A recent article in the Wall Street Journal, “Smaller Law
Firms Grab Big Slice of Corporate Legal Work,” discusses the recent trends in
the market for sophisticated legal work.
The article reinforces a number of trends in the legal industry that we
have observed at Gober Hilgers. Here are
Larger firms still are not successfully adjusting to the down turn. Despite the economic recession, rates for attorneys at large law firms continue to rise. The article notes that some firms continue to raise rates 5 to 10% per year, passing along higher costs to clients with tightening legal budgets. Gober Hilgers doesn’t engage in arbitrary yearly increases and can help provide clients with rate relief.
Clients are increasingly comfortable using smaller firm for sophisticated legal work. Talent and experience are important ingredients for high quality legal work – and they are no longer the exclusive domain of large law firms. As Don Liu, general counsel for Xerox Corp., puts it, “big law firms don’t have a monopoly on talent.” That is true; Gober Hilgers’s attorneys graduated from top law schools, worked at AmLaw 100 law firms, graduated at the top of their law school classes, and/or clerked for federal judges.
It is not just cost that matters. The article notes that, in addition to higher cost, the lack of attentiveness and responsiveness of larger law firms also raise concerns for in-house counsel. In fact, the article notes that “nearly 60% of the general counsel polled by AdvanceLaw said lawyers at the most elite law firms were less attentive to their concerns than those at other firms.” Gober Hilgers provides the kind of service and responsiveness to our clients that sophisticated clients deserve and expect.
On October 8, 2013, the U.S. Supreme Court heard oral arguments inMcCutcheon v. Federal Election
Commission, the latest campaign finance dispute before the Court. Since the
aggregate limit (a/k/a biennial limit) is lesser known than its "base limit" counterpart, we have re-posted a helpful chart that will help you better understand the intricacies of the limit at issue in the McCutheon case. You can view it by clicking here.
The recent collapse of one of New Jersey’s oldest and most prominent engineering firms offers government contractors (GCs) a cautionary tale on how quickly ethics law violations can reduce a healthy, century-old corporate giant to ashes. To find out more, we benefit from an exclusive article from Chris Gober and Shannon O’Leary from Gober Hilgers PLLC, one of the premier political law and government affairs firms in the United States.
Oddly enough, the annihilation of Birdsall Services Group (BSG) began in 2012 with a divorce. According to reports by the Star-Ledger, the soon to be ex-wife of Philip Angarone, Jr, BSG’s then-marketing director, secretly recorded her husband explaining that estimates of his income were inflated by bonuses that were actually reimbursements from BSG for political contributions he had made on behalf of the company. The criminal investigation of BSG was kicked off when Mrs. Angarone turned over the recording to law enforcement.
Under the alleged scheme, BSG made nearly $700,000 in illegal corporate political contributions disguised as personal contributions by BSG’s shareholders and employees to avoid being disqualified under New Jersey’s pay-to-play laws from obtaining public contracts. Multiple personal checks of $300 or less – which are below New Jersey’s reportable threshold – were bundled together by BSG and sent to numerous campaigns and political organizations. The shareholders and employees were then illegally reimbursed by BSG through bonus payments, and the firm omitted the illegal contributions from its reports with the New Jersey Election Law Enforcement Commission and from bid certifications declaring that it was in compliance with New Jersey’s laws.
A short thirteen months after the first subpoena was served, BSG pleaded guilty to criminal charges, agreed to pay $3.6 million in criminal and civil penalties, was disbarred from working on government contracts in New Jersey for 10 years, and was sold off in pieces after filing for bankruptcy. The former CEO and six other former executives and shareholders have been charged with conspiracy, money laundering, making false representations for government contracts, tampering with public records or information, and more. Each count of conspiracy and money laundering carries between 10 and 20 years in prison.
At least 27 states and dozens of localities have implemented “pay-to-play” (PTP) laws – aimed at preventing public corruption – that limit the political activities of government contractors and/or investment advisors who manage public pension funds. Though presumably well-intentioned, these PTP laws are crafted by politicians and often difficult to apply in the real world. Generally, these laws seek to: (i) ban or limit political contributions; (ii) made to certain officeholders, candidates, political committees and/or party committees; (iii) by GCs and, usually, a key group of individuals associated with the contractor; (iv) for a specified period of time before, during and/or after the contract; and (v) to compel public disclosure of any political contributions during a specified time period.
In today’s fast-paced and highly-regulated environment, GCs face significant pressure to preserve their bottom line while navigating the complexities of these PTP laws – particularly for companies with a regional sales force subject to varying PTP laws in multiple jurisdictions. GCs must also appreciate that even unintentional violations of PTP laws can cause them to lose a contract or be disbarred as a bidder, resulting in multi-million dollar losses for some. Violating a PTP restriction in one jurisdiction may also risk the company’s business in other jurisdictions because many jurisdictions ask the bidder to disclose its complete compliance history. Even worse, a violation of PTP laws can result in criminal charges and criminal and civil fines.
Simply put, conducting business without a proficient compliance system for PTP can be a “bet the company” move for GCs. To help map and manage the risk of PTP laws, GCs should ask and answer the following questions in every state, county, and municipality where it operates:
Do PTP laws apply to my business? Determine if the business you conduct is the kind captured by PTP laws. While the majority of PTP laws apply to companies making routine sales to a government or government agency, some jurisdictions target specific business types. Review the lobbying laws as well because some jurisdictions define sales activity as lobbying so all the regulations related to lobbyists may come into play, including lobbyist registration and reporting obligations.
Whose political contributions are covered by the law? Be clear about who is prohibited from making political contributions. The laws typically target the political contributions from the GC’s treasury, its subsidiaries, and the owners, officers, key executives, and employees directly involved in the sale, but in some jurisdictions they extend to the political action committee controlled by the GC, the company’s subcontractors, and the spouses and minor children of a key group of individuals associated with the contractor.
What are the officeholders, candidates, political committees or party committees included in PTP restriction? Understand who is restricted from receiving a political contribution. Some PTP laws lay out very broad groups restricted from receiving the political contribution, such as “statewide officeholders or candidates” or “political party committees.” Others are more specific and target government officials who hold a specific elected office or who have decision-making power over the contract in play.
What political contributions are prohibited? Identify how restrictive the contribution limit is. PTP laws typically set a very low dollar limit on political contributions that can be given without triggering an obligation to file disclosure reports and/or disqualifying a GC from a bid; however, some jurisdictions place an absolute $0 prohibition on any political contribution.
What is the timeframe for PTP restriction? Evaluate whether your company is qualified to be a GC based on previous political contributions because all PTP laws provide a timeframe for the restrictions. The law usually includes a look-back period that extends to a time prior to the contract bid, such as 24 months before the date of the RFP, while some impose restrictions after the contract expires.
What are public disclosures obligations? Increasingly, GCs face the burden to evaluate and report historical political contributions on the initial bid and/or certification of qualification forms before the government contract is won. Normally, PTP laws will obligate the GC to file periodic disclosure reports or place a continuing obligation on the GC to update forms submitted with the bid. If your company has numerous government contracts, consider implementing a formal system to track its reporting obligations across the country and ensure the public disclosure of information is accurate and consistent from one bid to the next.
Finally, there are best practices that your company can follow that will help mediate the risk of a violation:
Engage competent legal counsel to support your compliance program.
Inform the audit committee of the board of directors of the company’s risk, obligations, and compliance efforts – especially if the company is publicly traded.
Invest in a service to keep apprised of rapid changes in PTP laws and reporting obligations.
Create a pre-approval process for political contributions made by the company, its PAC, and other individuals targeted by PTP laws.
Update the company’s Code of Conduct, policies, and procedures with information on PTP laws, how non-compliance risks company profits, and clearly communicate the compliance commitment so employees understand why the company is asking for personal political activity information.
Use MIS technologies and leverage existing information, such as HR and sales data, to feed the knowledge base of the compliance program.
Use contract terms to require subcontractors to certify their PTP compliance programs and include terms that shift the risk, liability, and cost to back up the certification.
Below is the text of the letter. An official PDF version of the letter can be viewed at http://bit.ly/ZGeO66.
March 21, 2013
By Email and U.S. First-Class Mail
Steven T. Miller, Acting Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224
Re: Unlawful Disclosure of Tax-Exempt Organizations Confidential Taxpayer Information
Dear Acting Commissioner Miller:
As attorneys representing tax-exempt organizations, we are writing to express our grave concern about recent unlawful disclosures of pending applications and unredacted tax returns of certain tax-exempt organizations. We request that the Internal Revenue Service take immediate steps to determine how these disclosures of confidential taxpayer information occurred, to take any and all necessary steps to prevent similar disclosures in the future, and to make a detailed public statement describing these steps to reassure the tax-exempt community.
Recent reports and discussions make it clear one or more IRS employees responded to a public information request from the news organization ProPublica by giving ProPublica pending applications and subsequent extensive correspondence with the IRS regarding the applications from a number of organizations seeking recognition of their exemption from tax under Section 501(c)(4) of the Internal Revenue Code.
As you know, application documents are subject to public disclosure after recognition of the organization’s tax-exempt status, but still-pending (or withdrawn) applications are not. This restriction recognizes that pending applications are often incomplete and may include information about proposed activities that are questioned by the IRS determination agent and that the organization subsequently has a chance to clarify or eliminate from its plans before they are made public.
It is clear that the IRS recognized that the applications should not have been released to Pro Publica. Following the publication of the first article describing the disclosed application of one of the organizations, IRS employees contacted other organizations to warn them that their applications and associated materials “probably” had likewise been improperly disclosed. Indeed, ProPublica subsequently published additional confidential taxpayer information for a number of other organizations with pending applications.
These disclosures come on the heels of another recent allegation of an unredacted copy of a Form 990 annual information return (including an unredacted Schedule B showing major donors to the organization) for a 501(c)(4) organization that was released by someone at the IRS (or at least someone with access to IRS files).
All of these recent disclosures appear to have involved organizations with a conservative political ideology (although we are aware of similar improper disclosures that involved both conservative and liberal or progressive organizations in the past).
We are concerned that these recent reports will have significant negative consequences. Organizations fearful of such disclosures may be less forthcoming and intentionally vague about their activities on applications for exemption, Form 990s, and other filings. Donors may be deterred from giving if they fear their contributions might be improperly disclosed.
Moreover, organizations that espouse particular ideologies may be convinced – and may persuade others – that the IRS or its employees are biased against those ideologies and are engaged in a deliberate effort to undermine the organizations through deliberate improper disclosures. These results are all possible, whether improper disclosures by the IRS are malicious or merely the result of unintentional errors by agency staff.
The IRS is clearly aware that it has a problem – as demonstrated by the calls to organizations that were the victims of the disclosure to ProPublica – but the IRS needs to do more. The recent spate of improper disclosures requires a public statement to make it clear that the IRS has identified how these disclosures came about and describing the concrete steps the IRS has put in place to prevent any further such disclosures. Inaction or silence by the IRS fuels both fear of further disclosures and narratives alleging IRS ideological bias.
We urge you to address these issues promptly and forcefully. This is a public confidence issue where the Service is uniquely-positioned to reassure the public. It should.
Heidi K. Abegg, Webster, Chamberlain & Bean, LLP
Jeffrey Altman, Whiteford Taylor Preston, LLP
Robert Benton, Wiley Rein LLP
Catherine Bitzan Amundsen, Gray Plant Mooty
Jennifer Reedstrom Bishop, Gray Plant Mooty Karen Blackistone Oaks, Gober Hilgers PLLC James Bopp, Jr., The Bopp Law Firm, PC
Eve Borenstein, Borenstein and McVeigh Law Office LLC
Leonard M. Cole, Cole Nonprofits Law, LLC
Gregory L. Colvin, Adler & Colvin
Sarah Duniway, Gray Plant Mooty
Alan P. Dye, Webster, Chamberlain & Bean, LLP Chris Gober, Gober Hilgers PLLC Gail Harmon, Harmon, Curran, Spielberg & Eisenberg, LLP
The firm of Holtzman Vogel Josefiak PLLC
Greg A. Larson, Gray Plant Mooty
D. Eric Lycan, Steptoe & Johnson PLLC
Cleta Mitchell, Foley & Lardner, LLP
Stefan Passantino, McKenna Long & Aldridge LLP
John Pomeranz, Harmon, Curran, Spielberg & Eisenberg, LLP
Hank Raattama, Akerman Senterfitt
Emily Robertson, Robertson Law Office, LLC
Janice Rodgers, Quarles & Brady LLP
Laura Solomon, Laura Solomon & Associates.
Charles M. (Chip) Watkins, Webster, Chamberlain & Bean, LLP
Jeffrey L. Yablon, Pillsbury Winthrop Shaw Pittman LLP
Barnaby Zall, Weinberg, Jacobs & Tolani, LLP
[Firm names are listed for identification purposes only. Inclusion of the firm’s names does not indicate and should not be understood to imply endorsement of the views expressed in this letter by any of these firms or by other attorneys who are part of these firms but not listed here.]
cc: Lois G. Lerner, Director, Exempt Organizations Division, Internal Revenue Service
William J. Wilkins, Chief Counsel, Internal Revenue Service
The Honorable Max Baucus, Chair, U.S. Senate Finance Committee
The Honorable Orin Hatch, Ranking Member, U.S. Senate Finance Committee
The Honorable Dave Camp, Chair, U.S. House of Representatives Ways and Means Committee
The Honorable Sander Levin, Ranking Member, U.S. House of Representatives Ways and Means Committee
Federal Court Ruling Favors Future of Texas Super PACs
Ruling trumps state election code ban on some corporate contributions
AUSTIN, Texas – A federal judge has ruled in favor of a Texas-based political action committee (PAC) by granting a preliminary injunction in a First Amendment lawsuit that may permanently clear the way for so-called "super PACs" to influence state and local political races in Texas.
In September, the PAC Texans for Free Enterprise sued the Texas Ethics Commission challenging the constitutionality of the Texas Election Code provisions that prohibit PACs from accepting corporate contributions for the purpose of making direct campaign expenditures. The Texas Ethics Commission defines direct campaign expenditures as independent expenditures made without the prior consent, approval or cooperation of the candidate benefited.
The lawsuit cites the U.S. Supreme Court's 2010 decision in Citizens United v. Federal Election Commission, which held that corporations and unions can raise and spend an unlimited amount of money to campaign independently for candidates running for office. The Citizens United ruling and other court decisions that followed resulted in a new breed of political committees known as super PACs, which can legally raise and spend corporate money to influence elections for federal offices.
Following the Citizens United decision, the Texas Legislature amended the state election code to repeal all sections of the code prohibiting a single corporation from making direct campaign expenditures. The Legislature did not, however, repeal or amend code provisions that prohibit corporations from contributing to political action committees (i.e., super PACs) for the same purpose, which made it illegal for super PACs to influence state and local races in Texas.
The ruling from Judge Lee Yeakel of the U.S. District Court for the Western District of Texas in Austin prevents the Texas Ethics Commission from enforcing the contribution restrictions in Sections 253.003(b) and 253.094(a) of the Texas Election Code against Texans for Free Enterprise until the conclusion of the lawsuit. Notably, Judge Yeakel held that Texans for Free Enterprise has already established a likelihood of success on the merits of its claims.
With offices in Dallas, TX; Austin, TX; Omaha, Neb.; Lincoln, Neb.; and Washington, D.C., Gober Hilgers PLLC represents international corporations and small businesses, elected officials and candidates, political action committees, and nonprofits in litigation and political compliance matters. For more information, please visit the firm's website at http://goberhilgers.com.
NPR Report: Texas' Voter ID Law Creates A Problem For Some Women
Texas Republicans say this brouhaha is just Democrats making a mountain out of a molehill.
"The polls show the vast majority of likely voters support the idea of showing a voter ID when you cast the ballot, when you cast a vote, to protect the integrity of the election process," says Chris Gober, an attorney with the firm Gober Hilgers, which practices political law and has defended Texas Republicans in the state's redistricting battle.
Gober says the reports of problems at the polls are overblown and that poll officers have been told to err on the side of voters.
Texas can’t stop corporations from contributing to independent expenditure-only political action committees, or Super-PACs, the U.S. Court of Appeals for the Fifth Circuit held Oct. 16, in a case that it said was ‘‘one step removed from the facts of Citizens United’’ (Texans for Free Enter. v. Texas Ethics Comm’n, 5th Cir., No. 13-50014, 10/16/13).
Ruling halts State of Texas’ limited interpretation of Citizens United decision
NEW OREANS – On October 16, 2013, the U.S. Court of Appeals for the Fifth Circuit issued a published opinion in Texans for Free Enterprise v. Texas Ethics Commission that vindicates the political speech and association rights of corporations and political committees. The decision upheld the right of individuals and corporations to make unlimited contributions to a committee making independent expenditures only, which should permanently clear the way for so-called “super PACs” to influence state and local political races in Texas.
Following the Citizens United decision, the Texas Legislature amended the state election code to repeal all sections of the code prohibiting a single corporation from making direct campaign expenditures (more commonly known as “independent expenditures” under federal law). The Legislature did not, however, repeal or amend code provisions that prohibit corporations from contributing to political action committees (i.e., super PACs) for the same purpose. Although not widely recognized, these laws continued to make it illegal for super PACs to influence state and local races in Texas.
Texans for Free Enterprise, a Texas-based political committee formed for the purpose of making direct campaign expenditures only, sued the Texas Ethics Commission alleging the prohibitions unconstitutionally infringed its First Amendment rights. Shortly after the 2012 general election, the U.S. District Court for the Western District of Texas issued a preliminary injunction enjoining the State of Texas from enforcing the Texas Election Code laws that prohibited Texans for Free Enterprise from accepting corporate contributions for the purpose of making direct campaign expenditures. The Fifth Circuit’s opinion unanimously affirmed that lower court’s decision.
With offices in Dallas, TX; Austin, TX; Omaha, Neb.; Lincoln, Neb.; and Washington, D.C., Gober Hilgers PLLC represents international corporations and small businesses, elected officials and candidates, political action committees, and nonprofits in litigation and political compliance matters. For more information, please visit the firm’s website at http://goberhilgers.com.
For more information on the Texas super PAC decision, please contact Rhonda Reddick at (800) 559-4534 or firstname.lastname@example.org.
LINCOLN, NEB. – The commercial trial law
firm Gober Hilgers PLLCis pleased
to announce that partner Michael Hilgers was named as a “Rising Star” by the
nationwide legal publication Super Lawyers.
The "Rising Stars"
designation honors leading attorneys who are 40 years or younger. No more than 2.5 percent of all lawyers in
Iowa, Nebraska, North Dakota and South Dakota are named to the list. Super Lawyers conducts a rigorous nomination
and multi-phased selection process, which includes
independent research, peer nominations and peer evaluations.
Gober Hilgers is a leading innovator
in the legal industry, using entrepreneurial methods to reduce overhead costs
to efficiently deliver sophisticated legal work. Since the firm’s opening in 2011, Hilgers has
helped build a significant litigation practice emphasizing complex commercial
and intellectual property cases. Hilgers
has also conceived of and helped build the firm’s innovative special projects team, which has dramatically lowered costs for Gober Hilgers’ clients around the
country in a variety of complex litigation and similar cases.
The Omaha World Herald covers a federal-state legal tussle that is brewing in Nebraska after a Florida company asked a judge in U.S. District Court to prevent Nebraska Attorney General Jon Bruning from barring a law firm from pursuing a patent lawsuit against Pinnacle Bank, the third-largest bank based in Nebraska. Mike Hilgers is representing Pinnacle Bank in the dispute.
"Chis Gober, an attorney for the former senator, responded to our request for comment with this statement: 'Senator Ensign is focused on his veterinarian practice and the opening of Boca Park Animal Hospital, so this matter reached a point where it made more sense to negotiate a settlement and move on. We are appreciative of the Commission's willingness to agree to a final resolution without further waste of resources, and we're happy to put this matter to rest once and for all.'"
On March 25, 2013, Texas Lawyer released their publication "Legal Leaders on the Rise" spotlighting 25 up-and-comers in the Texas legal community. The Texas Lawyer editorial department undertook the project as a way to recognize Texas lawyers under 40 whose accomplishments distinguished them among their peers.
Click here to view the full profile on Chris Gober.
For the second consecutive year, Chris Gober, co-founder of the litigation and political law firm Gober Hilgers PLLC, is being recognized in the Texas Rising Stars listing, placing him among the top young attorneys in Texas.