Spontaneous Exclamations: LinkedIn etiquette

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, commercial finance, mergers & acquisitions, entity structure and formation, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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It is generally accepted that Facebook is in the process of taking over the world.  But before a giant, fire-breathing, robotic Mark Zuckerberg battles Godzilla and becomes our planetary overlord, let’s take a moment to talk about LinkedIn etiquette.

In the interest of being brief for a blog post, we can break this down into three categories: (i) portrait; (ii) content; and (iii) interaction.  Follow these easy steps on your way to achieving LinkedIn mastery (or just a convenient tool and a nicer looking page).

1.         Portrait – “My nose isn’t big. I just happen to have a very small head.” – Jimmy Durante. Everybody wants to look good, especially if they are posting a photo for the entire world to see.  However, while you may add to the quality of your LinkedIn profile page with a professional portrait, your profile really doesn’t need a photo.  Why?  To a significant portion of LinkedIn’s users’ dismay, this isn’t Facebook. LinkedIn is meant for professional networking as opposed to being an electronic yearbook in which you publish all of your personal exploits in or sometimes out of a bathing suit for the entire world to see.  Therefore, what’s most important is your professional credentials, not your face.

So if you have a professional portrait use it— it’ll make your LinkedIn page a more customizable extension of your profile page on your workplace’s website.  However, if you’re stuck cropping the better looking pictures of yourself from your latest trip to Cabo, don’t waste your time.  Drop the anxiety about posting a picture of your nose looking too big from your “bad side” and just don’t upload a photo.  It’s not necessary.  Focus on the content.

2.         Content – (insert hyperbole here). Simple: LinkedIn is your online resume, but you get more than one piece of paper to write it on.  Use this to your advantage.  Take your resume, insert it on your profile, and then expand on the details without being too verbose.   Whether you use your profile to network, acquire clients, job hunt, or whatever else, it’s a bonus to be able to convey to people exactly what you do.

When you meet people in a professional setting, much of the time they will briefly research your background and your LinkedIn profile will undoubtedly come up in a basic search.  As a result, since this profile is supposed to be analogous to your resume, avoid the excessive exaggeration.  How are you going to explain it later when your potential client asks you about the $300 billion  deal you quarterbacked one year out of law school, or what Anthony Bourdain was like when you were his sous-chef  (actually, bus-boy at the restaurant next door)?  Keep it simple, keep it honest.

3.         Interaction – This isn’t Facebook. While Facebook is admittedly a good networking tool, LinkedIn is excellent for professional networking.  Not only is LinkedIn a convenient online Rolodex to keep track of your network, but it’s an outlet to acquire introductions to virtually anybody you’d like to meet, so long as you are within a few connections of them.  You want to meet someone at XYZ Inc.?  Go on LinkedIn and search for everyone at XYZ Inc..  You will find that your college roommate went to high school with him and played on the same varsity badminton team.  There’s your foot in the door.  Bring your badminton racquet.

And that’s all there is to it.  Use LinkedIn wisely and it can add major convenience and value to your practice.  Treat it like Facebook and you won’t be the only one posting a bikini picture while simultaneously attempting to convince other professionals that you’re qualified to handle their 300 billion dollar deal.  If posting that picture is your move though, fair enough.  At least your nose doesn’t look too big.

Spontaneous Exclamations: Plan C, sue 100 law schools?

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, commercial finance, mergers & acquisitions, entity structure and formation, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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Last blog post, we expected that some disgruntled law students and recent graduates would sue their law school over the blatantly misleading employment statistics you find in almost every admissions booklet from almost every law school.  Well, almost every school may or may not be an exaggeration, but you get the gist of it.  Law school admissions statistics are frequently ambiguous in that the definition of “employed” within a year of graduation includes positions like coffee barista, zamboni driver, professional underwater synchronized scuba ballerina, and various other occupations that do not require a J.D. degree.  (See https://h20cooler.wordpress.com/2012/02/10/spontaneous-exclamations-plan-b-sue-law-school/).  Many of you have responded to me along the lines of: “Adam, caveat emptor— these students graduating within the last year or two entered law school after the start of the worst legal job recession in recent memory.  It’s their fault for going to law school knowing there’d be no jobs when they came out!”  In certain situations, this is could be a valid argument.  However, in addition to my points in the last article, shouldn’t law schools, which are tasked with teaching ethics and professionalism to the very students they enroll, refrain from purposefully publishing misleading and/or vague employment data?

Yet this just in: It appears that Plan B, “sue your law school,” was just bypassed for Plan C, “sue 100 law schools!”  According to Above the Law, and an interview conducted by Bloomberg Law, the attorneys behind the IIT Chicago-Kent College of Law class action and suits against 11 other law schools, have at least 20 additional suits planned.  Furthermore, Chicago Crain’s reported that these attorneys plan on suing as many schools as possible in 2012— 20 to 25 new suits every few months.  If this is true, this may be a shocking year for universities across the nation, that is, if any courts actually allow these cases to proceed.

As reported in Chicago Crain’s, Dean John Corkery of The John Marshall Law School stated that the attorneys intended to file suit even before even having any students or graduates to constitute a class.  Without addressing these attorneys’ questionable ethics for filing class actions potentially (but not necessarily) for their own personal gain (and are these ethics different from those underlying a significant proportion of class action lawsuits?), we now need to question whether the plaintiffs constituting the classes are generally miffed students and new attorneys or whether they may have been influenced to join the classes by the potential to recoup tuition and get back at the institutions that saddled them with so much debt and no job.

If this is the case, to all of the lovely commentators who expressed their lack of sympathy for recent graduates, perhaps these disgruntled young lawyers aren’t fully to blame.  Either: (1) they are whole-heartedly regretful for attending law school and seek payback (in which case your argument has some validity); or maybe, just maybe, (2) they were drawn in by the attorneys filing the class actions and aren’t the eloquent phrases conspicuously analogous to the word “brat” that a number of readers have claimed these law students to be (we’re lawyers, we hide behind ominous walls of words).  If No. 2 is true, while ethically ambiguous, is it really that bad?  In truth, should law schools really be intentionally reporting misleading statistics?  Perhaps these class actions are the only viable way to stand up to a heavily entrenched and ethically-borderline practice by a powerful industry.  Considering the news coverage these class actions have received, the class’ attorneys have already got your attention.

Spontaneous Exclamations: Plan B, sue law school

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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Everyone knew this would happen eventually, it was just a matter of when.   At the beginning of the month, the remarkable, yet expected, class action complaint was filed in the Cook County Circuit Court.  You guessed it, a group of recent IIT Chicago-Kent College of Law graduates and a student opted for Plan B.  Upon discovering that Plan A was unavailable— that there were no jobs available for recent graduates— a 2009 graduate, two 2011 graduates, and a soon-to-be 2012 graduate filed the class action against IIT Chicago-Kent.  The complaint against IIT Chicago-Kent is based on claims of fraud and dissemination of information to third parties in connection with the law school’s reporting of employment and salary statistics of graduates.

The complaint can be found at the following link on the plaintiffs’ attorney’s website: http://www.anziskalaw.com/uploads/Filed_Chicago-Kent

In my past blog posts, I have advocated for a change of the way law schools report employment statistics, though I have also described the careful balancing act.  Reporting non-misleading a/k/a “accurate” statistics would almost certainly be self-destructive to law schools because potential applicants would grasp the direness of the job market right now.  As a result, most of these potential applicants would simply not apply to law school and class sizes across the nation would plummet.  This is why law schools should not adjust their statistics reporting from a business standpoint.  However, from an ethical and, if this law suit is successful, legal standpoint, law schools should accurately report graduate employment statistics in order to save these students over a $100,000 worth of onerous debt.  Conversely, when times are good, the accurate reporting of 97 percent employment upon graduation and the first-year big law salary increase from $160,000 to $960,000 in New York, law school applications will flourish again.

Which leads us back to the crux of the matter: Law school tuition is so high that students who can’t find jobs and have been saddled with crushing debt at extraordinary interest rates have resorted to filing a class action lawsuit against their alma matter.  Whether or not the plaintiffs seek the return of their tuition payments, at the very least, they are applying firm pressure to compel schools to change their statistics reporting policy.  Also, bridges are ferociously burning.

Did the plaintiffs make the right decision?  Perhaps most practicing attorneys would say no.  These attorneys would claim that the plaintiffs are burning their bridges with law schools and law firms alike and will never find a legitimate job in the legal field ever.  Furthermore, these attorneys would assert that the plaintiffs brought this trouble upon themselves by attending law school during one of the worst legal recessions in recent memory.  Lastly they’d say that anybody with a shred of common sense could figure out that the law school’s statistics are blatantly distorted.  Boy!  These hypothetical attorneys are harsh!

On the other hand, what’s the downside?  The plaintiffs feel swindled by their schools and seek changes to the way the statistics are reported.  Perhaps they also hope for a return of their tuition and the chance at a debt-free life.  They might not even want to work in the legal industry.   Arguably, the plaintiffs are burning their bridges for the benefit of future law students.  Nobody said changing the behavior of powerful and moneyed forces on this planet was easy.

So what’s the solution?  Should law schools choose the high road and report accurate statistics and potentially decimate their application volume?  Or should law schools keep calm and carry on?  Again, like in many of my blogs, we can reach deep to the underlying problem: the student loan industry.  If tuition and lending terms were more reasonable to students, would people care at all about obviously skewed employment statistics, much less file a class action?

Spontaneous Exclamations: Gasp! Transactional attorneys litigating?

Adam Katz is a senior associate at Harrison & Held LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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You wake up in the middle of the night in a cold sweat, unable to sleep.  All sorts of legal arguments are running wild through your brain.  You recite your well-rehearsed words carefully in the hope that they will lull you back to sleep.  No such luck.  You’re a wide awake clammy mess on the eve of the most significant entry on your calendar for weeks… and you’re a transactional attorney going to trial!

One thing I feel young lawyers should never turn down is solid litigation experience.   Arguing a few motions or participating in a trial here and there will produce the following three results:  (i) you will become a well-rounded attorney able to take on additional types of matters leading to more billable hours (what associates crave!); and (ii) you may not realize it, but handling litigation matters will make you a better drafter; and (iii) you will gain important experience in managing clients’ anxiety, expectations, and emotional well-being.

Now, I’m not advocating for young transactional lawyers to become expert litigators.  Just enough experience to become confidently capable of arguing motions, taking depositions, conducting cross-examinations and the like.  Try to involve yourself in lawsuits of transactions gone bad.  What better way to understand what you are drafting than to see what happens when agreements are breached?

Crossing over to litigation will also give you valuable experience managing jittery clients.  Parties involved in high-stakes transactions frequently are anxious and emotional.  However, the apprehension and emotions can reach entirely new levels when your clients are being sued and their livelihoods are potentially on the line.  Managing expectations becomes an entirely different animal when negotiations fail and you then must win at all costs.  While discussing the lawsuit with your clients, you must keep in mind that, no matter how good you think your case is, the judge may disagree.

So when you wake up in that cold sweat pondering all of your evidence and preparing for all those curve balls opposing counsel might throw you at trial in the morning, hold your head up, have some confidence, and consider all of the great experience you are receiving on your path to become the best lawyer you can be.

Spontaneous Exclamations: Congratulations, everybody’s watching

Adam Katz is a senior associate at Harrison & Held LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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The first day you step into law school, you’re under a microscope. Any action or inaction can have lasting, significant, and occasionally preposterous consequences on a person’s legal career.  To you law students: Got too many speeding tickets?  Reported to the bar examiners.  Cited for jaywalking?  Reported to the bar examiners.  And most frequently, arrested for any sort of drunk misconduct in public?  Definitely reported to the bar examiners.  Even worse, the first day on the job as an attorney, you’re under a much more powerful electron microscope.  You have to watch your back, your reputation, and your Facebook.

Every summer and particularly around the firm holiday party season, stories appear in the news perhaps about how this law student jumped in the Chicago River for a quick swim after a firm baseball game outing. Or maybe how this attorney, in full Black Swan Halloween costume, blacked out after drinking a bottle of something awful, got arrested for blocking traffic doing pirouettes on Division Street and starting a bar fight.  These stories keep getting more ridiculous.

While it’s certainly OK to drink if you choose to, once you reach law school, you must also use your head.  Bar examiners are notoriously bad sports about misdemeanors and are especially crusty on felonies.  When things begin to get rowdy at your law school’s “Bar Review” bar crawl, stop for a second to think about how stealing the bar’s giant neon sign might be a good idea after 10 beers, but an unnecessary risk the next morning when you have a giant neon sign sitting in your living room.  Maybe you should have just stuck to the dance floor or watched the game like your original plan.

Firm attorneys, your holiday party or retreat, awkward as they may feel at times, is not a good place to black out and take a swim in the hotel’s fountain (happens more than you think).  Despite the open bar and the appearance of the firm’s leadership letting loose for a night, you are still at a work event and will thus be judged.  Random flirting and general scene-making does not help you build your reputation as an intelligent lawyer who makes smart decisions when it’s all on the line.  To sum it up, save the excessive drinking for your own time.  Retain your manners. Firm events are better for demonstrating your charm, getting to know your co-workers, and making your way up the company ladder.

No matter what you think, somebody is always watching, especially your clients.  Keep your wits about your or you might end up watching yourself on the news blocking traffic on Division Street in a Black Swan costume.

Spontaneous Exclamations: A brief holiday piece on padding your stats

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

Almost every attorney, at one point in their career, feels the itch.  Especially in this economy, when every hour counts towards job security, there’s a pressure to reach above and beyond stated goals.  Many attorneys work hard and hit their targets, while other attorneys may flounder or simply not receive enough work to bill the minimum required hours.  The itch to pad your stats a/k/a bill for extra time you did not work on a matter can be quite tempting.  On one hand, nobody may ever find out and you’ll get paid and bonused on hours you only worked in your wildest fantasies.  And what boring fantasies those would be.  On the other hand, you can fake hours and get caught, sanctioned, sued, and/or become a case study for all aspiring attorneys to examine in their dreaded mandatory ethics classes.

In honor of the holiday spirit, I’ll make this quick and easy for you:  DON’T DO IT.  If you choose to and get caught, you’ll end up with more than coal in your stocking or lose all of your Hanukkah gelt to poor dreidel spins.

It’s a simple weighing of benefits versus the consequences.  As an associate, if you pad your stats, you may hit your minimum hour requirement and be eligible for that lockstep raise and standing to move up a class year.  If you double-pad your stats and hit top bonus thresholds, you may receive a couple extra zeros on your bonus check and be the envy of the office, but at the end of the day you’ll have to not only live with yourself, but live with the fear of getting caught.  After you get busted, you will likely be sanctioned by your state bar, fired from your job, potentially blacklisted from your legal community, and (worst case scenario) featured on a slightly more famous law blog.  As a partner, if you pad your stats, say goodbye to your clients, and I shouldn’t need to remind you of this.

To all those who ignore this post, start with the (wo)man in the mirror, and as Michael Jackson aptly sang, “Take a look at yourself and then make a…CHANGE.”

With that in mind, here’s to a happy, ethical, and BlackBerry-free holiday season.

Spontaneous Exclamations: Do not take Blagojevich to Vegas

Adam Katz is a senior associate at Harrison & Held LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

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If by chance you happen to find yourself elected governor of the great state of Illinois, you might as well buy a bright orange jumpsuit and handcuff yourself to the nearest stationary object.  Odds are you’re going to the slammer.  But if you make it out of office scot-free, make sure that stationary object is a lottery ticket machine because you hit the jackpot, baby.

Yes, this week’s topic is former Gov. Rod Blagojevich and his 14-year prison sentence for crimes including wire fraud, attempted extortion, solicitation of bribes, bribery conspiracy, and false statements.

Statistics show that Blagojevich’s arrest and sentence should be a surprise to no one.  Over approximately the last 200 years, seven Illinois governors have been arrested or indicted.  A great many people have wondered why Illinois governors frequently have such legal troubles.  In my opinion, the late genius, Douglas Adams, put it best in his novel, “The Restaurant at the End of the Universe”:

“The major problem — one of the major problems, for there are several — one of the many major problems with governing people is that of whom you get to do it; or rather of who manages to get people to let them do it to them.  To summarize: it is a well known fact that those people who most want to rule people are, ipso facto, those least suited to do it. To summarize the summary: anyone who is capable of getting themselves made President should on no account be allowed to do the job. To summarize the summary of the summary: people are a problem.”

If people are the problem with respect to crime, how do governments deter said people and governors from committing crimes?  Incarceration is one answer.  Among other things, prisons sentences are meant to remove troublemakers from society, rehabilitate, and deter others from committing crime.  However, the question is, how long should these sentences be?  George Ryan was sentenced to six and one-half years and Blagojevich was sentenced to 14 years.

Was Blagojevich’s sentence too long given 18 corruption convictions? Some people think so given certain physically malicious crimes can carry shorter sentences.  It’s staggering to realize that a person who is convicted of a third DUI, a class 2 felony in Illinois, may serve a sentence of only seven years.  A person who is convicted of Aggravated DUI, a class 4 felony in Illinois, which occurs following a crash resulting in great bodily harm or permanent disfigurement, may serve a sentence of only twelve years.

Yet, Blagojevich was sentenced to more years because he breached the public’s trust.  Thus, we come to the question: is the public’s trust worth more than great bodily harm or permanent disfigurement?  It’s certainly fair to argue that one person’s health is more valuable than imprisoning one state official for taking money under the table and some quid pro quo.

Instead of focusing on whether Blagojevich’s sentence is too long, we should concentrate on the positives that may come out of the lengthy sentence.  Clearly, a sentence of six and one-half years is not grave enough to deter an elected official from committing crimes of corruption.  Fourteen years, on the other hand, may be just what it takes to dissuade the next few governors from breaking the law like seven of our previous governors.  When the risks outweigh the benefits for brainless crooks who are interested in reaching office in order to abuse their power, perhaps those far more suited to hold office will begin to run.  And what we may end up with are smarter, more ethical, and all around more capable politicians who are, ipso facto, the best type of people for the job.

Spontaneous Exclamations: The loan repayment situation (Part Two)

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

Examining the Yale Professors’ Solutions to the Law School Loan Repayment Problem  

Last week, we took a look at the Nov. 18 Slate.com article written by two Yale Law School professors proposing significant changes to how students pay for law school.  Specifically, we examined the professors’ first proposal: that the law schools should give applicants detailed and disaggregated reports on how many graduates passed the bar exam upon graduation and their annual salaries for the first 10 years after graduation.  This week we will explore the professors’ second proposal: that law schools rebate half of the year’s tuition of any law student who decides to drop out after their first year.

In summary, the law school returns half of the quitting student’s tuition or gives the student a rebate applicable towards government loans.  Any student who returns to a law school within five years or so would have to repay the rebate.  The underlying theory is that if both the student AND the law school have “skin in the game,” law schools would potentially select their incoming classes more carefully to maximize admittance of students who will graduate.  On a side note, I will not discuss the economic aspect of refunding tuition because, as far as I can tell, many law schools possess bottomless pits of money while tuition creeps upward.

Now, I like this idea.  It makes sense to me because these days it seems law school admissions offices focus too much on raising their rankings on various publications’ lists and not on choosing applicants who will become the finest attorneys.  Just as I wrote in the last column, a large number of law students choose to go to law school simply because: (i) they don’t know what else to do with their lives; (ii) they heard that lawyers get paid well; and (iii) they love “Law & Order. ” These are typically not the serious students that become serious attorneys.  The rebate may offer these students a way out after their first year when they realize law school isn’t “Legally Blonde” and being an attorney isn’t always as glamorous as Matthew McConaughey makes it out to be.  Students like this are admitted to top law schools because many achieved high college GPAs and performed well on the LSAT.

On a positive note, other than those who were legitimately interested in law school and changed their minds and those who did not get good grades, the lackadaisical students are probably the kinds of students who will take the rebate.  However, these are not the students law schools should be targeting.  If law schools execute the rebate plan, they should also incorporate serious interviews into the admissions process.  Even a simple interview could identify the types of students who don’t really want to go to law school or become a lawyer.  On second, thought shouldn’t law schools be doing this now?  Too many applicants with excellent potential fall through the cracks because a few lackadaisical applicants scored a point or two higher on the LSAT.  Then again, what school would want to take a hit to their ranking calculated by a for-profit publication employing suspect statistical methods that differ each year?

Spontaneous Exclamations: The loan repayment situation (Part One)

Examining the Yale Professors’ Solutions to the Law School Loan Repayment Problem 

Adam Katz is a senior associate at Harrison & Held LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on this post are welcome!

Just before Thanksgiving, on Friday, Nov. 18, slate.com posted a remarkable article proposing significant changes to how students pay for law school written by two unlikely authors.

Two Yale Law School professors proposed, among other items, that law schools should report bar-passage, employment, and salary data that doesn’t mislead students.  Also, law schools should dangle a fat carrot in law students’ faces and offer the less interested students money to quit after their first year.  When I read this article a week after it was posted, I nearly spit out my most recent bites of delicious turkey and mashed potatoes in surprise.  Such intriguing proposals about fiercely debated topics— law school loans and tuition— require some blog-worthy analysis!

This week we’ll examine the proposal about curbing the misleading graduate data.  Next week we will examine the proposal to dangle that fat carrot.

The authors propose that law schools give applicants detailed reports on how many graduates passed the bar exam upon graduation and their annual salaries for the first 10 years after graduation.  The authors suggest that law schools disaggregate the data to prevent misleading figures.  This feat of statistics would be accomplished by requiring all students who took federal loans to report the same.

I imagine that almost everyone with a heart agrees that, in an ideal world, not misleading applicants is a good thing.  When applying to law schools in the past decade, how many of you recall the figures indicating employment of near 100 percent of the class upon graduation?   For those of you graduating in 2007 or later, did you believe those numbers?  In an ideal world, supplying the proposed statistics to applicants would be wonderful.  I would be delighted if each law school’s statistics were transparent and comprehensive.  However, at countless law schools, and good ones at that, I fear reporting such statistics would decimate the number of worthy applications coming in because, if the rumors are correct, large proportions of 2Ls and 3Ls do not have law jobs and collective hope is low on finding positions.  Smart and able students would avoid such schools or law school all together.  Now, is this a good thing?

Pushing people away from law school who perhaps have genuine talent and desire to become an attorney?  Not necessarily, but perhaps there is a happy medium in which law schools can report certain accurate data that will turn away the students who go to law school because they don’t know what else to do while still keeping the serious applicants. Additionally, the schools would convey the message that taking on hefty debt is no small matter. Because, really, who would go to any graduate school that costs over $150,000 in loan principal and interest with few positions available upon graduation?  Only those applicants who truly want to be attorneys and understand the monetary burden?  Would reporting such data in turn lead to classes containing significantly less lower income individuals while increasing the concentration of students who can pay tuition out of their bank accounts?

Then again, other than for tuition being so outrageously expensive, did anyone really care about these statistics when the economy was booming?  In an ideal world, the cyclical economy will cycle on back to the boom times when jobs are plentiful and I wonder if so many people will care about these statistics.  However, does it make sense that these questions all lead to a root of the problem: the incredible expense of law school and the ridiculous interest rates on student loans that cannot be discharged after bankruptcy?  I’d like to say we wouldn’t be asking these questions about any graduate school if tuition were reasonable and loan interest rates weren’t at times reaching a flabbergasting 8 percent.

Spontaneous Exclamations: Super rumors from a super committee

Adam Katz is a senior associate at Harrison & Held, LLP.  He concentrates his practice on federal & state tax matters, mergers & acquisitions, entity structure and formation, commercial finance, and non-profit law.  Adam can be reached at (312) 753-6110 or akatz@harrisonheld.com.  Comments on all posts are welcome!

2010 was a wild one.  Not much more could put all tax lawyers on the edge of their seats more than the possibility of zero estate tax for an extended period of time.  Well, we already know the end of this fairytale: It happened and our collective jaws dropped.  A number of high profile figures passed away and utterly massive quantities of wealth passed to their heirs tax-free.  Finally, in December of 2010, Congress signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

The Act set the federal estate, gift, and generation-skipping transfer tax rate at 35 percent and established an exemption from the same at $5 million a person for the years 2011 and 2012.  In years prior to 2010, the gift tax exemption was $1 million and separate from the $3.5 million estate and generation-skipping transfer tax exemptions.  In an ideal world, that increase in the exemption for 2011 and 2012 allows for an increase in the amount of untaxed wealth that can be passed to heirs whether during a person’s lifetime or upon their passing.

Yet, a frightful shroud hangs on the horizon in the form of those eager senators and representatives who make up the Joint Select Committee on Deficit Reduction, otherwise known as the “Super Committee.”  No, the Super Committee is not comprised of your favorite superheroes in bright neon spandex (though that would make C-SPAN infinitely more entertaining), but they were tasked with saving the nation through issuing recommendations on how to reduce the deficit by at least $1.5 trillion over the next 10 years.  For some time, a mysterious rumor has been floating around that the Super Committee may issue a recommendation that the $5 million gift tax exemption be returned to $1 million.  Furthermore, the rumor asserts that the gift tax reduction may occur before 2013 or as soon as November 23, 2011… i.e. next week.  Other than one million attorneys, accountants, and financial planners speculating, there is little or no evidence that this rumor is anything more than a rumor.

Now, I believe this rumor has minimal bite.  The odds that Congress approves legislation reducing the gift tax is unlikely to me.  However, this whole situation and the fact that so many tax professionals are speculating to the point of informing their clients with formal letters of a possible change based on a simple toothless rumor raises interesting questions for attorneys.  First, is it our job to keep track of every rumor about new tax legislation when these rumors are likely false?  Second, if we are supposed to keep track of new tax legislation rumors, how does that affect attorney liability if we are wrong about the rumors?

While I believe attorneys should keep abreast of legitimate tax legislation proposals, I think keeping track of the simple rumors is not our duty.  Our duty is to act upon what the law is and what the law reasonably could be.  It is impossible to keep track of all of the baseless and almost baseless rumors and, further, advising clients on rumored legislation that never materializes could incur liability.  Conversely, if it is our duty to track rumors, how do we account for the legislation that passes without any prior news leaks?  Are we liable then for not having known what actions Congress would take?  Are we liable for being wrong about what actions Congress takes?  Attorneys are not handed a crystal ball with their diploma.

In this case, I am confident in saying it is unlikely a reduction in the gift tax or any other tax exemption would occur with less than one week’s notice.  It would simply be too difficult for people to adjust their estate and gifting plans.  However, like I said before, a shroud hangs on the horizon and our collective jaws have dropped before.  While attorneys are not given crystal balls in law school, we must be prepared for any and all possibilities…duty or not.