January-February San Antonio PERMIT 1001 TEXAS SAN ANTONIO PAID US POSTAGE PRST STD

Transcription

1 Lawyer January-February 2015 San Antonio PRST STD US POSTAGE PAID SAN ANTONIO TEXAS PERMIT 1001

2

3 January-February 2015 Features Tax Issues for Household Employers By Katy David Honors & Memories for Judge Polly Jackson Spencer By Amanda Reimherr Buckert Departments Feedback In Memoriam Fourth Court Update: Expressing Gratitude By Justice Patricia O. Alvarez Understanding the Texas Disciplinary Rules of Professional Conduct: Is Your Law Office Vulnerable? By Joseph A. Florio and Michael St. Angelo What is a Public Insurance Adjuster? By Robert W. Loree Federal Court Update By Soledad Valenciano and Melanie Fry On the Cover: Family Law Attorney, Robert F. Estrada - Courtesy photo edited by Kim Palmer. Archives of the San Antonio Lawyer are available on the San Antonio Bar Association wesite, San Antonio Lawyer is an official publication of the San Antonio Bar Association. Send address changes to the Bar Association address at the top of page 4. Views expressed in San Antonio Lawyer are those of the authors and do not necessarily reflect the views of the San Antonio Bar Association. Publication of an advertisement does not imply endorsement of any product or service. Contributions to San Antonio Lawyer are welcome, but the right is reserved to select materials to be published. Please send all correspondence to kimp@sabar.org. Copyright 2015 San Antonio Bar Association. All rights reserved. San Antonio Lawyer 3 January-February 2015

4 Lawyer San Antonio The San Antonio Bar Association 100 Dolorosa, San Antonio, Texas Fax: Officers/Directors President Thomas g. Keyser President-Elect James M. Marty Truss Vice President Bobby Barrera Secretary Beth Watkins Treasurer Santos Vargas Immediate Past President Rebecca Simmons Feedback Re: Gayla Corley, Judge Barbara Hanson Nellermoe: From Books to Bar to Bench Nov.-Dec Directors Rosa Cabezas-Gil Tom Crosley Dave Evans Dawn Finlayson Mexican American Bar Association Jaime Vasquez San Antonio Young Lawyers Association Patricia Rouse Vargas Bexar County Women s Bar Association Tiffanie Clausewitz San Antonio Black Lawyers Association Stephanie Boyd Editors Editor in Chief Sara Murray Articles Editor Natalie Wilson Managing Editor Kim Palmer Board of Editors Sara Murray, Chair Steve Fogle Hon. Laura Parker Hon. Richard Price Christine Reinhard San Antonio Bar Foundation Thomas g. Keyser State Bar of Texas Directors Sara E. Dysart Andrew L. Kerr Executive Director Jimmy Allison Departments Editor Leslie Sara Hyman Editor in Chief Emeritus Hon. Barbara Nellermoe Pat H. Autry, Vice-Chair Barbara: Thanks for the article. The author did an outstanding job with a good story. Bravo. Vincent R. Johnson Professor of Law and Director, Institute on Chinese Law & Business St. Mary s University School of Law I was so pleased to see Judge Nellermoe s picture grace the San Antonio Lawyer and enjoyed reading the article. She has had a distinguished career, and all of us are going to miss her sitting on the bench. Her advice to practitioners, incidentally, was right on target. A.J. Hohman, Jr. Your Honor, Well-written and well-deserved recognition of your service and the lasting legacy of the San Antonio Laywer. Kind regards, Fred Biery Sherry M. Barnash Barry H. Beer Charles Butts Merritt Clements Gayla Corley Ryan V. Cox Andrea Crouch Paul Curl Cristina Tijerina DeLeon Jane Rankin Dure Tanya Feinleib Jose Galvan Shannon Greenan Gilbert S. Gonzalez Stephen H. Gordon Per Hardy Sam Houston Leslie Sara Hyman Rob Killen Ex Officio Thomas g. Keyser Kim Palmer Rob Loree Burke C. Marold Hugh McWilliams Harry Munsinger Curt Moy Hon. Barbara Nellermoe Steve Peirce Donald R. Philbin Rob Ramsey Yanira Marie Reyes James Rodriguez Alexis Adams Scott Ronald D. Smith Regina Stone-Harris Johnny W. Thomas David Willis Natalie Wilson Kevin Yeary For advertising inquiries, contact: Monarch Media 2300 Chalet Trail, #K4, Kerrville, TX (210) rhogue1@hot.rr.com Chellie Thompson Roy Rector Former Lead Detective, Austin Police Department Computer Forensics Unit Reid Wittliff Former Division Chief, Texas Attorney General s Cyber Crimes Unit DIGITAL FORENSICS AND EVIDENCE SERVICES Extensive Experience and Proven Expertise in Digital Investigations (210) Texas Licensed Investigations Company, License #: A15320 Layout by Kim Palmer Managing Editor, San Antonio Bar Association San Antonio Lawyer 4 January-February 2015

5 Harry Ben Adams, III died in August at the age of 70. The San Antonio native attended San Antonio College and received his undergraduate and law degrees from St. Mary s University. In addition to being both a fine transactional attorney and litigator, he served as City Attorney for Universal City and as counsel to the Economic Development Corporation of Hollywood Park and Windcrest. Harry and his bride traveled widely throughout Europe and the Middle East. Jeffery Alan Babcock died in October at the age of 58. Babcock was born in Orlando, Florida. He received his undergraduate degree from Texas Lutheran College and his law degree from St. Mary s University School of Law. He was an Assistant U.S. Attorney with the Justice Department for more than twenty-five years, working last for the U.S. Attorney s Office in Houston. He was a member of Grace Lutheran Church in San Antonio and attended Crosspoint Lutheran Church in Houston. John Edwin Banks, Sr. died in March at the age of 91. Banks was a graduate of Thomas Jefferson High School. Following graduation from the University of Texas, he served in the Army Air Corps in the Pacific during World War II. Following military service, he earned an MBA while working on Wall Street. He obtained his law degree from Southern Methodist University School of Law and served on the editorial board of the Southwest Law Journal. Banks was SABA President from and a Director of the State Bar from He also served both as President and Board member of the San Antonio Area Foundation. Daniel Abraham Bass died in June at the age of 57. Bass studied film at the University of Texas and received his law degree from St. Mary s University School of Law. He was board certified in Civil Trial Law and practiced trial law for thirty-two years. San Antonio Lawyer 5 January-February 2015 Samuel F. Biery died in June at the age of 97. Biery was born in Streetman, Texas. He was a graduate of the Masonic Home and School of Texas. Following service both with U.S. Immigration, Border Patrol, and the Navy, Biery attended St. Mary s School of Law, from which he graduated in He and his brother Charles founded the law firm that became known as Biery, Biery, Myers and Armstrong, P.C. In its various incarnations, the firm served the area for more than fifty years. Biery held several offices with the San Antonio Bar Association and was the 1997 recipient of the Joe Frazier Brown Sr. Award of Excellence for lifetime achievement. James Edwin Bock died in July at the age of 79. Born in Waco and raised in Houston, Bock received his law degree from Southern Methodist University. He practiced trial law for fifty years and for more than half of that time was an Assistant U.S. Attorney, prosecuting criminal cases in the Western District of Texas.

6 Harry Ben Adams III Harry was a rarity in modern law practice a generalist who could do everything well. Harry was both a respected transactional attorney and a fierce courtroom advocate, who appeared in court almost up to the day that he passed. Harry s practice included representation of Red McCombs, who spoke at Harry s funeral, and various McCombs dealerships in a variety of transactions and lawsuits. When not working, Harry enjoyed cooking, fishing, and traveling. His travels took him to Europe, Africa, and the Middle East. Harry s real passion, though, was always the practice of law. He made no apologies about being a workaholic, usually arriving at his office around 4:30 a.m. He was also known as a plain talker and a person who spoke his mind. Clients and opposing counsel knew to expect Harry to pull no punches but to always keep his word. That meant that he was loved by many, disliked by some, but respected by all. Harry was married for fortyeight years to Beverly Adams, who survives him. He also has two adult children a son who lives in San Antonio and a daughter who lives in North Carolina along with numerous grandchildren. Dennis Phillip Bujnoch died in February at the age of 61. Bujnoch was one of nine children born to John and June Bujnoch in Houston. He received his undergraduate degree from the University of Houston and earned his law degree from South Texas College of Law. He was board certified by the National Board of Trial Advocacy and was acknowledged by his peers to be an exceptional trial attorney. Edward Emmanuel DeWees, Jr. died in March at the age of 81. The San Antonio native attended Austin College on a basketball scholarship. He entered military service after college and returned to earn his law degree from the University of Texas in He practiced law for more than fifty years, many of them with the Bexar County District Attorney s office. While in private practice, he concentrated his efforts on family law matters. DeWees was active in his church, First Presbyterian. He was a founding member of the Bachelor s Club of San Antonio and the Christmas Cotillion, a member of the German Club, and past president of the Conopus Club. Pepos Spiro Dounson died in February at the age of 84. Dounson was a 1951 graduate of St. Mary s Law School. The San Antonio native practiced for more than fifty years and had an affinity for things technical. He was an amateur radio operator with the nickname Old Sour Grapes. Robert F. Estrada died in April at the age of 76. Estrada attended Central Catholic High School, St. Mary s University, and St. Mary s University School of Law. He was Board Certified in Family Law and was involved in various bar sections and organizations related to family law matters. He was a member of the Texas Academy of Family Law Specialists and a founding member of the South Texas Collaborative Family Law Group. He was also an avid motorcyclist. Edward P. Fahey died in January just a few days prior to his 91st birthday. The Galveston native served in the military in the South Pacific and moved to San Antonio upon his discharge. He attended St. Edward s University in Austin and completed his education at St. Mary s University School of Law, receiving his law degree in He was a trial lawyer concentrating on insurance defense litigation and was elected to the American College of Trial Lawyers in He retired from the practice in Donald Olda Ferguson died in October at the age of 82. Ferguson was born in Breckenridge, Texas. He attended high school in Refugio and received both a BS degree Samuel F. Biery Sam Biery was one of thousands to become the first in his family to earn a degree through determination, hard work, and the GI Bill. He and brother, Charles, practiced law together for over fifty years, being in the first class of certified specialists (Family Law) in He was a precinct chair in the Democratic Party and active in the San Antonio Bar Association. Along with Charles, he received the Joe Frazier Brown Sr. Award of Excellence in Unbeknownst to his children for forty years, he struggled with panic and anxiety attacks and suicidal ideations from 1947 up to the time of his death. But three things helped defeat the fears and demons which haunted him: psychiatrists, medications, and most importantly, his wife of seventyone years, C.B., who followed him in death a few weeks later. They ran the good race. They fought the good fight and kept their faith in each other. The Honorable Fred Biery, Chief U. S. District Judge San Antonio Lawyer 6 January-February 2015

7 San Antonio Lawyer 7 January-February 2014

8 in pharmacy and a BBA degree in marketing from the University of Texas. Following military service, he got married and began work with Eli Lilly & Co. While at Eli Lilly, he took a leave of absence to attend and graduate from law school at St. Mary s University. He continued his career with Eli Lilly for a while, but ultimately he returned to San Antonio and partnered with James Gardner to form the firm of Gardner and Ferguson in Richard Ricky Hall Fox died in August at the age of 61. He attended Alamo Heights High School and the University of Texas, and received his law degree from St. Mary s University School of Law in He was an assistant criminal District Attorney for nearly twenty years and, later, a partner in the firm of Brock & Kelfer. Mike Hernandez, Jr. died in December at the age of 81. He was born in Weslaco in The family moved to San Antonio in the early 1940s. Hernandez graduated from Fox Technical High School. After high school, he worked in several different jobs and eventually moved to California to work with Beneficial Finance Company. He returned to San Robert F. Estrada When Bob first invited me to ride with his group of friends, he showed up on a gleaming purple Harley Davidson. If there was any piece of chrome made that was not on Bob s bike, it was only because Bob had not yet discovered it. Bob always kept the bike in gleaming, showroom condition, and it was a sight to behold. Eventually, he sold his beloved Harley and bought a beautiful Honda Gold Wing, but he never really bonded with the bike. He always complained that, compared to his Harley, the Honda s exhaust sounded like flatulence. Barry Snell He was a study in contrasts: pragmatic yet generous, mature yet contemporary, personable yet private. Bob cut a suave figure in his suits while in court, but he was just as happy out on his motorcycle in leather, or bicycling in shorts with his legal buddies. He was unquestionably sophisticated, yet he seemed to know every Southside taqueria by heart. A loyal husband, loving father, doting grandfather, and faithful Christian, Bob never truly looked his age but always seemed to possess a wisdom and grace well beyond his years. Elizabeth Jurenovich, Executive Director, Abrazo Adoption Associates Antonio as an area manager for that company. He enrolled at St. Mary s University, from which he received both his undergraduate (Economics) and law degrees. Hernandez joined the bar in His practice included family, criminal, and business matters. He was quite literally on his way to court when he was stricken. Lukin Taylor Gilliland, Sr. died in July at the age of 87. He attended Alamo Heights schools when all of them were located within what is now Cambridge Elementary. He attended the University of Texas, but his studies were interrupted by his enlistment in the Navy during World War II. Following military service, he earned his law degree from the University of Texas and went on to practice for more than sixty years. In addition to his success as an attorney, he excelled in both business and local politics, serving terms as councilman and Mayor of Alamo Heights. He was an informed and successful breeder of horses, both thoroughbred and quarter horses. Donald Joseph Mach died in February at the age of 67. The El Campo native attended St. John s Seminary for several years, but he attended El Campo High School his senior year. He received both his undergraduate and law degrees from St. Mary s University. He practiced law, both civil and criminal, principally in Bexar and Atascosa counties for more than forty years. He was an original member and former president of the Harp and Shamrock Irish Society, and in 1982 he was honored as Irish Man of the Year (despite his German heritage). Frank S. Manitzas died in July at the age of 80. The first-generation American was born in San Angelo to Greek immigrant parents. Following college at the University of Texas, he enlisted in the Army. He later attended law school at the University of Texas and was licensed in He worked as an attorney for the National Labor Relations Board before entering private practice. He was in the first group certified as specialized in Labor Law by the Texas Board of Legal Specialization in He was Chairman of the Labor Law Section of the State Bar from Lucian Leeds Morrison, III died in February at the age of 77. Morrison was a San Antonio native and a graduate of Alamo Heights High School. He attended the University of Texas for both his undergraduate and law degrees. Following military service, he joined his father s law firm ultimately becoming a partner in Morrison, Dittmar, Dahlgren & Kaine and its oil and gas practice. After a few years, Morrison moved on to a career in corporate banking, trust administration, and estate planning in Houston. He founded the Heritage Trust Company which, in 1990, was sold to Northern Trust of Chicago, one of the nation s largest trust institutions. He continued to counsel private trusts and individuals up to the day he died. Tillman Marc Perkins died in November at the age of 60. Perkins was born in Longview. He attended Kilgore College but later transferred to the University of Texas from which he received his undergraduate degree. He received his law degree from St. Mary s University School of Law. Perkins legal career San Antonio Lawyer 8 January-February 2015

9 began in Midland, but he returned to San Antonio to continue his practice after the birth of his first child. He returned to Longview in Carl Pipoly died in September at the age of 66. Originally from Cleveland, Ohio, Pipoly earned both his undergraduate and law degrees from the University of Denver. He began his legal career with Conoco Oil Company, negotiating and drafting joint venture agreements for mineral exploration and production. Beginning in 1988, Pipoly shifted his focus to litigation, primarily civil, where he enjoyed considerable success. He was a member of several trial-oriented organizations and was recognized as an Advocate with the National College of Advocacy. Amid all of this, he also swam the English Channel. Stephen L. Reznicek died in June at the age of 66. Reznicek was born in Omaha, Nebraska. He found himself a prime candidate for the military draft during the Vietnam War and elected to enlist in the Navy rather than be drafted. He chose wisely and found himself stationed in Japan. Following military service, he enrolled in the University of Nebraska, from which he received a BS degree in education. He later obtained an undergraduate degree in political science from Bellevue University in Omaha. In mid-life he returned to the classroom and earned a law degree from St. Mary s University in He practiced for several years with the firm of Garcia, Teneyuca and Reznicek and later worked for Standard Aero in import/export regulatory compliance. Meddie Charles Chuck Sullivan III died in November at the age of 64. Sullivan was a 1969 graduate of Alamo Heights High School. He served in the Army in Vietnam, was wounded and awarded the Purple Heart. He later attended law school at the University of Oklahoma and became licensed to practice in Texas in Sullivan practiced primarily criminal law. Sullivan was an avid motorcyclist and hunter. Ned Morris Wells, Jr. died in September at the age of 68. The San Antonio native attended Alamo Heights High School and earned both undergraduate and master s degrees from Southern Methodist University. He began law school at SMU, but his studies were interrupted by the Vietnam War and his enlistment in the Army. Following military service, Wells returned to legal studies at St. Mary s University School of Law, from which he graduated in He practiced law for forty years. He was a dedicated member of the San Antonio RoadRunners running club and a lifelong philatelist. Frank S. Manitzas Frank grew up in San Angelo the first-generation son of Greek immigrants in a country where all immigrants, legal or otherwise, were generally thought to come only from Mexico. Farmers, ranchers, school teachers, and others were accustomed to Martinez but had difficulty with Manitzas. But this son of Greek immigrants did not become embittered by his experience. Years later, he would still laugh about it. We were trying a case before an administrative law judge of the NLRB. The Board s lawyer called a witness named Frank Martinez. Frank leaned over and whispered to me, Let me cross-examine him. Frank began his cross-examination solemn and stern. Mr. Martinez, has anyone ever called you Frank Manitzas? The witness, obviously unprepared for such a question, looked first at his lawyer and then at the judge, and with a puzzled expression on his face responded, No, sir. Well, Frank replied, my name is Frank Manitzas, and all my life people have called me Frank Martinez. I was just curious if anyone had ever called you Frank Manitzas. I have nothing further, Your Honor. Pass the witness. Not only could Frank laugh about his experiences growing up in San Angelo, but he also drew strength and resolve from them. As he often said, I may be wrong, but I m never in doubt. He was proud to be a lawyer, proud to be a Texan, proud to be an Army veteran, proud to be an American. He could recite the Declaration of Independence from memory. He collected antiques, recited poetry, and loved opera. But above all else, he loved Mary Ellen and his family. Joe Harris AFFIRMED Judgment upheld. TLIE was voted best in Texas. Texas Lawyers Insurance Exchange has been voted best professional liability insurance company in Texas four years in a row by Texas Lawyer magazine. TLIE is also a Preferred Provider of the State Bar of Texas and has returned $32,800,000 to its policyholders. With all of these accolades as well as being in the business for over 35 years, doesn t TLIE make the BEST all around choice for you? / INFO@TLIE.ORG / San Antonio Lawyer 9 January-February 2015

10 Tax Issues for Household Employers By Katy David Following the rush of year-end planning, a respite from tax issues feels well deserved. We have survived the last push to complete time-sensitive tasks by December 31, and the April 15 filing deadline is not yet imminent. Nonetheless, we cannot neglect tax issues entirely. In particular, those of us fortunate enough to have paid help at home must attend to the various reporting deadlines that fall within the first months of And, for those who have been lax about household employee issues in the past, the new year is an opportunity to turn over a new leaf. Do I Really Have an Employee? That is the threshold question, and the answer is: you might. The Internal Revenue Service uses a number of factors to determine whether a person who works in your home is an employee (for whom you have tax withholding and reporting obligations) or an independent contractor (such that these requirements do not apply). In general, a worker is your employee if you control what work is done and how it is done. For purposes of determining whether a person is an employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job. More importantly, it does not matter whether you and the worker just agree that the worker is an independent contractor. The legal test controls, regardless of how you and the worker prefer to define your arrangement. Every situation is different, but examples illustrate the difference between an employee and an independent contractor. Example 1: A family hires a worker to clean their house once a week. The worker is scheduled to work on Wednesdays, but from time to time she reschedules to a different day. Sometimes, rather than cleaning the house herself, she unilaterally sends her sister or niece to do the work. She makes her own schedule, with the understanding that she will perform her work during the normal work day. She holds herself out as available for other work, and there is no expectation that she is available exclusively to the family. That is to say, when she is not working for the family, she is cleaning other people s houses. In this situation, I am comfortable that the worker is an independent contractor. Example 2: The same family also has a nanny. The nanny is required to arrive each morning by 8 a.m., and she stays with the children until the first parent arrives home around 6 p.m. She follows specific guidelines about the children s care. She cannot reschedule, and she cannot send another person in her stead. While she might pick up the occasional babysitting job on the side, she does not (and cannot) do other work that conflicts with her taking care of the family s children. On these facts, I would have a hard time arguing that the nanny was not an employee. Before you panic: there is a de minimis rule that prevents people who just have the occasional Saturday-night babysitter from having to deal with taxes and reporting. You have to pay federal unemployment tax (discussed below) only if you pay $1,000 or more in any calendar quarter to household employees. You have to withhold and pay social security and Medicare taxes (discussed below) only if you paid $1,900 or more in 2014 to any one household employee. If your total household worker costs are $60 a month for child care during your monthly date nights ($180 per quarter and $720 per year), you will never trip over these lines. However, if the person who works in your home is an employee and your payments are over the thresholds, you must report certain information to the Internal Revenue Service and Social Security Administration, and you must withhold and pay certain taxes to the government. What Taxes are Required? In Texas, when dealing with household employees, three types of taxes are in play: federal income tax, federal employment taxes, and unemployment taxes. Let s take them in order. Federal income tax is probably what comes to mind most readily. In general, income taxes are withheld from the pay a worker otherwise earned. The employer remits the withheld money to the government, to be applied towards the worker s current-year income tax liability. Unlike most other employers, as a household employer, you are not required to withhold federal income tax. You are allowed to withhold it if your employee asks you to. San Antonio Lawyer 10 January-February 2015

11 If you withhold, the employee s federal income taxes require some bookkeeping on your part, but because they come out of money you already owe your employee, they do not take money out of your pocket. The term federal employment taxes is a catch-all term that applies to three types of tax: social security, Medicare, and unemployment. Social security tax pays for old-age, survivors, and disability benefits for workers and their families. Medicare tax pays for hospital insurance. Together, these taxes are referred to as Federal Insurance Contributions Act ( FICA ) taxes. Both you and your employee may owe FICA taxes. Each person s share is 7.65% (6.2% for social security tax and 1.45% for Medicare tax) of the employee s wages. It is important to understand that your share does not come out of your employee s paycheck. It comes out of your pocket. You can withhold your employee s share from her wages or opt to pay it yourself (in which case, it is additional money out of your pocket). Unemployment taxes are paid at both the federal and state level. They are used to pay unemployment compensation to workers who lose their jobs. Federal unemployment taxes are referred to as Federal Unemployment Tax Act ( FUTA ) taxes. The FUTA tax is 6% of your employee s FUTA wages, up to $7,000. It s not withheld from your employee s wages, so it is on you the employer not the employee. All or a portion of the amounts you pay to the state unemployment fund by April 15 of the following year are credited against your federal liability, resulting in a net federal rate of only 0.6 percent. Do not get dizzy on the fractions. Just understand that you need to pay money to the Texas Workforce Commission by April 15 of the following year, and the money you pay will show up as a credit against FUTA liability on your personal federal return. Deciding How to Handle FICA This is the single trickiest part of the entire process: both personally and arithmetically. As a household employer, you can decide to pay your employee s FICA taxes on her behalf rather than withhold it from her pay. That is to say, in addition to paying your 7.65% employer-share of FICA taxes, you can pay your employee s 7.65% employee-share of FICA taxes, causing yourself rather than your employee to be out of pocket for this amount. Why would you do this? Perhaps you were not alert to the tax regime when you agreed to pay your employee a particular rate and you feel bad giving her a haircut you know she does not expect. Or, you might make the more deliberate decision to bear this tax burden for your employee. If you decide to pay your household employee s FICA taxes on her behalf, the amount you pay on her behalf is included in her wages on the Form W-2 you prepare (and for purposes of any income tax you withhold), but it is not itself subject to FICA or FUTA taxes. As a result, your employee s Form W-2 will show her actual wages as the social security and Medicare wages (used as the base for calculating FICA taxes) but will show her actual wages plus the FICA tax you paid on her behalf as her total wages (used to calculate her income tax liability). How to Report All of This and Pay All the Taxes? You must file a Form W-2 for each employee. You must give each employee her copy of the Form W-2 by January 31 of the following year. You must send a copy of each Form W-2, together with a Form W-3, to the Social Security Administration by February 28 of the following year. However, you do not use your Social Security Number on these forms. Instead, you need to obtain an Employer Identification Number from the Internal Revenue Service, which you can do online. Bottom line: computer systems are unpredictable; don t wait until the last minute. The Forms W-2 and W-3 are information returns. They tell the Internal Revenue Service about the employee s income (so that it can be checked against what the employee reports on her personal income tax return) and tell the Social Security Administration about the employee s Social Security payments (so that those amounts are credited to the employee s eventual Social Security benefits). The taxes (and any of your employee s income tax that you withheld) are reported using Schedule H, Household Employment Taxes, which is attached to your personal income tax return (Form 1040). The total amount on Schedule H flows through to your return and is added to your other income tax liability. If you use tax preparation software, know that Schedule H preparation is included in the Deluxe version of Turbo Tax. State unemployment taxes are reported and paid through the Texas Workforce Commission website. You will need to set up an account, but the process is very user-friendly. A Few Tips I work with the Internal Revenue Service every day and have tremendous respect for the work they do to administer our country s tax laws. Still, the first time I went through this process, I found it very challenging enough to make even the most diligent taxpayer want to throw up her hands. I have a few practical tips that might help you. First, understand that this article is for informational purposes only, to help you understand where the pitfalls are. For more information, consult Internal Revenue Service Publication 926, Household Employer s Tax Guide. If your situation is complicated or you have questions, consult your tax advisor. Second, be aware that you must file Forms W-2 and W-3 by paper, and that the forms cannot be printed off the Internet. You can contact the Internal Revenue Service to have forms mailed to you or if it is getting down to the wire pick up blank forms at the local Internal Revenue Service Taxpayer Assistance Center. Anticipate mistakes and grab multiple copies of the forms. If you use a professional tax return preparer and choose to pay FICA taxes on your employee s behalf, check the preparer s work. Like all of us, even experienced preparers can misunderstand the facts or make errors. Understand that the various taxes accrue during the year but are payable in the next year, together with your own income tax liability. To avoid coming up short, have a plan for where that cash is going to come from. One option is to estimate the liability as it accrues and tuck that amount of money away in a savings account or other place you will not casually access, so that it is there when you need it. Another (and perhaps more fool-proof) option is to provide your employer with a new Form W-4 to increase the amount withheld from your own paycheck. (Form W-4 was in the stack of paperwork you filled out when you started your job. It is the form that tells your employer how much income tax to withhold from each of your paychecks. You can adjust your withholdings by giving your employer a new one at any time.) The money will be sent to the Internal Revenue Service as it is withheld during the year. It will be reflected on your own Form W-2 and - continued on page 22 - San Antonio Lawyer 11 January-February 2015

12 Honors & Memories for Judge Polly Jackson Spencer By Amanda Reimherr Buckert ecently, Judge Polly Jackson RSpencer retired as the Judge of Bexar County Probate Court No. 1 a seat she held for twentyfour years. That court is so closely identified with Judge Spencer that it is affectionately referred to as Polly s Court. Judge Spencer has heard many complex probate cases during her tenure, but it is the personal interactions involving guardianship that she has treasured the most. Members of the San Antonio Bar are familiar not only with Judge Spencer s legal acumen, but also with her personal connection to the Probate Court, particularly guardianship actions. She is the guardian of her oldest daughter, Carrie, who became disabled after complications from a brain tumor she developed as a toddler. Judge Spencer and her husband George have three younger children, as well. At the October luncheon meeting of the San Antonio Bar Association s Elder Law Section, Judge Spencer was honored for her years on the bench with a touching and remarkable tribute that had the entire room wiping tears from their eyes. The stunning personal connection of the honor given to Judge Spencer left her choked with emotion as she recounted to a riveted room what that day recognizing her service on the bench meant to her. At this luncheon held on October 24, 2014, at the Frost Bank Plaza Club, outgoing Elder Law Section Chair Ben Wallis, III presented Judge Spencer with the Barbara F. Kishpaugh Elder Advocate Award, an award given to a person or entity who has rendered outstanding service to elders. The award is named for Colonel Kishpaugh, who was a nurse in the Army for thirty years and was later appointed by the Bexar County Probate Courts to serve as a volunteer guardian, court visitor, or guardian ad litem. She Judge Polly Jackson Spencer with the yellow roses and the Elder Law Section officers died in 2002 at the age of 79 and was posthumously awarded the first Elder Law Advocate Award in The award has carried her name with it ever since. Colonel Kishpaugh was a close personal friend of Judge Spencer and the honor of receiving this award touched the Judge very much. However, Wallis told the luncheon attendees that it just was not quite enough, and that he wanted to add a personal touch to the award by presenting her with a gift, just for Polly. The special gift that Wallis settled on was a beautiful glass vase created by the Garcia Art Glass Company filled with twenty-four yellow roses one for each of her years on the bench. This was presented by Judge Spencer s staff attorney, Karen Hogan, who has worked with her for twenty-one years and is also a member and past president of the Elder Law Section. Instantly, Judge Spencer was overcome with emotion and could no longer contain her tears. Judge Spencer slowly approached the podium to receive her award, clutching a tissue to her chest. After a few moments she said, There is no way to explain what this means to me. George and I remodeled our home and put a round table under a chandelier in our entry, that after much discussion we had decided would be a good spot for a piece from Garcia Art Glass. But since it involved spending money, George hadn t quite gotten to it yet. This is perfect. How did you know? Except nobody did know. It was a lucky coincidence, and the Elder Law Section members were quite surprised. In a moment of kismet, Judge Spencer added that she could not believe that there were yellow roses in her lovely new vase. Today, six years ago, and at exactly this time of day that I stand here, my mother passed away. Yellow roses were her absolute favorite flower. The entire room gasped and fell silent. Then most everyone cried. Judge Spencer said this connection to her mother and plans with her husband were an example of how much her retirement was really going to mean to her family. She recalled that her calling had often required her to sacrifice family time, and she worried about the toll her San Antonio Lawyer 12 January-February November-December

13 job took on her family, particularly her children. However, she knew that she could make a real difference in the lives of the residents of Bexar County, who were facing incredible struggles with which she was intimately familiar. Now as adults, her children have reassured her that those sacrifices were worth it, while simultaneously celebrating the chance to spend more time with her after retirement. Judge Spencer hopes that people will remember her and think that she listened and was fair. I also hope they think I usually got it right on the law, she said with a little laugh. Also, most people when they walk into a courtroom just want to feel like they have been heard and are usually okay with the outcome as long as they really feel they have been heard and that their case mattered. I think every case I have ever had before me mattered. Now what matters to her most is spending time with her beloved family. She said she had recently wandered the halls of her lovely home and wondered what it will be like to actually live there. Soon, she will be spend plenty of time living inside the walls of that lovely home with her family and remember her courtroom, Polly s Court, and her courthouse friends every time she looks at that beautiful vase sitting in her entry hall under the chandelier. She added that, sometimes, she will even fill it with yellow roses. Amanda Reimherr Buckert is a former newspaper reporter and the current Director of the Community Justice Program, which she has been with since Expressing Gratitude By Justice Patricia O. Alvarez Gratitude is not only the greatest of virtues, but the parent of all others. Marcus Tullius Cicero 1 This is not a legal article. This is an article about gratitude. As you develop your New Year s resolutions, consider the virtue of gratitude. What is gratitude? The word comes from the Latin word gratus, which means grace, graciousness, or gratefulness. 2 Gratitude is defined as the quality of being thankful; readiness to show appreciation for and to return kindness. 3 It is the most exquisite form of courtesy. 4 It is an art of painting an adversity into a lovely picture. 5 No one who achieves success does so without acknowledging the help of others. The wise and confident acknowledge this help with gratitude. 6 Like you, I am grateful every day for my family s unconditional love, for my faith, for my friends and colleagues. I am grateful for the opportunities people have given me. But I have not done a good job of expressing my gratitude to those who mean so much to me; after all, [s]ilent gratitude isn t much use to anyone. 7 In this short article, I address three points: (1) why gratitude is important; (2) how to express gratitude; and (3) what you can do in 2015 to show your gratitude. Benefits of Gratitude Many studies demonstrate the benefits of expressing gratitude. 8 They describe two important benefits of expressing gratitude: to feel good personally, and to make others feel good. Feeling Good I feel a very unusual sensation if it is not indigestion, I think it must be gratitude. Benjamin Disraeli 9 Expressing gratitude simply makes you feel better. This is why grateful people have higher levels of positive emotions. 10 They are happy with themselves and their environment. They are also healthier. [O]ver time gratitude leads to lower stress and depression and higher levels of social support... [and] is uniquely important to well-being and social life. 11 More importantly in our profession, feeling grateful makes people less likely to turn aggressive when provoked. 12 Gratitude is one of the sweet shortcuts to finding peace of mind and happiness inside. No matter what is going on outside of us, there s always something we could be grateful for. Barry Neil Kaufman 13 Gratitude not only makes you healthier, but it also improves your career, makes you more effective in managing people and your docket, opens network opportunities, and increases your productivity. 14 Simultaneously, gratitude blocks negative emotions because you cannot feel envious and grateful at the same time. They are incompatible feelings. 15 Making Others Feel Good More than other emotions, gratitude is the emotion of friendship.... It is part of a psychological system that causes people to raise their estimates of how much value they hold in the eyes Fourth Court Update San Antonio Lawyer 13 January-February 2015

14 of another person. Gratitude is what happens when someone does something that causes you to realize that you matter more to that person than you thought you did. 16 An expression of gratefulness sends a strong message that you value the other person. In the context of one s work environment, a supervisor s expression of gratitude in the form of thank you can increase an employee s social worth and self-efficacy behavior. Other employees will become more trusting of each other and more willing to help each other out. 17 If a thank you can have this effect, what will positive feedback or acknowledging an achievement do for your law firm? How Should We Express Gratitude? Feeling gratitude and not expressing it is like wrapping a present and not giving it. William Arthur Ward 18 Expressing Gratitude to Others The first thing that comes to mind is simply saying thank you to those who do something for you. That is certainly a start. But ask yourself whether your thank you is an automatic courteous response or really expresses your appreciation for something. We often take for granted the very things that most deserve our gratitude. 19 It does not have to be that way. Sharing with your spouse or your children your blessings for having them in your life, for their patience while you work late, or for any other matter expresses more than a thank you it expresses gratitude. Recognizing a co-worker s meaningful contribution to your final product takes thank you a step farther. Telling someone how fortunate you are to have him or her as a friend shows that person you do not take the relationship for granted. Expressing your admiration for someone s skills or talents, smiling, writing a letter, picking up the phone to simply say hello, or just showing an interest in others lives are all ways to express gratitude. Those who receive your heartfelt expressions of gratitude will feel good, appreciated, and worthy. Expressing Gratitude for What You Have He is a wise man who does not grieve for the things which he has not, but rejoices for those which he has. Epictetus 20 Epictetus s adage focuses on the things we have. Complaining about what we don t have stimulates negativism such as anxiety, dissatisfaction, stress, or envy. On the other hand, being grateful for what we do have allows us to focus on the present (versus speculate on the future) and helps maintain harmony and balance in our lives. Let us rise up and be thankful, for if we didn t learn a lot today, at least we learned a little, and if we didn t learn a little, at least we didn t get sick, and if we got sick, at least we didn t die; so, let us all be thankful. Buddha 21 Practicing Gratitude As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them. John F. Kennedy 22 What did President Kennedy mean? He reminded us that expressing gratitude is good, but we can do better. He invited us to incorporate gratitude into every aspect of our lives to develop the virtue of gratitude by our actions. This year, I invite you to join me in developing the personal virtue of gratitude. How do we begin? In his book Thanks! How Practicing Gratitude Can Make You Happier, 23 Dr. Robert Emmons recommends starting a journal and listing five things each week for which we feel grateful. The list may include a friend s generosity; a kind word from your supervisor, employee, or opposing counsel; a kiss from your parent or spouse; or your child s smile. The purpose of the journal is to remind yourself of the gifts, grace, benefits, and good things you enjoy. 24 I suggest that next to each item in your journal, you write two things you will do to show your gratitude. During the week, perform at least one act of gratitude. For example, if you are grateful for your law degree, make a donation to your law school. If you are grateful to your paralegal for her work in your last trial, buy her a card or give her a candy bar. If you are grateful to your child s teacher, tell her why you are grateful and offer to help with the next school event. Another way of showing gratitude is through deeds. A kind deed to a homeless person or a smile to your waiter shows you are grateful for having a roof over your head or access to food. Paying for a military member s meal at a restaurant shows you are grateful for that person s service and sacrifice (I witnessed an attorney taking this action, and my admiration for her grew instantaneously). Helping a neighbor mow the lawn shows gratitude for your physical body. Volunteering for the Community Justice Program shows your appreciation for having work! We can do so many deeds if we are grateful! The gratitude principles work. I applied them in my law practice, with opposing counsel, at our court, and with my friends and family. I am still working on expressing gratitude to those who mean so much to me. My life, however, is already richer because of my commitment to developing the virtue of gratitude! It takes so little to show you are grateful, and the result is immense. Develop the expression of gratitude and make it a happy 2015! The roots of all goodness lie in the soil of appreciation for goodness. Dalai Lama 25 e ENDNOTES 1 See generally Cicero, Wikipedia, en.wikipedia.org/wiki/cicero (last visited Nov. 17, 2014) (Roman, lawyer, writer, scholar, orator, and statesman, BC). 2 See Gratitude, Dictionary.com, dictionary.reference.com/browse/gratitude (last visited Nov. 17, 2014); Gratitude, Merriam-Webster.com, (last visited Nov. 17, 2014). 3 Gratitude, Oxford Dictionaries (English), definition/american_english/gratitude (last visited Nov. 17, 2014). San Antonio Lawyer 14 January-February 2015

15 4 See generally Jacques Maritain, Wikipedia, topic/ / Jacques-Maritain (last visited Nov. 17, 2014) (French philosopher, ). 5 Attributed to Kak Sri, an unknown person. 6 See generally Alfred North Whitehead, Wikipedia, Alfred_North_Whitehead (last visited Nov. 17, 2014) (English mathematician and philosopher; ). 7 See generally Getrude Stein, Wikipedia, Stein (last visited Nov. 17, 2014) (American author ). 8 E.g., Robert A. Emmons & Michael E. Mc- Cullough, Counting Blessings Versus Burdens: An Experimental Investigation of Gratitude and Subjective Well-Being in Daily Life, 84 J. of Personality & Soc. Psychol. 377 (Feb. 2003) available at edu/ faculty/mccullough/gratitude/emmons_mccullough_2003_jpsp.pdf; Adam M. Grant & Francesca Gino, A Little Thanks Goes a Long Way: Explaining Why Gratitude Expressions Motivate Prosocial Behavior, 98 J. of Personality & Soc. Psychol. 946 (June 2010), available at com/pdfs/grant_gino_jpsp_2010.pdf; Nathaniel M. Lambert & Frank D. Fincham, Expressing Gratitude to a Partner Leads to More Relationship Maintenance Behavior, 11 Emotion 52 (Feb. 2011); Randy A. Sansone & Lori A. Sansone, Gratitude and Well Being: The Benefits of Appreciation, 7 Psychiatry 18 (Nov. 2010), available at nlm.nih.gov/pmc/articles/pmc /; Martin E.P. Seligman et al., Positive Psychology Progress: Empirical Validation of Interventions, 60 Am. Psychol. 410 (July Aug. 2005), available at net/wp-content/files/papers/pospsy Progress.pdf; see also In Praise of Gratitude, Harvard Health Publ ns, Harvard Medical School, newsletters/harvard_mental_health_letter/2011/ november/in-praise-of-gratitude (last visited Nov. 17, 2014). 9 See generally Benjamin Disraeli, Wikipedia, (last visited Nov. 17, 2014) (British Prime Minister and writer; ). 10 Alex M. Wood et al., The Role of Gratitude in the Development of Social Support, Stress, and Depression: Two Longitudinal Studies, 42 J. of Res. in Personality 854, (2007). 11 Id. at John Tierney, A Serving of Gratitude May Save the Day, New York Times (Nov. 21, 2011), com/2011/11/22/science/a-serving-ofgratitude-brings-healthy-dividends.html?_ r=1& (last visited Nov. 17, 2014). 13 See generally Son-Rise, Wikipedia, en.wikipedia.org/wiki/son-rise (describing the home-based program for children with autism spectrum disorders... developed by Barry Neil Kaufman and Samahria Lyte Kaufman for their autistic son ); Meet the Founders of the Option Institute, The Option Institute, custom:founders,single,761 (last visited Nov ) (describing the Kaufmans). 14 Robert A. Emmons, Why Gratitude is Good, item/why_gratitude_is_good (last visited Nov. 17, 2014); Amit Amin, The 31 Benefits of Gratitude You Didn t know About: How Gratitude Can Change Your Life, Happier Human, (last visited Nov. 17, 2014). 15 Robert A. Emmons, Why Gratitude is Good, why_gratitude_is_good (last visited Nov. 17, 2014). 16 John Tierney, A Serving of Gratitude May Save the Day, New York Times (Nov. 21, 2011), com/2011/11/22/science/a-serving-ofgratitude-brings-healthy-dividends. html?_r=1& (last visited Nov. 17, 2014) (quoting Dr. Michael E. McCullough, University of Miami). 17 Adam M. Grant & Francesca Gino, A Little Thanks Goes a Long Way: Explaining Why Gratitude Expressions Motivate Prosocial Behavior, 98 J. of Personality & Soc. Psychol. 946 (June 2010), available at gino_jpsp_2010.pdf. 18 See generally William Arthur Ward, Wikipedia, William Arthur Ward (last visited Nov. 17, 2014) (often quoted author of inspirational maxims). 19 See generally Cynthia Ozick, Wikipedia, Ozick (last visited Nov. 17, 2014) (American writer, novelist, essayist; born 1928). 20 See generally Epictetus, Wikipedia, (last visited Nov. 17, 2014) (Greek Stoic philosopher, AD). 21 See generally Gautama Buddha, Wikipedia, (last visited Nov. 17, 2014) (founder of Buddhism). 22 John F. Kennedy, Proclamation No. 3560, 77 Stat (1963), available at UTE-77/pdf/STATUTE-77-Pg1030.pdf. 23 Robert A. Emmons, Thanks! How Practicing Gratitude Can Make You Happier (2007). 24 Robert A. Emmons, 10 Ways to Become More Grateful, edu/ article/item/ten_ways_to_become_ more_grateful1/ (last visited Nov. 17, 2014). 25 See generally Dalai Lama, Wikipedia, (last visited Nov. 17, 2014) (head monk of Gelug school of Tibetan Buddhism). Fourth Court Update Justice Patricia O. Alvarez is an associate justice on the Fourth Court of Appeals and is Board Certified in Personal Injury Trial Law. Before joining the Fourth Court, Justice Alvarez was a defense attorney for twenty-five years. San Antonio Lawyer 15 January-February 2015

16 Understanding the Texas Disciplinary Rules of Professional Conduct: Is Your Law Office Vulnerable? By Joseph A. Florio and Michael St. Angelo In more than thirty years as a practicing attorney, many of which were with the United States government, I have seen lawyers, good lawyers, penalized for violating the Texas Disciplinary Rules of Professional Conduct ( Disciplinary Rules ). Most of these violations occurred not because the lawyer did not know the rules, but because they were subject to an interpretation of a sub-set of a rule that did not seem important... until it was. Not all disciplinary sanctions are career-killers, but all are stressful and embarrassing. Available sanctions range from private reprimand to disbarment and carry various levels of censure and restrictions on a lawyer s ability to practice. Private Reprimand A private reprimand is available only if the case is tried before an evidentiary panel of the grievance committee, as opposed to a civil action in the district court. This is a case that is tried with the lawyer as the defendant. While the trial is not before a court, it still requires a great deal of preparation. A private reprimand is the lowest level of discipline that can be given. Although the disciplinary action is not publicized, and the lawyer can continue practicing law, this sanction remains a part of the lawyer s disciplinary history and may be considered in any subsequent disciplinary proceeding. A private reprimand is not available to everyone, though. There are at least six reasons why this type of reprimand cannot be available. If a lawyer falls into one of these six categories, he or she will receive a more stringent penalty. A private reprimand is not available if: (1) a private reprimand has been imposed upon the respondent lawyer within the preceding five-year period for a violation of the same disciplinary rule; (2) the respondent lawyer has previously received two or more private reprimands, whether or not for violations of the same disciplinary rule, within the preceding ten years; (3) the misconduct includes theft; misapplication of fiduciary property; or the failure to return, after demand, a clearly unearned fee; (4) the misconduct has resulted in a substantial injury to the client, the public, the legal system, or the profession; (5) there is a likelihood of future misconduct by the respondent lawyer; or (6) the misconduct was an intentional violation of the ethics rules. Public Reprimand As its name implies, this type of discipline is public, and the reprimand is published together with the name of the respondent lawyer. As with a private reprimand, the respondent lawyer can continue to practice law without interruption. A public reprimand is not available and the respondent lawyer will receive a higher-level penalty if: (1) a public reprimand has been imposed upon the respondent lawyer within the preceding five-year period for a violation of the same disciplinary rule; or (2) the respondent lawyer has previously received two or more public reprimands, whether or not for violations of the same disciplinary rule, within the preceding five-year period. San Antonio Lawyer 16 January-February 2015

17 Suspension for a Term Certain Commonly referred to as an active suspension, this public discipline means that the respondent lawyer is prohibited from practicing law for the length of the suspension. If the lawyer practices law during an active term of suspension, the conduct is a separate basis for further discipline and/or for contempt of the judgment. Upon the conclusion of an active suspension, the lawyer is eligible to practice law provided all other requirements for eligibility, such as payment of bar dues and compliance with continuing legal education, are current. Fully Probated Suspension This type of discipline is public and is for a term certain. The suspension, however, is probated, which means that the respondent lawyer may practice law during the period of suspension, but he or she must comply with the specific terms of probation throughout the probated suspension period. Terms of probation typically require that the respondent lawyer: (1) refrain from engaging in further misconduct; (2) not violate any state or federal criminal statutes; (3) keep the State Bar notified of current mailing, residential, and business addresses; (4) comply with continuing legal education requirements; (5) comply with the rules for maintaining trust accounts; and (6) respond to any requests by the Chief Disciplinary Counsel for information in connection with an investigation of allegations of misconduct. Depending upon the facts of a particular case, probation terms may also include: (1) additional continuing legal education; (2) a psychological evaluation; (3) substance abuse counseling; (4) practice of law under the supervision of a designated monitor; or (5) payment of restitution and attorney s fees by a certain date. A fully probated suspension is not available, and the respondent lawyer will receive a higher-level reprimand if: (1) a public reprimand or fully probated suspension has been imposed upon the respondent lawyer within the preceding five-year period for a violation of the same disciplinary rule; (2) the respondent lawyer has previously received two or more fully probated suspensions, whether or not for violations of the same disciplinary rule, within the preceding five-year period; (3) the respondent lawyer has previously received two or more sanctions of public reprimand or greater imposed for conflict of interest; theft; misapplication of fiduciary property; or the failure to return, after demand, a clearly unearned fee. In the event a fully probated suspension is not available, any sanction imposed must be for no less than thirty days of active suspension. Partially Probated Suspension This type of discipline is a combination of an active suspension followed by a period of probated suspension and is public. Disbarment This is the most severe discipline and results in a complete loss of a respondent lawyer s license to practice law. Once disbarred, the lawyer s name is removed from the membership rolls of the Supreme Court, and the lawyer is required to remit his or her law license and bar card. After five years, a disbarred lawyer may petition a district court to be reinstated to the practice of law. The disbarred lawyer must prove that reinstatement is in the best interest of the public and the profession, and serves the ends of justice. If such an application is granted, the disbarred lawyer is not automatically granted a law license. The disbarred lawyer must still pass the Bar Exam administered by the Texas Board of Law Examiners. Measuring and Improving Performance under the Disciplinary Rules All lawyers know that the Disciplinary Rules are for their benefit and that they are bound by those rules, but these questions remain: How do you keep the rules at the forefront of your law office? How do you make sure that everyone in the office knows how to comply? Compliance with the Disciplinary Rules requires frequent self-assessment, but how do you self-assess to a set of rules, and how do you determine where in your organization you are vulnerable? Your greatest asset is the intellectual capital represented by your employee base. If you could objectively assess that base, you would gain greater insight into, and understanding of, the Disciplinary Rules. The assessment would reveal strategic issues that affect law office performance, and it would give managers and supervising attorneys excellent insight into their vulnerabilities. This, in turn, would allow prompt identification and correction of misunderstandings of the Disciplinary Rules before an attorney is subjected to discipline. Assessment would allow you to detect problem areas in a meaningful way and identify specific areas where you or people in your office might not understand the rules. You would be able to identify the gaps between knowing that something is wrong and knowing why it is wrong. In short, you would be able to uncover business risks that could be fatal to someone s legal career or your business. So, how do you assess a law office to make sure that everyone that needs to know the Disciplinary Rules really understands them? How do you ensure that you know if there is a gap in understanding in the firm and where that gap exists? How do you know that the people you are assessing in your office are telling the truth about their knowledge of the rules? We have served as advisors to NeuraMetrics Inc. during the process of building an assessment product to accomplish these tasks and have vetted their work. NeuraMetrics Inc. is a company that specializes in business process improvement and has worked to create a formal, law-firm-wide, comprehensive, rigorous assessment of your employees knowledge of the Disciplinary Rules. This new tool uses web-based technology and an actual set of the Texas Disciplinary Rules of Professional Conduct to measure current understanding of those rules. Supervisors and managers can use the data to evaluate performance against the rules and to determine improvement potential. A comprehensive set of queries is administered over the web to the necessary employee base at all levels. Each survey is set up to be anonymous, with the understanding that confidentiality will bring about an honest and accurate assessment. The tool can be used by a firm of any size and applies to all practice areas. All of the scores in the assessment demonstrate how close the scored entities (entire firm, departments, functions, etc.) are to the standard which you have set. This tool will offer your law office - continued on page 22 - San Antonio Lawyer 17 January-February 2015

18 What is a Public Insurance Adjuster? By Robert W. Loree One of your clients or a prospective client telephones you and says that he or she needs your legal services. The client tells you that he has an insurance claim for damage to his property for one of the usual culprits fire, hail, windstorm, or water. He also tells you that the insurer is accepting coverage on the claim, but the insurer s adjuster is stringing the claim out and appears to be low-balling the cost of repairs. Your client has not obtained any estimates of his own for the cost of repairs and asks for your help with the adjustment of the claim. What should you do? As an attorney, your first inclination may be to reach a fee agreement with the client and assist him with the adjustment of the insurance claim. There are some pitfalls, however, that may not be readily apparent. First, there is the issue of payment. Your client may not be able to afford retaining counsel on an hourly basis, and taking a onethird or forty percent contingent fee interest would leave the client without the necessary funds to repair his or her property damage because insurers typically do not agree to pay any attorney s fees, even if an insured is represented by counsel during the claims adjusting process. 1 Second, when an attorney gets involved in the adjustment of an insurance claim, that attorney can easily become a fact witness on the claim by performing investigatory or adjuster type duties. When this happens, it abrogates the attorney-client privilege and can disqualify the attorney from participating in any future litigation. 2 Third, during the adjustment of the claim, the insured always needs to obtain his own estimate for the cost to repair the subject damage. It cannot be just any sort of estimate. It needs to be a Xactimate estimate, which is the industry standard for the adjustment of insurance claims. 3 Since attorneys do not prepare estimates or even know how to do so, then the attorney needs to incur additional costs with an expert to obtain that estimate. There is a very good alternative for the client that avoids all these potential problems with an attorney getting involved in the adjustment of an insurance claim. 4 That alternative is to recommend that your client retain a public insurance adjuster to assist him with the adjustment of the claim. Most clients, however, have never heard about public insurance adjusters and invariably ask: What is a public insurance adjuster? In Texas and many other states, a public insurance adjuster is a state licensed and bonded adjuster who represents only the insured concerning the adjustment and resolution of a first-party insurance claim for damage to real or personal property. Public adjusters can also represent an insured for any loss of income involved in a first-party insurance claim, often referred to as a business interruption claim. Since public adjusters represent only the insured, they even the playing field through their interaction with the insurer s adjuster in the investigation, documentation, presentation, negotiation, and settlement of the insured s claim. The insured has its own adjuster to properly work up and estimate the damage for the proper repair of his property and does not have to rely upon the insurer s adjuster for a fair evaluation. When necessary, the public adjuster will retain consultants, like roofing consultants or engineers, to determine causation-type issues or other related matters involved in the claim. Many times the public adjuster will advance these costs as part of his contract with the insured. In Texas, public adjusters are extensively regulated by the San Antonio Lawyer 18 January-February 2015

19 Texas Department of Insurance and under Chapter 4102 of the Texas Insurance Code. Section of the Texas Insurance Code requires that a public adjuster have a written contract with the insured to represent him in his insurance claim. The public adjuster s contract form must be approved by the Texas Department of Insurance and must contain a provision allowing the insured to rescind the contract by written notice within 72 hours of signature and a notice in 12-point type stating WE REPRESENT THE INSURED ONLY. Under Section of the Texas Insurance Code, a public adjuster can charge the insured for his services by an hourly rate, a flat fee, or a percentage of the total amount the insurer pays on the claim, not to exceed ten percent of the amount of the insurance settlement. Most public adjusters charge the ten percent contingent fee. The statute also prohibits a public adjuster from handling a third-party personal injury claim. Public adjusters are insurance professionals familiar with the coverages provided in property insurance policies. They are much more knowledgeable than the insured, and even most counsel, about what is covered under a property insurance policy and how to posture the claim to obtain full policy benefits. They provide the insurer with written notice of the insured s loss, which starts the clock and applicable time periods for the prompt payment of claims statute in Chapter 542 of the Texas Insurance Code and its 18% penalty if the claim is not timely paid. Public adjusters usually have estimating or construction backgrounds and are well versed in preparing estimates for property damage, including Xactimate estimates. Many of them have certifications in estimating and various construction related matters. Armed with this knowledge, public adjusters can identify the available coverages under the policy for the insured, determine causation for the loss, estimate the cost to properly repair the covered damage for the insured, and attempt to obtain a fair resolution of the insured s claim with the adjuster for the insurance company. They provide the insured with a prompt, efficient, and cost-effective service for the resolution of his insurance claim. In the event the insurer and its adjuster deny portions of the claim or low-ball the cost of repairs despite the public adjuster s efforts, the public adjuster usually refers the insured to counsel for litigation and provides counsel with his file. This file, which normally contains the subject insurance policy, the cost of repair estimates, any consultant s reports, the correspondence and s during the adjustment of the claim, and any other pertinent documents on the claim, provides counsel with the factual bases to move forward. Typically, this information is all that counsel needs to send the statutorily required notice letters under the Texas Insurance Code and the Texas Deceptive Trade Practices Act and to file suit after the sixty-day notice period. In addition, the public adjuster works with counsel during the litigation since he is both a fact and expert witness for the insured. As an expert witness, the public adjuster can testify to the reasonable and necessary cost of repairs and causation and can also comment on the insurer s claims handling since he is a licensed insurance adjuster. Currently, the Texas Department of Insurance has licensed 734 public adjusters to practice in the state. Checking with the Texas Department of Insurance website, and other Internet sources such as the Texas Association of Public Insurance Adjusters, com, should reveal the public adjusters practicing in your area. They can greatly assist your clients with the adjustment of their insurance claims, and in the event of a dispute, provide counsel with a claim ready for litigation. (Endnotes) 1 The only legal claim that may be available at this time is one under Chapter 542 of the Texas Insurance Code for the 18% per annum interest as damages for failing to timely adjust and pay the claim under the statute s various deadlines. Chapter 542 also provides for the recovery of reasonable attorney s fees, but insurers rarely pay any such 18% interest or attorney s fees without litigation. 2 See In re Tex. Farmers Ins. Exch., 990 S.W.2d 337, 341 (Tex. App. Texarkana 1999, pet. denied) (holding that if counsel acts as an investigator or an adjuster and not as an attorney, then the attorney-client privilege does not apply); Tex. Disciplinary R. Prof l Conduct 3.08 (Lawyer as a witness). 3 Xactimate is a computer program designed for estimating insurance claims, and it includes localized pricing for all the items in the scope of repairs, plus sales tax, general conditions, overhead and profit, and other factors affecting the repair job. 4 These problems are not present if the insurer has denied the claim, at which time the client or prospective client needs to consult with counsel about whether the denial was proper and what coverage issues are involved. Robert W. Loree is the senior and managing partner of the San Antonio law firm, Loree & Lipscomb. He has a general civil litigation practice and specializes in first-party insurance claims for insureds on a contingent fee basis. Mr. Loree has been practicing thirty-six years, is licensed in Texas and Colorado, and is board certified in Civil Trial Law by the Texas Board of Legal Specialization since San Antonio Lawyer 19 January-February 2015

20 Federal Court Update By Soledad Valenciano and Melanie Fry Summaries of significant decisions rendered by San Antonio federal judges from 1998 to the present are available for keyword searching at Court Web found at courtweb.pamd.uscourts.gov/ courtweb. Full text images of most of these orders can also be accessed through Court Web. If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano or Melanie Fry by phone at or or by at svalenciano@svtxlaw. com or mlfry@coxsmith.com with the style and cause number of the case, and the entry date and docket number of the order. Motion to Dismiss; Private Cause of Action; 38 U.S.C Bouldin v. Wells Fargo, N.A., SA-14- CV-722-XR (Rodriguez, Oct. 16, 2014); Campbell v. Wells Fargo, N.A., SA-14- CV-723-XR (Rodriguez, Oct. 16, 2014); Ivey v. Wells Fargo, N.A., SA-14-CV-726- XR (Rodriguez, Oct. 16, 2014). Wells Fargo foreclosed on three different properties. Borrowers loans were each secured by the United States Department of Veteran Affairs ( VA ). Borrowers obtained injunctive relief, and Wells Fargo removed each action to federal court, thereafter filing motions to dismiss for failure to state a claim. In a matter of first impression for the Fifth Circuit, court granted each motion to dismiss. Borrowers do not have a private cause of action under 38 U.S.C to enforce any requirement that the VA be notified prior to instituting foreclosure proceedings on a VA-secured loan or to enforce any requirement that the VA be notified that borrower s payment was rejected after notice of default. Using a Cort analysis, 422 U.S. 66 (1975), court concluded that 3732 is designed to protect the government s interests, not the borrower s; the statute s plain language does not indicate that a private cause of action might be implied; a private cause of action is inconsistent with the statute s legislative scheme, as the statute is not intended to provide a means for veterans to prevent foreclosure when in default; and mortgage foreclosure is traditionally relegated to state law. Foreclosure; Abandonment; Review of Bankruptcy Order In re Gene R. Rosas (Rosas v. America s Servicing Co. & Deutsche Bank Nat l Trust Co., as Trustee for the Fremont Home Loan Trust Series ), SA-14- CV-601-XR (Rodriguez, Oct. 14, 2014). After bringing a series of state-court and bankruptcy proceedings in an attempt to stop the foreclosure sale of his residence, Chapter 13 debtor filed his fifth bankruptcy petition and an adversary proceeding against the servicer and holder of the note on the residence, seeking a determination as to the validity of the lien and to quiet title. Debtor appealed bankruptcy court s order granting servicer and holder s motions for summary judgment. Court held that bankruptcy court did not err in: (1) concluding that, under Texas law, forbearance agreement issued by servicer and holder and signed by debtor amounted to abandonment of all accelerations prior to specified date; (2) finding that acceptance of payments and application of such payments to the amount owed without seeking other remedies constituted abandonment; and (3) finding that defendants rights to enforce collection of the note were not time-barred. Motion to Dismiss; Temporary Restraining Order; Injunctive Relief; State Action Cokley v. Barriga, SA-14-CV-945-XR (Rodriguez, Oct. 28, 2014). Resident of private assisted living facility sued court-appointed guardian and guardian ad litem. Resident contended that she was being held against her will at the facility. Court denied resident s requests for a TRO and injunctive relief pursuant to 42 U.S.C. 1983, the Fourth and Fourteenth Amendments, and the Americans with Disabilities Act. Resident failed to allege facts to state a claim as the court-appointed guardian and guardian ad litem are not state actors and the assisted living facility in question is not a public accommodation. Remand; Improper Joinder; Pleading Practice Rajajoshiwala v. Travelers Cas. Ins. Co. of Am., SA-14-CV-715-XR (Rodriguez, Sept. 23, 2014). Court remanded insured s case against insurer and claims adjuster. Insurer had removed case based on diversity jurisdiction, arguing improper joinder because insured had no reasonable basis for his claims against claims adjuster for violations of the Texas Deceptive Trade Practices Act ( DTPA ), violations of Texas Insurance Code Chapters 541 and 542, and negligent misrepresentation. Court determined insured s Texas state court petition is not held to a federal court heightened pleading standard. Court noted that insured s DTPA and 542 claims against adjuster likely would not survive, but claims against adjuster for violating Chapter 541 for unreasonable investigation had a reasonable basis in state law. Although other federal courts in Texas have held that merely pleading that Defendants acted in violation of the law, without identifying specific actors, can lead to improper joinder, court was not convinced that the pleading at issue did not state a claim under Texas law and pleading practice. Fair Labor Standards Act; Executive Exemption Mohnacky v. FTS Int l Servs., L.L.C., SA-13-CV-246-XR (Rodriguez, Oct. 2, 2014). Court denied plaintiff s motion for partial summary judgment on his claim that defendant failed to pay him overtime under the Fair Labor Standards Act ( FLSA ). Genuine issue of material fact existed as to whether plaintiff, a field coordinator for a frac crew of ten San Antonio Lawyer 20 January-February 2015

21 to twelve members, was subject to executive exemption. Plaintiff earned a salary over $455 a week, directed crew members, provided on-the-job training, and was the highest ranking employee during fracking convoy. Plaintiff s job description included hiring, grievances, and termination of employment. Although plaintiff denied ever giving recommendations for employment decisions, court found enough evidence to let a jury decide whether executive exemption was met. Court denied plaintiff s motion for summary judgment that defendant acted willfully. Mere negligence in performing an internal audit to assess whether field coordinators were properly classified as exempt was insufficient to establish willfulness as a matter of law. While prior litigation involving the same legal issue can support a finding of willfulness against an employer, prior litigation at issue involved a position different than that held by plaintiff and was, therefore, insufficient to put defendant on notice that its policy violates the FLSA. Diversity Jurisdiction; Amount in Controversy; Eviction Federal Nat l Mortg. Ass n v. Gibson, SA- 14-CV-712-XR (Rodriguez, Sept. 3, 2014). Plaintiff sued to evict defendant from her home. Defendant removed, asserting diversity jurisdiction. Court remanded because defendant did not establish an amount in controversy greater than $75,000. Defendant pleaded that fair market value of the property was $144,280. But where plaintiff only seeks eviction and not monetary damages, the amount in controversy is the value of the right to occupy the property, not the underlying value of the property. Although foreclosure of the home was a possibility, it was not before the court. Defendant made no allegations as to fair rental value of the property and, therefore, could not establish federal diversity jurisdiction. Removal; America Invents Act; Copyright Act DEA Specialties Co., Inc. v. DeLeon, SA-14- CA-634-XR (Rodriguez, Sept. 4, 2014). Plaintiff distributor sued former supplier and employee for breach of distributor and employment agreements. Defendant supplier counterclaimed for copyright infringement under the Copyright Act, alleging that plaintiff continued to copy and use defendant s proprietary software to distribute a competitor s products. Defendant removed pursuant to 28 U.S.C as part of the America Invents Act. Court held defendant s claims arose under Copyright Act and did not merely assert a dispute over ownership of copyrighted material. Court exercised supplemental jurisdiction over plaintiff s state law claims because all parties claims arose from the distributorship agreement. Soledad Valenciano practices commercial and real estate litigation with Spivey Valenciano, PLLC. Melanie Fry practices commercial litigation and appellate law with Cox Smith Matthews. San Antonio Lawyer 21 January-February 2015