What’s the Deal with Marketing and Business Development Anyway?

Depending on your firm, there may be “marketing” people who check in with you from time to time, asking you to update your profile or encouraging you to write a client alert about trends in your area of the law. They may even take the logistical nightmare of event planning out of your hands. They are generally helpful and, once the project is finished, you typically experience a feeling of relief, having completed the act of “marketing yourself.” With that out of the way, you are free and clear to focus on practicing law, right?

Of course you should handle those matters and continue to keep your clients satisfied. How else are you able to bill the hours that, if nothing else, keep the office lights on? As you slip back into lawyer mode, your marketing person asks some (at best, uninvited) questions. You spent a quantifiable amount of time doing this, so how do you plan to follow up on your activity?  You’ve laid the groundwork, what is the next step in netting new business? Might there be something more than the simple and comfortable three or four promotional activities that you dutifully check off each year?

That precise spot is the intersection of business development and marketing. Thinking strategically about how you promote yourself and to whom will improve how you spend your non-billable time. At their coldest, most basic levels, marketing is what enables you to create or deepen a relationship, and business development is how you convert that relationship into new revenue.

These complimentary concepts are slowly being embraced by lawyers who realize that marketing and business development are no longer optional. The livelihood of practicing law in a private firm is entirely relationship based: The most accomplished and brilliant legal mind will never maintain a long term, mutually beneficial client relationship without developing a connection with the person on the other end. So it is that your firm recognized a need and formed a “non-lawyer” service area to enable (perhaps push and sometimes drag) you to maintain and grow relationships with your professional contacts.

John D. Bowers
Business Development Manager
Saul Ewing LLP
www.saul.com

Changed My Mind — Moving Back to the United States from Abroad

I recently encountered an issue where a child who was raised in the United States moved with the parents to another country for 11 months. For one of the 11 months, the mother and the child returned to the United States for a visit. Now, the mother is in the United States with the child for another visit, and they do not want to return to the foreign country where the father is located.

The first question that I asked and answered was whether the foreign country is a signatory to the Hague Convention, which it is. Because it is a signatory, the next question is what is the child’s country of habitual residence?

This is where the situation is interesting. If the parties intended to move to the foreign country and stay there, and if the child has become acclimatized to the country, then the foreign country has likely become the country of habitual residence. To determine whether a child is acclimatized to the new country, the courts consider factors such as whether the child speaks the language, whether the child has friends, how involved in activities the child is and whether the child has traveled in the foreign country. In this most recent issue presented to me, although it appears that the parties may have intended to move to the foreign country for a long-term basis, the child does not speak the language, the family kept items in storage in the United States, the family rented an apartment abroad instead of purchasing a home and the child attended an international school with more transient students.

In light of these facts, it appears that the mother will have a strong argument that the Hague Convention does not apply because the United States, where the child is located, is the child’s country of habitual residence. The argument is that the habitual residence never changed from the United States where the child was raised and went to school. Interestingly, even if the Hague does apply, the mother would likely be able to present the defense that the child does not want to return because the child is fifteen which is old enough for the judge to interview and for the child to have an understanding and opinion regarding where the child resides.

Judy McIntire Springer
Fox Rothschild LLP
www.foxrothschild.com

This Doesn’t Sound Good

Suppose you were a corporate executive and your employer offered you a golden coffin. Would you be happy or sad?

There are a variety of ways of compensating corporate executives, ranging from incentive bonuses and stock options to various forms of nonqualified deferred compensation and “perks.” Some of these benefits are designed to encourage employees to stay with the company. If you stay a certain period of time and achieve certain goals, you’ll be handsomely rewarded; but if you leave early, nothing. These types of arrangements are often referred to as golden handcuffs. Another method of encouraging employees to stay is to assure them that if the business is sold or undergoes a substantial change in control, something good will happen. That something might be immediate vesting in stock options or a cash payment if employment ends shortly after the change. This is referred to as a golden parachute. If more modest benefits are promised to employees at lower echelons of the business, the phrase tin parachute is used. There are restrictions on the use of golden parachutes that are too generous, and that can lead to the imposition of an excise tax by the IRS.

An article on the Human Resource Executive Online Web site notes evidence of so-called golden coffin payments, based on examination of filings made with the SEC. Executives may become entitled to salary continuation payments for several years after their deaths, or their families might be given the right to continue the use of executive perks, such as private jets and country clubs. I suppose the theory is that the executive has been given so much compensation during life that any further increases can’t be justified to shareholders. So, as an alternative to paying more, the idea is to pay it longer, even after death. Still, golden coffin? It doesn’t sound like something nice.

As an alternative to this desire, like General Bullmoose from Li’l Abner, to have all the money in the world, some executives have opted to create a golden legacy. If the executive or his family has a particular charitable interest, the employer might arrange that life insurance proceeds on the executive’s life, or a large severance payment, be paid to a favorite charity or to a foundation set up by the executive during life. There shouldn’t be any tax consequence to the executive or his or her family from such payments, even though there are at least some indirect benefits to the family that might be generated. This enables the executive to do estate planning that is solely focused on providing for the family after the executive has passed on or, as they would say several generations ago, joined the silent majority (a phrase having nothing to do with the Nixon administration).

Robert H. Louis
Saul Ewing
http://www.saul.com/

Mendte’s Digital Footprint

Regardless of your personal feelings for Larry Mendte, we have to admit that he has a significant profile in the Philadelphia and tri-state media. Larry is someone that I’ve admired for his work both on camera and in the local community. He has given of his time to local nonprofits – and as an emcee – he really knows how to get the crowd laughing.

All that said, unless you’ve been hiding under a rock recently, you will see that not even our media is immune from media scrutiny.

As you probably know, Larry was charged with breaking into Alycia Lane’s (his co-anchor), personal e-mail accounts. According to the local news coverage, he hacked into her e-mail more than 500 times and then shared information he read to a local newspaper.

As a result, Larry was charged with one felony count of “intentionally accessing a protected computer without authorization and obtaining information in furtherance of a tortious act.”  Now, having practiced in the criminal law arena more than 10 years ago – I didn’t event know that crime existed.

If the allegations are true, I certainly don’t condone such behavior. The bottom line is this: digital information leaves a footprint. We need to be conscious on a daily basis of what we access online and who is watching.

Gina F. Rubel, Esq.
Furia Rubel Communications, Inc.
http://www.furiarubel.com/

‘The Dean is Furious! He’s Waxing Wroth!’

This was the only quote I could think of to introduce a discussion of planning with Roth IRA and retirement plan benefits. In response to this statement, Groucho Marx said: “Is Roth here too? Tell Roth to wax the Dean for a while.”

Delaware Sen. William Roth gave his name to this type of retirement benefit. It’s simple, sort of. You don’t get a tax deduction when the contributions are made, but you don’t pay taxes when the account is distributed at retirement. You give up a current tax saving in exchange for a greater one later. Is this a good deal? The answer is definitely, sometimes.

If you knew that you would pay a higher tax rate in retirement, Roth tax treatment would clearly be better. Conversely, if you knew that your tax rate would be much lower in retirement, it might be better to stay with the traditional method of planning: a deduction up front and taxation later. Opinions vary on this subject, and studies have been made to try to determine when and whether one method is superior to the other. There are some unknown elements: not only your own tax rate but tax rates in general. Who can predict what income tax rates will be 10 or 20 years from now? Or that Roth treatment will still be in effect?

For now, here are two situations in which Roth treatment makes sense. First, if you have a child who has a summer job, it makes sense that the child have a Roth IRA. In most cases, kids with summer jobs have little or no income tax liability anyway, so a deduction for an IRA contribution is of no value to them. Then, they will have many years in which the Roth IRA can grow tax-free. When the funds are distributed, perhaps 50 years later, the small contributions from summer jobs could be a large amount.

Here’s another possible benefit: Roth IRAs do not have minimum distribution rules, unlike standard IRAs and qualified plans. If an individual has other assets such that he or she won’t need the Roth money, the balance can be left in for the rest of the individual’s life and be paid out only in the next generation. This extremely long-term accumulation period, followed by no tax on distribution, can make Roth a valuable planning benefit.

People with standard benefits can convert them to Roth benefits by paying taxes on them now. After that, any distributions will be free of tax. The ability to convert is limited to those with income below certain levels, but that restriction will end by 2010. At that time, anyone will be able to convert to Roth treatment. This opens up the possibility of interesting estate planning with Roth benefits, which we’ll discuss in another blog.

Robert H. Louis
Saul Ewing
http://saul.com

Moves in Investment Management Practices Continue with Lateral to Pepper Hamilton

Pepper Hamilton grew its investment management practice group with the addition of a Morgan Lewis & Bockius partner.

John M. Ford joined the firm’s Philadelphia office where he will focus on investment company and investment adviser regulatory matters, the formation and registration of investment companies and advisers and issues relating to regulatory compliance and securities law.

Ford was a partner in Morgan Lewis’ investment management and securities industry practice group. Prior to that, he was an attorney with mutual fund service company Rodney Square Management Corp.

Aside from his focus on investment management issues, Ford has experience counseling clients on reorganizations, mergers and other business combinations of investment companies.

“John has 12 years experience assisting financial institutions with their investment management activities and is a perfect fit for our financial services practice in general, and our growing investment management practice in particular,” Pepper Hamilton investment management practice chairman Joseph V. Del Raso said in a statement.

Ford’s move continues a flurry of lateral activity this year in the relatively small investment management bar in Philadelphia.

William H. Rheiner, the partner-in-charge of Ballard Spahr’s investment management group for more than 20 years, joined Stradley Ronon Stevens & Young in March as a partner along with partners E. Carolan Berkley and John N. Ake, of counsel Lisa M. King and associate Matthew R. DiClemente.

At that time, legal analysts said Stradley Ronon and Drinker Biddle & Reath were the biggest local players in the practice area. Most of Morgan Lewis’ work in the area is done out of its Washington, D.C., office, they said, as is Dechert’s.

Paula D. Shaffner, who represents investment broker/dealers in their litigation needs, left Saul Ewing for Stradley Ronon in May.

~Gina Passarella, Senior Staff Reporter

Legal Aid Classic Raises $20K

A Montgomery Bar Association fundraiser for the regional legal aid organization raised $20,000, including the bar association’s matching donation of $10,000 raised in the July 8 Legal Aid Classic.

Last year’s Legal Aid Classic raised $17,000, according to Jim Mathias, the bar association’s director of marketing, communications and public affairs.

Legal Aid of Southeastern Pennsylvania, which provides pro bono civil legal services to low-income residents of Bucks, Chester, Delaware and Montgomery counties, has a $460,000 cut in its budget this year because of the drop in grants derived from interest earned from attorney trust accounts. The shortfall makes up 11 percent of Legal Aid’s $4.5 million budget.

The Montgomery County portion of Legal Aid of Southeastern PA will lose close to $120,000 in IOLTA funding.

– Amaris Elliott-Engel, Staff Reporter

Cantor Nominated for Second Judgeship Run

Andrew B. “Andy” Cantor’s nomination to an open judgeship on the Montgomery County Court of Common Pleas is the second time Cantor has been nominated for a county judgeship.

Former Gov. Robert Casey Sr. nominated Cantor in December 1991. Cantor — who was traveling in Italy last week and wasn’t reachable by The Legal for the article The Legal published about Gov. Edward G. Rendell’s nominations for open Court of Common Pleas judgeships around the state — said he went through a confirmation hearing and was recommended by the state Senate Judiciary Committee, but the Senate never acted on his confirmation.

This time, Cantor — who says he would become the only Democrat on the Montgomery County bench if he was confirmed — feels that any political objections to his nomination aren’t warranted because he would only be able to serve the end of 2009 after turning 70 next year.

“My nomination really should not be a political consideration,” Cantor said. “I will turn 70 during the next year. I could not run for re-election. I can serve to the end of 2009, and there would be an election in 2009 for my seat, but I could not participate. I think that would be a plus in assisting me to get confirmation.” Canto also unsuccessfully ran for a judgeship in 1993.

Cantor, who has been practicing law for more than 44 years, said becoming a judge would be the culmination of his career.

“I just feel it’s time to give back something,” Cantor said. “I do feel that I have something to offer as a judge.”

Cantor, a partner with Wisler Pearlstine in Blue Bell since 1973, practices mostly in municipal and estate law, but he has handled domestic relations, civil litigation and criminal cases in the past.

Cantor attended the University of Pennsylvania Law School and has been president of the Montgomery Bar Association.

“The bar association is very active and an excellent bar association,” Cantor said. “We’ve had a very good bench in Montgomery County for years. I look forward to the challenge of meeting those standards if confirmed.”

Cantor said he would follow the law as a judge, and that he would bring to the bench an even temper and consideration to lawyers and litigants.

Cantor has been nominated to fill the judgeship left open following the death of Judge Toby Lynn Dickman last year. A hearing on Cantor’s nomination won’t be held until the Senate returns from recess in the fall.

– Amaris Elliott-Engel, Staff Reporter

Legal Services Get Modest Increase in State Budget

State funding for legal services organizations hurting from a drop in grants from interest on lawyer trust accounts increased only $526,000 in the state budget process last week, said Samuel Milkes, executive director of Pennsylvania Legal Aid Network, the statewide coordinating organization for 10 regional legal services programs and six specialized legal resource programs.

The state budget originally proposed increasing funding by $1 million.

Milkes said that because other appropriation items were slashed even more dramatically that legal services organizations were pleased that some increase was seen in the budget.

“We also realized when looking at the treatment of other lines it certainly represents support from the governor and the legislature that we very much appreciate,” Milkes said.

Total state funding, separate from a federal services block grant, is about $3.1 million.

The state funding for legal aid programs that provide direct services is distributed to PLAN, which then allocates according to the most recent census and the poverty populations in each area of the sate.

“We’re appreciative of the legislature and the governor,” Milkes said. “We also appreciate how much the Philadelphia bar and the Pennsylvania bar and lawyers around the state worked hard to see this increase.”

In interviews with The Legal, legal services organizations have said that every extra penny will help them because IOLTA grants are down 33 percent, or $7.3 million, statewide in the fiscal year that started July 1.

– Amaris Elliott-Engel, Staff Reporter

Sign Here, My Dear

This was the title of a series of lectures to help spouses, mostly wives, understand financial matters. It addressed a very real problem that families face when the “financial spouse” passes on.

What bills do I have to pay? Will I have enough income to cover my expenses now that my spouse is gone? Will I have to sell my home? Or, will I have enough to make gifts to children and grandchildren during my life? These kinds of questions, which arise frequently in estate planning and administration, demonstrate the need for a kind of planning that incorporates knowledge of retirement plans, financial planning, elder law and estate-planning concepts. Lawyers practicing trusts and estates have most of these skills and need to understand the importance of having a wider view of the planning client’s requirements.

I have discussed with clients the preparation of a template during the lifetime of the financial spouse, setting forth what expenses need to be met and how they are paid:

• Bills paid every month, such as telephone, other utilities, car payments.
• Bills paid on a regular but not monthly basis, such as auto and homeowners insurance, life and disability insurance premiums.
• Bills paid as expenses are incurred or are chosen to be paid, such as credit cards, contributions, medical and dental expenses, veterinarian (if you live at my house), car repair, home repairs.

A second part of the template is things to do during the course of the year:

• Car inspections.
• Home inspections.
• Medical and dental checkups.
• Memberships in various organizations, such as ambulance services, that are useful to families.
• Required distributions from retirement plans, depending on the survivor’s age.
• Filing tax returns and paying any required estimated taxes.

A third part of the template is a list of the people to contact for assistance:

• Lawyer (always the top of the list).
• Accountant.
• Insurance agents.
• Home service and repair people.
• Car repair services.
• Other specialized assistance.

And, finally, it’s important to have good organization of the information. There’s no point in assembling information if the survivor can’t find it. I’ve had some clients who went a little overboard on this (“walk three paces to the left”), but it is important that the survivor know where things are. As the large Baby Boom Generation moves toward retirement and beyond, it will be important to help them plan these practical aspects of the balance of their lives.

Robert H. Louis
Saul Ewing

http://www.saul.com