Category: Uncategorized

Companies with Loyalty Programs in the Crosshairs for CCPA Compliance Investigations

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BY MATTHEW E. YARBROUGH

California’s Attorney General has put businesses operating loyalty programs in the state on notice that they may be subject to investigation. AG Rob Bonta has done so by sending notices to several companies alleging noncompliance with the California Consumer Privacy Act (CCPA)—a law that requires businesses offering discounts, free items or other rewards to provide consumers with a notice of financial incentive when these offers are made in exchange for personal information.

Pursuant to the CCPA, companies with loyalty programs—including those in the retail, home improvement, travel and food services industries—are obligated to describe the material terms of their financial incentive initiatives before customers opt in to participate. Businesses that have failed to do so have 30 days to cure and come into compliance with the law.

AG Bonta’s recent action brings into focus the reality that data within the confines of the CCPA is collected not only online, but whenever customers enter personal information—like phone numbers and addresses—to avail themselves of discounts and rewards, even at a supermarket, a local coffee shop or favorite clothing store. The takeaway: brick and mortars collect data too, an action that can bring with it government scrutiny by virtue of the CCPA.

To date, the CCPA is known to be the toughest data privacy law in the U.S. Its enforcement across industries by California’s Department of Justice began in July 2020, but as a wide-ranging data regulation platform, its impacts are being felt by companies nationwide. Among the businesses that have received noncompliance notices are data brokers, marketing companies, media outlets and online retailers.

Given the AG’s commitment to the ongoing and robust enforcement of the CCPA, every customer-facing company needs a CCPA Data Privacy Compliance Assessment, and time is of the essence as CCPA compliance requirements become even stricter in 2023.

Of course, the cybersecurity, privacy and data team at Michelman & Robinson, LLP is here to address any of your CCPA-related concerns. Feel free to contact Matthew Yarbrough at [email protected] should you have any questions.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Injunctive Relief: Be Careful What You Wish For

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BY MATTHEW R. LASKY

When crafting requests for injunctive relief, lawyers often counsel clients against overreaching. That’s because should a client seek an order that goes too far, there’s a risk that the request will be rejected wholesale, leaving the client with no relief at all.

Of course, there’s always a chance that a client’s request for injunction will be granted as well. Which means clients must be prepared for the legal and public relations consequences of getting what they asked for. That being said, when framing the injunctive relief to be sought, every client needs to contemplate a very straightforward question: “am I prepared for what happens if the court says yes?”

The recently granted temporary restraining order in a case out of Wisconsin—ThedaCare, Inc. v. Ascension NE Wisconsin, Inc.—illustrates the importance of considering ahead of time what may lie ahead if and when injunctive relief is obtained. As it turns out, the plaintiff’s initial success getting the TRO in ThedaCare frustrated both its litigation strategy and long-term goals.

An Aggressive Approach to the Great Resignation

The Great Resignation (which includes both resignations in favor of other jobs and complete departures from the workforce in the wake of COVID-19) continues to impact employers everywhere, and this is particularly the case in the healthcare sector. Healthcare workers have faced unprecedented challenges during the pandemic and historic levels of burnout, requiring employers to make special efforts to retain employees. For its part, ThedaCare—which operates several healthcare facilities in Wisconsin—resorted to a novel tactic to address the challenges associated with the Great Resignation: a temporary restraining order.

In late January, ThedaCare filed a complaint in state court alleging that a rival facility, Ascension NE Wisconsin Inc, was attempting to “poach” 11 at-will employees of its interventional radiology and cardiovascular team. According to ThedaCare, this activity resulted in 11 resignations and constituted tortious interference with its employment relationships.  As alleged by ThedaCare, Ascension “knew or should have known that this action would decimate ThedaCare’s ability to provide critical care at a time of critical need”; namely, the ongoing public health crisis.

ThedaCare’s complaint was accompanied by a motion for a TRO requesting that the court order Ascension to either “make available” to ThedaCare certain members of the interventional radiology and cardiovascular team or, in the alternative, to temporarily refrain from hiring any of the team. ThedaCare argued that permitting Ascension to hire away its employees would cause a “public health calamity.” The court agreed and granted ThedaCare’s motion.

To ThedaCare’s chagrin, this turned into a public relations quagmire after the case was picked up by the news and healthcare providers took to social media to express (understandable) outrage that at-will employees, without non-compete agreements, were being blocked from accepting new employment. No doubt, the bad press certainly complicates the recruitment efforts necessary for ThedaCare to replace the departing employees. To make matters worse, the PR nightmare was all for naught—Ascension filed legal briefs of its own and the court lifted the TRO only a few days later, frustrating ThedaCare’s litigation goals.

This episode teaches an important lesson to those seeking emergency relief from a court: fear not only what happens if a court says “no”; consider, too, what happens if the court says “yes.”

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Hackers to the Rescue: An Overview of Bug Bounties

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BY MATTHEW E. YARBROUGH

For far too many companies worldwide, computer hacks are an inevitability. Indeed, some experts place the statistical probability of a data breach at around 30%, which means potentially devastating trouble is lurking for nearly one in three businesses, both domestically and overseas. And when cybercriminals do infiltrate corporate computer systems, the resulting price tag can be substantial—recent estimates suggest that, on average, each breach costs companies in excess of $3 million.

The good news is that organizations in the private and public sector have at their disposal an arsenal of tools to combat cybercrime. Among them are so-called bug bounty programs, a lesser known but increasingly used method of identifying and fixing network vulnerabilities.

What’s a Bug Bounty?

A bug bounty program gives ethical hackers the green light to dig into an entity’s systems, applications and data to uncover security risks—this in exchange for a monetary reward for the hackers that successfully discover and report on security weaknesses, bugs and the like. Essentially, bug bounties allow companies to leverage the community of ethical hackers (also known as “white hats”)—those authorized to gain access to an organization’s IT assets—in an effort to implement the strategies and actions of malicious attackers and shine a light on vulnerabilities that can be corrected before cybercriminals come calling.

Here’s how bug bounties work. A company first settles on a budget for its program and then establishes acceptable parameters (read: specifies the systems that ethical hackers can attempt to penetrate). While some businesses give carte blanche to white hats, others set clear boundaries and keep certain IT components off-limits so as not to interfere with operations, productivity and profits.

Ethical hackers then go to work, infiltrating systems and searching for vulnerabilities that can lead to a security breach. Once a problem is discovered, the hackers (or hacker) submit a report notifying the company that engaged them of the vulnerabilities uncovered. They also present alternatives for remediation and deliver the details necessary for developers to replicate and otherwise validate the bug(s) found.

In terms of compensation, ethical hackers are paid sums commensurate with the severity of the vulnerabilities they detect. These amounts can range from a few thousand dollars to seven figures, depending upon the gravity of the security risk revealed and, of course, the size of the company in question.

Of note, money’s only a part of the equation for the ethical hacking community. The pride, recognition and “street cred” that comes along with a successful security assessment is a further motivating factor for any white hat worth his or her salt.

The Undeniable Value of Bug Bounty Programs

As companies and organizations like Facebook, Yahoo, Google, Yelp, Microsoft and even the U.S. Departments of Defense and Homeland Security know, bug bounty programs are advantageous for several reasons.

First and foremost, they can (1) serve to identify system vulnerabilities—those that, if left unremedied, could be exploited by malicious hackers and cybercriminals—and (2) provide for necessary patches and fixes meant to render a network impenetrable. As such, a bug bounty can be an invaluable resource for companies looking to protect their IT assets and reputation and limit legal and financial exposure.

Likewise, despite the financial rewards paid to the ethical hackers who shine a light on an entity’s network failures, these amounts are typically a fraction of the cost associated with remediating a cybersecurity incident at the hands of a criminal enterprise. In fact, no matter how expensive a bug bounty may be, a white hat’s compensation is sure to be exponentially cheaper than a data breach.

It gets even better. Because ethical hackers are only paid if and when they uncover a vulnerability, there’s little financial risk in initiating a bug bounty program. For this reason, bug bounties are a perfect complement to regular penetration testing, which has its limits.

As a matter of fact, one of the drawbacks of penetration testing is that it’s typically conducted by a single security professional—or a small team—testing a company’s systems and applications. Bug bounties, on the other hand, are open to the universe of ethical hackers—hundreds if not thousands of individuals bringing to the table a breadth of experience and skillsets that best replicate the nefarious workings of cybercriminals.

It Takes a Village

For the good of all private and public entities—and the people they serve—data and network breaches are to be avoided at all costs. Which is why it’d be wise for every company to create and incorporate bug bounty programs into their Incident Response Plans (IRPs) and data lifecycle management programs (DLMPs)—this in order to ensure data privacy and cybersecurity compliance.

It’s important to understand that most state laws, including the new California Privacy Protection Act, require an analysis and investigation of an organization’s data privacy and cybersecurity program after a breach. So do states attorneys general and the Federal Trade Commission. As such, having a robust, evergreen IRP that includes a supervised bug bounty monitorship may serve to keep government enforcement bodies away. Even better, bug bounties, IRPs and DLMPs can prevent or diminish risk, liability, penalties and fines from regulators.

No doubt about it, bug bounties, along with penetration testing, IRPs, DLMPs and the work and insights of experienced legal counsel can—together—go a long way toward maximizing available network protections and shielding IT assets from bad actors near and far.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Proxy Wars: Climate, Diversity Among Top Considerations for Institutional Investors

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BY STEPHEN WEISS, MEGAN J. PENICK

The securities professionals at Michelman & Robinson, LLP have identified certain policy items of importance to institutional shareholders going into 2022. These policies, flashing brightly on investor radar screens as they consider proxy statements soliciting votes, are set forth below.

In our estimation, public companies—those with significant blocks of institutional shareholders—that fail to pay heed to the guidelines discussed in this post may be unable to secure the proxy votes they need during proxy season and otherwise. As such, it is recommended that annual reports issued and the proxy statements filed by listed companies cover all of the following.

Climate-Related Risks

Institutional investors, companies and other market participants are particularly concerned about climate change and board oversight of climate-related risks and transition plans. Indeed, stakeholders are increasingly applying non-financial, ESG (environmental, social and governance) factors to identify growth opportunities, among other things.

Because investors are integrating climate considerations in their investment, engagement and voting processes, public companies—especially those that are significantly contributing to climate change—are encouraged to introduce related board accountability policies.

How important is it for board members to implement climate-friendly standards? So much so that Institutional Shareholder Services (ISS) is recommending votes against responsible incumbent directors in cases where the public company in question is not considered to have adequate disclosures in place or quantitative greenhouse gas (GHG) emission reduction targets.

Say on Climate (SoC) Plans

With climate in mind, public companies are expected to disclose climate-related risks, targets and transition plans on an annual basis in line with the reporting framework created by the Task Force on Climate-related Financial Disclosures (TCFD). By allowing shareholders to vote on these disclosures (including disclosure of operational and supply chain GHG emissions and the company’s commitment to be “net zero” for such emissions), entities can determine if they are meeting shareholder expectations on climate-related issues and institutional investors are able to make informed decisions.

For its part and when looking at management proposals asking shareholders to approve a given company’s climate action plan, ISS weighs the “completeness and rigor of the plan.” When it comes to shareholder proposals, ISS also takes into account the company’s actual GHG emissions performance; the existence of recent significant violations, fines, litigation or other GHG controversies; and whether the proposal is unduly burdensome or prescriptive.

Board Diversity

Last year, the SEC approved Nasdaq’s Board Diversity Rule, which aims to diversify the boards of directors for Nasdaq-listed companies. By way of the Rule, Nasdaq-listed companies will be required to have at least two diverse directors, one who self-identifies as female and one who self-identifies as an underrepresented minority (read: Black or African American; Hispanic or Latinx; Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander; or two or more races or ethnicities) or LGTBQ+.

This is a hot-button issues for many institutional shareholders, which underscores the need for public companies to institute related policies and guidelines. Note that board diversity requirements are not exclusively the purview of Nasdaq and the SEC. Similar requirements have been enacted in California, Washington, New York, Maryland, Illinois and Colorado, and several other jurisdictions are also considering comparable mandatory gender diversity legislation.

ISS has taken a stand here too, recommending that shareholders vote against the chair of the nominating committee (or other directors on a case-by-case basis) at companies in the Russell 3000 or S&P 1500 if there are no women on their boards. In addition, ISS recommends an against vote or withholding votes for the chair of such a nominating committee in the absence of racially or ethnically diverse board members.

Unequal Voting Rights

Public companies with unequal voting rights (read: provisions limiting the voting rights of some shareholders and expanding those of others) are increasingly frowned upon. Oftentimes such unequal voting is established prior to a company going public in order to protect the ability of founders to maintain control. A prime example is Facebook and the inability of shareholders to influence its polices due to Mark Zuckerberg’s 50%+ voting control.

ISS is recommending (with certain exceptions) that beginning in 2023 shareholders vote against the boards of directors (other than new nominees) at companies maintaining unequal voting rights structures. For newly public companies, ISS recommends voting against board members or withholding from the entire board (with the exception of new nominees) if, prior to the company’s public offering, an unequal, multi-class voting structure was adopted (especially one that does not include a sunset provision). Where such a structure was implemented and a sunset provision applies, the company at issue should disclose the rationale for its adoption and the reasoning behind the timing of the sunset provision (such as needing to maintain control in order to effectuate a series of planned, post-IPO acquisitions and the need to assure they are approved). If such a sunset provision allows the unequal voting structure to continue beyond seven years, that structure will be considered unreasonable. Consequently, entities would be wise to alter any contradictory policies accordingly.

A Final Word

Of course, M&R’s securities pros, including Megan Penick at [email protected] and Stephen Weiss at [email protected], are available should you have any questions or need guidance regarding any the foregoing policies or recommendations coming from ISS.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Contracts Are Now A Must for Domestic Workers in Chicago

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BY BRYAN JOHNSON

The new year has brought with it a new law impacting all those in Chicago who employ domestic workers.

Effective January 1, anyone who engages a housekeeper, nanny, caregiver or home health service provider in the Windy City must provide that worker with a written contract (in their primary language) that spells out the wage and work schedule agreed upon by the employer and the individual under their employ. Notably, such an agreement is mandated whether the domestic worker is considered to be an employee or independent contractor.

The reasoning behind the new requirement is to create a fair and equitable workplace and ensure accountability, transparency and predictability for domestic workers so they can plan for themselves and their families. According to Mayor Lori E. Lightfoot and the Chicago Department of Business Affairs and Consumer Protection (BACP), an environment of collaboration and dialogue should be created to ensure that the terms of the work agreement are mutually agreeable.

The following contract formalities apply:

  • The document should be reviewed and signed in person by the domestic worker, the employer and a witness;
  • The agreement can be printed or be provided in a printable communication in physical or electronic format, such as an e-mail; and
  • Contracts should be reviewed annually and when there is a change to the job description or scope of work.

Note that sample agreements can be found here.

For purposes of reference, all Chicago worker protections are enforced by the BACP Office of Labor Standards (OLS), which is dedicated to promoting and enforcing the city’s labor laws, including Minimum Wage, Paid Sick Leave, Fair Workweek, and Wage Theft Ordinance.

Employers and their domestic workers can learn about relevant protections and employee rights by visiting Chi.gov/Care. Of course, the employment law specialists at Michelman & Robinson, LLP are always available to answer your questions as well.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Is It Time to Ban Cellphone Bans? Recent Events at Amazon Are Instructive

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BY SHAINA L. KINSBERG

Bans on the use of mobile phones at work aren’t a new concept. For years, employers across industries have barred employees from not only using, but even possessing cellphones while on the job. This includes Amazon, which—until recently—prohibited them in their warehouses.

The reasons for such a policy vary but include the adverse impact mobile phones could have on employee productivity (they can serve as a distraction), company security and overall privacy. As such, employers in several different sectors—manufacturing, hospitality and trucking, among them—say no to employees inclined to grab their smartphones to make calls, text or check headlines while actually working.

This begs the question: are cellphone bans legal? The short answer is yes, at least when employees are “on the clock,” but that doesn’t mean they’re a good idea.

The NLRB Weighs In

Back in 2020, the National Labor Relations Board ruled on a case involving Cott Beverages and whether the company could rightfully ban mobile phones in the workplace. The NLRB answered in the affirmative, approving a rule that required employees to store their cellphones in lockers and use them only in non-working areas (like break rooms) and not during actual working time.

Of note, the NLRB indicated that a complete cellphone ban would’ve likely violated the National Labor Relations Act to the extent it would interfere with employee’s opportunity to engage in union activity.

The Fair Labor Standards Act seems to be aligned with the NLRB’s thinking, as it limits the ability of an employer to restrict what an hourly employee can do during personal time (e.g., when “off the clock”). Still, the FLSA does nothing to keep management from otherwise regulating what an employee can bring into a work area.

Amazon’s About-Face

Prior to the pandemic at Amazon, warehouse employees weren’t allowed to have their mobile devices with them on the warehouse floor. Instead, these workers had to leave their phones in their cars or lockers.

When COVID-19 hit, this rule was temporarily suspended so that workers could use their cellphones to gain immediate access to emergency information. And while the ban was to be reinstated this month, that plan has been put on hold in the wake of a recent tornado that destroyed an Amazon facility in Edwardsville, Illinois a few weeks ago, killing six employees.

Understandably, workers throughout the U.S., including those at Amazon, want to be able to use their mobile phones, even when engaged at work, to retrieve real-time information in the event of a tornado or other weather-related or natural disaster, during public health crises, and in a time plagued by workplace violence. This is because smartphones facilitate instant communication with first responders and family should an employee’s life be in danger.

For these very reasons, Amazon is reassessing its cellphone policy. Other employees from coast-to-coast that currently restrict the use of mobile phones at work might take Amazon’s lead and reevaluate their collective stance on the issue.

The Pros vs. the Cons

Sure, cellphones can be a distraction and many of us spend far too much time face down staring at our screens (perhaps you’re reading this story on your iPhone or Android). They can pose a safety risk too—imagine a long-haul trucker reading alerts while on the road. Further, any device with a camera can subject a company’s sensitive, proprietary materials to compromise. All of these factors could certainly justify an employer’s embargo on cellphone use.

At the same time, we’re living in a time of COVID-19, intense weather events and mass shootings, all of which necessitate the need for on-the-spot information. Fortunately, we’re also living in the digital age, and those smartphones in our pockets and purses can serve as a lifeline. By virtue of the latter, the time may be now to place a ban on cellphone bans.

That being said and whatever a company’s preference may be regarding the onsite use of mobile phone, it’s always best for management to consult with legal counsel to craft policies that adequately address their unique workplace concerns.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Department of Justice Targets Fraud and Corruption within Substance Abuse Disorder Treatment Industry

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BY SCOTT D. TENLEY, KELLY M. HAGEMANN

Late last week, the U.S. Department of Justice announced criminal charges against 10 defendants for alleged kickback schemes at substance abuse disorder treatment facilities in Orange County. These charges are part of “The Sober Home Initiative”—a coordinated effort among federal and state law enforcement to investigate and prosecute fraud and corruption within licensed rehab and sober living facilities. In connection with the DOJ’s announcement, a lead prosecutor ominously told the Orange County Register, “This is the beginning, not the end.”

As alleged by the Justice Department, the newly-charged defendants associated with treatment facilities assigned values to patients based upon insurance coverage—values derived from the expected reimbursements the patients’ insurers would pay the respective facilities for providing treatment services. The DOJ further contends that the patient recruiters were paid kickbacks for each patient they referred.

Among the defendants are facility “controllers,” including an employee. As such, the Justice Department appears to be expanding its reach beyond facility owners. This is consistent with the broad language of EKRA, as well as California state law, both of which allow prosecution of any person or entity involved in alleged improper kickbacks. Consequently, facilities should be mindful of any actions their employees take that relate to marketing or attracting patients. Indeed, well-intentioned facilities should be on high alert if they suspect employees or independent contractors are violating EKRA or state law.

Another interesting development brought to light by way of the DOJ’s prosecution is that one of the alleged recruiters was also charged with possession with intent to distribute fentanyl, which is an entirely new—and dark—dimension to these cases.  The press release linked above also repeatedly uses the word “purported” with reference to treatment services rendered, suggesting that investigators are also focused on fraudulent billing in addition to body brokering.

As a testament to the strength and thoroughness of the government’s investigation, four of the 10 defendants have already pleaded guilty and are awaiting sentencing.  In fact, ongoing charges like these were anticipated in our previous reporting and discussed during our webinar last week titled, “Billing and Marketing In the Addiction Treatment Industry: Staying on the Right Side of the Law.”

We expect more cases like these as the federal and state governments coordinate their efforts and continue their intense scrutiny on the substance use disorder treatment industry. Those within the industry who seek advice on responding to criminal charges or investigations should contact Scott Tenley at [email protected] and Kelly Hagemann at [email protected].

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Cryptocurrency Rage Sparks SEC Action in the Era of Celebrity Endorsements 

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BY KRAIG AHALT

While cryptocurrency remains a new concept for many investors across the globe, more and more people are becoming familiar with the digital asset class. This is not only a result of the constant drumbeat of crypto-related headlines in the media, but also because of the personalities touting the potential for riches from Bitcoin, Ethereum and the like.

In fact, a much younger audience of would-be crypto tycoons is being reached by virtue of the individuals being paid to advertise digital coins and exchanges. These include TikTok stars such as the D’Amelio sisters and Tana Mongeau, who have been retained to endorse cryptocurrency to their millions of followers. Even Kim Kardashian West has jumped on the bandwagon. She has posted ads for Ethereum Max—a speculative digital token created by unknown developers—on her Instagram stories, and these have been viewed tens of millions of times.

Given what appears to be a modicum of crypto endorsement mania, those in the limelight doing the promoting must be well aware of potential legal exposure as a result of oversight by the U.S. Securities and Exchange Commission.

The SEC Is Watching 

The SEC has had its eye on cryptocurrency endorsements for years now. Back in 2018, boxing champion Floyd Mayweather and celebrated music producer DJ Khaled settled charges levied by the SEC for failing to disclose promotional payments from three Initial Coin Offering issuers, including Centra Tech Inc. For his part and among other things, DJ Khaled touted Centra as a "Game changer." Not to be outdone, Mayweather hyped Centra’s ICO by telling his Twitter followers, “Get yours before they sell out, I got mine…"

The cases against Mayweather and Khaled were the first to charge promotional violations involving ICOs. In the end, the two agreed to pay a combined total of $767,500 in disgorgement, penalties and interest as a result of their undisclosed endorsement deals. Of note, their unlawful promotion of the ICOs came after the SEC issued a report in 2017 suggesting that altcoins may be characterized as securities subject to federal securities laws, including the applicable anti-touting provisions of the Securities Act of 1933.

Why it Matters

Pursuant to Section 17(b) of the Securities Act, potential investors must be able to discern whether an endorsement has been paid for or is coming from a disinterested party. Clearly, Mayweather and Khaled crossed the line by not disclosing their financial interest in promoting the ICOs they peddled, which drew the scrutiny of the SEC.

Influencers now endorsing crypto products should learn from their mistakes. They should also pay heed to ongoing SEC messaging. In a recent tweet, the SEC stated, “Social media influencers are often paid promoters, not investment professionals,” and “the securities they’re touting…could be frauds.” This language is not at all subtle, and the takeaway for celebrities and influencers is that the SEC will continue to stridently pursue the issue of paid endorsements and related disclosures.

Bottom line: talent and social media mavens alike should be cautious when considering attaching their names to any security offerings, including those involving crypto. It is incumbent upon them (and their representatives) to do their due diligence; thoroughly vet the digital assets or exchanges they may promote; consult with legal professionals about the weight of SEC scrutiny and the possibility of exposure for violating securities laws; and always disclose any financial incentive they may receive for their endorsements.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

The Business and Practice of Law: Five Emerging Legal Trends to Watch

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BY RONALD R. CAMHI

Law firms are dynamic and ever-changing, as is the marketplace for legal services. That being said, in my capacity as the Los Angeles Office Managing Partner at Michelman & Robinson, LLP, I am hyper aware of shifting behaviors and technological advancements that move the needle relative to the business and practice of law.

With 2022 fast approaching, I have identified five trends emerging within the legal industry that will shape law firm operations, recruitment and the client experience in the new year. The good news is that M&R has been well ahead of the curve when it comes to all of them, allowing the firm to differentiate itself among its peers, Big Law included, here in L.A. and throughout the country.

1. Talent Acquisition

Law firms are only as good as the lawyers and staff within their ranks. To paraphrase Jack Welch, former Chairman and CEO of General Electric: a company’s assets go up in the elevator in the morning and ride down at night. This means that attracting and retaining the best attorneys—from first-year associates up through the partner level—is a must for premier firms like M&R. However, by virtue of a challenging labor market, talent acquisition across virtually all practice areas is more difficult now than any time in recent memory.

No surprise, then, that the adoption of innovative hiring and retention strategies tops the list of emerging trends going into 2022. M&R has already made a splash in this category with its recent headline-grabbing announcement regarding associate compensation. Given our mission to have associates view us not as just an arbitrary place to practice law, but as a firm where careers are built and passions realized, we have significantly adjusted our compensation scale upward, making M&R associates among the highest paid in the legal industry beginning in 2022.

Our efforts in terms of talent acquisition do not end there. M&R is also planning to launch a student debt refinancing program and a first-time mortgage initiative for associates. All of this is in addition to the ordinary perks of working at M&R, which places an immense emphasis on culture, diversity, inclusion, professional development, advancement and attorney branding.

Non-lawyer recruitment at the executive level, which is becoming more commonplace in law firms big and small, also falls under the banner of talent acquisition. M&R struck early in this regard as well. For years, the firm has had a robust C-suite in place, which now includes a Chief Operating Officer, Chief Financial Officer, Chief Advancement Officer (charged with the development of the firm’s lawyers and professional staff) and Chief Innovation and Product Office (tasked with developing new ways to deliver superior outcomes for M&R’s client and expanding our already considerable innovation competence). Our executive team frees up our legal professionals to do what they do best—practice law.

2. Elevation of the Client Experience

Client service should always be the center of a lawyer’s professional universe, yet the client experience is not always prioritized in our profession. This is beginning to change and will likely continue to do so in 2022, with the marketplace for legal services becoming increasingly competitive. In response, law firms have looked to enhance the client experience by introducing alternative fee arrangements and value-added services, among other things.

At M&R, client service excellence and client inclusion have been our defining principles since we opened the doors in 1999. We view our work on behalf of clients as a collaborative process, and always work together with them to develop strategies directed to their specific needs and objectives. In doing so, we make it a point to stand out as thought leaders in our clients’ industries and keep them involved throughout any given matter, which is indicative of the firm’s focus on the client experience.

In addition to this level of collaboration (and as addressed below), we have committed to leveraging technology to enhance the way in which we are able to represent clients. This begins with industry leading communication technologies that allow us to accommodate our clients’ chosen platforms and facilitate more convenient and seamless client interactions, but also extends to process reengineering and new product development.

3. Digital and Technological Engagement

Technological trends are always a focus across industries, the legal space included. And within the law firm world, and certainly at M&R, there is an ongoing shift towards even more digital engagement, be it with clients, colleagues, opposing counsel or the courts.

COVID-19 and the stay-at-home restrictions imposed as a result forced us all to adopt video conferencing as a way of life. For attorneys, remote hearings, depositions and meetings with clients and co-workers have become commonplace. What we have learned as an industry—and at M&R more particularly—is that this ability to harness Zoom and similar tech as a means of communications has created efficiencies in the practice of law that will certainly outlive the pandemic. Consequently, we can expect to see advancements in digital interfaces made available to legal professionals and the public by courts and other governmental agencies.

Technological improvements, including improved AI, that enable improved automation of document review and discovery, legal research, litigation support and the “mining” of the vast amount of data we generate are well underway at M&R, and there are more resources on the horizon too. These advances will ultimately serve to optimize law firm operations, reduce costs and mitigate risk, and we as a firm remain committed to availing ourselves of best-in-class tech as it comes online and is proven secure and effective.

4. Optimizing the Legal Spend

As legal fees rise, GCs across the country are being asked to reduce costs. Yet this is a real challenge, especially with escalating associate salaries, not to mention the anticipated uptick in both litigation and corporate transactions coming out of the pandemic.

Given the current state of law firm economics and the surge in demand for legal services, those in charge of corporate legal departments are beginning to reframe their fiscal mandates. As we turn the page on 2021, GCs are increasingly focused on optimizing the legal spend and viewing their lawyers and law firms as assets to be leveraged.

To get there, a rising tide of GCs are seeking out legal service providers, like those at M&R, who possess specific— even niche—industry and subject matter expertise and who can provide next-level work product. The benefits of engaging such counsel are many. Attorneys that fit the bill are able to easily identify not just legal concerns, but broader business issues as well, which means that dollars spent on legal can actually benefit bottom-line corporate objectives.

5. Diversity & Inclusion

The most sought-after and admired law firms will continue to emphasize their collective commitment to a diverse and inclusive workforce in 2022 and beyond. At M&R, diversity and inclusion is a cornerstone of our culture, operations and recruitment efforts.

The firm prides itself on fostering an inclusive environment where everyone has a voice, no matter their background, culture, ethnicity, orientation or position. This encourages healthy internal debate and innovative, strategic thinking that inures to the benefit of our client base, which itself is as diverse as the firm.

While diversity and inclusion are trending topics across industries, at M&R, they are core values. In fact, for years our Diversity & Inclusion (DI) Committee has met bi-monthly to discuss and promote these issues—ones we view as being as important as ever before.

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It’s Beginning to Sound a Lot Like Christmas: A Brief Overview of Holiday Songs and Their Copyright Implications

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BY JENNIFER A. MAURI

The holidays are just around the corner, which means the Christmas songs we know and love are soon to be heard over and over again. No doubt about it, it’s the most wonderful time of the year when it comes to the holiday standbys about to permeate the airwaves.

The month of December is especially wonderful for the lucky few cashing in on the music that brings such joy to the world.

I don't want a lot for Christmas

There is just one thing I need

I don't care about the presents

Underneath the Christmas tree

That ubiquitous tune, “All I Want for Christmas Is You,” has earned Mariah Carey well in excess of $60 million since its release in 2011. And the rich get richer. In Ms. Carey’s case, her hit Christmas song is estimated to bring in another $600,000 or so between now and December 25th.

Beyond Mariah, the playlist of Christmas favorites raking in the dough for an array of other artists and music publishers alike is endless. Indeed, holiday songs are broadcast in a variety of formats seemingly everywhere, lining the pockets of copyright holders with royalties. Which begs the question: what are the legal ramifications for using these songs without a license to do so?

Copyrighted Works

As a matter of law, the use of a copyrighted song for commercial purposes without the appropriate license exposes the unauthorized user to substantial liability for copyright infringement.

In the United States, every original work of authorship fixed in any tangible medium of expression is subject to copyright protection. This includes Christmas songs. That being said, copyrights don’t last forever. In fact, they expire 70 years after a given author’s death, after which the work in question becomes public domain and can be used without a license.

There are two distinct types of copyright that may apply to a holiday song written and performed since 1926 (note that in the U.S., works published before January 1 of that year are in the public domain): 1) the copyright in the musical work itself, and 2) the copyright in a sound recording of the song. To be clear, a copyright in a musical work embodies the right to the musical composition (read: the notes and lyrics of the song as they appear on sheet music). In contrast, a copyright in a sound recording (sometimes referred to as a “master recording”) contemplates the rights to a recorded performance of a musical work by a specific artist.

Take “Silent Night” for example. The music and lyrics of that beloved song were composed in 1818, and the authors passed away in the mid-1800s. Thus, because the writers have been dead for over 70 years (and since the song originated pre-1926), the sheet music and lyrics to “Silent Night” are in the public domain, meaning anyone can perform it without having to first obtain a license. And many have done just that. There are thousands of different sound recordings by various artists singing “Silent Night.” Bing Crosby recorded his memorable version in 1945. Much more recently, Carrie Underwood did the same in 2020.

Because Mr. Crosby died just 44 years ago and Ms. Underwood is alive and well, the applicable copyrights in these two renditions of “Silent Night” are still active. As such, anyone wanting to use Bing and Carrie’s recordings commercially would need to get a license to do so, which could be quite costly.

Works in the Public Domain

As mentioned, pre-1926 musical compositions and sounds recordings are in the public domain. Therefore, works originated in 1925 or earlier may be performed (musical composition) or broadcast (sound recording) without license. Likewise, a song written and recorded by a person that’s been dead for at least 70 years is also fair game. Nonetheless, the selection of holiday tunes that meet these criteria is slim. As a practical matter, then, most every Christmas song that an individual or business might want to play or otherwise use commercially is probably protected by a copyright.

The Takeaway for Those Seeking to Leverage Christmas Music for Commercial Purposes

For most of us, the soundtrack of the holiday season is played without controversy. That’s not necessarily true for those wanting to incorporate Christmas songs into their commercial endeavors such as radio and television advertisement, podcast breaks and even social media posts. For these people and businesses, licenses must be secured, assuming the works in question are copyright protected, which is likely the case.

Again, any unlicensed use of third-party music can be characterized as copyright infringement. And while perhaps inconsistent with the spirit of the holidays, unauthorized use of Christmas music in the U.S. can expose the infringer to up to $150,000 in statutory damages, plus additional damages such as attorney’s fees. Parenthetically, fair use is an affirmative defense to a copyright infringement claim. While beyond the scope of this article, the fair use doctrine promotes freedom of expression by permitting the unlicensed use of copyright-protected works in certain circumstances.

Bottom line: for anyone looking to commercialize Christmas music owned by third-parties, be aware that the copyright holders, and not Santa Claus, will surely find out who's been naughty or nice.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.