CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Archive for July, 2019

Next Up Libra: Regulating Cryptocurrency

Posted on: July 23rd, 2019

By: David Molinari

Reluctance to accept cryptocurrency as a medium of exchange continues to focus, in substantial part, on the inability to regulate a virtual form of currency.

Cryptocurrencies were originally meant to be stateless entities, not beholden to legal frameworks of any state or country.  Such intent was/is short-sighted if the goal is to function as an alternative currency.  Regulation is the doorway through which cryptocurrency must pass to be considered a viable system of currency for everyday transactions.  The word “regulation” has taken on a negative meaning.  “Regulation is bad for (fill in the blank)” is a familiar refrain.  However, regulation, at least concerning currency markets and exchanges, establishes rules and order.  When the currency alternatives are defined by the term “virtual,” proponents of cryptocurrency will face skepticism.  In the absence of federal directives on the cryptocurrencies, some states have tried to take matters into their own hands.  The result is a patchwork approach trying to meld old currency regulations to control the new frontier of cryptocurrencies.  Perhaps as a nod to the inevitable choice of government regulation or irrevocable stamp of “outlaw,” Facebook’s executive, David Marcus, in recent statements before the Senate Banking Committee noted that Libra will get “appropriate approvals” from regulatory agencies and be subject to regulatory oversight and review.

But what does regulatory oversight look like in a virtual currency world? How can any state or the Federal Government regulate a system where any major corporation with international reach can create their own form of cryptocurrency.  Cryptocurrencies raise concerns of national security because virtual currencies have the potential for illicit activities such as money laundering or facilitating other unlawful behavior.  The virtual currency market was created so digital asset service providers can operate in the shadows of no regulation.  Also, cryptocurrencies are highly volatile because exactly what backs the currency?  What is the value of any cryptocurrency at any time?  How can the system be protected from fraud?

There are three aspects that should be covered when attempting to establish a system of regulation for virtual currency: The use of cryptocurrencies as legal tender in business transactions, imposing authority on operation of cryptocurrency exchanges as money transmitters; and the status of smart contracts and Ethereum Tokens.

The first two factors seem amendable to the type of regulatory framework of establishing a commissioner or government arm that is responsible to evaluate whether the crypto/digital currency has capital enough to ensure safety and soundness of the currency for consumer protection.  A minimum amount of capital should be maintained by the cryptocurrency provider measured by total assets, total liabilities, the expected value of the virtual business activity, the amount of leverage employed and liquidity.

A difficult factor is determining a definition of “digital unit” to be used as a form of stored value.  Further, should there be carve-outs for online gaming platforms, digital units used exclusively as part of a consumer affinity or rewards program; or, digital units redeemable for goods, services or purchases exclusively with the issuer or designated merchant.

Libra is the latest threat to an old guard established financial system.  Where Facebook’s Libra allegedly differs is it is not intended to compete with the US or other countries’ sovereign currency; and therefore, won’t interfere with central banks on monetary policy. Yet by the very nature of being an alternative currency, Libra like other cryptocurrencies are competitors and disruptors of established currency markets.  A competitor is seen as a threat in most environments; when the environment is a financial system, competitors are a threat that raise serious concerns.  Libra, like other cryptocurrencies were designed to be independent of legal frameworks.  Regulation is the opposite to cryptocurrency’s design.  While such opposites in another environment or market would cripple any new product or service, cryptocurrency as a technology, is an idea whose development isn’t tied to or halted by government oversight.  While it is quaint to conclude cryptocurrency will be forced to adjust to government’s brand of regulation, that may not be accurate in this situation.  Cryptocurrencies are operating and will go on and continue to be unregulated. It is the regulating bodies that are playing catch-up.

If you have questions or would like more information, please contact David Molinari at [email protected].

Are Verbal Fee Splits Among California Law Firms Okay?

Posted on: July 18th, 2019

By: Greg Fayard

The answer to this question is now “no.” When different law firms split a legal fee–say a contingency fee–verbal “gentlemen’s agreements” are not permitted under California’s new ethics rules. The old ethics rules allowed different law offices to verbally agree to a referral fee wherein the referring lawyer would get, say, 5% of any total recovery by another, unaffiliated lawyer. New Rule 1.5.1, now requires that the unaffiliated lawyers splitting or dividing such a fee have their own agreement in writing. Further, the client has to consent in writing to that fee split. The written disclosure to the client must disclose the terms of the fee split and the identity of the lawyers who are splitting the fee. As long as the total fee charged by all lawyers is not increased due to the agreed split, fee sharing among different law offices is permissible under California’s ethical rules.

The agreement among unaffiliated law offices need not be signed, however. An informal e-mail setting forth the terms of the fee split could suffice.

The lesson here is casual, oral arrangements among California law firms to split legal fees are no longer permitted under the ethical rules.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Federal Litigation and How to Turn a USCIS Denial into an Approval

Posted on: July 17th, 2019

By: Ken Levine

The FMG Immigration Section was retained to prepare a green card case for one of the top chess players in Asia.  Our client, Oliver Barbosa, is a chess Grandmaster who hails from the Philippines.  He is currently ranked the 2nd best chess player in his country, the 60th best chess player on the Asian Continent and the 474th best chess player in the world.  FMG was already familiar with Oliver’s credentials. Our firm had previously secured an O-1 (extraordinary ability) work visa on his behalf, which allowed him to work as an Instructor for a prominent chess instruction company in New York City.

Information on Oliver’s impressive chess accomplishments can be seen in the attached articles:

http://bangkokchess.com/gm-oliver-barbosa-runner-up-of-the-14th-bcc-open-2014/

http://www.chessdom.com/parsvnath-international-open-oliver-barbosa-clinches-title/

Given the substantial evidence supporting Oliver’s O-1 work visa we had confidence that USCIS would look favorably upon our EB1 filing.  However, USCIS raised several legal issues in a request for evidence (RFE) and cast doubt on his eligibility to receive a green card under this category.  FMG immigration attorneys vigorously responded to the Immigration Service’s RFE and two weeks later we were met with a surprising denial decision.

After assessing the denial and determining that the legal reasoning set out in the decision was very much at odds with the actual evidence, FMG strongly recommended pursuing federal legal action.  While there are appellate steps within the USCIS process (Motion to Reconsider or an Appeal to the Administrative Appeals Office) these options were substantially less preferable than simply taking USCIS straight to Federal Court.   FMG filed what is known as a “Declaratory Action” in the U.S. District Court for the Eastern District of New York – https://www.pacermonitor.com/public/case/28492611/Barbosa_v_Barr_et_al

Our case was never reviewed by the Federal Judge nor was it necessary to appear in court.  23 days after filing and a mere five days after the Assistant U.S. Attorney (AUSA) entered their appearance, we received a notice that USCIS had reopened the denial and approved the EB1 petition.  The approval means that Oliver and his wife (Sunshine) will receive their green cards under our country’s most elite and prestigious immigration category.  Congratulations Oliver and Sunshine!

Oliver emailed us the below comments and has authorized us to print them here:

I have had the privilege of having Ken as my immigration attorney for over 3 years.  He had my O1 application approved then we hired him to prepare the green card.  Since the beginning of the green card process I was realistic and understood that the immigration process will sometimes not go smoothly, but I also believed that my decades of success and recognition in chess would work in my favor. 

The EB1 denial was unexpected and devastating.  While we were reluctant to challenge Immigration in court, since taking the government to court is just not what one does in the Philippines, Ken convinced us.  He spent a lot of time answering our questions about a lawsuit and addressing our concerns.  Ken explained his reasons for wanting to sue the government, pointed out what evidence he felt Immigration did not consider, and overall really seemed to have all the bases covered. Less than 3 weeks after the case was filed we received a call from Ken.  Immigration reversed the denial and approved my EB1 case!! 

I want to say a few things about Ken.  He is honest, trustworthy and very straightforward. He will tell you exactly where you stand and what direction you should go.  Thank you so much Ken for all your help, your perseverance and last, but certainly not least, for believing in my case.  Winning in court would not have been possible without your hard work, knowledge and skill.  I have already recommended him to other chess players and will certainly retain his services for my future immigration matters.”

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected].

United States Supreme Court to Decide Whether Georgia Law can be Copyrighted

Posted on: July 15th, 2019

By: Jason Kamp

The United States Supreme Court recently agreed to decide whether the annotations contained in the Official Code of Georgia Annotated (OCGA.) can be copyrighted by the state of Georgia, granting certiorari in State of Georgia, et al. v. Public.Resource.org, Inc., Case No. 18-1150 (S. Ct. June 24, 2019).

As explained by the 11th Circuit Court of Appeals, “In most states the ‘official’ code is comprised of statutory text alone, and all agree that a state’s codification cannot be copyrighted because the authorship is ultimately attributable to the People. Conversely, all agree that annotations created by a private party generally can be copyrighted because the annotations are an original work created by a private publisher. But the annotations in the OCGA are not exactly like either of these two types of works. Rather, they fall somewhere in between — their legal effect and ultimate authorship more indeterminate.” State of Georgia, et al. v. Public.Resource.org, Inc., 906 F.3d 1229, 1232 (11th Cir. 2018).

Unlike most official state codes, Georgia’s official code is annotated with non-statutory text.  This text includes summaries of judicial decisions, editor’s notes, research references, notes on law review articles, summaries of Attorney General opinions and other materials.  “The Code itself makes clear that these annotations are a part of the official Code, stating that the statutory portions of the Code ‘shall be merged with annotations… and [are] published by authority of the state …and when so published [are to] be known and may be cited as the ‘Official Code of Georgia Annotated.’ O.C.G.A. § 1-1-1.”  Id. at 1233.

The annotations are developed by a private party, LexisNexis, according to a contract with the State of Georgia. This contract specifies the type of annotations that appear with the statutory text and requires that LexisNexis present the content in a specific manner.  A state commission supervises the work LexisNexus performs and holds final editorial control. The Georgia legislature then adopts the annotations as their own, merging them with the statutory text in a process similar to passing the underlying laws. The State of Georgia holds the copyrights to the annotations LexisNexus creates.

Litigation over the copyrighted annotations began when a non-profit organization purchased and scanned all 186 printed volumes of the Official Code of Georgia Annotated and posted them to its free website.  The state sued and won in the district court.  Late last year the 11th Circuit Court of Appeals reversed, holding Georgia’s official code annotations are sufficiently “law-like” to be considered a work created by the state and outside the realm of copyrightable material.

The United State Supreme Court does not grant cert to affirm a lower court’s decision nearly as often as it does to reverse.  However, this case resides at the tension point between two American values: equal access to democratic institutions and private property rights.  Perhaps the Court merely wants to weigh in.

If you have questions or would like more information, please contact Jason Kamp at [email protected].

Some Potential Certainty in an Outcome in an Uncertain Medical Malpractice World

Posted on: July 12th, 2019

By: Shaun Daugherty

Medical malpractice claims can be dangerous in front of a jury and some recent Georgia verdicts are proof of that.  In Georgia, as many other states, medical doctors typically have consent clauses in their professional liability policies that require their consent before any payment may be offered by the insurance company.  In part, this is because any payment by the insurance company on behalf of the provider to settle a malpractice claim is reportable to the National Practitioner’s Databank(“NPDB”) and, for physicians, the Georgia Composite Medical Board (“the Board”).  The Board has the power over the providers’ licenses and a report could start an investigation that could lead to sanctions against the providers’ license, up to and including revocation, and the sanctions are public record.

Because of the uncertainty in the medical malpractice trials, may times the parties seek some parameters in the form of high/low agreements where the plaintiff is guaranteed some minimal amount even if the jury returns a verdict in favor of the provider, but caps the top dollar payout even if the jury awards more.  However, the consent clause in the providers’ insurance contracts usually require that this agreement also be consented to because the payment of the “low,” even in light of a defense verdict, would require a reporting to the Board, but not the NPDB.  Georgia HB 128 changes this state reporting requirement now that it has been signed into law.

The NPDB does not require reporting of the payment of a “low” in light of a defense verdict in a medical malpractice trial and HB 128 seems to mirror the intent of the federal reporting requirements.  Now, if a physician receives a defense verdict at trial, any payment of a “low” is no longer reportable to the Board by the insurance carrier and, thus, no potential investigation or sanctions.  This removal of the reporting requirement may result in incentivizing physicians to consent to these types of agreements in the future to allow for more certainty on the potential outcomes of the cases, regardless of what a jury may do.

If you have questions or would like more information, please contact Shaun Daugherty at [email protected].