff ofeditors, clerks, and typists that edited,printed, and released approximately5,000 appeal decisions and 12,000 motiondecisions per year. He was a co-designer ofthe court’s computer database of caserecords; monitored and report-ed on court statistical informa-tion; developed a court case-load management plan; pre-sented orders to show cause tothe duty Justice for signature;and advised attorneys and prose litigants on court procedure.

During his years with theCourt, Mr. Pelzer co-authoredthe “Guide to Civil Practice:With Forms,” which may befound on the Court’s website.He also authored the follow-ing NYS Bar Association arti-cles, which are valuableguides for every practitioner: “TheBasics of Appellate Jurisdiction: TheConcepts of Aggrievement, Appealabilityand Reviewability in New York CivilAppellate Practice” and “Taking andPerfecting an Appeal to the AppellateDivision, Second Judicial Department.”

Presiding Justice A. Gail Prudentistated that, “[t]he Appellate Divisionowes a tremendous debt of gratitude toJames Edward Pelzer for his loyal anddedicated service to the court over thelast 39 years. As a result of his wisdomand foresight, the Appellate Divisionprogressed from index cards and hand-written docket books to a modern, auto-mated case management system and auseful presence on the Internet. Hisdevotion to a life of public service andcommitment to the highest ideals of thelaw has enabled the court to maintain itslong tradition of excellence.”

Mr. Pelzer will not only be missed bythose he worked with at 45 MonroePlace; he will be missed by all the mem-bers of this Association who had casesbefore the Court and received his courte-ous and knowledgeable assistance.

Matthew G. Kiernan has beenappointed as the new Clerk of the Court.

In announcing the appointment,

Presiding Justice Prudenti said, “Thepeople of the Second JudicialDepartment will be well served by thisappointment. Throughout his distin-guished career, Mr. Kiernan has continu-ally demonstrated his unique talents asboth a lawyer and administrator. As an

Associate Deputy Clerk, hehas been highly regarded forhis hands-on, innovativeapproach to management,which earned him the respectand admiration of both thejudicial and non-judicial per-sonnel of the court. His legalbackground in both civil andcriminal law, coupled with hisstrong management andinterpersonal skills, willgreatly assist him in thisappointment. Mr. Kiernanhas the court’s complete confi-dence that he will succeed in

this new challenge. He will be an inte-gral component of our continuing effortsto meet the complex and varied needs ofall those who come to the court seekingjustice and assistance.”

Mr. Kiernan graduated from JohnsHopkins University in 1982 andVillanova Law School in 1986. He beganhis legal career as an associate with thePhiladelphia law firm Connor andWeber, P.C. After returning to New Yorkin 1988, he worked in a private firmwhere he concentrated in insurancedefense. In November 1989, Mr. Kiernanwas named the Assistant Town Attorneyfor the Town of Southold where he coun-

seled the Town Board,Planning Board and ZoningBoard. Concurrently withthat position, he also servedas a Special AssistantDistrict Attorney for SuffolkCounty. In March 1994, Mr.Kiernan was appointedPrincipal Law Clerk to theSurrogate of Suffolk County.He remained in that positionuntil January 1998, when hewas appointed PublicAdministrator of SuffolkCounty.

In December 2002, Mr.Kiernan became an Associate DeputyClerk of the Appellate Division, SecondJudicial Department, as well as itsDirector of Professional Services. He hasserved as co-chair of the GuardianshipTask Force, Director of the IndependentJudicial Election QualificationCommittee and is a member of theAppellate Court Committee of the SuffolkCounty Bar Association and the NewYork State Bar Association.

Charles Holster is the Vice-chairperson of theAppellate Practice Committee

James Edward Pelzer

Matthew G. Kiernan

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requirements. If you have dual licenses(e.g., attorney and CPA), each is to beentered on the application.

If you still have a question, you can callan IRS PTIN specialist at 1-877-613-PTIN(7846)

Why Compensated Tax PreparersNeed a PTIN

All tax preparers are governed byTreasury Department Circular 230“Regulations Governing the Practice ofAttorneys, Certified Public Accountants,Enrolled Agents, Enrolled Actuaries,Enrolled Retirement Plan Agents, andAppraisers before the Internal RevenueService” (http://www.irs.gov/pub/irs-pdf/pcir230.pdf). Failure to comply withCircular 230 can lead to suspension frompractice before the Internal RevenueService and penalties. The final PTIN reg-ulations were published in the Federalregister on September 30, 2010.2 Theaforementioned regulations expand thereach of Circular 230 to all compensatedtax preparers.

Your Employees Who Are NotAttorneys, CPAs, or Enrolled Agents

It’s back to test-taking3 for these people.Initially (but not until sometime in 2011)two types of tests will be offered. One testwill cover wage and 1040 non-business taxreturns and the second type will coverwage and 1040 small business tax returns.There is no mention in the regulationsabout a test for estate (assuming thatCongress refreshes the estate tax) and gifttax returns. Nevertheless a PTIN will be

required. In Frequently Asked Questions,the IRS has said that “The IRS will issueadditional guidance or instructions forother tax returns.”4 There is some discus-sion of possibly changing the PTINrequirement for non-signing employeeswho work for a law firm or accounting firmunder the direction of an attorney or CPA.5In addition to the test, ‘registered taxreturn preparers’ will be required to take15 hours of continuing education courses ineach ‘registration’ year.6 This is not thesame as a calendar year. Three of those 15hours must be for a federal tax law updateand two of those hours must be for tax-related ethics topics. Just as we (attorneys)do, Registered Tax Return Preparers mustkeep records (proof) of their compliancewith the continuing education rule.Attorneys, CPAs, and enrolled agents areexempted from the Circular 230 continu-ing education requirement. Whew! NewYork Attorneys already need 12 hours peryear and New York CPAs need 24 special-ty hours or 40 non-specialty hours of con-tinuing education each year.

Any “…individual who is compensatedfor preparing, or assisting in the prepara-tion of, all or substantially all of a taxreturn or claim for refund of tax…7 musthave a PTIN. The word substantially is

troubling. It lacks definition although theregulations do give some examples.Observation: If in doubt, register. The pre-amble to the regulations states that theemployer identification number (not thePTIN) of others who were relied on “for the… substantive accuracy of the preparationof the tax return or claim for refund” (e.g.,subcontracted work) must be included onthe tax return8 (possibly resulting in anew form to be associated with the client’stax return). That leads to an interestingobservation. Where an accounting firmretains a law firm (or a law firm retainsan accounting firm) to provide specializedtax advice for a tax return that theaccounting (or law) firm is preparing, howwill it look to the client, fee wise, when he,she or it sees one or more such listings?Currently, it will not be necessary to list,on the tax return, the PTINs of all of youremployees who work on a tax return butas has been stated, they all need a PTIN.

MiscellaneousA piece of trivia: I started preparing

payroll and simple income tax returns atage 13 for my CPA father. Under theupcoming PTIN rules, I could not substan-tially help him since a PTIN cannot beissued to anyone under the age of 18.

Special PTIN application rules apply toforeign (non U.S.) tax preparers who do nothave a U.S. social security number, and toconscientious religious objectors without asocial security number.9

There will be a public database ofreturn preparers.

Currently, a PTIN will need to berenewed annually, and a user fee paid, onthe anniversary date of the issuance of thePTIN.10

If you walk away from your computerduring the registration process (as I did to

attend to another business matter for 15minutes), you will get knocked off the site.The good news is that when you sign backin, you won’t need to re-enter informationpreviously entered. It will have been saved.

On the online application under“Addresses,” the Permanent MailingAddress area accepted my 9 digit zip codebut in the area for the Address used on myU.S. Individual Tax Return, the 9 digit zipcode was rejected and only my 5 digit zipcode was accepted (even though my taxreturn includes my 9 digit zip code).

For those thirsting for more detailedinformation, you can visit Google, Bing,Wikipedia, irs.gov or your favorite searchengine.

Alan E. Weiner, CPA, JD, LL.M. is PartnerEmeritus of the CPA firm of Holtz RubensteinReminick LLP, with offices in New York Cityand Melville, Long Island.1. $50 is the IRS portion of the user fee and $14.25

will go to the third party vendor (Accenture)administering the program. The total fee maychange in the future as the program matures.

2. Federal Register/Vol. 75, No. 189, Page 603093. See Frequently Asked Questions on the IRS web-

site. Testing is expected to begin in mid-2011; al-though an applicant can take the test an unlimitednumber of times, a fee will be charged each time;applicants who have a valid PTIN when testingbegins will have until December 31, 2013 to passthe test; the test is taken at a designated testing site.http://www.irs.gov/taxpros/article/0,,id=218611,00.html PTIN FAQs are updated frequently.

4. Ibid.5. IRS News Release IR-2010-99, Sept. 28, 2010;

repeated in IRS News Release IR-2010-107, Oct.27, 2010.

6. In IRS News Release IR-2010-107, Oct. 27, 2010,the IRS announced that the 15 hour continuingeducation requirement would be waived for 2011.

7. Treasury Regulation Section 1.6109-2(g) 8. Federal Register/Vol. 75, No. 189, Page 603109. Revenue Procedure 2010-41, Internal Revenue

Bulletin 2010-48, November 29, 201010. Treasury Regulation Section 300.9 and the pre-

amble thereto; also IRS News Release IR-2010-99, Sept. 28, 2010


outsider liability under the misappropri-ation theory. Under Rule 10b5-2 a duty oftrust is owed to the source of informationwhen: (1) the persons involved in thecommunication have agreed to keep theinformation confidential; (2) the personsinvolved have a history, pattern, or prac-tice of sharing confidences that resultedin reasonable expectation of confidential-ity; and (3) the person who provided theinformation was a spouse, parent, child,or sibling of the person who received theinformation. The defendant may then tryto prove that based on the facts and cir-cumstances, there was no reasonableexpectation of confidentiality. AlthoughRule 10b5-2 establishes a bright-linerule of liability, it does not prevent afuture finding of outsider liability underdifferent circumstances.

Not all courts have unequivocallyendorsed Rule 10b-2. The EleventhCircuit in SEC v. Yun, 327 F.3d 1263,1271-1274 (11th Circ. 2003) rejected theRule 10b5-2 presumption that a mar-riage creates a duty of confidentialityunder Rule 10b5-2. Furthermore, theUnited States v. Kim, 184 F. Supp. 2d1006 (N.D. Cal. 2002), the court ques-tioned whether Rule 10b5-2 exceeded itslimitation by establishing a duty basedon a mutual expectation of confidentiali-ty without a binding agreement.

Despite the repercussions, attorneyshave continuously been found liable forinsider trading. In SEC v. Guttenberg, Lit.Rel. No. 20022 (March 1, 2007), the SECbrought an insider trading action againstformer executives and traders from UBSand a former inhouse attorney withMorgan Stanley. This case reveals anexample of both the misappropriation andclassical theory. Counsel and her hus-band, also an attorney, pleaded guilty to

criminal charges after the counsel illegal-ly tipped to her husband material non-public information regarding pendingacquisitions and shared in illegitimatetrading profits. In SEC v. Aragon CapitalManagement LLC, Lit. Rel. No. 19995A(February 13, 2007), an attorney pleadedguilty to conspiracy in an insider tradingoperation. He was sentenced up to fiveyears in jail, paid a substantial fine, andwas permanently barred from participa-tion with an investment adviser.

In SEC v. David Schwinger, Lit. Rel.No. 20152 (June 13, 2007), the SECbrought securities fraud charges against aformer managing partner of KattenMuchin Rosenman LLP after he allegedlymisappropriated information discoveredwhile interviewing a former corporation’schief counsel for a position the firm. Theattorney settled with the SEC by consent-ing to a permanent injunction from violat-ing Rule 10(b) and Rule 10b-5, disgorge-ment of profits ($13,027), and payment ofdamages equal to twice the profits.Although not mentioned in the settle-ment, it has been suggested that thepenalty was higher than usual becausethe defendant was an attorney.

Strategies to Prevent Insider and Outsider Trading

Corporations have enacted policiesthat warn employees about the implica-tions of trading or revealing materialnonpublic information. Counsel shouldadvise corporate clients of the need forsuch corporate policies.

To prevent insider trading, corpora-tions may offer classes to educate em -ployees on the dangers of insider trading.The SEC has required blackout periods,trading plans, or limited trading windowsfor directors, officers, or employees. Thesepolicies have thwarted illicit trading bycontrolling when insiders are permittedto trade company stock.

A blackout period is a mechanism to

safeguard against insider trading during atime when employees may possess materi-al nonpublic information. During a black-out period officers, directors, and otheremployees are prohibited from buying orselling corporate stock. These blackoutperiods are usually instituted prior to therelease of financial reports. This restric-tion on trading helps maintain confidencein the stock price as well as prevent corpo-rate insiders from gaining an unfair trad-ing advantage.

A written plan for trading securitiesunder Rule 10b5-1, 17 C.F.R. 240.10b5-1,allows corporate insiders to buy or sellcompany stock under specified conditions.Those who agree to such a plan are notordinarily restricted to the rules of ablackout period. Under such a plan, cor-porations are able to monitor insider trad-ing. Additionally, a trading plan offerstransparency to other traders and theSEC about insider involvement. However,10b5-1 trading plans have certain limita-tions. The plan must be agreed uponbefore the insider has material nonpublicinformation, and the insider cannot influ-ence the person or entity responsible forexecuting the plan.6

Corporations may allow insiders toopenly trade company stock during what iscalled a trading window. Following thepublic announcement of its financialreports, insiders are permitted to tradecompany stock for a short time. Such trad-ing by insiders is allowed because there isa presumption that all relevant materialinformation is publicly available.7 The pur-pose of a trading window is to limit anytrading advantage to insiders.

ConclusionFederal security laws, case law develop-

ment, and corporate policies all work toprevent corporate insiders and outsiders,including attorneys, from acting in breachof their fiduciary duties of confidentiality.Insider trading liability can stem from an

outsider misappropriating informationthat has not been disclosed to the public,or from an insider trading on materialnonpublic information. The penalties forsuch a violation are severe, both criminalin scope and civil suits that are enough toterminate one’s legal career. Counsel mustbe cautious when advising public clients intrading companies’ securities since theymay find themselves a suspect in an insid-er trading probe and subject to harshpenalties. As the cases illustrate, attorneysliable for insider trading may be held to ahigher standard, may have more to losethan others, and may receive a more strin-gent punishment for such illegal actions.

Stanley H. Fischer is a founding member of thefirm of Fischer and Burstein, PC and has beenadmitted to practice law in the State of New Yorksince 1968. He represents numerous corporateentities and serves as general counsel to a pub-lically traded company. He may be reached by e-mail at: [email protected].

David S. Fischer is an attorney admitted to prac-tice law in the states of New York (2006) andNew Jersey (2005). He has previously clerked forthe Honorable Micha Lindenstrauss (currentcomptroller of the State of Israel) while Mr.Lindenstrauss was the chief judge of the Haifa(Israel) District Court.

Gaddi Goren is a third year law student atBrooklyn Law School.

1. Laura Strickler, Armen Keteyian, “SEC AttorneysProbed For Insider Trading”http://www.cbsnews.com/stories/2009/05/14/cbsnews_investigates/main5014672.shtml May 14, 2009

2. See Carney, John J. and Fokas, Jimmy. “InsiderTrading: Why More Attorneys are Being Chargedand What Companies Should do to Prevent It”New Jersey Law Journal, August 1, 2007.

3. See Hazen, Thomas Lee. “Identifying the DutyProhibiting Outsider Trading on MaterialNonpublic Information.” Hastings Law Journal,Vol. 61:888, p. 889. March, 2010.

4. SEC v. McDonald, 699 F.2d 47, 50 (1st Cir. 1983).5. TSC Indus., Inc. v. Northway, Inc. 426 U.S. 438,

449 (1976).6. Whitepaper. ComputerShare. “SEC Rule 10b5-1

Insider Trading Plans – Establishing a ProgramThat Works.” 2009

7. Id.

SECURITIES FRAUD ...Continued From Page 3

PTIN ...Continued From Page 14


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