It would be very satisfying to say, “Sorry, IRS, you are too late to audit me!”^[1] It can save you stress and expense, and it can allow you to avoid having to prove that you were entitled to a deduction or find receipts. The IRS statute of limitations is important for heading off and handling audit trouble; you need to know how long you are exposed. And surprisingly, the rules are consistent whether you are an individual, corporation, partnership, or nonprofit organization. Here’s what you need to know.

Myth #1: The IRS Has Three Years, and Then You’re Home Free.

Not really. It is true that the main federal tax statute of limitations runs three years after you file your tax return. But there are many exceptions that give the IRS six years or longer. Timing can be critical. If your tax return is due April 15, but you file early, the normal statute runs three years after the due date. Filing early does not start the clock on those three years. If you get an extension and file on October 15, however, your three years run from then. If you file late and do not have an extension, the statute runs three years following your actual (late) filing date.

The statute is six years if your return includes a “substantial understatement of income.” Generally, this means you have left off more than 25 percent of your gross income. Suppose that you earned $200,000 but only reported $140,000? You omitted more than 25 percent, so that means you can be audited for six years.

The circumstances can matter, too. Maybe this was unintentional, or you were reporting in reliance on a good argument that the extra $60,000 wasn’t your income. In that case, the six-year statute still applies. But be aware that the IRS could argue that your $60,000 omission was fraudulent. The IRS gets an unlimited number of years to audit for fraud, as we will see.

What about not an omission of income, but overstated deductions? The six-year statute of limitations does not apply if the underpayment of tax was due to the overstatement of deductions or credits.

Myth #2: Only Omitting 25% of Your Income Triggers the Six-Year Statute of Limitations.

Actually, the 25% threshold is a practical one. For years, there was litigation over what it means to omit income from your return. Taxpayers and some courts said “omit” means leave off, as in don’t report. But the IRS said it was much broader.

Example: You sell a piece of property for three million dollars ($3M), claiming that your basis (what you invested in the property) was $1.5M. In fact, your basis was only $500,000. The effect of your basis overstatement was that you paid tax on $1.5M of gain, when you should have paid tax on $2.5M.

In U.S. v. Home Concrete & Supply, LLC,^[2] the Supreme Court slapped down the IRS, holding that overstating your basis is not the same as omitting income. The Supreme Court said three years was plenty of time for the IRS to audit in such cases. But Congress overruled the Supreme Court and gave the IRS six years in such a case, so that is the current law. Six years can be a long time.

Myth #3: The Only Way the IRS Can Have No Time Limit for an Audit Is If No Return or a Fraudulent Return Was Filed.

The IRS has no time limit if you never file a return, or if it can prove civil or criminal fraud. If you file a return, can the IRS ever claim that your return didn’t count, so that the statute of limitations never starts to run? Yes. If you don’t sign your return, the IRS does not consider it a valid tax return. That means the three years can never start to run.

Another big no-no is altering the “penalties of perjury” language at the bottom of the return where you sign. If you alter that language, it also can mean that the tax return does not count. Such a move may sound like tax protester statement. However, some well-meaning taxpayers forget to sign, or may unwittingly change the penalties of perjury wording. Some other taxpayers just miss a form to end up in audit purgatory.

Myth #4: Foreign Income, Foreign Gifts, and Assets Are the Same.

Nope, foreign income and assets are different to the IRS, and they trigger tougher audit rules. The three years is also doubled if you omitted more than $5,000 of foreign income (say, interest on an overseas account). The IRS is still going after offshore income and assets in a big way, which dovetails with this audit rule.

This rule applies even if you disclosed the existence of the account on your tax return, and even if you filed a Report of Foreign Bank and Financial Accounts (FBAR) reporting the existence of the account; this rule’s six-year audit period matches the audit period for FBARs in any case. FBARs are offshore bank account reports that can carry civil and even criminal penalties far worse than those for tax evasion.

Certain other forms related to foreign assets and foreign gifts or inheritances are also important. For example, if you receive a gift or inheritance of over $100,000 from a non-U.S. person, you must file Form 3520. If you fail to file it, your statute of limitations never starts to run. Incidentally, penalties for failing to file these forms or for filing late are steep.

IRS Form 8938 was added to the tax law by the Foreign Account Tax Compliance Act (FATCA). Form 8938 requires U.S. filers to disclose the details of foreign financial accounts and assets over certain thresholds. This form is separate from FBARs and is normally filed with your tax return.

The threshold for disclosure can be as low as $50,000, so it pays to check out the filing requirements for your situation. Higher thresholds apply to married taxpayers filing jointly and U.S. persons residing abroad. But the forms are nothing to ignore. If you are required to file Form 8938 and skip it, the IRS clock never even starts to run.

Myth #5: U.S. and Foreign Companies are Treated the Same.

Not hardly. If you own part of a foreign corporation, it can trigger extra reporting, including filing an IRS Form 5471. It is an understatement to say this form is important. Failing to file it means penalties, generally $10,000 per form. A separate penalty can apply to each Form 5471 filed late, incomplete, or inaccurate. This penalty can apply even if no tax is due on the whole tax return. That is harsh, but the rule about the statute of limitations is even harsher.

If you fail to file a required Form 5471, your entire tax return remains open for audit indefinitely. This override of the normal three-year or six-year IRS statute of limitations is sweeping. The IRS not only has an indefinite period to examine and assess taxes on items relating to the missing Form 5471, but in addition, the IRS can make any adjustments to the entire tax return, with no expiration until the required Form 5471 is filed.

You can think of a Form 5471 a bit like the signature on your tax return. Without the form, it is almost as if you didn’t file a return. Forms 5471 are not only required of U.S. shareholders in controlled foreign corporations. They are also required when a U.S. shareholder acquires stock resulting in ten percent ownership in any foreign company. The harsh statute of limitation rule for Form 5471 was enacted in 2010 as part of the same law that brought us FATCA.

Myth #6: Amended Tax Returns Always Extend the Audit Period.

If you want to amend your tax return, you must do it within three years of the original filing date. You might think that amending a tax return would restart the IRS’s three-year audit statute, but it doesn’t. However, where your amended tax return shows an increase in tax, and when you submit the amended return within 60 days before the three-year statute runs, the IRS only has 60 days after it receives the amended return to make an assessment. This narrow window can present planning opportunities. In contrast, an amended return that does not report a net increase in tax does not trigger an extension of the statute.

Myth #7: There Are No Time Limits on Tax Refunds.

Getting money back from the IRS is hard. If you pay estimated taxes, or have tax withholding on your paycheck but fail to file a return, you generally have only two years (not three) to try to get it back. Suppose you make tax payments (by withholding or estimated tax payments), but you have not filed tax returns for five years. When you file those long-past-due returns, you may find that overpayments in one year may not offset underpayments in another. This is painful, resulting in lost tax money, and it catches many taxpayers unaware.

Myth #8: It’s a Mistake to Give the IRS More Time.

On the contrary, if the IRS wants more time to audit you, you should generally agree. The IRS must normally examine a tax return within three years, unless one of the exceptions discussed here applies, and though it tracks the three-year statute, it may need more time to audit.

The IRS may contact you asking you to sign a form extending the statute. It can be tempting to say no, but saying no is often a mistake.

It usually prompts the IRS to send a notice assessing extra taxes, without taking the time to thoroughly review your explanation of why you do not owe more. The IRS may make very unfavorable assumptions. Thus, most tax advisers tell clients to agree to the requested extension. You may, however, be able to limit the scope of the extension to certain tax issues, or to limit the time (say, to an extra year).

Myth #9: Counting the Years of the Audit Period Is Easy.

Counting three years is easy, but it can be tough to apply the statute and to count those three years in some cases. For example, say an IRS notice is sent to a partnership, but not to its individual partners. The partnership tax rules may give the IRS extra time. In other cases, the statute may be “tolled” (held in abeyance) by an IRS John Doe summons, even though you have no notice of it.

A John Doe summons is issued not to taxpayers but to banks and other third parties who have relationships with taxpayers. You may have no actual notice that the summons was issued. Yet it can extend your statute of limitations. This can occur if a promoter has sold you on a tax strategy. The IRS may issue the promoter a summons asking for all the names of his client/customers. While he fights turning those names over, the statute of limitations clock for all of those clients is stopped.

Another situation in which the IRS statute is tolled is where the taxpayer is outside the United States. If you flee the country for years and return, you may find that your tax problems can spring back to life.

Myth #10: You Don’t Need to Worry about the States.

Actually, state tax filings matter a lot. The IRS may audit first and the state later, or the reverse. They are usually connected. Some states have the same three- and six-year statutes as the IRS. Some have their own, like California, where the basic tax statute of limitations is four years, not three. In California, if the IRS adjusts your federal return, you are required to file an amended return to match up what the feds did. If you don’t, the California statute will never run out.

In most states, if you never file a return, the state statute never starts to run. That means thinking about your exposure. In California, for example, if you move out, filing non-resident returns just to report California source income to start California’s statute can be wise. There can be many tricky interactions between state and federal statutes of limitations.

Myth #11: Proof of Filing Isn’t Important.

Being able to prove exactly when you filed and exactly what forms were included can be critical. For that reason, keep scrupulous records, including proof of when you mailed your returns. The difference between winning and losing may depend on your records. The vast majority of IRS disputes are settled, and getting a good or mediocre settlement can hinge on your records, too. The statute usually begins to run when a return is filed, so keep certified mail or courier confirmation.

If you file electronically, keep all the electronic data, plus a hard copy of your return. As for record retention, many people feel safe about destroying receipts and back-up data after six or seven years. However, never destroy old tax returns. Keep copies forever. Also, do not destroy old receipts if they relate to basis in an asset.

For example, receipts for home remodeling 15 years ago are still relevant for as long as you own the house. You may need to prove your basis when you later sell it, and you will want to claim a basis increase for the remodeling 15 years back. For all these reasons, be careful and keep good records.

Conclusions.

An audit can involve targeted questions and requests on particular items only. Alternatively, audits can cover the waterfront, asking for proof of virtually every line item. Even if you do your best with your taxes, taxes are horribly complex. Innocent mistakes can sometimes be interpreted as suspect, and digging into the past is rarely pleasant. Records that were at your fingertips when you filed might be buried or gone even a few years later, so the stakes can be large.

Tax lawyers and accountants are used to monitoring the duration of their clients’ audit exposure, and so should you. It pays to know how far back you can be asked to prove your income, expenses, bank deposits, and more. Watch the calendar until you are in the clear.

1. Robert W. Wood practices law with Wood LLP (www.WoodLLP.com) and is the author of Taxation of Damage Awards and Settlement Payments and other books available at www.TaxInstitute.com. This discussion is not intended as legal advice. ↑

2. 132 S. Ct. 1836 (2012). ↑

“The Rule of Law and Business: Lessons from Experiments in South America” is the eighth article in a series on intersections between business law and the rule of law, and their importance for business lawyers, created by the American Bar Association Business Law Section’s Rule of Law Working Group. Read more articles in the series.

“The rule of law is crucial for promoting economic growth, sustainable development, human rights and access to justice. Where the rule of law is strong, people and businesses can feel confident about investing in the future.”

Former United Nations Secretary-General Ban Ki-moon

The United Nation’s Sustainable Development Goal 16 (SDG 16) reflects a global commitment to “Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable, and inclusive institutions at all levels.”^[1] Considered both a goal, in and of itself, and a key enabler for the rest of the United Nations 2030 agenda, SDG 16 is grounded in the understanding that promotion of the rule of law is good for business.^[2] Despite this global and unequivocal recognition of the link between the rule of law and business, business lawyers still face resistance when introducing the Rule of Law as a tangible aspect of their professional practice, in part due to an apparent lack of opportunities to advance this fundamental principle in a pragmatic way, while providing advice to their clients.

Experimenting with reimagining what lawyers can do to advance business and the rule of law, CAMINNOS Soc. Civ., a business lawyer–led organization, is testing and developing novel approaches to business law tailored to support communities in rural South America using innovative approaches to individual and collective entrepreneurship. CAMINNOS works with new entrepreneurs to help them build capacity to engage with real world challenges by helping them cultivate experience- and results-driven thought leadership. One of the main goals of this approach is to empower small and medium business owners to engage with lawmakers to collaborate around using business frameworks to proactively solve or regulate societal problems. In supporting this kind of capacity building through law in business, CAMINNOS (co-founded and led by the author) operates on the understanding that the Rule of Law is of paramount importance—for businesspeople—in solving business problems and creating a healthy business environment in the long run.

CAMINNOS’s approach to business advising is grounded in educating clients on their Rule of Law obligations. At the big picture level, CAMINNOS uses Base-of-the-Pyramid (BoP) business models^[3] and blockchain technology^[4] to empower rural communities in strategic sectors to generate resources for development in their territories, with a focus on sustainability.^[5] In CAMINNOS’s case, the governance model of its community-owned companies provides families within each community with control and equal voting power to determine how to reinvest the companies’ revenue into sustainable development projects. Moreover, the start-up companies that CAMINNOS structures and advises allow each of the communities that have ownership in them to create an additional income source, to diversify their local economies through revenue reinvestment, and to change their members’ mindset, from a welfare to an entrepreneurial mentality.^[6] Thus, CAMINNOS acts to serve not only its clients’ businesses but also its clients’ larger vision of how these business will live in and impact society for the good.

Legal advising is at the core of these projects, and CAMINNOS adapts traditional approaches to lawyering by designing into them capacity-building programming and technical support that allow clients to learn how to operate their business entities independently by complying with sector regulations providing transparency, and promoting good governance across large shareholder bases. Based on this experience on the ground, CAMINNOS sees the role of the lawyer, particularly for lawyers advising small, medium, and new businesses, as including educating clients on the rule of law, including by emphasizing corporate ethics and the role of environmental sustainability and social impact together with profit.

At CAMINNOS, business law advising is not only about helping clients mitigate risk but also about empowering clients to learn to identify and address the legal frameworks underlying the root causes of such risks. Implementing such an approach, in 2021, CAMINNOS developed a project to introduce indigenous populations to the rural tourism sector through companies owned by the members of their communities. This project was the winning initiative in the Local Innovators Contest 2021^[7] organized by the Local Innovation Network^[8] and Ashoka,^[9] and selected from the proposals of more than 120 local government leaders paired with social entrepreneurs. The innovative component of the project was the design of a digital inclusion program that allowed collaboration between business lawyers, local government, and rural communities to develop and implement a digital tourism program formed as business entity run by its shareholders, with equal participation from business and the community. By facilitating multistakeholder collaboration^[10] in response to client demands, CAMINNOS was able to find long-term and systemic legal and business law solutions to the difficulties and limitations that rural tourism in Bolivia had to face during COVID-19 lockdowns. Reaching out to key allies, CAMINNOS gathered the National Protected Areas Authority, tech startups, NGOs, and academic institutions to design strategies to support rural communities in the tourism sector, creating legal frameworks to integrate such communities as direct participants in the sector. This collaborative public-private pipeline was able to implement a digital tourism program for rural communities to gain skills to create digital tourism experiences and digital artwork using blockchain technology that promoted and sold the works as non-fungible tokens^[11] in cryptoart galleries. The initiative was selected from among 80 public-private partnership proposals, as the most innovative project in the Local Innovators Contest 2021 international competition. This project and CAMINNOS’s work provide an example of the potential at the intersection of business and public policy that will be replicated in 2022 by other communities and the public sector in Bolivia and Argentina.

From working at the intersection of business and law, CAMINNOS has learned that business lawyers are key to activating the potential for businesses’ leadership within the business community. Moreover, CAMMINNOS has found that delivering innovative legal advice to clients that allows them to go beyond compliance with “minimum” safeguards to focus on the more enterprising “do no harm”^[12] principle invigorates business and inspires business leadership. It also creates within business clients an interest in and a commitment to engage in strengthening the rule of law by building and growing more accountable business institutions. These actions can be defined as part of the “changemaker” movement, a rather uncommon term for the legal profession, yet understandable enough to indicate that professionals on this level of engagement are committed to assume a different approach to attain new and better results in their effort to uphold the Rule of Law and achieve their clients’ social goals. Driven by its clients’ goals and aspirations, CAMINNOS is creating a community development model through new governance structures in rural communities, causing a change of mindset that redefines the relationship and power dynamics in communities, with a special focus on gender equity and the interactions between communities and other actors such as governments, private investors, NGOs, and civil society movements. The organization continually works to promote specific legal regulation to change the status of sustainable development for rural areas to allow indigenous communities’ inclusion in disruptive and scalable industries, such as the energy and technology sectors, enabling them as business actors.

CONCLUSION

Applying business law frameworks, CAMINNOS has trained rural communities on how to construct and operate community-led gas stations, as well as how to reinvest their profits into sustainable development projects. Anchored in business law and principles of rule of law, CAMINNOS has also deployed multidisciplinary teams of researchers, engineers, and financial and legal specialists to structure a corporate governance model that has enabled the creation of community-owned gas stations for five communities, granting ownership to more than 4500 families and enabling them to exercise their shareholder rights and comply with corporate regulations that govern commercial entities in that jurisdiction.

Some of the lessons that CAMINNOS has learned through its work are specific to South America. However, the core of CAMINNOS’s approach appears to have universal application. For example, incorporating advising on the nature and value of the rule of law into traditional business advising to help clients cultivate business leadership skills is an approach that business lawyers advising new or socially minded business clients can immediately experiment with and adopt. Moreover, business lawyers can also begin to develop networks beyond the legal community so that, where affordable, they can offer their clients collaborative and big picture opportunities for business growth and innovation that support and enhance the rule of law in a way that advances their clients’ leadership positions. In this context, an innovative approach to legal advising can be understood as a process to provide clients with effective solutions to systemic social and environmental issues, using strategic and multidisciplinary approaches, grounded first and foremost in business law and, more broadly, in principles of rule of law. The concept itself calls for an intervention that goes beyond traditional legal counseling, requiring a deeper understanding of the social problems, the culture, and the context, driving business lawyers to question whether existing law is helpful to the highest aspirations of the businesses and business clients they serve in given circumstances and how the Rule of Law can be upheld and relied upon in such work.

As an added fruit, given that the impact of socially conscious business projects is measured in both financial and social terms, this approach to business lawyering also allows lawyers to measure their own social impact, in addition to their financial impact—a measure that might make them more appealing and attractive to socially-minded entrepreneurs, who are increasingly numerous. Keep in mind that measuring social gains initially requires the design of a theory of change model, understanding the underlying needs of your clients and the communities they wish to serve and translating them into objectives, which must be aligned to identified needs in the relevant communities, needs also targeted as pressing social issues listed in the 17 Sustainable Development Goals^[13] promoted by the United Nations.

1. Any errors or omissions, and the opinions expressed in this Article, are the author’s own. The author can be contacted at [email protected]. ↑

2. https://www.un.org/ruleoflaw/sdg-16/ ↑

3. The term is used in economics to refer to the poorest two-thirds of the economic human pyramid, a group of more than four billion people living in abject poverty. Business for the Base of the Pyramid as a strategy was popularized by C.K. Prahalad, as well as other writers, such as Ted London, reframing the world’s poor living on less than US$ 1.25 per day as “resilient and creative entrepreneurs” as well as “value-conscious consumers.” ↑

4. Blockchain can be understood as a system to record information in a way that makes it extremely difficult to change or be hacked. It works as a decentralized ledger that records the origin and ownership of a digital asset. It gained notoriety as the technology used to created and support cryptocurrency, such as Bitcoin, Ethereum, and other digital coins. It is used for many purposes, such as to register digital assets, create Decentralized Finance (DeFi) structures, program Smart Contracts, and form Decentralized Autonomous Organizations (DAO), among its most common applications. ↑

5. More information can be found at https://caminnos.org/. See, “Assessing the Impact of Social Enterprises Using the U.N. Sustainable Development Goals and IRIS,” http://www.sonencapital.com/news-posts/assessing-impact-social-enterprises-using-u-n-sustainable-development-goals-iris/. “Social entrepreneurship is increasingly recognized as a means of addressing the world’s most pressing social and environmental problems. However, assessing the impact of social enterprises continues to be challenging. Part of the challenge is to find a shared language of impact in the myriad approaches used by social entrepreneurs, impact investors, and development agencies to code, classify, and interpret impact.” ↑

6. See, e.g., “Rural Youth Innovation Award honours youth leaders fighting COVID-19,” https://www.ifad.org/en/web/latest/-/rural-youth-innovation-award-honours-youth-leaders-fighting-covid-19. CAMINNOS works closely with rural communities, and we will see two of the projects launched by this organization led by an attorney in Bolivia that are examples of systemic change as an effect of strategic legal advice. ↑

7. The Local Innovators Contest is an initiative driven by Ayni | Systemic Innovation Communities, an alliance between different organizations of the Latam region with a strong commitment to innovation and the transformation of our cities. Its fifth edition, Collaborative Cities, was targeted to foster territorial transformation through open and participatory work between local government leaders and social innovators (social entrepreneurs). More than 120 teams registered for this initiative to co-design transformative solutions to local problems in areas as diverse as citizen participation, waste management, environmental issues, social inclusion, health, and food security, among others. ↑

8. The Local Innovation Network (Red de Innovación Local) supports local government teams to become leaders in the development of their communities through the improvement of their management capacities, the construction of collaborative networks, and the promotion of innovative public policies. ↑

9. Ashoka: Innovators for the Public, an NGO based in the United States and ranked as the fifth best NGO in the world by independent media organization NGO Advisor, builds and cultivates a community of over 3900 social entrepreneurs and change leaders who transform institutions and cultures so they support changemaking for the good of society. ↑

10. “Driving deep social change most often requires us to work in collaboration with diverse stakeholders on shifting a system together. While such multi-stakeholder collaboration can have a transformational impact on a system, it also comes with its own challenges and requires a specific type of leadership and strategy to be effective.” Ashoka Europe Fellowship Program developed a course to strengthen the leadership skills and strategy of social entrepreneurs for facilitating multi-stakeholder collaboration: https://fellowship-europe.ashoka.org/multi-stakeholder-collaboration. ↑

11. Non-fungible tokens (NFTs) are digital art pieces registered as unique tokens or items, using blockchain technology to create a smart contract that grants authenticity and proof of ownership. Its value is in the blockchain, which removes the middleman and confirms the origins or authorship of the art. ↑

12. See “Emerging Voices: ‘Do No Harm’ and The Development of General Corporate Human Rights Obligations,” Gabriel Armas-Cardona, Opinio Juris (August 28, 2015), http://opiniojuris.org/2015/08/28/emerging-voices-do-no-harm-and-the-development-of-general-corporate-human-rights-obligations/. (Emphasizing that “The principle of ‘do no harm’ has been used as a touchstone in corporate human rights obligations since at least 2002 and is a surprisingly suitable standard for developing a structure for general obligations.” Yet, this principle is not designed to guide the actions of business entities towards social good contributions, but to restrict them to avoid human rights violations.) ↑

13. See “Assessing the Impact of Social Enterprises Using the U.N. Sustainable Development Goals and IRIS,” http://www.sonencapital.com/news-posts/assessing-impact-social-enterprises-using-u-n-sustainable-development-goals-iris/, quoted at note 5. ↑

During 2020 and 2021, Cuatrecasas advised on thirty-two private equity deals with transaction values greater than €10 million. Based on this experience, we can highlight some of the most relevant market trends in the Spanish private equity market.

General overview

In 2021, almost half the transactions reviewed were deals valued at over €100 million.

Investment was distributed among different sectors, but the food industry and technology, media, and telecom (TMT) sectors were particularly active.

In 2020, there was a clear change in trend from previous years, and investments (compared to exits or SBOs) were dominant with 82% of the transactions.

In recent years, an increasing number of private equity funds and financial sponsors have been adopting alternative investment strategies to buyouts. In this scenario, some traditional funds have sought to diversify their strategies and products. These alternative strategies often result in innovative structures and instruments such as minority investments, which are more flexible and can be adapted to the company’s needs and to the risk profile.

However, when a private equity fund invests, the most common transaction continues to be one in which it buys 100% of the target company’s capital stock or takes a majority shareholding through a pure share purchase deal.

Approximately one-quarter of transactions continue to be ones in which the private equity fund, instead of buying a majority shareholding directly, buys the target company through a special purpose vehicle (SPV), after which the seller reinvests in the SPV, usually through a capital increase. Although this happens for many reasons, tax, indebtedness and regulatory reasons are the most common.

Deal process

In 2021, more than half the transactions reviewed were auctions with tighter deadlines due to the pandemic.

During the first year of the pandemic, there were fewer transactions with conditions precedent (47% in 2020) compared to previous years. Based on our experience, this is probably because, unless conditions precedent were strictly necessary, the uncertain circumstances made parties prefer fast transactions with simultaneous signing and closing.

In March 2020, Spain followed the trend of other European countries (e.g., France, Germany, and Italy) and implemented a prior authorization system for foreign direct investments (FDIs), either because the investment is made in a strategic sector or because of the investor’s profile. This was in line with Regulation (EU) 2019/452 (the “FDI Regulation”) and the EU Commission’s guidance—which called on all EU Member States to set up a full-fledged foreign direct investment (FDI) screening mechanism. This became the most remarkable aspect within the M&A market.

A transitional authorization system for EU investors also applies until December 31, 2022, but it only applies to investments in (i) Spanish listed companies that carry out their business in a strategic sector, and (ii) unlisted companies if the value of the investment exceeds €500 million and they also carry out their business in a strategic sector.

Despite the initial concern and uncertainty as to how the new regulation would affect the implementation of M&A deals (mainly owing to the regulation’s being unclear), in practice, it has not discouraged investment.

Due to funds’ interest in strategic sectors, an FDI analysis was needed in most transactions. Apart from this new condition precedent, which became increasingly regulated due to the pandemic, the negotiation and regulation of interim periods have not been as affected by the pandemic as was previously expected.

Unlike in previous years, when almost half the transactions requiring regulatory approval included a “hell or high water” clause, this was rarely the case in 2020 and 2021. Instead, the most common practice was to establish that the conditions the regulatory authorities could impose had to be assumed unless they were especially burdensome or exceeded certain limits.

Although the opposite could have been expected, there was a progressive decrease in the use of break-up fees in 2020 and 2021 in case the closing did not occur or there was a breach of the closing obligations. Also, the use of conditions subsequent was again scarce (less than 10% of transactions).

Consideration and pricing mechanisms

The locked-box mechanism consolidated its dominance in 2021 as the most used pricing mechanism (66% of transactions). Even though the locked-box mechanism has become the most used, the completion accounts mechanism was still used in 32% of the deals in which net debt and working capital were the most widely used financial parameters for the post-closing adjustment.

The use of equity tickers continues to grow, and structuring them as a fixed daily amount is more common than setting a fixed daily rate.

The seller’s liability under leakage compensation is either capped at the leakage amount effectively received, or expenses and taxes are added.

All transactions with deferred consideration were earn-outs or a combination of fixed deferred price and earn-outs. When an earn-out is agreed, there are sometimes covenants to protect the seller, but this is uncommon. Most earn-outs are linked to EBITDA or, in general, to the company’s benefits.

Warranties and indemnity undertaking

In 2020 and 2021, when there was more than one seller, their liability was usually joint or individual, or a combination of both (individual for the fundamental warranties and joint for the business warranties). Joint and several liability was hardly seen.

In 85% of transactions with a deferred closing, the seller was considered to repeat the representations and warranties (R&Ws) on completion.

Share purchase agreements (SPAs) are usually limited quantitatively and temporarily. However, those limits differ depending on whether there is an investment or an exit and whether warrant and indemnity (W&I) insurance is taken out. In Spain, the impact of a buyer’s actual or deemed knowledge on claims for breach of warranties is usually negotiated under SPAs.

In 2020 and 2021, an 18-month limitation period became the most used, abandoning the trend of longer periods in previous years. The most used liability cap for business and tax warranties has increased slightly and is now 20% to 30% of the purchase price.

During 2020, in all exit transactions, the private equity fund was not liable for the breach of business or tax warranties because a W&I insurance had been agreed. However, during 2021, this happened only in 40% of the transactions. However, as usual, in all transactions in which private equity funds invested, industrial sellers granted business and tax warranties, or W&I insurance was agreed. Specific indemnities were almost always included in transactions where W&I insurance was not agreed, and a private equity fund was investing.

Unless a W&I insurance was agreed, all deals had lower and upper limits. Regarding lower limits (and excluding W&I transactions), (i) the seller was not usually obliged to indemnify for losses if each loss, considered individually, was less than a certain amount (de minimis exclusion or de minimis amount), and (ii) all the deals included a basket. In these cases, the seller is not liable for damages unless the aggregate amount of the claim, together with all the claims (each over the de minimis amount), exceeds the basket amount. In cases where a basket is agreed, 77% took the form of tipping baskets and 23% of non-tipping baskets.

There have been more transactions with an anti-sandbagging clause than with a pro-sandbagging clause.

Buyer’s remedies against seller’s liability

In general, during 2021, funds have been less demanding in the seller’s guarantees, either because they were buying highly demanded assets or because the valuation was beneficial and there was no need for further guarantees.

Regarding classic buyer’s remedies, third-party guarantors were the most used, exceeding escrows, which were the most used in the past five years. This is probably because, as money was cheap, some escrow agreements were charging interest instead of giving it, discouraging parties. No transaction used a bank guarantee as a seller’s guarantee.

W&I insurance continues to be the most used buyer’s remedy, albeit less markedly so than in the past. Its use has become widespread, both when private equity funds are investing and disinvesting, and not only within the framework of an exit, though its use has focused on clean exits (90% of W&I transactions).

Dispute resolution

Parties opted for arbitration in 41% of transactions as the dispute resolution mechanism to resolve conflicts arising from the agreement.

The most common seat of arbitration was Madrid. Arbitration proceedings were mostly managed by the International Court of Arbitration of the International Chamber of Commerce (ICC), or by the Court of Arbitration of Madrid.

In California, workers’ compensation claims sometimes lead to crossover employment actions, or even California Division of Occupational Safety and Health (“Cal/OSHA”) cases, stemming from the same set of facts and circumstances. Consider, for instance, an employee working for a construction company who falls off a ladder and breaks his back during the course and scope of his job. There is no dispute that this incident is a work-related injury. However, it could also result in a Cal/OSHA action and might snowball into a Serious and Willful Misconduct claim, a wrongful termination lawsuit, or even a Labor Code Section 132a claim in the hands of the right attorney, if the employee is separated after the fall and the circumstances tangentially support the allegation.

While the employer in this example may be aware of the obvious (i.e., that the injury will result in a workers’ compensation case, and an expensive one at that), the employer may not foresee how the incident can also result in multiple types of claims and potential liability. Generally, there is a three-step process that every employer should take when a work-related injury occurs to mitigate exposure.

The first step is to identify all potential claims that can arise from a work-related injury and how the handling of the claims might overlap within the company. Many employers recognize how industrial and employment-related claims intersect and take specific action when appropriate, including but not limited to offering modified duties to an injured worker to cut off temporary total disability benefits in the workers’ compensation claim, as compared to making the determination and/or engaging in dialogue with the injured worker to initiate an adequate interactive process under the California Fair Employment and Housing Act (“FEHA”). However, most businesses (large ones in particular) that have designated departments to handle workers’ compensation cases, leaves of absences, and the interactive process fail to ensure crossover handling of the claims. As a result, problems arise because the departments are siloed. Indeed, businesses, and their insurance companies, that take a narrow approach to handling workers’ compensation claims can overlook the potential for significant civil exposure and the opportunity to shut down that risk before it escalates into a bigger, more costly problem given the substantial costs involved with defending an employment lawsuit and the exorbitant damages that can be recovered.

As an example: an employee, Mary Jane, is called into a performance review on November 15, 2021, where she learns that she is not meeting expectations. The week prior, Mary Jane had complained to her manager about her neck and elbows hurting from typing at work, but she was not offered any medical treatment or accommodations to alleviate the pain. Mary Jane is distraught by the news regarding her performance, and is concerned about being terminated, so she goes to see her doctor to consult on both the neck and elbow pain as well as her psychological distress. In mid-December 2021, Mary Jane submits a doctor’s note to the employer advising that she needs a month off due to work stress, as well as to allow sufficient time for her neck and elbow pain to subside. However, when Mary Jane fails to submit formal leave paperwork as requested by the employer, she is terminated prior to the end of that month. Mary Jane seeks legal counsel and finds an attorney to file a workers’ compensation claim on her behalf. She claims a continuous trauma of work stress and injury to her neck and elbows. Early in the litigation, the defense team quickly resolves the workers’ compensation claim by Compromise and Release for $15,000. Mary Jane and her workers’ compensation attorney walk away with their settlement.

A couple of months later, the employer receives a six-figure settlement demand letter from a different civil attorney alleging violations under the FEHA and whistleblower retaliations on Mary Jane’s behalf. In hindsight, when rushing to close the file on the workers’ compensation side, the potential civil exposure was completely neglected. Here, although Mary Jane had a straightforward workers’ compensation claim, the employer either missed, or purposely chose not to accommodate, the month off per the original doctor’s note. In terminating her, the employer may have unknowingly established a viable disability discrimination action including liability on the derivative claims, such as failure to provide reasonable accommodations and/or failure to engage in the interactive process, in addition to a retaliation claim for the adverse employment action (i.e., the discipline and subsequent termination following Mary Jane’s complaint about her neck and elbows).

Under this scenario, the best way to prevent crossover exposure and potential for substantial damages is open communication between departments, including Human Resources (“HR”), Risk Management, Leave of Absence, Workers’ Compensation, and Legal. Civil exposure for businesses is often the result of the “right hand not knowing what the left hand is doing.” Here, if the HR and the Workers’ Compensation departments had communicated at the outset of the injury, there would have likely been more consideration given to the timing of the performance review meeting in relation to Mary Jane’s complaint about neck and elbow pain. Further, if the employer had a consistent date on which they delivered performance reviews to all their employees, the appearance of retaliation would be mitigated. That is, if Mary Jane and her peers were reviewed the same day, the argument that she was disciplined based on reporting work-related pain to her neck and elbows loses traction. However, if the employer does not follow a consistent review date, and the performance review meeting date at issue was arbitrarily selected, the employer will have a more difficult time justifying the reason for the date of the meeting and how the meeting was unrelated to her pain complaint the week prior. Furthermore, if the HR, Workers’ Compensation, and Leave of Absence departments had communicated about Mary Jane’s return-to-work status, they would have likely recognized termination may not have been appropriate at that time.

The second step to mitigate exposure on potential crossover claims is to remember that all adverse actions, especially terminations or suspensions, should be reviewed with experienced employment counsel. If counsel is not available, then a trained HR professional with knowledge and expertise in employee risk management, and the importance of timelines, should be consulted. In this scenario, the advice of counsel or senior HR management may have prevented Mary Jane’s termination from proceeding while Mary Jane was engaging in protected activity.

The third and final step to mitigate exposure, and a best practice when settling a workers’ compensation claim with potential civil liability, is to secure a general civil release with separate consideration. California workers’ compensation settlements need to be approved by an administrative law judge (“ALJ”); general releases should not be presented to the ALJ approving the workers’ compensation settlement, as the ALJ does not necessarily have jurisdiction over claims outside of the work-related injury. Nevertheless, if a business insists on and is successful at negotiating with the injured worker and/or their counsel for a solid general release as a term of the resolution, this provides far more protection than a simple voluntary resignation. In this instance, had the workers’ compensation defense team secured a solid release, the employer could have presented the release to the employee’s civil attorney, and the employment-related claims would have been dead on arrival.

In sum, identification coupled with open communication, coordination, and a global litigation strategy that covers the varying but related claims is key for businesses to minimize the snowball effect that can arise out of what might appear to be a simple workers’ compensation case.

“Do you have full authority to settle this matter?” the U.S. District Court Judge directed to me in a tone that made quite clear he doubted very much that could be true. As a thirtysomething lawyer sitting next to an even younger law firm associate, I understood why he was incredulous. He was right to be so, but not because of our relative youth and inexperience. Put simply, I appeared at this mandatory settlement conference with no intention of settling the case. I could put a modest number on the table if the plaintiff wanted to fold his cards and go home. But we thought we wanted to try the case. The plaintiff had occupied a prominent spot in our organization, which gave the case visibility. We believed he would make a bad witness. Our star witness, the president of a billion-dollar division, would surely connect with the jury. Plus, we believed the sole practitioner local lawyer representing the plaintiff could never outshine our big firm/big city litigator.

I muttered something about having “sufficient authority” in response to the judge’s question. I might as well have lit a firecracker—he bellowed at me, “I don’t care about what you think is sufficient authority, I want the person here with complete and total authority!” As I started to explain that “total” authority would require that we convene a meeting of our board in his chambers, the associate mercifully cut me off and said, “Your honor, we have full authority.” The mini-crisis I had inexplicably created passed, and the settlement conference ended an hour later. Only plaintiff’s counsel seemed irritated, correctly observing that we could not have expected his client to take our miserly offer.

Fast forward a few months, and I am sure you can guess what happened next. If your guess is that the plaintiff and his counsel dazzled the jury, our star witness and impressive litigator fell flat, and the jury punished us with a monster damage award, you might be surprised to learn that none of that happened. Our witnesses did great, having been superbly prepared by counsel who threw themselves at the trial with all their energy. The jury returned a defense verdict, and we congratulated ourselves on devising and executing a brilliant strategy. But the celebration did not last very long.

First, there were the legal fees. Defense counsel did what they were supposed to do, working night and day in the weeks leading up to and through the two-week trial. But the bill seemed staggering, and a lot more than the former employee would have taken in settlement. The CFO remarked that we must have lost our minds to spend that much. My boss turned on his longtime outside counsel and demanded to know why she thought it was reasonable to bill that much time. Her completely reasonable response was, “When you committed to try the case, I did think you wanted to win it.” But in the longstanding tradition of general counsel scapegoating outside counsel, the damage was done, and the lawyer-client relationship had been broken beyond repair.

Second, the various witnesses who had taken precious days away from running the business to testify at trial were uniformly irritated. To a person, they proclaimed that with their experience, winning personalities, and general brilliance, they did not need the extensive preparation they endured before testifying. Objectively, they were quite wrong—anyone who has tried a case or defended a deposition has seen the chasm between the prepared and unprepared witness. But with no objective standard to consult and the division president pressing his thumb heavily on the scales, the narrative that the legal department had let outside counsel run amok took hold and became accepted wisdom.

As a legal team, we had foreseen those potential negative outcomes and had prepared ourselves to deal with them. We thought any blowback would be worth it because our demonstrated willingness to try and win this case would have a deterrent effect. Future disgruntled employees would think twice before filing a case and risking our wrath. But it never really works that way. No matter how hard you try to avoid mistakes, they will occur, and the company will sometimes be on the wrong side of a dispute. Moreover, the employee who thinks they have been treated unfairly will not likely be dissuaded because some other employee lost their case. If there had been some deterrent effect, it would not have lasted long, as memories fade quickly for those not directly involved. In fact, it’s been some time since I have been able to remember the plaintiff’s name.

The less than stellar result of the case did not hit the legal team like a thunderclap that forced us to reevaluate and change our ways. I don’t think we even discussed it formally. However, in hindsight, the win that felt like a loss made a big contribution to how my approach to litigation and settlement opportunities changed over the next twenty years. I learned that the most important imperative is to understand the difference between cases that you must take to final judgment versus cases you are willing to take to trial. The cases you must take to final judgment are centered around something fundamental to your business. For example, when you terminate one of your senior executives who has corruptly influenced procurement decisions, you must take the ensuing wrongful termination case to its conclusion. A financial settlement will be viewed as condoning corrosive behavior and will make a dreadful statement to your team about what you really value. In other words, the cases you must take to final judgment are existential: either the company cannot exist if it does not prevail, or something about the case will cause the company to compromise a fundamental value if you choose to settle.

Deciding whether a case fits in the “must not settle” category will require thorough analysis and should rarely produce a “yes” answer. Deciding whether a case falls in the “willing to keep litigating through trial” category is a bit simpler. Do you think you can win? If the answer is yes, ask next, “Why do you think so, and will the case have to be tried?” Answering those questions is a great starting point for inside and outside counsel to determine the approach for a mediation or settlement conference.

Believing that a case can be won does not mean that it will be won or that winning will not ultimately feel more like losing. Thus, being willing to litigate, up to and including through trial, should also mean that you want to make serious efforts to settle the case. Mediations and settlement conferences usually provide the best opportunity to have those efforts bear fruit. The introduction of a neutral third party can have a powerful effect on how litigants view cases, so while many cases do not require that intervention, parties and their counsel should make the most of the opportunity when it is there.

But too often litigants and their lawyers view settlement conferences as a step to be endured before getting to the main event. Mediations are largely voluntary events, but the same view often holds true. Because most cases do settle it might seem strange that this view persists. I believe the reason is that too many litigation teams view the mediation or settlement conference as another opportunity to win the case. Trial lawyers are perhaps the most naturally competitive people on Earth—you can’t put them in a situation that they won’t try to win, whether it’s a jury trial or ordering lunch. Viewing every situation as an opportunity to win can make outside counsel impede instead of facilitate a successful mediation.

Successful mediation requires that the question of authority is thought through well in advance of the event. You need to decide where your bottom line is and arm the negotiating team with enough authority to get there. When you have too many disputes to handle personally, you need to train surrogates in how to use their authority wisely and develop a level of trust in them to provide sufficient authority. The first few times I found myself in the position of sending a surrogate to a settlement conference instead of being the surrogate, I discovered that I had checked neither of those boxes.

We had an employment discrimination case we had acquired in a merger of public companies that I thought we should settle, but my colleagues were less certain. We had no hope of winning a summary judgment motion, so the case had reached the “try or settle” decision point. Instead of fighting to get the necessary authority for that stage of the case, I sent my associate GC to a mandatory settlement conference with a five-figure number, $90,000 if I remember correctly. (I had more authority than that but held back the last $50,000). I did not expect it to be enough but hoped that the gap would at least be narrowed between the plaintiff’s prior half-million dollar demands and the nuisance value number we had previously offered. The conference was set to start at 9:00. An hour or so later, my phone rang.

“Where do we stand?” I asked my associate GC.

“I am going to need more authority,” she said, guessing that I had more to give.

“OK, how far apart are we?”

“We are at $90,000; plaintiff has come down from $500,000 to $480,000.”

“OK, come home and let’s discuss what happened.”

What had happened was that the judge had asked the parties privately for their final numbers at the start of the conference. My colleague had answered the question directly and used her full authority when she was still many miles from a deal. It happens a lot and says a lot about why some judges do not make very good mediators. But it also showed that I had failed to impart to my team how to handle the situation. The former employee’s counsel was not near her final number but had nowhere to go when my colleague used her full authority on the first exchange of numbers. Too late for that case, I imparted to my team the lesson I had learned from hundreds of experiences in that situation—do not use up your authority unless you are very close to making the deal.

But what if you show up with “enough” authority to make a deal and the other side is unreasonable? Perhaps the answer is that the person clinging to an unreasonable position may know full well that they are putting forward a losing argument. They may have their own problems with emotion and reason on their side and have themselves not been given enough authority to get to a deal. You cannot pummel someone who lacks authority into accepting your position. They simply cannot meet your demands. If you insist on demonstrating that you are right, you will not make the deal, and you might damage the relationship. As one of my colleagues said to me in private when I had just spent fifteen minutes eviscerating the utter stupidity of the argument put forward by a junior lawyer of an important supplier on a key point in a negotiation, “Have you considered the possibility that he understands everything you are saying and does not have permission to agree with you?” I calmed down, apologized to my opposite number in the negotiation, and accepted that we were not going to finish that day. The deal was completed three weeks later, and the relationship stayed strong.

Returning to my initial experience with the federal judge where I fumbled the authority question, there was one other subsequent conversation worth noting. I asked our CFO a few days after the experience, “If I went nuts and exceeded my authority at a settlement conference, would the company pay what I agreed to?” He looked at me quizzically and replied, “We certainly would. We would also probably fire you. Where is this going?” I replied, “That’s all I needed to know.” From then on, whenever I was asked “Do you have full authority to settle this matter?” I could confidently reply, “Yes, your honor, I have full authority.”

Despite the existence of a global pandemic that we continue to navigate, the payments ecosystem is experiencing robust growth, amplifying certain trends such as shifting to omnichannel and contactless payments. We are seeing disruption across the payments ecosystem as new competitors enter the fray and scale up and new business models emerge. The pandemic has led to a surge in e-commerce, including transactions on “marketplaces”—online sites that match buyers and third-party sellers. Previously, it was primarily brick-and-mortar merchants who entered e-commerce through online platforms.

The development of new payment technologies, such as peer-to-peer payment technologies and contactless payment technologies, shows the payments ecosystem has evolved to provide an expanded set of point-of-sale payments options for consumers. The payments ecosystem is leveraging improvements in technology to adapt to consumer demand for speed and convenience, as well as for “touchless” aspects that make such technology desirable for consumers to use at point-of-sale during a pandemic.  

The panel “Payments Link: Rails, Platforms, and Deals,” held virtually on September 22, 2021, as part of the 2021 Business Law Virtual Section Annual Meeting, shed light on the aforementioned issues by featuring a discussion on the current payments landscape and key considerations for merchants and consumers with respect to their preferred payment methods. The speakers on the panel were:

• Judy Mok, Partner at Ballard Spahr (moderator)
• Tracy Cheney, General Counsel of Early Warning Services
• Lisa Detig, Vice President & Associate General Counsel Americas at Match Group, LLC
• Ryan Richardson, Lead Global Partnerships Counsel at Stripe Inc.
• Ling Ling Ang, Associate Director at NERA Economic Consulting

This program is currently available as an ABA on-demand CLE on the ABA website: https://www.americanbar.org/events-cle/ecd/ondemand/418241486.html.

In this panel, Ling Ling Ang highlighted recent (at the time) antitrust developments related to the payments ecosystem, such as the termination of Visa’s proposed acquisition of Plaid following a suit filed by the U.S. Department of Justice; Square, Inc.’s acquisition of Afterpay; and the filing of Camp Grounds Coffee, LLC et al. v. Visa, Inc. et al. Interest in antitrust in financial services at the federal level is demonstrated by the U.S. Department of Justice’s newly established Financial Services, Fintech, and Banking Section, along with the July 9, 2021, Executive Order on Promoting Competition in the American Economy. Antitrust considerations in payments include the effects of vertical mergers, the role of platforms, digitization, and consumer welfare. The panel discussed how the evolution of payments ecosystems appears to call for additional critical legal and economic analysis, likely applying novel models and techniques.

There was an in-depth discussion on Zelle, a peer-to-peer payment solution provider and how it works. Tracy Cheney provided basic statistics about Zelle in terms of volume and participants. Cheney discussed how the money movement flows with Zelle, its distribution channels, and integration with settlement rails such as Visa, Mastercard, ACH, and RTP. Cheney also highlighted some payment opportunities using Zelle, including:

• Person-to-Person Payments (P2P): paying a babysitter, a mom sending emergency money to a kid at college, or paying a friend back for purchasing concert tickets
• Consumer-to-Business Payments (C2B): paying for general services around the house, such as landscaping or cleaning; paying rent; paying a personal trainer or groomer
• Business-to-Consumer Payments (B2C): insurance companies disbursing insurance proceeds to a homeowner, an employer reimbursing employees for travel and expenses, a class action administrator disbursing a settlement pool

Cheney also discussed the Zelle Network’s governance structure.

Ryan Richardson discussed the flow of data and funds in the payment system, and Stripe’s role in the payment system. This role differs country to country: “Stripe is an acquirer in most of the European Union and the United Kingdom, Hong Kong, Singapore, and many parts of Asia, but in the United States and some other markets, [Stripe] is not a direct or a principal member of the payment system.” He also discussed other services Stripe provides to its customers, including business analytics services.

The panel also discussed the rise of other payment options, including card not present transactions and buy now, pay later (BNPL) programs (the latter of which may be offered in both online and in-store channels), which is consistent with payment methods having evolved to address pain points in the way customers shop and pay online. Judy Mok discussed how millennials make up a substantial portion of the customer base for BNPL programs because these types of programs tend to appeal to younger consumers who may be wary of credit cards. Traditional financial services players and Silicon Valley giants alike are trying to enter this line of business that fintechs have pioneered. Some recent examples include Comenity Bank’s acquisition of Bread and Apple Inc. and Goldman Sachs’s entry into the BNPL space, along with Square, Inc.’s acquisition of Afterpay.

The panel discussed how, for merchants to offer payment solutions that are attractive to consumers (whether on the acceptance or issuance side), merchants must enter into commercial agreements with payments solution providers (whether such a provider is a financial institution, a fintech partner or some other third-party provider) to provide such offerings to their customers. Lisa Detig spoke about procurement processes for and considerations of merchants in strategic payments arrangements. Considerations include information security and data privacy, the long-term nature of the partnerships, and potential evolution in the payments landscape.

Panelists shared legal contractual considerations for merchants looking to enter strategic partnership arrangements in the payments space. The panel also discussed allocation of risk in the payment world including liability for unauthorized transactions, misdirected payments, and scams.

On February 24, 2022, Lex Machina released its 2022 Law Firms Activity Report (the “Report”). The Report ranked firms across sixteen federal practice areas over the last three years, revealing which firms filed and defended the most cases in how many districts and involving what amounts of damages.

In the past, in-house attorneys have used this report as a starting point for selecting outside counsel. Law firms have historically used the report to understand how they compare to their peers and competitors in order to maximize their strategies in bids for clients. However, the report also provides valuable data-driven insights into evolving litigation trends across practice areas, districts, and time.

One of the most interesting trends highlighted in the report involves the effect of the COVID-19 pandemic on case filings in various practice areas. When the pandemic first began two years ago, Lex Machina began to track cases caused by COVID-19 (the “COVID Cases”), and it continues to do so now. The data and analytics from tracking these cases reveal that the impact of COVID-19 on litigation activity in different practice areas has continued to evolve and change as the pandemic has progressed.

For example, several of the most active law firms involved in COVID Cases filed cases under the American Disabilities Act (the “ADA”) or alleged employment claims. This pattern contrasts with litigation activity in the early stages of the pandemic, when according to Lex Machina’s previous Law Firms Activity Report, contracts and securities case filings were some of the most robust, as plaintiffs reacted to broken contracts and plummeting stock value. These trends likely reflect the fact that the later stages of the pandemic have tended to heavily impact different practice areas, such as employment and civil rights cases involving the ADA. This stands to reason, as over time, remote-work situations and morphing government mandates have given rise to a new host of legal issues. The Report indicated that employment defense firms were especially busy, filing cases involving claims related to vaccine mandates, disability discrimination, whistleblower retaliation, and lack of protective equipment, among other claims.

In addition, the case filing trends revealed that class actions and lawsuits related to singular large-scale events continued to influence the legal landscape and drive up case counts, particularly in the areas of product liability, torts, and insurance. For example, in product liability, the most active law firms representing plaintiffs and defendants were each involved in approximately 800 cases in 2020 that were related to a Bard medical device, which drove up their three-year case counts and placed them at the top of the lists of most active firms.

Some other trends revealed in the Report include the Department of Justice’s continued dominance as the most active counsel overall. In terms of the most active law firms, the Legal Analytics showed that while some law firms with high case counts had dedicated specializations, there were several national litigation firms that appeared in multiple practice areas. For example, Skadden, Arps, Slate, Meagher, & Flom topped two different lists for defense firms in the practice areas of Antitrust and Securities, while Fox Rothschild appeared in multiple lists of top firms in the Bankruptcy, Contracts, Copyright, False Claims, Trade Secret, and Trademark practice areas. Many of the most active employment firms, such as Jackson Lewis, also appeared in the lists of the most active firms with cases caused by COVID, as well as the most active firms overall.

The Report revealed several key litigation trends over the last three years, as well as highlighting the law firms and counsel that were most active in different practice areas during this time. Leveraging the data-driven insights provided by the Report can be powerful for gaining an enhanced understanding of the evolving landscape of federal litigation.

Lex Machina’s Law Firms Activity Report presented data from Lex Machina’s Legal Analytics platform. Using machine learning and technology-assisted attorney review, raw data was extracted from PACER (Public Access to Court Electronic Records), which contains documents from federal district court. The raw data was then cleaned, tagged, structured, and loaded into Lex Machina’s proprietary platform. The report was prepared by the Lex Machina Product Team using charts and graphs from the platform. The commentary was provided by Lex Machina’s legal experts.

If you hope to write off your legal fees, there is some good news from the IRS. Before you rejoice, the bad news is that the complex and confusing rules governing when legal fees are deductible have not gotten any easier. There are still plenty of cases in which deducting legal fees is difficult or when the rules seem to say that you shouldn’t be deducting them at all. Even so, there is some good news, because the mechanics for deducting employment, whistleblower, and civil rights legal fees have been improved, at long last: starting with 2021 tax returns, the IRS is implementing a new Form 1040 that has a line item for attorney fees.

Deductions Were Previously Hard to Claim

The tax code was amended back in 2004 to allow legal fee deductions “above the line” in some cases, which is almost like not having the income in the first place. But the deduction has been quirky to claim ever since. Many taxpayers have trouble; so do accountants and some types of tax return preparation software. That is barely surprising. Since 2004 it has been a kind of write-in deduction, sort of like writing in a political candidate who isn’t on the ballot.

Before and after 2004, the other kind of deduction was below the line. That meant subject to all sorts of limits and thresholds (including the dreaded alternative minimum tax (AMT)). The result was usually that you lost much or even all of your deduction. And starting in 2018, that below the line deduction went away entirely (until 2026, when it is supposed to come back). Talk about confusing. So this above the line deduction was and remains terribly important, which is one reason why how to claim it is so critical.

I have seen plenty of mechanical glitches with these deductions since 2004. I have seen some plaintiffs not properly claim the deductions they deserve and some plaintiffs and their return preparers not claim them at all—sometimes purely or largely because they cannot seem to manage the mechanics. In that sense, the easier mechanics created by the recent IRS update are a big win.

Because the previous versions of Form 1040 did not have a separate line to write in “other” above-the-line deductions, above-the-line deductions involving employment, whistleblower, and civil rights cases had to be written onto the dotted leader line next to the box where the total of the above-the-line deductions was to be calculated. This reporting not infrequently created confusion with the computer systems of state taxing agencies, because their algorithms often didn’t recognize the legal fee deduction reported on the leader line, or outside of any box of the form.

State agencies, like California’s Franchise Tax Board, would regularly send notices to taxpayers who followed the IRS’s instructions asserting that the taxpayers’ tax returns must contain a calculation error: The total of the above-the-line deductions reported in the boxes of the Form 1040 as calculated by the states’ computers simply did not match the taxpayer’s self-reported total on the tax form, they said. Of course, in these cases, the supposed calculation error was simply that the taxpayer’s calculated total correctly included the legal fee deduction written onto the leader line, whereas the state’s calculation did not. Even though these state notices are relatively easy to address, it was obviously frustrating to taxpayers to default into a state income tax examination over a poorly drafted tax form.

Not only was there no proper line for legal fee deductions on the IRS forms, but you had to include a particular code next to your write-in. If your case was an employment case, the code to enter was “UDC” for unlawful discrimination claim. The instructions said:

Write “UDC” and the amount of the attorney’s fees next to line 36 of Form 1040. For example, if you paid $100,000 in attorney fees, write “UDC $100,000” next to line 36.

If your case was a whistleblower case, you put in “WBF” for whistleblower. (I’m not sure what the F stood for, though “fees” seems the most likely candidate).

But at long last, starting with 2021 tax returns, the IRS is finally making it easier with a new Form 1040 that has a line item for attorney fees. For 2021, Schedule 1 to Form 1040 now gives you two lines. Line 24 of Part II, Adjustments to Income, allows for:

(h) Attorney fees and court costs for actions involving certain unlawful discrimination claims $_________

(i) Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations $_______

Notably, there is still not a separate line item specifically for “WBF” whistleblower fees under Section 62(a)(21). Perhaps that deduction is too rarely claimed to merit its own line. Still, the new form makes life a little better for those claiming “other” above-the-line deductions that do not have their own line on the tax form. The IRS has finally included an “other adjustments” line, Line 24z, where other above-the-line deductions can be reported in an actual box on the form without having to write them onto any leader lines. Hopefully, the inclusion of this catchall line will fix the state “calculation error” notices issue created by the previous versions of the Form 1040.

When the IRS updated the Form 1040, it also updated its instructions for the Form 1040, which now make no mention of the codes (“UDC” and “WBF,” for example) that used to be necessary to identify the deduction on the old forms. That makes sense for UDC deductions under Section 62(a)(20), since they now have their own line and do not have to be identified by a code.

However, this is somewhat puzzling for the above-the-line deductions that have not been given their own lines, since taxpayers will still need to identify the type of “other” deduction claimed on the new catchall Line 24z. It will be interesting to see if tax preparers continue to use “WBF” to identify whistleblower fee deductions out of convention, even though that code is no longer required or mentioned in the form’s instructions.

Plaintiffs Paying Tax on Legal Fees

Why worry about deducting legal fees in the first place? Most plaintiffs would rather have the lawyer paid separately and avoid the need for the deduction. Unfortunately, it is not that simple. If the lawyer is entitled to 40 percent, the plaintiff generally will receive only the net recovery after the fees. Most plaintiffs therefore sensibly assume that the biggest tax they could face would be tax on their net recoveries.

However, regardless of how the checks are cut, the plaintiff must usually contend with 100 percent of the proceeds under Commissioner v. Banks, 543 U.S. 426 (2005). As a result of that seminal case, plaintiffs in contingent fee cases must generally recognize gross income equal to 100 percent of their recoveries, even if the lawyer is paid directly, and even if the plaintiff receives only a net settlement after fees. This harsh tax rule usually means plaintiffs must figure out a way to deduct their 40 percent (or other) fee.

Fortunately, in 2004 shortly before Banks was decided, Congress enacted an above-the-line deduction for employment claims, civil rights claims, and some whistleblower claims. Plaintiffs in employment and civil rights cases can use this deduction for contingent fees, generally ensuring that they are taxed on their net recoveries, not their gross. Even so, many taxpayers and return preparers have had trouble with the mechanics of claiming it, as discussed above. There are also technical limits because a plaintiff’s deduction for fees in employment, civil rights, and qualifying whistleblower cases cannot exceed the income the plaintiff received from the litigation in the same tax year.

If all the legal fees are paid in the same tax year as the recovery (such as in a typical contingent fee case), that limit causes no problem. But this is a problem if the plaintiff has been paying legal fees hourly over several years. In that event, there is no income to offset, so you cannot deduct the fees above the line. Paying back the prior fees and having the lawyer charge them again in the year of the settlement is sometimes suggested to bring the fee payment into the same tax year as the recovery. It is unclear if that kind of circular flow of funds would adequately address the issue, although perhaps it might give a potential return position.

Who Can Claim the Above-the-Line Legal Fee Deduction?

The big question, of course, is what types of cases qualify for the above-the-line deduction? The answer is that only employment, civil rights, and some types of whistleblower claims qualify for it. Some people fear that employment cases based on contract disputes without discrimination might somehow not qualify. Perhaps that fear was fueled by the “UDC” notion that might seem to suggest that only unlawful discrimination claims (as opposed to all employment claims) qualify. However, there is a catchall provision, section 62(e)(18), that seems to cover the waterfront and make the long list of claims unnecessary. In the tax code itself, any claim about employment is actually defined as an unlawful discrimination claim.

Unlawful Discrimination

The above-the-line deduction applies to attorney fees paid because of claims of “unlawful discrimination.” The definition of such claims refers to claims for unlawful discrimination brought under these federal statutes:

• the Civil Rights Act of 1991;
• the Congressional Accountability Act of 1995;
• the National Labor Relations Act;
• the Fair Labor Standards Act of 1938;
• the Age Discrimination in Employment Act of 1967;
• the Rehabilitation Act of 1973;
• the Employee Retirement Income Security Act of 1974;
• the Education Amendments of 1972;
• the Employee Polygraph Protection Act of 1988;
• the Worker Adjustment and Retraining Notification Act;
• the Family and Medical Leave Act of 1993;
• chapter 43 of Title 38 (concerning employment rights of uniformed service personnel);
• Section 1981, Section 1983, and Section 1985;
• the Civil Rights Act of 1964;
• the Fair Housing Act; and
• the Americans with Disabilities Act of 1990.

It also refers to claims permitted under any provision of federal law (popularly known as whistleblower protection provisions) prohibiting discharge, discrimination, retaliation, or reprisal, and under any provision of federal, state, local, or common law providing for the enforcement of civil rights or regulating any aspect of the employment relationship.

Catchall Employment Claims

Arguably the most important piece in all this is the section 62(e)(18) catchall provision, which makes a deduction available for claims alleged under:

Any provision of federal, state, or local law, or common law claims permitted under federal, state, or local law —

i. providing for the enforcement of civil rights, or

ii. regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, or prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law.

This language is very broad. Some people may argue that an employment contract between a company and an executive doesn’t involve alleged discrimination and might not be covered. However, it seems hard to argue that an employment contract dispute does not amount to an employment matter within the meaning of this broad catchall statement. Many people claim these deductions and have been doing so since 2004. Yet so far, there is little guidance on this issue.

In LTR 200550004, however, the IRS ruled that attorney fees and costs rendered to obtain federal pension benefits fell within the catchall category. The case concerned a taxpayer who, after his retirement, discovered that he was being shortchanged on his pension. The IRS found unlawful discrimination. Interestingly, the IRS ruled that the case fell within the catchall category for unlawful discrimination even though the action was brought under ERISA (one of the enumerated types of unlawful discrimination).

Because only actions brought under section 510 of ERISA are expressly allowed under section 62(e), the catchall provision was needed to cover the taxpayer’s case. This ruling suggests an expansive reading of the catchall category, and so does the plain language of the statute.

Whistleblower Recoveries

The “unlawful discrimination” deduction also creates an above-the-line deduction for whistleblowers who were fired from their employment or retaliated against at work. But what about whistleblowers who expended legal fees to obtain a qui tam award but were not fired? Separately from the unlawful discrimination deduction, section 62 allows these qui tam plaintiffs to deduct their attorney fees above the line.

Several features about fees in non-employment whistleblower cases are noteworthy. Originally, the law for non-employment whistleblowers covered only federal False Claims Act cases. In 2006 the above-the-line attorney fees deduction was expanded to include attorney fees paid by tax whistleblowers in cases brought under section 7623 (regarding detection of underpayments of tax, fraud, etc.). In 2018 it was extended to SEC and Commodities Futures Trading Commission whistleblowers. Regarding False Claims Act recoveries, commencing with the 2018 tax year, the above-the-line deduction for attorney fees was extended to cover state whistleblower statutes as well.

Civil Rights Claims

The catchall language in section 62(e)(18) also provides for the deduction of legal fees to enforce civil rights. This unlawful discrimination deduction is arguably even more important than the deduction for fees concerning employment cases. What exactly are civil rights, anyway? You might think of civil rights cases as only those brought under 42 U.S.C. section 1983.

However, the above-the-line deduction extends to any claim for the enforcement of civil rights under federal, state, local, or common law. Section 62 of the Internal Revenue Code does not define “civil rights” for purposes of the above-the-line deduction, nor does the legislative history or committee reports. Some definitions are broad indeed, including:

. . . a privilege accorded to an individual, as well as a right due from one individual to another, the trespassing upon which is a civil injury for which redress may be sought in a civil action. . . . Thus, a civil right is a legally enforceable claim of one person against another. See Volume 15, American Jurisprudence, 2d at Page 281, quoted in In re Colegrove, 9 B.R. at 339 (emphasis added).

Moreover, in an admittedly different context (charitable organizations), the IRS itself has generally preferred a broad definition of civil rights. In one general counsel memorandum, the IRS stated: “We believe that the scope of the term ‘human and civil rights secured by law’ should be construed quite broadly.” Could invasion of privacy cases, defamation, debt collection, and other such cases be called civil rights cases? Possibly.

What about credit reporting cases? Don’t those laws arguably implicate civil rights as well? Might wrongful death, wrongful birth, or wrongful life cases also be viewed in this way? Of course, if all damages in any of these cases are compensatory damages for personal physical injuries, then the section 104 exclusion should protect them, making attorney fees deductions irrelevant.

However, what about punitive damages? In that context, plaintiffs may once again be on the hunt for an avenue to deduct their legal fees. Reconsidering civil rights broadly might be one way to consider fees in the new environment. In any event, the scope of the civil rights category for potential legal fee deductions seems broad.

Conclusion

The IRS gets big points for fixing what has been a tough deduction to claim since 2004. Personally, I’m still not used to the Schedule 1 idea for Form 1040, which may have been part of the effort to make tax returns more akin to postcards. Of course, we know how that turned out. But those issues aside, the IRS change for 2021 returns with the express line item for above-the-line attorney fees is a huge win.

Schedule 1 devotes two lines to these deductions: Line 24 of Part II, Adjustments to Income, for “(h) Attorney fees and court costs for actions involving certain unlawful discrimination claims” and “(i) Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations.” Don’t overlook them.

In recent months, two courts expressed disapproval of the use of non-consensual third-party releases in plans of reorganization: (i) the Southern District of New York, in In re Purdue Pharma, L.P., and (ii) Eastern District of Virginia, in Patterson v. Mahwah Bergen Retail Group, Inc. These decisions represent a significant shift towards curtailment of the use of non-consensual third-party releases in plans of reorganization. Non-consensual third-party releases arise in Chapter 11 plans and are an uncommon tool in bankruptcy proceedings. Instead of voluntary releases—which are the typical, and preferred, tool in Chapter 11 plans—a non-consensual third-party release is generally sought when the claim(s) against the third party must be released because the third party has a substantial and essential economic contribution that makes such release vital to the plan.

The Southern District of New York’s Decision in In re Purdue Pharma L.P.

On December 16, 2021, Judge McMahon of the Southern District of New York reversed the Bankruptcy Court’s confirmation of the Debtors’ plan of reorganization because of the non-consensual third-party release provisions in the plan.^[1] In her decision, Judge McMahon analyzed whether Section 105(a), 1123(a)(5), 1123(b)(6), or 1129 of the Bankruptcy Code authorizes the Bankruptcy Court’s approval of non-consensual third-party releases. Judge McMahon concluded that none of those statutory sections confer authority on the Bankruptcy Court to grant non-consensual third-party releases.

After concluding that the Bankruptcy Code does not expressly authorize the approval of the third-party releases at issue, Judge McMahon considered the Debtors’ argument that the Bankruptcy Court could approve the non-consensual third-party releases because of the lack of any statutory prohibition prohibiting them. Judge McMahon rejected the Debtors’ argument, finding that Congress’s silence on the issue does not mean that the Bankruptcy Court has authority to approve non-consensual third-party releases. In contrast, as Judge McMahon noted, Congress has expressly authorized such releases, assuming certain conditions are met, in asbestos-related cases.^[2]

The Eastern District of Virginia’s Decision in Patterson v. Mahwah Bergen Retail Group, Inc.

Following on the heels of the Judge McMahon’s decision in In re Purdue Pharma, Judge Novak of the Eastern District of Virginia similarly disapproved of the use of non-consensual third-party releases in a plan of reorganization in his January 13, 2022 decision.^[3] In the underlying bankruptcy case, the Bankruptcy Court approved broad non-debtor releases of—among other claims—securities-fraud claims against the Debtors’ insiders as part of the Bankruptcy Court’s confirmation of the Debtors’ plan of reorganization. Finding the third-party release provisions void and unenforceable, Judge Novak labeled the breadth of the release provisions as “shocking” and cautioned that third-party releases are a “device that lends itself to abuse.”

In reaching his decision, Judge Novak expressed significant concern with the due process implications of non-consensual third-party releases, explaining that the “third-party releases strike at the heart of these fundamental rights.” As the third-party releases would release the claims of—at a minimum—hundreds of third parties without their consent, Judge Novak held that the third-party releases “offended the most fundamental precepts of due process.”

In addition, Judge Novak held that the Bankruptcy Court lacked jurisdiction to approve the broad, third-party releases at issue. Analyzing whether the Bankruptcy Court has constitutional authority to release the claims of third parties under the Supreme Court’s decision in Stern v. Marshall,^[4] Judge Novak found that the Bankruptcy Court:

1. failed to identify whether it had jurisdiction over the released claims; and
2. lacked jurisdiction over many of the released claims because such claims included claims between non-debtors that have little to no connection to the bankruptcy estate or the administration of the bankruptcy case.

Conclusions & Takeaways

The In re Purdue Pharma and Mahwah Bergen Retail Group decisions add to the growing uncertainty regarding the use of third-party non-consensual releases in a plan of reorganization. Even prior to the In re Purdue Pharma and Mahwah Bergen Retail Group decisions, courts had been split on the issue of third-party non-consensual releases. Judge McMahon’s and Judge Novak’s decisions add to the increasing body of case law that either disfavors or expressly prohibits the use of broad, non-consensual third-party releases.^[5] In the wake of these decisions and until the uncertainty regarding the use of third-party of releases is resolved, debtors will have to proceed cautiously before seeking approval of broad, non-consensual third-party release provisions in a plan of reorganization.

1. Judge McMahon’s decision can be found at In re Purdue Pharma, L.P., 7:21-cv-08566-CM (S.D.N.Y. Dec. 16, 2021). ↑

2. See 11 U.S.C. § 524(g). ↑

3. Judge Novak’s decision can be found at Patterson v. Mahwah Bergen Retail Group, Inc., 3:21-CV-00167-DJN (E.D. Va. Jan. 13, 2022). ↑

4. See 564 U.S. 462 (2011). ↑

5. See, e.g., In re Pac. Lumber Co., 584 F.3d 229 (5^th Cir. 2009); In re Lowenschuss, 67 F.3d 1394 (9^th Cir. 1995); In re W. Real Estate Fund, Inc., 922 F.2d 592 (10^th Cir. 1990). ↑

This article is related to a Showcase CLE program at the ABA Business Law Section’s 2022 Hybrid Spring Meeting. To learn more about this topic, view the program as on-demand CLE, free for Section members.

Traditionally, corporations’ main risk factors were related to business and business environment, and the primary criterion for evaluating corporate action was maximizing shareholder welfare and return. Recently, a new set of risk criteria outside the traditional focus on financial performance is gaining prominence: environmental, social and governance (ESG) risk management. ESG risks are more than just reputational—they can include costly litigation, hefty fines, seizures at U.S. ports, debarment, bank insecurity, and plunging stock value. Bottom line: ESG risks can stop or seriously delay company operations.

On March 31, a panel discussion at the American Bar Association Business Law Section Hybrid Spring Meeting will consider the evolution of ESG concerns and reporting, from philanthropic and discretionary corporate social responsibility (CSR) acts to required disclosure and regulatory focus as an inherent part of valuation. The breadth of shareholder proposals related to ESG and the importance of board governance and oversight will be discussed, along with the need for robust internal ESG governance processes for assessing materiality. The panelists will examine ESG risks through the eyes of not only major company or financial institution general counsel or senior in-house and outside counsel, but also of a diverse group of professionals in this area from several perspectives, including the founder and president of a leading human rights litigation advocacy group. These perspectives include:

• Regulatory activity regarding climate risk within the financial services sector, including expectations of the Office of the Comptroller of the Currency and the Federal Reserve Board. In addressing climate risk, financial institutions must analyze physical risk (e.g., the risk associated with the direct impact of climate change on institutions’ physical assets and the physical assets of their borrowers); transition risk (e.g., the risk associated with increased market demand for lower carbon–producing products and services); acute risks (e.g., the risks associated with a specific short-term climate event, such as a natural disaster); and chronic risks (e.g., the risks associated with the increase in frequency of natural disasters over time). The panelists will provide an overview of recent developments and discuss the practical implications for financial institutions and their customers.
• Litigation risks for companies as well as board members and officers, whether from regulatory agencies, private plaintiffs, or public interest organizations. Discussion also will include the status of strategic litigation in the human rights arena; other mechanisms underway that can disrupt labor trafficking, such as the Trade Facilitation and Trade Enforcement Act and the Federal Acquisition Regulation; trends in the litigation arena; and the status of extraterritorial application in human rights cases.
• Risks springing from the draft E.U. Directive requiring human rights due diligence and remediation of adverse impact issues in supply chain management, and specific contract assurances addressing such human rights initiatives, including the concept of shared responsibility. Recently, shared responsibility was addressed in a unique buyer code of conduct found in Version 2.0 of the Model Contract Clauses to Protect Human Rights in International Supply Chains (the MCCs), which incorporate the UN Guiding Principles on Business and Human Rights (UNGPs) and the Organisation for Economic Co-operation and Development (OECD) guidelines and are drawn from the ABA Model Principles on Labor Trafficking and Child Labor. Published in the Winter 2021–2022 issue of The Business Lawyer, the MCCs integrate human rights due diligence into every stage of the supply chain contract, allow enforcement by every buyer and supplier in the chain (eliminating conventional privity of contract), and prioritize remediation of human rights harms over conventional contract remedies.
• Other newly manifest risks that have surfaced in recent years.

The program will emphasize how companies, banks, investors, and advisors take legal risks all the time, but often fail to integrate these risks effectively in an environment that is changing continuously. Those who ignore these and other ESG risks do so at their peril and miss the chance to create long-term value as advocated by BlackRock CEO Larry Fink in his last few annual CEO letters. As the demand for data and transparency with respect to ESG factors increases, the need to break down silos and be sure legal oversight is truly integrated with an organization’s compliance and operations is the only way to create an effective overall enterprise risk strategy. We will also discuss essential, practical tools for measuring, monitoring, and proactively managing a variety of ESG risks and provide ample materials for future reference.

There can be no question that the role of legal counsel is expanding into a proactive role in an organization’s broader enterprise governance, risk management, and compliance (GRC) strategy. The ever-increasing ESG initiatives impacting many aspects of business are evidenced, in part, by the number of ESG-related CLEs at the upcoming Business Law Section Hybrid Spring Meeting. The objective of all these ESG-related CLE programs, listed below, is to be sure business lawyers have the tools to assist clients in coordinated efforts to act with integrity in fulfilling legislative, regulatory, contractual, and even self-imposed obligations.

The Myriad Approaches to ESG Data and How to Use Your Data to Report Reliably on March 31, 2:00–3:30 p.m. ET, from the Legal Analytics, Cyberspace Law, International Business, International Coordinating, and Sports Law Committees

The Future of Commercial Office Space in Hybrid Workplace and Its Impact on Lenders, March 31, 4:00–5:00 p.m. ET, from the Banking Law, International Business, International Coordinating and Legal Analytics Committees

Equity, Equality, Regulation and Enforcement: The Evolving Regulatory Landscape of Fair Lending Redlining and UDAAP, April 1, 8:00–9:00 a.m. ET, from the Banking Law and Credit Union Committees

Current State of the Syndicated Loan Market, April 1, 10:00–11:30 a.m. ET, from the Commercial Finance and Uniform Commercial Code Committees

Understanding the Elements of ESG and Current DOL Guidance on ESG in Plan Investments, April 1, 2:00–3:00 p.m. ET, from the Employee Benefits and Executive Compensation and Corporate Social Responsibility Law Committees

ESG in the Board Room: Counseling Directors on ESG, April 1, 4:00–5:00 p.m. ET, from the Federal Regulation of Securities, Corporate Social Responsibility Law, Corporate Governance, International Business Law and International Coordinating Committees