February 2012 Archives

Electronically-In-Touch

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March 2012

Dear Young Lawyers Section Members:

Welcome to the latest edition of Electronically-In-Touch, the e-publication of the NYSBA Young Lawyers Section. The current issue includes information regarding the upcoming Young Lawyers Trial Academy, a recap of the YLS events at the annual meeting and information regarding some great events run by the Committee on Lawyers in Transition. We then proceed onto four articles, covering Estate Planning, Charter Schools, Magistrate Judges and International Contracts. Please keep your articles coming to Electronically-In-Touch.

Erin K. Flynn, Esq.

Editor, Electronically-In-Touch

Chair's Message

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March Madness and the YLS

March has always been one of my favorite months of the year. We begin the transition to spring and celebrate St. Patrick's Day. Many of us also look forward to March Madness. Whether a basketball fan or not, millions come together each year for the annual NCAA men's basketball tournament. You might not even be aware that basketball games are being played, but you surely know about "brackets." One of the reasons that the NCAA basketball tournament has become so popular is that it means different things to different folks, and people get engaged for many reasons. Some of us are on board to follow a certain team, whether as a hometown fan, as an alum, or maybe just because the mascot is pretty cool. Other people simply like the camaraderie that is fostered by passing brackets around the office and sneaking around to watch the end of that mid-day game where the 13 seed is taking out a 4. For the teams themselves, the first weekend is really about the little guys, with the more traditional schools usually coming out on top as the tournament progresses (don't tell that to the Butler's of the world though). People love the Madness, and while we might be on board for different reasons, we can all take away the positive feeling of being a part of something larger than any one person, school or region.

In many ways, an analogy can be made between March Madness and becoming active in a bar association. Most bar associations draw members from diverse backgrounds and practice areas. Attorneys come to an association for many different reasons, be it networking, professional development, access to programming and information, community service opportunities, or simply to be part of the group. Whether the attorney wants to "play ball" or "fill in a bracket," opportunities exist within the bar for each individual. An experience can be meaningful for vastly different reasons, and it's that convergence of difference that yields so many great possibilities. The whole is truly greater than the sum of its parts. If you aren't already involved with the Young Lawyers Section, come to one of our signature programs or attend a local event. You may be wondering why all those people care if the mid-major takes out a big school in the NCAA tournament, or why people are attending another bar function. You've got to admit, though, they look like they are having a great time.

Before we look ahead to March Madness and upcoming YLS programs, let's recap some of our recent events. The YLS joined the Bar Association in an action-packed week at the Annual Meeting in late January in New York City. The week started with the annual diversity reception, where many people took the opportunity to learn more about our section (and others as well). Our Annual Meeting program was held on Wednesday, January 25th. The day started with a continuing legal education program entitled "An Overview of Representation of Non-U.S. Citizens." Alena Shautsova did a fantastic job of organizing the program by choosing interesting topics and speakers. Our section's Executive Committee meeting followed the CLE. Among other topics of business, the officers for the upcoming year (June 2012 through May 2013) were elected: Michael Fox as Chair, Lisa Schoenfeld as Chair-Elect, Sarah Gold as Treasurer and Jason Clark as Secretary. I can assure you that the Section is in great hands with Mike, Lisa, Sarah and Jason at the helm. Of course, our Executive Committee also plays such an important role in carrying out the section's initiatives. Many of the positions have been filled for next year, but there are a few openings for anyone with an interest in getting involved. Additionally, there are plenty of committee positions still available, so please contact us to inquire about ways to become active in the section. On Thursday and Friday of the Annual Meeting, Jason Clark and Simone Archer chaired our Bridging the Gap program, which was filled to capacity each day. The program was well received, in no small part because Jason and Simone put a great deal of effort into creating a program with diverse topics and speakers. On Thursday evening, a large group gathered for our section's annual Outstanding Young Lawyer Award presentation and reception. This year's recipient was Karen Wu of Perlman and Perlman in New York City, a most deserving recipient who truly embodies the ideals of our profession at a young age.

There has been an extensive amount of attention this year placed on the possibility of our section being granted a seat on NYSBA's Executive Committee. I am pleased to report that this became official at the Annual Meeting, as the vote was carried in our favor. The representation begins in 2013, and carries a significant benefit to our membership. It is a nod to the importance of young attorneys in our profession, something NYSBA has and continues to hold in high regard.

As we look ahead to March, our Section is getting ready for the third annual Trial Academy. It will be held March 21-25 at Cornell Law School in Ithaca. This program is designed to teach, advance and improve the trial techniques of young attorneys with an emphasis on direct participation. Immediate past-Chair Philip Fortino and Chair-Elect Michael Fox have laid the foundation for this year's Trial Academy. Our dedicated faculty of veteran trial attorneys (criminal and civil), prosecutors and judges return to critique the attendees. There is very limited space for this program, so please visit www.nysba.org/trialacademy2012 for additional information about the program and registration.

NYSBA is holding a special Bar Association week in late March in Buffalo. The events begin on Tuesday March 27th, with a section appreciation and recruitment reception at the Hyatt in Buffalo (5:30pm-7:30pm). YLS is a sponsor and will have a table at the event, so please come out to join us. The events continue on Wednesday and Thursday, March 28th and 29th, with the Ontario-New York Legal Summit. This is a joint venture of NYSBA and the Ontario Bar Association, featuring a special two-day CLE program taking place in Toronto and Buffalo. The NYSBA House of Delegates meeting will be in Buffalo on Saturday, March 31st. Finally, the Young Lawyers Section and the Bar Association of Erie County's Young Lawyers Committee are planning a special networking/membership event on Saturday evening (March 31st). The event is currently scheduled to be held at Templeton Landing in Buffalo. Please stay tuned for additional details about this event, but mark the date on your calendars now. Having been born and raised in Buffalo, I am really excited about President Doyle's Bar Week, and look forward to seeing many of you there.

As you can see, there are many great YLS and NYSBA events coming up soon, with additional events in some of the local districts. Come out to see us, fill in a bracket, and enjoy the Madness of March!

- James R. Barnes, Esq.

Section Chair

Trial Academy

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Young Lawyers Section Trial Academy

The Young Lawyers Section (YLS) is again sponsoring and coordinating the Trial Academy, the New York State Bar Association's only comprehensive trial training program. The Trial Academy will take place at Cornell Law School from Wednesday, March 21, 2012 through Sunday, March 25, 2012.

This intensive 5-day trial techniques and advocacy program is geared toward young and new lawyers - teaching, advancing, and improving the quality of their experience in the courtroom, in order to benefit their careers and their client's interests.

Participating in the Trial Academy is the perfect opportunity to gain critically important trial experience outside of the courtroom. Participants will attend a morning lecture on an aspect of a trial from both the criminal and civil trial perspective and spend the afternoons in small groups with their designated team leader demonstrating the day's trial skill from a previously provided civil or criminal fact pattern. One-on-one critiques will be provided by a rotating faculty made up of NYSBA leadership and leading litigators, advocates and Judges from every region of New York.

The Trial Academy is open to any attorney wishing to learn or improve upon their trial skills and provides a unique opportunity for participants to have a meaningful experience which extends beyond a typical classroom setting.

View/Download the Program Brochure.

The last day to pre-register online is March 16, 2012. Register online now

Annual Meeting Recap

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OVERVIEW of REPRESENTATION OF NON-U.S. CITIZENS

On January 25, 2012 the NYSBA YLS leadership presented me with a great opportunity to chair a half day CLE event for young lawyers during the NYSBA Annual Meeting conference in Hilton, New York.

Our Section chose Immigration as the theme for the CLE because we felt there is a growing need for Immigration practitioners and competent counsel who can address needs of non-US citizens within and outside the traditional Immigration Law frames.

The 3.5 hour CLE was titled "An Overview of Representation of non-US citizens," and covered topics of Immigration Basics (speaker Allen Kaye), Removal Proceedings (speaker Kerry Bretz), Representation of non-US citizens in Criminal Courts, motions to vacate (speaker Douglas Reda), and Representation of non-US citizens in Employment proceedings and Labor disputes (speaker Joanne Macri), with Anthony Colleluori a well known Criminal and Civil Rights Trial Lawyer acted to fill in the gaps and stimulate discussion. After the program ended a number of the speakers stayed behind to field further questions from the audience

The panel of our speakers worked hard to put together updated and practical materials, "ready to go forms" and recent decisions of the New York and US Supreme Courts cases. The panelists' presentations focused on points that help to identify most common issues that arise out of one's status, such as prospects of guilty pleas, possibilities of relief from removal, do-s and don't's in Labor disputes. The key point of the training was that counsel should proceed with caution when representing a non US citizen. Lawyers must keep in mind that almost every area of law has developed its own rules and regulations concerning persons that are not US citizens.

The participants truly enjoyed the program and we hope to present interesting programs like this in the future.

- Alena Shautsova, Esq.

TRANSFORMING PREPARATION INTO PRACTICE


For the 2012 New York State Bar Association's Annual Meeting program, the Young Lawyers Section organized a Bridging the Gap CLE entitled, "Transforming Preparation Into Practice." For two days, approximately 170 young attorneys attended thirteen different programs, led by thirty-one panelists and lecturers, who are leaders in their respective fields of practice. Transforming Preparation Into Practice was an amazing success and one of just several programs that the Young Lawyers Section organizes every year.

This year's program had three goals. The first, was preparing young lawyers for professional success. One of the biggest complaints we hear from newly admitted attorneys, is that they are not prepared to practice law. While law school may have taught them the legal principles they need to be successful at their practice, transforming their academic preparation into tangible skills in the work place takes time. Our aim was to expedite that process. Our second goal, was shaping young practitioners into well-rounded attorneys. Today's legal industry does not work in a vacuum. You need a healthy understanding of all forms of law to be successful. By offering a diverse set of programs, we endeavored to make our young attorneys more aware of the legal world around them. Finally, we wanted to get more young lawyers involved in the New York State Bar Association. There are so many opportunities that are available if you just stay connected with your fellow colleagues, and the New York State Bar Association is a terrific way to do so. By organizing a bridging the gap program that appealed to bar and non-bar members alike, we strove to use Transforming Preparation Into Practice as introduction to the New York State Bar Association as a whole.

As for the program itself, the first day was fantastic. Anne E. Dello-Iacono started us off with an amazing program on elder law basics. Her presentation, was followed by Zachary N. Goldstein's presentation on transactional legal negotiation strategies; the Honorable Gerald Lebovits' insights on landlord/tenant laws; and William R. Henrick's lecture on data security and identity theft.

The rest of the day consisted of three panels. John E. Knudsen chaired a litigation panel featuring the Honorable Timothy S. Driscoll, Tucker S. Stanclift, and Don M. Tellock. The next panel discussed the prosecution and defense of New York securities laws under the Martin Act. Marc B. Minor served as program chair on a panel that also featured Joy A. Weber, Andrew J. Lorin, and James Q. Walker. At its conclusion, the same group of panelists stayed on, with James Q. Walker taking over as chair, for a fascinating discussion on corporate investigations.

The second day was just as successful. It began with a first-rate introduction to depositions by David Paul Horowitz and included a clever presentation on opening your own practice by Glenn Truitt. The second morning also featured a work-life balance panel chaired by Marjorie A. McFarlane Lucas, featuring Camille Chin-Kee-Fatt, Adrienne A. Harris, and Supria B. Kuppuswamy; and a legal ethics panel chaired by David A. Lewis, featuring the Honorable Milton A. Tingling, Kermitt J. Brooks, and Mark F. Dewan.

The highlight of this year's Bridging the Gap event was our "New York Law and Policy" program which featured the top decision-makers of New York law. It began with a keynote address from the 55th Governor of New York, the Honorable David A. Paterson, who discussed various legal issues he faced as Governor. Topics included his reform of the Rockefeller Drug Laws; his legal authority to appoint a Lieutenant Governor; and his unprecedented use of budget extender bills to insert budget cuts and force the legislature to vote on the budget. After the Governor's keynote address, I chaired and moderated a panel discussion featuring United States Attorney for the Eastern District of New York, Loretta E. Lynch, and First Deputy of the Office of the New York State Attorney General, Harlan E. Levy. Ms. Lynch and Mr. Levy discussed how their offices use the law to protect the interests of New Yorkers, and fielded questions from the audience.

The final program of our event was equally superb. Ted Shaw chaired a panel featuring Joan Biskupic, Roderick M. Hills, Jr., and Noah A. Levine. The panel previewed the Supreme Court's docket for the 2012 term and discussed the ramifications these cases may have on our constitutional rights.

Simone and I had an amazing time co-chairing the Young Lawyer Section's 2012 Annual Meeting program. A special thank you to all the speakers who participated in this year's program, and to the young attorneys that joined us this year. It was a tremendous experience.

On behalf of the Young Lawyers Section, I hope to see you all at next year's Bridging the Gap program.

Sincerely,
Jason M. Clark
Co-Chair, YLS Annual Meeting Program

Lawyers In Transition

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NYSBA's Committee on Lawyers in Transition is a valuable resource for young lawyers. The committee, whose tag line is "offering solutions to the changing face of the legal employment marketplace," offers a wide variety of programs that not only help you navigate the current job market but also give you the skills to cope with whatever you may encounter.

It's not too late to attend "Leap Into a New Career Networking Event" on Wednesday, February 29, 2012 from 6:30 p.m. - 8:30 p.m. at The Stag's Head (252 East 51st Street @ 2nd Ave, New York, NY). Whether you are currently searching for employment or may be interested in exploring different practice fields, this will be a great opportunity to discuss either in a casual and social atmosphere.

On March 8, 2012, the Committee on Lawyers in Transition is offering a free webcast on "Alternative Careers for Lawyers". You can register for the webcast at www.nysba.org/March8thWebcast.

Additionally, all of the committee's past webcasts are available online at www.nysba.org/LITArchivedWebcasts.

Estate Planning

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I'm Turning Thirty: Now What?

Lauren Mechaly, Esq.

Thirty. The big 3-0. In 2012, I will enter my thirties. It is an exciting thought. What have I accomplished? What will I accomplish? How do I get where I want to be in life? There are many pieces of the puzzle that somehow have to fit together.

My friends are entering this stage of their lives in different positions. Some have babies, others have not started thinking about babies. Some have their own businesses, others have student loans. Sound familiar? Maybe you are single, engaged, or married. Maybe you own, maybe you rent, maybe you still live with your parents. Maybe you are first starting graduate school, or maybe you are starting a new career.

But we all have one thing in common - we are turning thirty. And we all have one common question - do I need to start planning now? The answer, of course, is yes. The real question is, how?

Many young adults think of "life and estate planning" as something their parents, maybe even their grandparents, are doing. There is a common misconception of what life and estate planning means and why it is important at all stages in life.

There are various estate planning documents to consider, but a few core documents will provide the protection you need right now. A Last Will and Testament controls the disposition of property in your name alone at the time of your death. Any assets held jointly, in trust for others, or with a designated beneficiary, will pass directly to those individuals.

It is important to prepare a Will so that any property held in your name alone is distributed according to your wishes. Consider the necklace your grandmother gave you, or the first stuffed animal you ever had. What about your computer, your wedding china, or the antique mirror you had to have? Preparing a Will allows you to gift these specific items to someone who would appreciate them just as much as you do.

Your Will provides you with an opportunity to propose a guardian for your minor child in the event your spouse passes first, or if you are a single parent, so that you know your child will be cared for and loved. You can nominate the person to serve as Executor of your Will, giving you sense of calm and confidence that the right person will be handling your affairs.

Proper planning will protect the business you worked so hard to establish, or the home you spent so long saving for. You can make sure any debt you have is handled appropriately so that your loved ones do not bear that burden in the future.

Advance Directives such as a Power of Attorney and Health Care Proxy allow you to designate someone to act on your behalf if and when you become incapacitated.

Your estate planning attorney can also assist you in your "life planning." Speaking with a wealth management advisor and insurance advisor are imperative at this stage in life. Whether you have significant funds to invest or are simply looking to make the most of what you have, the right financial planner can help you realize your goals. An insurance advisor who understands your needs can help you plan for your future needs, and those of your loved ones. Your estate planning attorney can refer you to the right professionals so that you have a team working for, and with, you.

Maybe turning 30 isn't so bad after all.


Lauren I. Mechaly, an associate attorney at Littman Krooks LLP, focuses her practice on elder law, special needs planning, and special education advocacy.

Charter Schools

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Nonprofit Charter Schools and For-Profit Management Companies: Who Is In Control?

By Julia L. Davis, Esq.

A recent New York Times article profiled energy executive Dennis Bakke and his wife Eileen, who, after retiring from his business, decided to enter the world of commercial charter schools "to experiment with applying business strategies and discipline to public schools." The couple's company, Imagine Schools, is now the largest for-profit manager of charter schools in the country. The piece was less than glowing and revealed a number of government officials and disgruntled charter school board members who reported the company's attempts to dominate and control their communities' non-profit charter schools.

Imagine is not the only commercial charter school manager, known in the education world as an education management organization ("EMO"). Companies like Mosaica Education Inc., Edison Schools, Inc., Charter Schools USA, White Hat Management and Chancellor Beacon Academies (which merged with Imagine in 2004) now manage between nine and twelve percent of all charter schools in the U.S. Imagine's recent bad press is emblematic of the problems with for-profit companies managing charter schools that are emerging across the country.

EMOs like Imagine often flout traditional nonprofit law by co-opting independent nonprofit charter school boards who are their clients and creating obvious conflicts of interest in the financial operations of the schools they manage. EMOs frequently work to dominate the board of the charter-holding nonprofit and then negotiate a contract to manage the charter school - which cannot be an arms-length transaction, as required of nonprofit boards. In light of the threats EMOs pose to nonprofit charter school independence, the New York State legislature recently prohibited charter schools from hiring for-profit companies to manage schools.

Some commentators have called for a prohibition on for-profit EMOs managing charter schools altogether because of "inherent" conflicts between the goals of public education and for-profit business.

A new funding initiative called Race to the Top, created by the Obama administration, raises the stakes for charter schools by tying vast amounts of federal education grants to states' lifting caps on the number of charter schools they permit. In the face of financial crisis, many states are scrambling to close state education budget shortfalls. Some are closing schools, laying off teachers, and searching for other sources of revenue. In this context, states have significant incentives to relax the barriers to charter schools in order to obtain millions in federal aid. In New York, for example, the legislature significantly increased the cap on charter schools from 200 to 460 state-wide following its failure to win $700 million in Race to the Top funds during the first round of the competitive application process in order to make the state eligible to reapply.

This is a critical time for charter schools. In addition to federal support, charter schools have attracted the interest of private philanthropists and foundations. Even the once hostile teachers' unions are finding a role to play in charter school education. What was an experiment of the early 1990s is now increasingly part of the fabric of public education throughout the United States.

For charter schools to meet the requirements of accountability and financial stewardship that their use of public funds requires, the relationships between nonprofit charter school boards and management companies must radically change. State and federal reforms are necessary to promote school independence, bolster credibility in the charter school movement generally, and prevent charter school domination by EMOs in jurisdictions where they are permitted to operate.

The number of charter schools continues to grow in many states. For-profit education management companies will continue to serve this market. However, lessons learned by management companies over the last two decades reveal that operating charter schools is "more difficult and more expensive than [companies] anticipated." This is, according to the companies, a result of "charter school opponents [who] have been able to impose high political and legal costs on these organizations." Economies of scale have driven industry consolidation, as companies operate multiple school sites, often in different parts of the country, from a centralized office. This is not unlike a franchise business model. In the face of shrinking profits and scrutiny from political leaders and the press, management companies are becoming more selective about "client acquisition." This does not bode well for nonprofit charter school boards.

For-profit management companies will always seek ways to maximize control to ensure efficiency and profit. This includes driving the creation of a charter school from application to contract negotiation to subsequent charter renewal, where possible. Indeed, doing so, according to management company leaders themselves, is essential to success.

In light of the negotiating power and motivations of management companies, the threat of nonprofit charter school board capture or inappropriate delegation comes into sharp focus. The opportunity for abuse, in light of the limitations for oversight and enforcement from government and other parties, demands express directives for charter schools. The consequences of failure to govern can be catastrophic, including revocation of tax-exemption, imposition of tax liability, and/or revocation of charter call for ex ante rules to guide board activity at every stage. This includes: specifying non-delegable duties for nonprofit boards, including fiscal management and maintenance of financial record-keeping that a contracting EMO may not conduct; requiring charter school boards to adopt conflict of interest / self-dealing policies for board membership that prevent board members who are employees or have any financial ties to a contracting EMO; and, requiring boards to conduct a review and reveal any conflict of interest between board members and a contracting EMO before a charter is granted or renewed to avoid boards becoming management companies' alter egos.

Charter schools need to understand how to structure relationships with a for-profit management company, and specifically which functions state nonprofit law and the IRS will require them to retain. Failing to do so leaves charter school boards in a perilous position, simultaneously under-prepared to negotiate with the management company, and the party who bears the risk for failure to comply with IRS obligations for tax-exempt status. More importantly, it threatens to undermine the public trust placed in charter schools and the people who come together to lead them.


This piece includes excerpts from a recent article by Julia L. Davis published in the Brigham Young University Education and Law Journal, Vol. 2011, No. 1, titled "Contracts, Control and Charter Schools."

Julia L. Davis is an Associate at Venable LLP in New York City.

Magistrate Judges

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MAGISTRATE JUDGES: A PRIMER FOR YOUNG LAWYERS

By: Cynthia Devasia, Esq. and Andreas Koutsoudakis, Esq.

Imagine your firm is representing a defendant in a § 1983 civil rights case. At the inception, the district judge assigned to the case seeks the parties' consent to disposition of the case by a magistrate judge. This often occurs at the first Rule 16 conference before the district judge, so don't get caught flat footed. As is often the case, the district judge may not disclose the name of the magistrate judge unless asked. Since your firm's decision as to whether or not to consent may depend greatly on who the magistrate judge is, don't be shy to ask that question immediately. Once you know who the intended magistrate is, and before you decide whether or not to consent, it is important that you know what a magistrate judge is and what authority she will have in your case.

WHAT IS A MAGISTRATE JUDGE?

Simply put, a magistrate judge is a judge who, pursuant to 28 U.S.C. § 631 et seq., is authorized to assist the district courts and judges in managing and resolving criminal and civil cases. The office of the magistrate judge was first created by the Federal Magistrates Act of 1968. With that legislation, Congress sought to improve the judiciary's efficiency and assist federal district court judges facing overflowing dockets. The new magistrate judge system replaced the old commissioners system which had developed under the Judiciary Act of 1789 and operated within the federal courts for nearly 175 years. Since 1968, Congress has clarified and expanded the role of the magistrate judge through a number of other legislative enactments.

Today, magistrate judges conduct preliminary proceedings in both criminal and civil cases, conduct certain trials and perform any other duties delegated to them by the district judge as long as they are not inconsistent with the Constitution and laws of the United States. 28 U.S.C. § 636. In 2010, magistrate judges disposed of 1,027,191 matters. These matters included preliminary criminal proceedings such as search warrants, arrest warrants and summonses, evidentiary hearings, pretrial conferences, probation/supervised release hearings, and guilty plea proceedings. Civil proceedings conducted by magistrates included deciding dispositive and non-dispositive motions, fact finding for preliminary injunction motions, pretrial conferences, settlement conferences, mediations, evidentiary hearings, social security appeals, and special masterships. Trials conducted by magistrates included civil consent trials and misdemeanor/petty offense cases. Magistrate judges were also involved in prisoner litigation matters such as state and federal habeas corpus cases, civil rights cases, and evidentiary hearings.

There are currently 571 magistrate judge positions in the federal district courts with 527 fulltime positions, 41 part-time positions and 3 combined positions. The number of magistrate judgeships is determined by the Judicial Conference. Unlike district judges, magistrates are not appointed by the President and approved by the Senate; they are appointed by the respective district court judges based on recommendations from merit selection panels made in accordance with statutory guidelines and standards established by the Judicial Conference of the United States. Prospective candidates are subject to a rigorous screening process
which includes background checks and interviews. Magistrate judges do not enjoy lifetime appointment. Full time magistrates serve eight-year terms that are renewable by vote of the federal district judges, with part-time magistrates serving four-year terms. There is also an age limit for service: 70 years of age with certain exceptions. A magistrate judge may be removed during her term by the district judges for "incompetency, misconduct, neglect of duty, or physical or mental disability". 28 U.S.C. § 631(i). The Judicial Conference may also extinguish a position if it is deemed no longer necessary.

Since your district judge asked you whether or not to consent to the magistrate judge, you get to "opt-in" to the magistrate's authority. You should be aware that some districts automatically assign cases directly to the magistrate judge and it will be up to the parties to decline consent. Parties may consent to the magistrate for all purposes including trial. A judgment issued in a case in which the magistrate is given full consent may be appealed the same way in which a judgment issued by a district judge is appealed. Absent consent, matters that are referred to the magistrate for Reports and Recommendations are reviewed and decided by the district judge.

HOW ARE MAGISTRATE JUDGE'S DECISIONS REVIEWED?

Non-dispositive Matters

Assume you or your adversary declined to provide full consent to the magistrate judge and the district judge still refers all non-dispositive pretrial discovery matters to the magistrate judge. After confirming a discovery plan with the magistrate judge and engaging in some discovery, you file a motion for a protective order seeking to prevent the plaintiff from obtaining certain information. The magistrate denies your motion. Now what?

Since the case is before the magistrate without the consent of all parties, and the motion you filed is a non-dispositive one - i.e., it does not involve a disposition of a claim or defense of a party - the ruling/order, while effective when it is made, is appealable to the district judge. Given the sensitivity of the information sought to be protected, you decide to do so. Accordingly, you file and serve a brief outlining your objections (along with a copy of the order) within 14 days of the date the magistrate's order was issued. Your adversary has 14 days to respond to your objections.

Because the Federal Magistrate Judge Act (28 U.S.C. § 636(b)(1)(A)) authorizes magistrate judges to issue orders resolving certain pre-trial matters without the parties' consent, the district judge will set aside the magistrate's order denying your motion only if it is "clearly erroneous or is contrary to law." Fed. R. Civ. P. 72(a). A finding is "clearly erroneous" when, after considering all of the evidence, the district judge is convinced the magistrate judge made a mistake in her ruling. A finding is contrary to law if the district judge concludes the magistrate judge misinterpreted or misapplied the law. This standard of review is significantly high, and provides great deference to the magistrate's ruling. As such, litigants should be aware that the chance of success is often low in such cases.

Dispositive Matters

After unsuccessfully appealing the magistrate's order, you are forced to provide your adversary the information you sought to protect. The information was so helpful to her case that she decides to file a motion for summary judgment on three of the five causes of action against your client. Since a summary judgment motion involves disposition of a claim - here, three claims - it is considered a dispositive matter; the magistrate does not have statutory authority to issue a final order. Because the parties declined to consent to the grant of such authority in this case, the magistrate is left with only the authority to provide a Report & Recommendation ("R & R") for the district judge's consideration when ruling on
the motion.

This time, unlike the protective order motion, the magistrate judge's R & R is favorable to your client since it recommends the district judge deny plaintiff's motion for summary judgment. While you would like the same deferential standard that applies to nondispositive motions to apply here, the district judge's review is based on a de novo standard. Because of this, your adversary naturally files and serves her objections to the magistrate's R & R. As with appeals of non-dispositive orders, the time limit to do so is 14 days from the issuance of the R & R and you have an additional 14 days to respond.

A de novo review gives the party objecting to the R & R a second opportunity to address the unfavorable aspects of her arguments, and requires the district judge to make her own determination after reviewing the facts and the law - as opposed to affirming or reversing the magistrate's order on a non-dispositive matter only when it is "clearly erroneous". Even though the R & R is not binding, the magistrate's R & R still has a significant impact on the district judge's decision. Specifically, the R & R provides a recommended ruling on the motion supported by a thorough analysis of the evidence, the applicable law and the parties'
arguments. Often times, the magistrate is one who regularly handles specific types of cases, and may, therefore, be more current on the applicable law than the district judge. Accordingly, the magistrate's R & R has significant credibility with the district judge.

In addition to knowing what a magistrate judge is, what her authority is and how binding her rulings are, there are certain other considerations to keep in mind when deciding specifically whether you should consent to the magistrate judge's jurisdiction in whole or in part. A good discussion of those considerations can be found in Should you Consent to the Magistrate Judge? Absolutely, and Here's Why, 37 LITIGATION 2 (Winter 2011).

Now that you have an understanding of the magistrate judge's purpose, role, and authority in federal court matters, you can make an informed decision the next time you are faced with this issue.

Cynthia Devasia and Andreas Koutsoudakis are litigation attorneys at Koehler &
Isaacs LLP, a full service law firm located in New York City. They can be reached at
cdevasia@koehler-isaacs.com and andreask@koehler-isaacs.com

International Contracts

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GETTING THE INTERNATIONAL DEAL DONE

By: Emily A. Georgiades, Esq.

In such a highly globalized world it is difficult to work in the legal field and not come across a case with an international dimension. It is inevitable that lawyers will have to deal with transnational law- especially in international business transactions. There are contracts being made around the world for sale of goods or services and it is vital for every lawyer to know the basics of drafting a contract involving one or more international parties. All parties want stability and predictability in their deals and it is the lawyer's duty to help his client achieve their business goals within the ambit of the law.

Contract drafting is to a certain extent a creative process and should be well thought-out. The clauses in the contract help ensure legal certainty. The following clauses and considerations are crucial to every international contract:

1.) arbitration clause;
2.) choice of law clause;
3.) clearly identifying the parties to be bound;
4.) clearly defining the responsibilities each party has towards the other;
5.) indemnification clause;
6.) warranties.

Most often in the pre-contract stages all parties will be amicable towards one another and neither will foresee any pending disputes. But the friendship is easily ruined when one party feels aggrieved and there neither party previously agreed a choice of law or forum to adjudicate the issue. A well drafted contract (and a well-prepared lawyer) will be one which foresees any possible litigation in the horizon and provides for a way to remedy those issues. The Arbitration Clause is one of the most important clauses in an international contract. It provides a choice of law and forum for resolving any disputes. As of 2010, it has been reported that 145 countries subscribe to the New York Convention, making it one of the most desirable choices of law to use for arbitration.

The Arbitration Clause and Choice of Law:

The location of the litigation/arbitration is crucial because if there is a dispute the parties will want a judgment/award that is enforceable either in the United States and/or abroad. If the dispute is to be arbitrated then the contract should state in which forum the dispute will be heard and which law is to be applied. Once an award is obtained it should be taken to a court to be perfected in order to be enforced. To enforce a judgment abroad, it is wise to determine whether there is a bilateral or multilateral treaty on the enforcement of judgments between the country in which the judgment was obtained and the country in which you are seeking to enforce the judgment.

Within the United States, the U.S. Constitution provides for the recognition of judgments rendered by the courts of sister states within the United States (i.e. the Elasticity Clause). However, a lawyer should consider whether a foreign judgment can be enforced by the U.S. Courts or vice-versa (whether a U.S. judgment can be enforced abroad).

When drafting a client's contract it is best to determine what type(s) of dispute may arise and consider from the onset which forum and set of laws are more likely to favor your client. Likewise there may be cumbersome procedures in foreign countries which may translate into higher costs for your client. One such problem is obtaining evidence abroad which is partly governed by the Hague Evidence Convention. The Supreme Court held in Societe Nationale Industrielle Aerospatiale v. United States, [482 U.S. 522] (1987), that the Hague evidence Convention supplements U.S. laws. Therefore, an American lawyer must be aware of this when dealing with cross-border transactions.

Possible remedies available to your client is also an important factor to consider. Factors to consider include whether your client is entitled to punitive damages or moral damages. Some nations do not provide punitive damages in certain cases. Similarly, not all nations provide for injunctive relief or specific performance.
In the event the parties did not make an effective choice of law then a majority of U.S. states have followed the approach taken in §188 of the Restatement (Second) of Conflicts which states in part that the law to be applied to an issue is determined by taking into account the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject-matter of the contract, and the domicile, residence, nationality, place of incorporation and place of business of the parties. In addition, it should be noted that §188 (1) provides that "the rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties..."

Tax Implications

When dealing with cross-border transactions it is important to recognize the relevant tax implications. A good starting point is to identify the applicable domestic tax laws and any bilateral tax treaties that are in force between the countries in which the transaction is occurring. The U.S. has signed numerous bilateral tax treaties which may be found on the IRS website.
In the U.S., since 1918, tax laws have allowed a credit against the federal income tax of income and certain closely related taxes paid to foreign countries. The main purpose of the foreign tax credit is to limit the amount credited to foreign taxes to no more than the U.S. taxes that would have been imposed on the foreign income involved. The formula used to determine the limit is: Tax credit = U.S. income tax before other credits x foreign income/total taxable income. U.S. Internal Revenue Code, 4.61.10.9 (05-01-2006).There are other factors to consider and it is advisable to consult a tax expert on the matter.

Another significant factor is who will benefit from the income from the transaction- will it be an individual(s) or a corporate entity? There are different tax structures for each and even for different types of companies. Of course a corporation will have elected to be taxed a certain way at its inception. For example, an LLP in the U.S. may have elected to be taxed on the corporate level instead of at the partnership level or vice-versa. All these factors should be considered in structuring the best deal for a client. Tax law can be complicated and it is recommended that a lawyer work in conjunction with a certified accountant to ensure their client complies with the tax laws and also makes the best choices going forward.

Emily Georgiades, Esq. is a member of the New York State Bar, the Bar of England & Wales and the Cyprus Bar Association. Emily has a Master of Laws in Corporate, Banking and Finance Law from Fordham University School of Law.

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