LegalMatch: Business Law

When it Comes to Fill-In-The-Blanks Legal Documents, Buyer Beware

2010-09-23T11:55:13-07:00

Lawyers can be expensive. That’s no secret. It’s also arguable that, for many simple legal matters, a lawyer might not be necessary. Simple wills and uncontested divorces are common examples.

As a result, an industry specializing in pre-printed legal forms for things like quitclaim deeds, wills, and uncontested divorces has popped up. These forms have been available in office supply stores for years, but the Internet has really let the industry take off, with companies allowing consumers, for much less than a lawyer would charge, to simply plug their information into a website, pay the fee, and receive a printed copy in the mail, or print it themselves. At that point, they usually just have to sign the documents, and maybe have them notarized.

This is a pretty sweet deal…assuming that the results are always flawless. A recent story in the New York Times, however, shows that this is not the case. The author tested out 4 popular online services for drafting legal documents. She used each one of them to draft a will, and then had an experienced estate planning lawyer go over them. The lawyer found holes in every one of the documents, though found that 3 of them were good enough that they probably wouldn’t cause any major problems. But the last line of the story really sums up the problem – a layperson probably doesn’t know enough about the law to spot the holes in these cookie-cutter legal documents, and they don’t know what to look for. Essentially, they don’t know what they don’t know.

Barring some fundamental remaking of our legal system, people are always going to make wills, get divorced, file for bankruptcy, and apply for trademarks, among other things. And some might argue that many attorneys charge far too much for these relatively simple tasks, considering the amount of work they require. In this economy, the opportunity to get the same results at a fraction of the price is more tempting than ever.

However, if there are any significant problems with a legal document, the long-term cost can be much greater than what it would have cost to hire a lawyer in the first place. Consumers will either find their intentions completely frustrated because a will, or other legal document, turns out to be invalid, or they’ll have to hire a lawyer to clean up the mess.

This possibility, and the fact that some people believe that they’ve already been harmed by using such documents, has led to a class-action lawsuit against LegalZoom, the biggest player in the industry, alleging that it has engaged in the unauthorized practice of law. To an outside observer, this could look a lot like an entrenched, protectionist, change-averse profession trying to stamp out competition and stifle innovation. I can’t read minds, so I don’t know the motivations of the lawyers in this lawsuit, but I wouldn’t be surprised if they were motivated, in part, by self-interest.

But if the case has merit, so what? After all, lawyers have to put food on the table, just like everyone else. Now, I’m not saying that they, or members of any other profession, have a right to do this by stifling legitimate competition, but if their clients have legitimate claims, the fact that the outcome sought by the plaintiffs might be beneficial to the legal industry should not be relevant.

What is relevant is the question of whether or not these services engage in the unauthorized practice of law. And that’s a tough question. Basically, if you provide legal advice, you are practicing law. If you provide legal information, you’re not.

The differences between these two concepts are subtle, but crucial. Legal information is simply telling a person what the law is, and then leaving the recipient of the information to decide what they want to do with that knowledge. Legal advice, on the other hand, goes a step further. It involves telling the recipient what the law is (or simply knowing what the law is), applying it to the recipient’s unique factual situation, then telling them what they should do.

Do pre-printed legal forms count as legal information, legal advice, or something else? An argument can certainly be made that these forms do constitute legal advice – they involve the synthesis of many different laws into a usable document, applicable to a person’s particular factual situation.

Of course, it could also be argued that these documents are just statements of what the law is, leaving the purchaser to make their own decisions based on that information. Whatever the case, we should find out fairly soon, when this case is resolved.

But in the meantime, what should we take away from this? Well, if you have a fairly simple legal problem, and want to solve it as cheaply as possible, ask yourself: what would it cost me if I did every single thing wrong in solving this problem, and the exact opposite of what I intended came to pass (we’ll call this “A”)? Then you should look at what it costs to hire a lawyer (“B”). If A > B, it’s probably a good idea to seek the help of a lawyer experienced in the relevant area of law.

Of course if B > A, using pre-printed legal forms might be for you. Just remember, every single factual situation is different, and they can’t all neatly fit into a simple questionnaire. If you decide to use these forms, it’s probably a good idea to have a lawyer at least review them before you rely on them to produce the desired legal outcome.

After all, when it comes to something like a will, you might only get one shot to get it right.

By: Rusty Shackleford

Winning Negotiations: How Lawyers Secure High Settlements

2010-09-20T11:46:53-07:00

For all the slack lawyers receive for being underhanded or corrupt, the vast majority are good decent people out there to do the best they can for their clients. If you live in California or follow the changes in its legal community, you may be aware that one of its most prominent figures died this week.

William Coblentz was one of the founding members of Coblentz, Patch, Duff, & Bass LLP, a prominent law firm in San Francisco. Mr. Coblentz was a man of many things: developer, politician, activist. But what he saw himself most as was a lawyer, and he was a great one who helped shape San Francisco’s look and culture. He was known for his charm and wit, as well as ability to use these skills to become a great negotiator.

Being able to convince people to give you what you want is no easy feat. Harder still is to do so and still maintaining a good relationship with the person afterward. Like any skilled negotiator knows, the art of influencing isn’t done with a hammer, but with a scalpel. So in honor of Mr. Coblentz and his legendary negotiation abilities, here are some tips you can use if you ever find yourself in a position where you need to structure a deal.

1) Be Nice

People are always surprised by this one, but negotiators and lawyers the world around will tell you that being nice is the first step required when you’re trying to get anyone to do anything. Most people just don’t respond well to bullies. Think about the worst bosses you’ve had in your life; the one thing that they all probably had in common was that they were all jerks and that was probably the reason why you stopped working for them and found a new job. People just don’t like to do things for those they dislike, but generally have less of a problem doing favors for friends. Being nice sets a positive and collaborative tone. This in turn will usually cause people to be more responsive to your request.

2) Keep Your Emotions In Check

This can be difficult to do, especially when the negotiation is concerning things that are personal to you. However, staying emotionally neutral is often the best way to get deals to go your way. In some sense, keeping your emotions in check is really meant to keep you from forgetting to be nice. In most adversarial negotiations yelling and fist-pounding are counterproductive and lead to stalemates. The more you stay calm and nice, the more fair and reasonable you’ll seem to your opponent, which in turn will make your suggestions all the more persuasive.

3) Ask For More Than You Think You Can Get

If you’ve been calm and friendly so far, this tactic can go a long way in turning the tide in your favor. Most people can get uneasy asking for more than they expect, but I’m here to tell you that you have to fight that urge to throw out your best offer first. The reason is because that usually will set the tone for the whole negotiation and you may soon find yourself settling for a lot less than you had originally anticipated. So tell them your ridiculous offer, but do it confidently and calmly so that they know you’re serious. Don’t worry about offending them. Because in the end, when you come down for that offer to your reasonable one, it will seem like you came down a lot. And if they take your high offer, then woo-hoo!

4) Don’t Leave Your Opponent Feeling Cheated

This may seem counterintuitive to the previous rule, but it’s really designed to keep the other party from reneging. Because even if you can get a person to agree to your really high offer, they may have second thoughts about it later and back out if they feel they’ve been cheated. Furthermore, depending on the situation, it may also help to maintain good relations with your opponent so that they’d be willing to deal with you again in the future. Leaving a good impression on the other party is easy to do and can be as simple as throwing in a little gesture that will make them feel good that they were willing to settle with you.

5) Be Willing To Walk Away

You may not always feel this is an option, but if your negotiations have reached a point where you feel the settlement is too expensive, you have to know and recognize that it’s not the right deal for you. Knowing that you can walk away is a powerful tool. Not only will it prevent you from feeling remorse and regret later, but it can also sometimes trigger your opponent into giving you a better offer.

Sticking to these tactics will serve you well whether you are battling it out in a legal related situation or otherwise. Share your negotiation stories below and please send your condolences to the Coblentz family.

By: Andrew Dat

Lawyers Should Stick To Lawyering

2010-09-15T09:44:00-07:00

Let me qualify that title: if you’re a lawyer and want to become a Psychic Friend, you should probably not pretend that you’re providing legal advice. If you want to make a full career change, maybe you should hand in your law license, just be to be on the safe side.

That’s because lawyers, when engaged in the practice of law, are bound by strict ethical rules requiring them to be completely honest with their clients, and only give them advice based on the facts of their case, and the applicable law. Psychics also purport to give their clients useful advice, though the assertion that they actually do this is, to be charitable, questionable.

So, what happens when a lawyer acts as both an attorney as well as a channel to the supernatural realm? In one case, it resulted in a state bar telling an attorney under its jurisdiction to pick a job, and stick with it.

A lawyer in Arizona is facing disciplinary action, and a possible 6-month license suspension, after convincing her client that she was possessed by the client’s deceased wife. Apparently, the lawyer and the client exchanged emails which contained vague references to sexual activities, presumably between the lawyer and the client. Under the laws and ethical rules of almost every state, sexual conduct between an attorney and a client is usually prohibited.

Both the lawyer and the client testified that they both genuinely believed that the lawyer was possessed by the deceased wife, and the discipline authorities didn’t get into the question of whether or not this is true. This is a good idea, because while there is almost no empirical evidence that psychic powers are real, the old “prove that they aren’t real!” argument, while illogical, can seriously bog down a debate or investigation into the question of whether or not ethics violations occurred.

It should be noted that the disciplinary board was able to recommend suspension because the attorney misled it in an earlier, unrelated, hearing about her belief that she channeled the dead wife, and not specifically because of her claim that the channeling happened.

Still, this story raises some interesting issues about when a lawyer’s personal beliefs (and, as I’m sure you assume, lawyers span the ideological spectrum, just like any other group of people) might interfere with their job.

Suppose a lawyer genuinely believes that he or she is psychic, and that valuable evidence can be obtained by holding a séance, and asking (for example) the victim in a murder case who the murderer is. Obviously, any “evidence” gathered in this manner would be completely inadmissible, and rightly so. We simply have no way of knowing for sure, one way or another, if it’s authentic (unless there’s obvious evidence that the whole thing was faked). With other types of evidence, such as documents, photographs, physical evidence, etc., authenticity can usually be verified with some degree of certainty. Obviously, if you’re a criminal defendant, you probably don’t want your fate to rest on the feelings of somebody who claims, with no possible verification, to be a psychic.

One could also see this being a big problem in probate cases – when the validity or intent of a decedent’s will is being determined. Suppose there are two children of the decedent, and the will clearly leaves a large sum of money to one of them, but it’s not clear which one. A probate court will have to determine the likely intent of the decedent at the time the will was written. Do we want cases like this determined by a lawyer who claims that he or she spoke to the decedent from beyond the grave, and the decedent clearly told the lawyer that he intended to leave the money to the lawyer’s client?

What if the lawyer for the other child makes the exact same claim, except to say that the decedent said that he wanted to leave the money to that lawyer’s client? Even if you assume that one of the lawyers is definitely psychic, there’s absolutely no way to determine which one is telling the truth. You can see why such evidence never gets anywhere near a courtroom.

This case is different, however. It wasn’t clear why the lawyer claimed to have “channeled” the deceased wife of her client, but it apparently wasn’t to gather evidence, or influence a court in any way. Perhaps it was a form of grief counseling? Even if the lawyer isn’t really channeling anyone, it might provide some emotional benefit to the client, helping him obtain closure, if he honestly believes that he’s talking to his wife. And if the lawyer honestly believes this as well, what’s the harm?

In this case, not much, apparently. But there are plenty of good reasons why a lawyer should leave the grief counseling or psychic channeling (if that’s what the client wants) to somebody else. Lawyers and grief counselors often perform roles that are diametrically opposed – attorneys usually have to keep their emotions out of a case, and advise their clients based on their best understanding of the facts and the law, not their feelings. Counselors, on the other hand, necessarily have to be empathetic (or at least sympathetic) with their clients.

Both professions can perform equally-important functions, but they’re just too different, and their objectives too opposed, for one person to fill both roles, for the same client.

By: Rusty Shackleford

Government Bonds: A Heck Of A Lot Harder To Collect On If Issued By Nazis

2010-09-14T10:38:14-07:00

In this age of the internet, it seems like no one entity or person is immune from having their skeletons eventually pulled out of their proverbial closets – though the actual private nature of these skeletons for some may be suspect. While it’s hard for us as individuals to maintain our privacy, we should all be glad that at least we can eventually live down our collective indiscretions.

The same can’t be said for organizations or countries. If they screw up, they have their whole history recorded in textbooks to be taught to future generations.

Why suddenly bring up Nazi Germany you ask? Well, it’s because that part of history which many Germans everywhere would probably like to forget ever happened just doesn’t seem to want to go away. It doesn’t matter how many David Hasselhoffs or Sandra Bullocks they give us, because as soon as everyone starts to forget about the atrocities committed by Nazi Germany, BAM, something else comes out to remind everyone that Germany also gave us Hitler.

This latest uproar is over German government bonds that were sold to Americans after World War I. These bonds were sold by Germany so that they could raise money to rebuild the country after the war. The bonds worked like any government bond and gave the same attractive benefits. The best being that government bonds are guaranteed by the issuing country. This means that short of the government going bankrupt or being overthrown, the bonds will always be paid back.

At the time, Germany was selling bonds at a high interest rate in order to generate money faster. However, Hitler then used some of the money to create his army and start World War II. After the dust settled, many US bondholders couldn’t get paid. Why? Because Germany claims that the Soviet Army stole many repaid bonds from a Nazi vault after the war ended. Therefore in response, Germany instituted a complex validation process to ensure any bond submitted for repayment today are authentic and not part of the stolen Soviet bonds.

You can probably guess what happened next. Germany denied a bunch of US bonds claiming they were part of the stolen Soviet bonds. The bondholders got angry, but held on to their bonds. And today, bondholders have filed suit in US federal courts in order to get those denied bonds repaid, which if they are, could mean potential losses in the billions of dollars for Germany.

The question now is whether or not Germany will actually have to pay. Unfortunately the answer is that they probably won’t.

Unfortunately for these bondholders, international business transactions are governed by a very complex area of law that generally favors governments over private citizens. The reason is because the principle of international comity compels most government judicial systems to rule in favor of countries, rather than individuals. Comity is just a fancy way of saying governments try to respect the sovereignty of other governments in order for them to get the same respect back (basically it’s a “we won’t stop you if you don’t stop us” mentality).

Though the international comity isn’t the only things courts will consider, it’s one of the driving factors in their decision making process. To that end, in the case of foreign property, such as a bond, US courts will always defer to foreign law when deciding a case. Specifically, in this instance it would be German law. Though the US court will usually do an inquiry into whether the foreign law itself is just, which they almost always will find that it is (comity, remember?). In which case, the court will then look at whether the person bringing the property claim followed the foreign law in question. Here it would be whether the bondholder went through the Germany bond validation process and whether the determination that the bond was invalid for repayment was correct. This is where the US bondholders will likely run into the most trouble.

You see, the authentication process is a very fact specific process requiring concrete evidence. Germany maintains a list of stolen bonds. The US bondholder would need to show evidence that would refute Germany’s list. And chances are, it will probably be very hard for any bondholder to find any evidence to support them since the bonds were issued over 70 years ago. Most homicide investigations get cold after a year of searching, and that’s with a full staff of trained detectives. What’s the chances anyone will be able to find credible evidence on something as old as a WWI era government bond? Not very likely.

I don’t want to say these bondholders will never get the money they believe they deserve. However, if it were me, I think my time would be better spent trying to find a wealthy Nazi memorabilia collector looking to expand his inventory instead of trying to win a 70 year old lawsuit.

By: Andrew Dat

The High Price of Student Loans in a Recession

2010-08-02T16:49:15-07:00

Although the economy has picked up a bit in recent time, we are still in a recession and people feel the pinch not just in their wallets but in the limited job market as well. Not surprisingly, when young professionals are out of a job and cannot seem to find a suitable replacement, they often go back to school. Consequently, graduate school applications have increased dramatically over the past couple years. For example, the number of people taking the LSAT (a prerequisite for law school) increased 20% from 2008 to 2009 and other graduate school admissions tests saw a similar, if not greater, increase.

But just because you go to graduate school does not necessarily mean you are going to land your dream job. And when post-graduation expectations are not met, that means that there is a whole lotta debt to account for!

Such is the case for a Charlotte Law School graduate who is attempting to have his debts discharged through bankruptcy proceeding—a very difficult undertaking. The entertaining part of his petition has to do with what he expects his alma matter to admit about his debt—a request for his former law school to admit that they should have known he would have been in no position to repay his educational loans.

I had previously blogged about this issue earlier in the year; it is very difficult to discharge student loan debt without a showing of extreme undue hardship. Since he has no chance of the school admitting that they should have known he would not be able to pay his debt, I think that bankruptcy will not be the answer for this financially strapped lawyer.

Of course, he could have avoided this mess by not getting that far into debt to start with. One article I found helpful in controlling educational debt included these tips:

Look into scholarships and grants
Work your way through graduate school
Ask yourself whether your new career can realistically pay off your debt—i.e. whether or not your aspiring career will pay a salary commensurate with the cost of the debt you are about to incur?
Put yourself on a real budget

LegalMatch also has some good options for those people considering canceling their loans. Canceling loans essentially means that you engage in a type of public service and get part or your loan obligations reduced. Teaching needy people, joining the military or other uniformed service, or performing community service are all examples of activities that have allowed for loan cancellation.

Whatever approach people take to financing their education, the long-term repercussions for failure to pay off your debt can be lasting and bankruptcy is rarely the answer. That being said, considering what your ability is to pay off your debt before you get into it and looking at loan cancellation options once you are into debt seem like two viable options that are often overlooked.

By: Violet Petran

A Look At The Last Day Of The Supreme Court

2010-07-08T14:58:47-07:00

I know it is baseball season and the world cup right now, so it may be hard to think outside the sports arena; but the Supreme Court is also winding down their season and they have produced some notable decisions in a range of areas this term. Like a good movie, the Court saved the best for last and handed out four opinions in their final day, which may or may not impact you but nevertheless is especially exciting to us law junkies. The topics revolved around patent law, the first amendment right of association, separation of powers, and the second amendment. So in no particular order, here is a brief summary of what was decided...

· Bilski v. Kappos: This case concerned an invention that was used to predict business and economic cycles which was ultimately determined not to be eligible for a patent by the majority of the court, but held that this decision does not necessarily exclude business methods from patent eligibility.

· Christian Legal Society v. Martinez: Here, the court looked at whether UC Hastings law school may deny school funding and other benefits to a religious student organization because the group requires its officers and voting members to agree with its core religious viewpoints. The Court held that imposing an “everyone is welcome” policy is reasonable in order to receive funding.

· Free Enterprise Fund v. Public Company Accounting Oversight Board: the opinion served to strengthen notions of separation of powers by finding certain appointment limitations placed on a public company to be unconstitutional.

McDonald v. City of Chicago: The second amendment does apply to the state and local government through application of the fourteenth amendment.

Even If you aren’t directly affected by the decisions made by the Court, I think it is still important to know what is happening in the world around you. Of course, I find the law school freedom of association issue to be most interesting and a decision that could have an effect on the lower levels of education as well. But whether you think some of these decisions are a win or a setback, they are changes and I think it is good as a society to constantly be re-evaluating our stance on issues.

By: Violet Petran

And for My Next Trick, I'll Make Your Law License Disappear!

2010-06-30T12:00:28-07:00

Practicing law isn’t for everyone. Most people who aren’t cut out to be lawyers (and that says nothing bad about a particular person), intuitively know this, and never go to law school in the first place, instead heading to careers in other fields. For some people, however, the only way to find out that something isn’t for you is to try it.

The Supreme Court of Wisconsin just ruled that a lawyer who apparently disappeared off the face of the Earth should be disbarred, and revoked his law license. All of this was done without the lawyer being present to explain himself, because he apparently left the country, and could not be found.

Attorneys have many ethical duties to their clients. One of the most important is the duty to regularly communicate with their clients, and keep the client apprised of the progress of their case. Failure to do so constitutes a serious ethical violation, and possibly malpractice.

Obviously, some legal matters move slowly, and an attorney with a heavy caseload can’t be expected to update clients every day, especially if nothing significant has happened with their case. However, they do have to respond to client inquiries in a reasonable period of time, and update clients about any significant developments.

By simply disappearing without telling anyone where he was going, or even that he was leaving, the attorney did a serious disservice to his clients. If any of their claims became time-barred (the relevant statute of limitations expired) due to the attorney’s inaction, you can bet that he would be facing a serious malpractice suit, as well as discipline from his state’s relevant licensing authority.

Furthermore, this attorney actually had the audacity to abscond with some of his clients’ money, which he did not earn. One common arrangement for paying attorneys is known as “retainer.” The client pays the attorney a significant chunk of money up front, and the attorney then draws from that fund as they bill for their work. If they resolve the matter without going through the entire retainer, it is supposed to be refunded in full to the client. The same goes for if the attorney terminates the lawyer-client relationship before the retainer is depleted (though he can, of course, keep any money which he actually earned and billed for).

This attorney, in addition to leaving his clients hanging with respect to their legal matters, actually took a good deal of their unused retainers with him, which, in addition to being a crime, is also an ethics violation, subjecting an attorney to discipline. In fact, mishandling (though not necessarily outright stealing) of a client’s money is one of the most common causes for disbarment and discipline of lawyers. This often happens through negligence, and is not deliberate, but it’s dealt with severely in either case.

One really has to wonder why a lawyer, who ran his own practice which appeared to have been at least moderately successful, would simply disappear without telling anyone. While this lawyer was a solo practitioner, he did share office space with other attorneys (though they were not associated with him professionally), and they quickly noticed his absence. After all efforts to contact him failed, they found a journal in his desk. His last entry didn’t say much, but it did say that he was “abandoning his life as he knew it.” It quickly became apparent that he left the country, but there is apparently no way to know where he went.

This is, obviously, a bizarre story. It’s hard to imagine what was going through this man’s head when he decided to abandon a profession he spent years, and huge amounts of work, getting into, not to mention his entire life at home. It’s one thing to work a few years in a profession and decide that you don’t like it. In those cases, most people simply (well, it’s not a “simple” process, but you know what I mean) try to work their way into a new field, hopefully one which they find more fulfilling. Leaving everyone you know behind with no word on where you are seems like throwing the baby out with the bathwater.

Now, if this guy wanted to quit the legal profession and leave the country, nobody should try to stop him. It’s his life, after all. However, there is a right way and a wrong way to do these things. He did it the wrong way. As an attorney, he swore an oath to serve his clients’ interests, even if it’s to his personal detriment. It is decidedly not in a client’s interest to simply stop working on their case, and leave them hanging with no clue as to what just happened.

If he wanted to quit the profession and skip town, he could have avoided burning a lot of bridges if he’d just been willing to put in the effort to wrap up his current clients’ cases, transfer as many as he can to other attorneys, and stop taking new clients. It would have taken a little time and effort, but the guy was a lawyer; he should be used to putting time and effort into things. And that says nothing about the worry he likely caused his friends and family, if he had any.

A person such as this should, of course, not be allowed to practice law. Clients place their attorneys in positions of great trust. For that reason, everything should be done to ensure that only the most trustworthy individuals are allowed to become lawyers. Lawyer jokes notwithstanding, most state licensing authorities do a pretty good job of this. However, some bad apples inevitably slip through the cracks.

It’s very clear that this guy didn’t want to be a lawyer anymore, so it’s not likely that being disbarred is going to bother him too much. Of course, having all this stuff on record will probably subject him to significant lawsuits by his former clients, and possibly criminal charges, if he ever returns to the U.S. So, wherever he is, I hope (for his sake) that he isn’t regretting his decision.

By: Rusty Shackleford

Fortune Tellers Protected by the First Amendment

2010-06-23T13:36:57-07:00

The highest court in Maryland has just ruled that a county ordinance banning fortune-telling for money is unconstitutional, under the First Amendment’s protection of free speech. The case involved the owner of several fortune-telling businesses who intended to open a new business in Montgomery County, Maryland. He ran afoul of a county ordinance that had been on the books since 1951

We’ve recently seen other cases like this in the news, where a business which essentially sells expressive conduct and content is categorically banned. Most notably, a local ordinance that bans tattoo parlors has recently come under constitutional attack.

Cases like this are interesting, because they represent an intersection between what would ordinarily be relatively mundane regulations, like zoning, and important constitutional questions. A tricky balancing act has to be performed when a law of general application burdens the constitutional rights of a particular group of people (for example, when a certain religious practice includes rituals which violate generally-applicable laws, such as the use of illegal drugs).

It’s not clear why this county wanted to ban fortune-telling. The law is from the 50s, so maybe they thought that fortune-telling led to black magic, which caused people to abandon Jesus, which of course led to communism…or something. Or maybe they simply thought that fortune-tellers are frauds. The latter possible explanation is not entirely unreasonable (here’s a helpful graph).

Of course, just because I personally believe that fortune-telling, and any other claim of psychic powers, is a bunch of hokum, it doesn’t necessarily follow that I think such activity should be banned, or that consenting adults should be prohibited from spending their money on it, if they so please.

In general, I think, that as long as people know what they’re getting themselves into (to that end, I would not be opposed to requirements for disclaimers that there’s absolutely no scientific evidence to support the claims made by psychics), the law shouldn’t stop them. Pat Murphy, at the Benchmarks Blog argues that, because fortune tellers are fake, there is nothing wrong with banning them altogether, ignoring the fact that not everyone who pays for a fortune-telling session actually believes in this stuff. Many do it for entertainment. Furthermore, he ignores the fact that sometimes, people choose to ignore evidence that counters the beliefs they choose to hold. Many atheists might argue that anyone who donates money to a church is being defrauded, but nobody seriously argues that all religions should be banned.

But getting back to the constitutional issues, I think this guy actually has a better case than the owner of the tattoo parlor, even though his likely arguments also seem to be pretty solid. In the tattoo parlor case, the locality does not actually ban tattoos. If you’ve got a tattoo, regardless of what it depicts, you’re doing nothing illegal. It simply prohibits the making of tattoos within town limits. The distinction is subtle, but important, from a free-speech perspective. Most of the expressive activity associated with tattoos is the content of the tattoo itself, rather than the act of making it. Furthermore, the anti-tattoo law is generally applicable, and simply bans tattoo parlors, without respect to the images or words they choose to put on a person’s skin.

If the law had simply restricted the types of images or words that you could put in a tattoo, it would be unconstitutional, without question. As it stands, the city can at least fall back on the notion that this law doesn’t restrict the expression of a given message or idea; it just places a very narrow limit on how they can be expressed.

The Montgomery County ordinance, on the other hand, bans speech based entirely on its content. Content-based restrictions on speech almost never withstand constitutional scrutiny. The court noted, correctly, in my view, that this is not “commercial speech,” which is generally less protected (for example, advertisers can be required to disclose truthful information, and can be banned from making false or misleading statements).

The county argued that it only regulated a certain form of commercial speech. However, the commercial speech doctrine only applies to advertisements. Speech which one person pays another for the privilege of hearing is no less protected simply because somebody pays to hear it.

Furthermore, the law here was absurdly vague. It provided that “Every person who shall demand or accept any remuneration or gratuity for forecasting or foretelling or for pretending to forecast or foretell the future by cards, palm reading or any other scheme, practice or device shall be subject to punishment.”

So, anyone who gets paid to predict the future has committed a crime? What about weather forecasters, stock advisers, or the county board of supervisors itself (they did, after all, predict that fortune-tellers “shall be punished,” and were paid to do it)?

Even if there were no specific challenge on the specific speech restrictions on fortune-tellers, anyone affected by this law almost certainly could have challenged it as being unconstitutionally vague. Any law which restricts speech, even if the intended application of the law would be constitutional, can be overturned if the law is written so vaguely that a reasonable reader would have no way of knowing what it actually prohibits, since such a law would almost certainly chill constitutionally-protected speech.

Finally, although it doesn’t appear to have been raised, this law probably violates fortune-tellers’ (and their clients’) rights to free exercise of religion. After all, many fortune-tellers probably really believe that they have supernatural powers, even if they don’t. And many fortune-tellers often base their beliefs on various religions.

In the end, I believe that all of the most likely possible justifications for this law are horribly misguided, even by 1950’s standards. If it’s designed to prevent people from being defrauded by dishonest “psychics,” that’s a decent enough sentiment; but with minimal research, a person could find all the documentation they would ever want to show that there’s no evidence that psychics are real. If they still chose to believe in psychics, and spend their money on them, that’s their business.
The other possible (though less likely) explanation is that the Montgomery County board of supervisors thought that they were preventing people from engaging in sacrilegious, Satanic rituals. If this was the reason for the law, or even part of it, that’s even worse. If this is the case, the law would be a flagrant violation of the First Amendment’s free exercise clause.

All in all, I’m glad that this law was overturned. I might never pay for a psychic, but if I wanted to, I wouldn’t want the government telling me I couldn’t, even if it is for my own good.

By: Rusty Shackleford

Primer on Indian Gaming Regulation

2010-05-18T12:16:26-07:00

Chances are, you may be wondering about the relation of Indian casinos to your state’s local economy. These operations and other gaming activities are regulated by federal law, and tribes must interact with state ordinances as well. What follows is a basic primer on the regulation of Indian gaming.

Background

Contrary to popular belief, Indian Gaming is highly regulated by federal laws. The National Indian Gaming Commission (NIGC) was established in 1988 to oversee gaming on Indian lands. The NIGC estimates that there are currently upwards of 400 different Indian gaming operations being conducted across 29 total states. In 2008 tribal gaming operations reported over $26.7 billion in revenue.

Revenues obtained from gaming by Indian tribes can only be used may only be used for specified purposes. These include funding tribal government programs; promoting tribal economic development; donations to charitable organizations; and providing for the tribe’s general welfare.

Federal Regulation and the Indian Gaming Regulatory Act of 1988

Different types of gaming activities on Indian lands are subject to differing levels of regulation. The main law which establishes a judicial framework for Indian gaming is the Indian Gaming Regulatory Act of 1988 (IGRA). The act was intended to create a legislative basis for gaming operations on Indian land, as well as allowing gaming as a source of revenue for tribes. The Act also established the NIGC mentioned above.

The main contribution of IGRA is that it created three different classes under which Indian gaming activities can be sorted. Each corresponds to the amount of control that the tribe may exercise in its operation:

· Class I: “Social” or “traditional” games involving little to no wagering for minimally valued prizes. Often includes games played as part of tribal ceremonies. Class I games are regulated by the tribes.

· Class II: Primarily bingo and other pull-tab type games. Also includes lotto and non-house banked card games such as some poker and bridge games. Regulated under the NIGC. Games in this class allow tribes to retain the most amount of revenue.

· Class III: “Casino”- type games such as slot machines, craps, and house-banked card games such as three-card poker and blackjack. Also covers other games not falling into Class I or Class II. A tribal-state compact is required in order for the tribe to operate Class III games in a given state.

Tribal-State Compacts

Under the IGRA, states are not allowed to levy taxes on tribal gaming revenues. Instead however, in order to operate Class III games, tribes must enter into a tribal-state compact in which they agree to distribute a portion of gaming income to state governments. These compacts must be approved by the secretary of the interior.

Some states have a varying number of compacts with several tribes at any given time. For example, California alone approved 59 tribal-state compacts for casino-style gaming in 1999. The National Conference of State Legislatures compiled a report of estimated revenue collected by states from tribes in compacts:

State revenue from tribes (in millions) for 2004-2005 from tribal-state compact agreements:

Arizona: $50.4
California: $130.0
Connecticut: $345.0
Michigan: $15.7
New Mexico: $36.4
New York: $50.0
Wisconsin: $104.2

Under the IGRA, tribes ideally are allowed to negotiate with states in revenue sharing agreements similar to the way that organizations formulate contracts. However, case law has changed much of the negotiating power that IGRA had granted to tribes.

Significant Court Decisions

Indian gaming law has a rich history of landmark cases which influenced regulatory laws. The first of these is a 1987 Supreme Court case known as California vs. Cabazon. In Cabazon, the court held that tribes may not engage in any form of gambling if it is illegal in the state. Conversely, tribes may engage in forms of gambling which are legal in the state, regardless of other laws which may limit gaming activities. The IGRA was enacted partly in response to this case.

The next and perhaps most significant court case for Indian gaming was Seminole Tribe vs. Florida. This 1991 case basically devastated the tribal-state balance that existed under IGRA. The Supreme Court denied tribes the right to compel states to enter into tribal-state compacts, including gaming agreements.

While the case did not completely eradicate the option to enter into a compact, it does severely limit tribes’ negotiating power. States now have much more power in negotiating with tribes, with the result being that several tribes either had to give up treaty rights or share gaming profits with states. The Seminole decision has created a gap in Indian gaming law, and many groups are attempting to restore the legal provisions that were originally intended under IGRA.

Recent Developments

Despite the Seminole holding, Indian gaming has experienced massive growth over the last few decades, in particular the Class III casino-type gaming activities. In response to the gaming boom, Congress introduced the Native American Technical Corrections Act of 2006. Specifically, the Act authorizes the National Indian Gaming Commission (NIGC) to collect 0.08% of gross Indian gaming revenue by tying its fee collections to industry growth. The stated purpose of the fee collections is to allow the Commission to keep pace with industry standards as well as provide assistance and oversight.

Besides the fee collecting provisions, the 2006 Act also authorizes the Bureau of Indian Affairs (BIA) to implement procedures which makes the process for approving tribal casinos more transparent. For example, local communities will have more say in the selecting casino sites. This is already being reflected with some issues such as the litigation surrounding Casino San Pablo in California

Conclusion

Proponents of tribal sovereignty are concerned and point to the positive impacts of Indian gaming, such as charitable contributions and job creation. However, local communities tend to focus on negative images associated with casinos such as violence and increased crime rates. While tribes initially had much control over gaming operations on Indian land, it seems that court cases and recent legislation are chipping away at the negotiating powers of tribes. It seems to me that in the future Indian gaming will be subject to even more regulation as the law accommodates increased government involvement.

By: Jay Rivera

Blame it on the Technology: Why The IRS Doesn't Accept The Turbo Tax Excuse

2010-04-27T15:25:56-07:00

As Benjamin Franklin so famously said, “in this world, nothing can be certain but death and taxes.” If I were to describe doing taxes in two adjectives it would be stressful and annoying. Who’s with me???!! With tax season behind us, it is time to start thinking about whether you filed your taxes correctly with the appropriate accounting and deductions. Actually, that is more like the last thing people want to think about. Whether you use a professional, do them yourself, or use one of the many online sites designed to make the process relatively painless, most people do their taxes, get their returns, and forget about it until next year.

Whether human or machine, mistakes are made in the preparation of taxes and the IRS does not take these lightly. Tax audits can happen to anyone from big companies or everyday taxpayers. When the IRS thinks that you have not paid your fair share of taxes, they may perform an "Income Tax audit" of your tax returns, past and present. They usually come to this conclusion when they think either you: haven't reported all your income, or made deductions you shouldn't have. Although often unnoticed, on the occasion that there is an audit, a mistake (or many) can have consequences. In addition to collecting money (with corresponding penalties of course), the government can also place individuals in jail for tax evasion.

Recently at trial before the tax court, one taxpayer, or more appropriately one tax underpayer, repeatedly argued that she always filled out their tax returns using TurboTax and that she consistently confused capital gains and losses with ordinary income and expenses. Although the Court concludes the errors in petitioners’ tax preparation were made in good faith, she did established that she behaved in a manner consistent with that of a prudent person. Specifically a “prudent person” would have double checked with another program, seen a professional, or otherwise sought outside advise when encountering an unknown term. The verdict: you cannot blindly rely on Turbo Tax to escape the penalties for your errors.

Ironically, this turbo tax excuse was named after our current Secretary of Treasury Tim Geithner. Known as the Geithner defense, Geithner argued that mistakes in his taxes were not his fault at all but rather were problems with the tax preparation software. Geithner is not the only famous name to have tax problems. Celebrities such as Nicolas Cage, Willie Nelson, Marc Anthony, and Annie Leibovitz have all had very expensive and very publicized problems with the tax man.

I, for one use Turbo Tax to prepare my taxes and it is easy to get very mechanical in the process and skip over important areas. I am not a math person and find the forms, deductions, and all the numbers to be really intimidating and confusing. Although the software is easy to use, these cases show how it is also easy to abuse. I think that people need to be held more accountable than the software they use and to blame all deficiencies in the taxes on a tax program like TurboTax does not and should not fly with a tax court.

By: Violet Petran