Terra Extraneus

There seems to be some fear that many eligible tax payers will not receive their tax rebates because they did not file a 2007 tax return. An old friend sent around an email indicating that some of the people that might not have filed a 2007 return could include disabled Social Security beneficiaries and disabled or retired veterans otherwise receiving benefits, as well as others. Thus, it is time to check in with these folks and make sure they get their money by filing a return.

Please access these links for special filing instructions and a sample Form 1040A (.pdf) that highlights the simple, specific sections of the return to fill out.

Of course, the tax rebate probably would not be needed if Americans financed their federal government with sales tax receipts rather than income taxes. But, that is a topic for another day.

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The Small Business and Work Opportunity Tax Act of 2007 imposed penalties on tax preparers if the tax return understates the taxes due to the government and the tax preparer knew or should have known. Most tax preparers will wisely avoid this problem by asking for less documentation from the client to avoid the “knew or should have known problem” and rely more on the representations made by clients. Thus, the government will actually reduce the accuracy of returns by blinding tax return preparers. This is a typical example of legislative over reaction.

But, some CPAs will panic and demand from their clients voluminous proofs, and no doubt, become defacto auditors for the government.

To avoid this problem, will CPAs need a duty of zeal to their clients ingrained into them through their ethics code as has been drilled into lawyers through theirs? In the meantime, taxpayers will have to determine who their non-attorney tax return preparer or tax advisor actually represents, them or the government?

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The sword play among law firm marketing pundits and bloggers of late pretty well proves the point: law firm marketing did not grow as a profession and the concept of law firm marketing, much less governing principles, have never emerged. Larry Bodine’s blog on law firm marketing and the startling candor of Betiayn Tursi in her magazine summarized the state of things.

However, the reason few law firms “get it” when it comes to marketing, in addition to the fact that trying to organize a law firm owned by more than one lawyer is like herding cats, is because the concept of “marketing” is all but illegal among lawyers, much less not a subject of educational course work.

If law firms are ever to going to “get it,” it will only be because they finally figure out that it is the “brand” and the “brand recognition,” first and foremost, that lays the foundation for “marketing” as most lawyers understand it and accept it. Because “solicitation” is generally illegal for lawyers, the idea of “branding” and promoting the brand is often obscured. Even if you never solicit a client, make the law firm identifiable, brand it, and make the brand well known, and solicitation either becomes unnecessary or easy (and legal).

Most law firm employees that are titled as some sort of marketing professional can only be effective if they can help the firm create a brand and successfully promote it. Most law firms stumble on this through charity sponsorships. Not the ones in which the forty largest law firms in town are also named sponsors, but the ones which they sponsor exclusively, especially those charity events promoted by an existing client or officer of a client. It starts off with a few golf or T-shirts. The next year the charity event rolls around, it involves a few radio spots. The third year it includes a local but sophisticated newspaper and electronic media campaign in which the law firm becomes one of the spokesmen for the event or the charity. And after that, it takes on a life of its own.

While other marketing plans and efforts continue, such a corner stone leading to community recognition is the first step that makes everything else work. Also, it is the most fun and leads most law firms to meet the most new people in the shortest amount of time.

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UPDATE****3/26*** The Court withdrew its order on a 5-4 vote to restudy the internet access issue. Hopefully, the Court will retain the new rule requiring exercise of care when putting individual identification information in public pleadings. But, internet access to court files should be retained.
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The Oklahoma Supreme Court, though not unanimously, hurled the Oklahoma Court system backwards with such force the court system is now back in 1982. Pleadings are no longer available on line from the Oklahoma court system’s internet presence, the Oklahoma Supreme Court Network.

This action was imposed unilaterally by our highest and usually most sensible Court for the stated reason that it would protect privacy. Forgetting for the moment that the other way the Court addressed it, by passing a rule limiting personal and financial information disclosure, was the only effective way to address it, the Court’s fear of gadgetry was both humorous and sad.

Pleadings are public records that can be viewed at any Court Clerk’s office, so the court did not remove them from the public sphere, but just made them harder and more expensive to review, because now it takes a trip to the courthouse to view and copy the pleadings. The Court just reduced the convenience of review by eliminating the instant review possible on line. Because court dockets and court cases can still be searched on line, the pleadings can still be easily identified, as can the parties to law suits. Exact identification of parties might be harder, but that only is true until one makes the trip to the courthouse to review the pleadings.

Of course, only 80% of Oklahoma’s court system was ever on line, not all 77 counties were on line, and only in one or two counties could every pleading be accessed, although some access was available to pleadings in all the counties that made up the 80%. Nevertheless, our Court system seemed quite modern and efficient because of this access.

The great contradiction, and the humor, in our high court’s pull back from the 21st century, is that the unstated and underlying premise has to be that Oklahoma state court pleadings are somehow more valuable and more dangerous than federal court pleadings. Every federal court pleading in the United States, much less in the federal courts sitting in Oklahoma, unless under court ordered seal, can be downloaded for eight cents a page on the Pacer system.

The great sadness resulting from Oklahoma’s action is that because of the Court’s failure to reconcile the virtually complete access to federal pleadings with Oklahoma’s sudden phobia about access, the Oklahoma action seems to be reactionary and parochial.

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What requires the skills of an appliance technician and Spiderman? A brand new satellite dish!!

In 2007, the Oklahoma Supreme Court reiterated a time honored rule of law that before there is liability in a negligence claim there must be a duty. The breach of the duty must also cause the damage (injury). But, fundamentally, if there is no duty by one person to another, then there can be no liability.

Thus, in Lowery v Echostar Satellite Corp., 2007 OK 38, the Oklahoma Supreme Court held that the satellite dish company had no liability because it had no duty to prevent its customer from falling off her own roof when she tried to repair the satellite dish. The customer suffered several broken bones in the cause of satellite dish television. It did not matter that the customer had customer service on her wireless so that they could talk her through the repair. The satellite dish company could not see the roof, the customer, or whether the two would not be compatible.

More interesting is the fact that what caused the customer to try to scale her roof was the need to repair the satellite dish. The customer called customer service and was sent a package of three small screws. She again called customer service to inquire how the three screws were sufficient to her need and why someone was not out to repair the dish. Customer service told her no one would be coming out.

The satellite dish warranty contract apparently did not specifically require that a human be dispatched to do the warranty work, but rather anticipated that the customer would be the one to scale the roof and do the repair. Thus, the Supreme Court could do nothing for the consumer.

Nobody with any sense of fairness would sell a warranty that required the skills of a technician and Spiderman to maintain a consumer device – except the satellite dish folks, it seems. Maybe they have forgotten that the satellite dishes are small and installed on high places, rather than the old ones that were as big as small cars and had to sit on the ground.

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After the United States Supreme Court defanged the tort system in Campbell v State Farm Insurance Company by limiting punitive damages to ten times actual damages, insurance companies almost uniformly reverted to their business methods employed prior to the advent of theories of recovery involving bad faith breach of contract. The primary method of boosting insurance company financial performance has almost always been by increasing the cash reserves the companies invest, such that in the modern era, most insurance companies make more money from their investments than they do their sales of new policies.

One of the ways insurance companies increase their cash reserves, and thus the size of their investments and the resulting investment profits is to refuse to pay claims to policyholders. Insurance companies accomplish this by tightening their claims investigation procedures and excluding claims, in whole or in part, on ever more detailed guidelines for claims payment. This method has several permutations. One method is to never actually deny the claim, but rather to put up so many requirements to qualify for payment, usually manifested in ever more clever paper work technicalities, that the policyholder eventually in exhaustion gives up. Another method is to do post claim underwriting.

Post claim underwriting is manifested in “investigations” of the claim that start with the initial application, if the application is still within the time it can be contested, and sometimes even if it is not, and look for any flaw or mis-statement. The initial application is often as much authored by the commission seeking (and sometimes commission hungry) insurance sales person as it is by the prospective insured or policyholder. The application questions are usually detailed and often use technical medical or other terms.

Most insureds and policy purchasers assume that the insurance company obtained a release of medical records from them for some purpose and that erroneous medical history answers will be corrected by a review of the medical records supposedly obtained. While this might or might not be true, a few months or a few years later when the major claim is being “investigated,” many companies often revisit the original decision to accept the policy, called “underwriting,” and determine if there were any errors in the application that could be characterized as wrong or fraudulent.

Companies that engage in this sort of retrospective underwriting analysis assume the insured or policy purchaser lied and assume the selling agent just faithfully took down their answers to the questions, even though the insurers know fully that the agents often have to explain the questions and help decide what the answer should be.

In a binding arbitration in California, Bates v Health Net, Inc., BC321432, [hat tip to Lisa Girion, Los Angeles Times, otherwise, no one would have known and to TerraX’s editor, Terry Hull, or I would not have known] the arbitrator wrote a lengthy report of the testimony about post-claim underwriting that led to policy rescission (cancellation). Health Net wanted out of the policy as soon as Ms. Bates developed breast cancer and $125,000 in medical bills. The arbitrator awarded Ms. Bates $9 million, some substantial part of that in bad faith punitive damages. Thus, this Award was doubly rare, a large award in arbitration to a consumer, and, a report on the practice of post-claim underwriting, which is typically illegal or typically unfair, or both.

The Award is presently on the LA Times website, the link is in bold above, and is an excellent explanation of the post-claim underwriting methodology. The only thing missing is the one thing only a Grand Jury could probably get a handle on, and that is the cold blooded actuarial data the insurance company likely used to determine whether post-claim underwriting denials would be cost effective in preserving or increasing reserves and profits. You can bet that even though this Award laid it out in cookie cutter clarity, there will be no hearings by the enforcement division of any Insurance Commissioner in any state. That makes Campbell v State Farm all the more effective to protect insurance company financial statements.

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The folks at the 39th Annual RV SuperShow found one of our cartoons funny enough to post on their website. Our cartoon, “Red Neck Risk” portrays two of our favorite trying to hook up their RV with less than the skills taught by our friends at the RV Show, much to the suprise and pain of their cat.

[Hat Tip to our buddies over at the double wide over at House Marketing and Management.]

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I attended the showing of this great movie twice, so far, with a bitter sweet attitude. The movie brought back many memories of my own debate career. My debate partners were among the finest people and greatest minds I have ever known. One would be famous during one of America’s most tragic times, one would be commercially successful beyond the ability of an Oklahoman to comprehend and only able to achieve that success away from the limitations we have placed on ourselves, one would be a great debate coach, and another would be a well respected minister. I met my wife because of debate. I travelled the United States because of debate and saw the great universities of the day. In the National Debate Tournament of 1976 in Boston, my partner and I, representing “SE Okie,” debated not one but two Harvard teams. While I may be unable to place myself in the shoes of the first nationally recognized black debaters, or comprehend the black experience in America, debate is another matter.

The movie, The Great Debaters, also reminded me of the fact that at one time in things intellectual, Oklahoma universities, like Oklahoma City University, were leaders. That has been lost and replaced by sports.

In part, it was lost because forensics education in Oklahoma was systematically dismantled. Without a forensics education system, no debate coaches were trained or qualified.

In Oklahoma, the large universities have always lagged behind the smaller ones in debate even if they excelled in sports.

While the University of Oklahoma attended the National Debate Tournament eleven times during the history of the tournament, from 1947 to 2007, Northeastern Oklahoma State University attended fifteen times, University of Central Oklahoma (formerly Central [Oklahoma] State University attended fourteen times and Southeastern Oklahoma State University attended ten times. In other words, to become the preeminent debate power in Oklahoma, OU must qualify teams to the NDT at least four more times. Also, the University of Oklahoma would have to do one more thing: win it at least once.

Only Southeastern Oklahoma State University has won the National Debate Tournament among Oklahoma higher educational institutions.

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Most people that engaged a financial advisor employed by a FINRA (formerly NASD) broker-dealer and all registered representatives signed something containing a mandatory arbitration clause. FINRA announced that for 2007, new arbitration case filings dropped to their lowest level since 1992. That is a staggering concession.

While some political forces have been trying literally forever to abolish or curtail arbitration, arbitration itself may be doing what political power could not do.

I have been handling securities industry arbitrations since 1988 and I have represented broker-dealers, registered representatives, and customers, although few of the latter, and I thought 2007 was a busy year. It seems, however, it was less busy than I realized.

The three years of lesser activity at FINRA Dispute Resolution, 1992, 1998 and 2006, averaged 4,644 case filings annually. 2007 was 70% of that average; 30% below the average of the lowest filing years prior to 2007.

It will be interesting to see if the industry credits one or more allegations of: good returns of 2007, good compliance initiatives, or something else. Could it be that the legal community has figured it out and has revised upward the criteria for case selection to offset the fact that it is a high risk forum?

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In his book, Witnessing Their Faith, Religious Influence on Supreme Court Justices and Their Opinions, author Jay Alan Sekulow, Esq., attempted to test the hypothesis that Supreme Court justices wrote their opinions under the influence of their long held religious beliefs. The book’s actual value, instead, seems to be the explanation of how opinions and decisions of the high court of the United States reflected the influence of the times, and the beliefs held during those times, in which the Justices lived.

This is not a book that tries to explain how either the Court works or how the System of Freedom of Expression works. Those topics have been left to others. It is also not a treatise on 1st Amendment law, although its help in understanding the development of the law in that area is invaluable. While it is certainly true that our Supreme Court bases its rulings on prior decisions, the common law, and the foundational documents of our government, such as The Constitution, The Bill of Rights, and the Declaration of Independence, the Supreme Court Justices very much embedded in the events which for us are history but for them were events experienced and yet to be pondered.

Thus, while this book might not take its place next to The System of Freedom of Expression by Thomas I. Emerson (1970) or Freedom of Speech by Zechariah Chafee, Jr. (1920), it will no doubt have a place for lawyers, Christians and students of the Court that are working toward an understanding of 1st Amendment law.

The most striking thing about the book is its historical recitations that inescapably lead to the conclusion that most of the Court decisions reviled by today’s citizen Christians were handed down because of disputes between citizen Christians. This was clearly a case in which the “church” in its universal sense, rather than meeting as was done at the first Jerusalem Conference described in Acts 15, bickered and left to secular authorities the task of sorting out the dispute. Indeed, the book also demonstrates why Christians today are not as unified as would be necessary to achieve the political desires of most evangelicals. The book should be read by lawyers that do not practice in the area but are often presented questions by Christians regarding their rights under the 1st Amendment.

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