Here is your June/July 2018 eNews from the Business Law Section (BLS)
With about two months left in the CLA’s first year in operation, the BLS and CLA are hard at work building the long-term foundations of the organization that succeeded the State Bar’s former voluntary Sections:
Search for an Executive Director
A committee chaired by CLA Vice-President Emilio Varanini and BLS member Roland Brandel has been appointed to conduct a search for the CLA’s first Executive Director. It retained search firm Young Mayden, LLC to help identify qualified candidates. The committee hopes to have an Executive Director selected by the September 14-15, 2018 CLA Annual Meeting.
Read More Below
Search for Office Space
The CLA has narrowed its search for new corporate offices to two locations in downtown Sacramento. The CLA anticipates moving to the new offices in early January 2019.
California Young Lawyers Association (CYLA)
CYLA is the nation's largest association of young lawyers, defined as attorneys in practice for eight years or less. The CLA is looking to work more closely with the CYLA, including by having each of its 16 Sections appoint a liaison to the CYLA Executive Board, which will result in more opportunities for young lawyers to participate in Section activities. If you are a young lawyer, this is a great time to get involved in the CYLA and CLA. If you are interested in serving as the BLS representative to the CYLA, please contact me at firstname.lastname@example.org.
Annual Meeting 2018 (September 14-15, 2018)
The 2018 CLA Annual Meeting will be held on September 14-15, 2018, in San Diego, California. The BLS will host a reception on Friday, September 14, from 5:00 to 7:00 p.m., and its Annual Breakfast on Saturday, September 15, from 7:30 to 9:00 a.m., where Larry Sonsini, of Wilson, Sonsini, Goodrich & Rosati will be awarded this year’s BLS Lifetime Achievement Award.. The keynote speaker at the breakfast will be Elisa D'Amico, of K&L Gates, co-founder of the Cyber Civil Rights Legal Project. We hope to see you there!
Business Law News (BLN)--- CALLING ON EDITORS!
The BLN is looking to add new members to its highly-respected Editorial Board. Editors work with authors during the writing process, edit articles, and perform other proofreading functions. If interested in joining the BLN Editorial Board, please contact Jerry Grossman at email@example.com. This is a wonderful opportunity to get involved in BLS leadership and, ultimately, the BLS Executive Committee.
Membership in Executive Committee and Standing Committees
At its June monthly meeting, the BLS Executive Committee considered and voted on applications for standing committees and the Executive Committee. It also voted to approve the next BLS Chair. The names of those selected for the Executive Committee, including the BLS Chair, were sent to the CLA Board of representatives, which had the opportunity to weigh in on the new members selected by the BLS. Newly-selected Ex Comm. members have now received their appointment letters.
Most of the BLS standing committees have year-round rolling admissions, based on available space. If you are interested in getting involved with a standing committee, a membership application can be found here.
Congratulations to Monique Jewett-Brewster, who was selected as the next Chair of the BLS Executive Committee, starting September 15, 2018.
The BLs is working with the California Minority Counsel Program (CMCP) to bring awareness of the importance of diversity in the legal profession, and to introduce CMCP and BLS members to each other. To that end, a reception is scheduled for August 9, 2018 in Oakland, California, to be hosted by the CMCP Ambassadors Council and BLS. See additional information below.
The BLS and CMCP are also planning to write a series of articles about diversity in the legal profession. If interested in writing or editing such articles, please contact: Monique Jewett-Brewster, at firstname.lastname@example.org.
In conclusion, the BLS offers many opportunities for California attorneys to get involved in the legal profession. If interested in joining this vibrant legal community, you can read more about the BLS at http://calawyers.org/Business.
Uzzi O. Raanan
Danning, Gill, Diamond & Kollitz, LLP (Los Angeles)
Chair, Business Law Section
Come join the Business Law Section of the CLA and the CMCP Ambassadors Council (CMCPAC) for a happy hour "Networking @ Nite" event on August 9th at Luka's Taproom and Lounge in Oakland, where you can mix and mingle with Bay Area business lawyers who are passionate about increasing diversity and inclusion in the legal profession. The BLS and CMCPAC hope that you will experience an evening of collaborative discussion, while creating strategic relationships, meeting new friends and enjoying delicious food and drink. This event is FREE.
The California Lawyers Association (CLA) is soliciting applications for the position of its inaugural Executive Director. The immediate task of the Executive Director will be to work with CLA leadership to mold CLA infrastructure and staff to create a foundation for a strong member-focused voluntary bar association.
In addition to having experience managing staffs and budgets, the Executive Director should be an adept communicator, comfortable with the responsibility of providing information to leadership as well as effectively representing the CLA to external audiences when called upon to do so. The Executive Director will oversee the CLA’s staff operation at the organization’s new headquarters in Sacramento, California and will be responsible for leading, managing and executing the affairs of the Association as directed by CLA’s leadership and implementing its policies to the overall benefit of the organization, its constituent entitles and members.
Qualifications: A four-year baccalaureate degree from a recognized college or university is required; a law degree or education in administration, finance, and management is helpful. Business or association management experience of at least ten years; a demonstrated record of successful senior management experience. Senior management leadership in bar associations is highly preferred.
Indications of interest, inquiries, applications and nominations should be directed by email to:
Barbara Mendel Mayden
Young Mayden, LLC
The BLS is comprised of 15 standing committees whose members review and propose legislation, draft eBulletins, BLN articles, and practice guides, and speak at live and webinar programs. The committees meet between 5 and 10 times each year, usually by telephone. Committee members develop valuable personal and business relations with other practitioners in their respective fields of practice.
To qualify for membership, a practitioner must be a member of the BLS and have practiced law at least five years. Each committee is comprised of 16-30 members, selected for 3-4 year terms.
(Note: Existing members were automatically appointed to the same committee for their remaining term under the CLA. Applications are only required for new members or for those whose terms expire in 2018.) Applications can be found here.
Please send the completed application to John Buelter.
On June 1, 2018, the California State Bar released instructions, FAQs, forms and requirements for most active California attorneys to be re-fingerprinted under California Rule of Court 9.9.5, approved by the California Supreme Court. Click here.
The deadline for compliance with this requirement, before the penalty period begins, is April 30, 2019. A number of local bar associations are planning to host events where California attorneys will have access to approved fingerprinting vendors.
Courtesy of CEB, we are bringing you selected legal developments in areas of California business law that are covered by CEB’s publications. This month’s feature is from the June 2018 update to Advising California Partnerships. References are to the book’s section numbers. See CEB’s CLA Section Member Discount Page for special discounts for Business Law Section members. The most significant legal developments since the last update include developments in such important topic areas as federal and state tax law, conflicts of interest, and contract law issues.
Congress enacted the Tax Cuts and Jobs Act (Pub L 115–97, 131 Stat 2054), effective January 1, 2018. See §3.1. Among its provisions affecting partnerships, the Act makes the following changes:
Since the Tax Cuts and Jobs Act was enacted, the IRS has issued some limited guidance concerning various aspects of it, including the following:
The IRS has issued TD 9787, 81 Fed Reg 69291 (Oct. 5, 2016), which contains final regulations under IRC §§704, 707, and 752. The final regulations under §707 provide guidance relating to disguised sales of property to or by a partnership, and the final regulations under §752 provide guidance relating to allocations of excess nonrecourse liabilities of a partnership to partners for disguised sale purposes. Treas Reg §1.752–3. See §§2.38, 3.31–3.42, 13.3A, 13.19–13.20, 13.54, 13.61, 14.29.
The IRS has issued temporary and proposed regulations regarding transfers of appreciated property by United States citizens to partnerships with foreign partners related to the transferor; the regulations override the rules under IRC §721 for nonrecognition of gain on the contribution of property to a partnership in exchange for an interest in the partnership unless the partnership adopts the remedial allocation method and satisfies certain other requirements. TD 9814, 2017–7 Int Rev Bull 878. See §§3.12, 3.21, 13.36.
The IRS also issued final and temporary regulations concerning how liabilities are allocated for purposes of IRC §707 and when certain obligations are recognized for purposes of determining whether a liability is a recourse partnership liability. TC 9788, 2016–2 Cum Bull 889. See §§3.31, 3.42, 13.19, 13.54, 13.61.
The California Franchise Tax Board has released a final summary of 2017 federal income tax changes. See §3.83.
The Bipartisan Budget Act of 2015 (BBA) (Pub L 114–74, 129 Stat 584), effective for tax years on or after January 1, 2018, changes the way the IRS will be conducting audits of partnerships and LLC tax returns and creates a new centralized partnership audit regime. It imposes taxes on the partnership rather than any partner, and eliminates the special election for large partnerships. It also substitutes the term "partnership representative" for the old "tax matters partner." Operating agreements throughout the book have been revised accordingly, and form language has been added to accommodate these provisions of the BBA. IRC §§6440–6446. See §§3.79, 6.14A, 6.56A–6.56C, 8.40, 8.41A, 10.14A–10.14E, 13.3, 13.3A.
The IRS has issued several sets of proposed and final regulations to implement the new partnership audit rules of the BBA. 82 Fed Reg 27334 (June 14, 2017); REG–119337–17, 82 Fed Reg 56765 (Nov. 30, 2017); REG–120232–17, REG–120233–17, 82 Fed Reg 60144 (Dec. 19, 2017); TD 9829, 83 Fed Reg 24 (Jan. 2, 2018); REG–118067–17, 83 Fed Reg 4868 (Feb. 2, 2018). In addition, on March 23, 2018, Congress enacted a series of Technical Corrections Related to Partnership Audit Rules (Pub L 115–141, Division U, Title II, §§201–207, 132 Stat 348) within the Consolidated Appropriations Act, 2018 (Pub L 115–141, 132 Stat 348). See §§6.14A, 10.14E, 13.3A.
Effective July 1, 2017, the California State Board of Equalization (BOE) has been restructured. The BOE will continue to perform the duties assigned to it by the California Constitution, while all its other duties will be transferred to the new California Department of Tax and Fee Administration and the Office of Tax Appeals. Many forms formerly filed with the BOE and publications formerly published by it are being transferred to the Department of Tax and Fee Administration. See §7.48.
The legislature has provided that for taxable years beginning on or after January 1, 2017, a partnership that is required to file a return with the Franchise Tax Board (FTB) under Rev & T C §18633 or §18633.5 may apply for an extension for up to 7 months. Rev & T C §18567(a)(2)(B). See §13.7.
The Fourth Appellate District of the California Court of Appeal held that automatic disqualification of an attorney was required in a class action due to a concurrent conflict of interest implicating the duty of loyalty. Walker v Apple, Inc. (2016) 4 CA5th 1098. See §1.8.
The United States District Court for the Eastern District of California held that the case-by-case inquiry required in certain conflict-of-interest situations involves a two-step, burden-shifting process. National Grange of the Order of Patrons of Husbandry v California Guild (ED Cal, May 12, 2017, CIV. No. 2:16-201 WBS DB) 2017 US Dist Lexis 72994. See §1.10.
A mistaken designation of an individual signing an agreement as the "managing member" of an LLC did not invalidate the agreement for lack of authority, in the absence of actual knowledge by the other party that the individual had no authority to execute the document. Western Surety Co. v La Cumbre Office Partners, LLC (2017) 8 CA5th 125. See §2.62.
A California court held that Corp C §15907.02(h) does not prevent a limited partner from contracting with a third party such that a partner agrees to turn over to the third party any distributions, information, or documents he receives from the partnership, or to vote on partnership matters as instructed by the third party. SP Investment Fund LLC I v Cattell (2017) 18 CA5th 898. See §§2.71, 7.70, 16.48.
The California Supreme Court held that a provision in a predispute arbitration agreement that waives the right to seek public injunctive relief is contrary to California public policy and unenforceable under California law. McGill v Citibank, N.A. (2017) 2 C5th 945. See §15.5A.
The United States Department of Justice maintains a List of Pro Bono Legal Service Providers in immigration court and legal aid centers in California. It is located here.
Information about other Pro Bono Opportunities can be found on The State Bar of California’s website.
If you know of other opportunities for pro bono help from BLS members, please contact Dennis Wickham.
The 15 BLS Standing Committees publish eBulletins announcing developments in their area of law and upcoming events open to BLS members. Click here to sign up to receive these eBulletins from any BLS Standing Committee completely free of charge.
Did you know that the BLS maintains a presence on LinkedIn, Twitter, and Facebook where BLS posts regular updates about new cases, new regulations, key legislative developments, and news and events from the BLS’s Standing Committees? What you may not know is that you can not only send items to the BLS to post or tweet, but also suggest items from your own social media pages for the BLS to re-post, re-tweet, or like. Doing so expands the reach of what you have to say to everyone who likes or follows the BLS on its various social media platforms and may result in the BLS following you! Please submit your suggested items for consideration or direct any questions to BLS Social Media Coordinator, Reno Fernandez and join the ever-expanding discussion!
Dennis Wickham, Editor-in-Chief
Cathryn S. Gawne, Contributing Editor
Kenneth Minesinger, Contributing Editor
Corey R. Weber, Contributing Editor
Monique D. Jewett-Brewster, BLS Vice Chair of Publications
Uzzi O. Raanan, BLS Chair