Tuesday, August 4, 2015

50 Cent is Broke

As most of you know, Curtis James Jackson, III a/k/a 50 Cent filed Chapter 11 bankruptcy on July 13, 2015. He filed what's commonly known as a skeleton petition, which is a bare-bones filing used to get a case on file as quickly as possible and which does not contain the required disclosures regarding assets and liabilities. He then filed a motion to extend the timeline to file his actual disclosures, which was granted. On August 3, 2015, he finally filed the rest of his schedules.

To make a long story short, he was almost $8M underwater on the day he filed bankruptcy. I have attached the relevant documents below. Here is a brief explanation of the interesting documents: Schedule A contains his real estate holdings; Schedule B contains all of his other personal property and assets; Schedule D lists the mortgage on his house; Schedule F lists all other unsecured debts, except child support; Schedule I lists monthly income; and Schedule J lists monthly expenses.

Here are the highlights:

  • Total Assets: $24,823,899.18
  • Total Debts: $32,509,549.91
  • Monthly Income: $184,969.58
  • Monthly Expenses:  $108,000
  • Cash in the bank: $10,554,486.13
  • Ownership interests in his companies: $4,412,712.24
  • Total value of his automobiles: $500,618
  • Monthly child support: $14,600
  • Monthly household expenses/utilities: $72,000
  • Monthly meals and entertainment: $3,000
  • Monthly wardrobe: $3,000

Here are the complete schedules. Take a look and let me know if you have any questions. I think this is interesting stuff!

Saturday, August 1, 2015

Amendments to Illinois Pro Hac Vice Rules

The Supreme Court of Illinois amended Rule 707 (renamed as Permission for an Out-of-State Attorney to Provide Legal Services in Proceedings in Illinois) and made related amendments to Rules 756(a) and (a)(1) and 718(e) and (f), all effective for appearances filed in proceedings on or after July 1, 2013. The amendments do not require any action by an out-of-state attorney who obtained permission to enter an appearance in an Illinois proceeding prior to July 1, 2013.

Amended Rule 707 permits an out-of-state attorney to enter an appearance in a proceeding in Illinois before a court, a court-annexed alternative dispute resolution body, or a agency or administrative tribunal of the State of Illinois or of a local government unit, if the attorney: 
  • meets licensure and other eligibility requirements
  • associates with an Illinois attorney who files an appearance in the proceeding
  • files a verified Statement with the tribunal

No order of the tribunal permitting the appearance is required. However, the attorney must serve the verified Statement on the ARDC, register annually with the ARDC, and pay fees to the ARDC.

Amended Rule 707 does not affect the longstanding practice under which an out-of-state attorney authorized to practice law in another United States jurisdiction is permitted to provide legal services at a deposition in an Illinois proceeding without need of separate Rule 707 permission, if the out-of-state attorney is assisting an attorney whose appearance in the proceeding is authorized, regardless of the location of the deposition. The out-of-state attorney is subject to the disciplinary jurisdiction of the Supreme Court of Illinois (Supreme Court Rules 751(a), 752(a) and (b), 779(a) and Rule 8.5 of the Illinois Rules of Professional Conduct). The longstanding practice is consistent with Rule 5.5 of the Illinois Rules of Professional Conduct. This practice does not permit an out-of-state attorney to file an appearance or to provide legal services before the tribunal, including the filing of any pleading, motion, or other document,  without obtaining Rule 707 permission.

Click here for instructions for a Rule 707(d) statement and for a listing of fees and requirements.

Friday, July 17, 2015

Donut Fridays

The South Carolina Bar Ethics Advisory Committee has issued an opinion (here) approving a law firm's weekly delivery of a box of donuts to banks and real estate agencies that refer clients to the firm. The boxes also contain beverage "koozies" bearing the firm's name and a coupon for $50.00 off a consultation or real estate closing. The Advisory Committee found that Rule 7.2(c) of the South Carolina Rules of Professional Conduct governed the situation. Like Illinois Rule 7.2(b), the South Carolina rule prohibits a lawyer from giving "anything of value to a person for recommending the lawyer's services." According to the South Carolina opinion, as long as the weekly donut boxes were delivered regardless of whether the recipient had referred clients to the firm that week, Rule 7.2 was not violated. A violation would occur, however, if delivery of the donut box was contingent on referrals to the firm.

For large sections of suburban Chicago such a transparent advertising ploy offering “koozies,” discount coupons, and donuts simply would not work. In those communities the box would need to contain "koozies," discount coupons, and kale.

Monday, July 6, 2015

Continued Employment as Consideration for Postemployment Non-Compete Clauses

McInnis v. OAG Motorcycle Ventures, 2015 IL App (1st) 130097 (here), provides valuable insight concerning the enforceability of restrictive covenants in employment contracts. The appellate court began by summarized the requirements for an enforceable restriction on an employee’s future employment, namely, that the restrictive covenant is (1) ancillary to a valid contract, (2) supported by adequate consideration, and (3) reasonable.

Moving to the heart of the matter, the court evaluated the adequacy of the consideration supporting the restrictive covenant in McInnis’s employment contract with OAG. The court recognized that employment for a substantial period of time after initiation of an at-will employment agreement can be sufficient consideration. But the court also noted that Illinois case law appears to require at least two years of continuous employment to permit a finding of adequate consideration. Since McInnis had been employed by OAG for only 18 months, the court found the consideration inadequate and affirmed the trial court’s denial of OAG’s motion for a preliminary injunction enforcing the covenant.

The majority opinion in McInnis holds that for continued employment standing alone to constitute adequate consideration, the employment must continue at least two years. Employment for a shorter period is insufficient. The dissent argued that such a “bright-line” test is illogical and unfair and that there is no reason that employment for 23 months should automatically be deemed inadequate consideration to support a restrictive covenant.

The value of the opinion lies not only in its thorough discussion of Illinois cases on the two-year “bright-line” rule but also in its discussion of the split among the federal courts interpreting Illinois law on the issue.

Saturday, June 13, 2015

Proposed Amendments to the Illinois Rules of Professional Conduct

On July 22, 2015, the Illinois Supreme Court Rules Committee will conduct a public hearing on multiple proposed changes to the Rules of Professional Conduct. (The hearing notice is here and the proposed amendments are here).

The proposed amendment to Comment 2 of Rule 1.18, seeks to clarify the circumstances under which a communication by a visitor to a law firm's Web site can transform the "visitor" into a "prospective client." Proposed Comment 2 describes a firm's Web site that merely provides general legal information and sets forth the lawyer's education, experience, and practice areas. E-mailing information to that firm most likely will not transform the visitor into a prospective client. However, if a firm's Web site goes further and specifically requests or invites the visitor to submit information "without clear and reasonably understandable warnings and cautionary statements that limit the lawyer's obligations,” then a submission "likely” will constitute a consultation and establish a prospective client relationship.

ABA Formal Opinion 10-467 (here), suggests that a Web site disclaimer warn visitors that (1) sending information does not create an attorney-client relationship; (2) information sent is not confidential; (3) no legal advice has been given; and (4) the firm will not be prohibited from representing an adverse party. To be effective, the disclaimer must be conspicuously placed and in language understandable to a reasonable person.

Regardless of whether the Supreme Court adopts the proposed amendment to Comment 2, it may be a good time for law firms to check their disclaimers against the requirements of ABA Formal Opinion 10-467. And if the proposed amendment is adopted, it may be appropriate to add to the disclaimer that sending a communication does not create an attorney-client relationship or an attorney-prospective client relationship.

Wednesday, May 27, 2015

Illinois Lawyers Must Now Register Online

Amended Illinois Supreme Court Rule 756, effective June 1, 2015, requires all attorneys to register annually online.  Paper registration is no longer accepted.

As part of the yearly registration process, new Rule 756(g) also requires that lawyers provide the Attorney Registration and Disciplinary Commission with the following information (1) an address, email address, and telephone number; (2) a residential address; (3) a list of other states in which the lawyer is licensed to practice law; (3) the type of entity at which the lawyer practices, the number of lawyers in that organization, the lawyer’s principle areas of practice; and (4) whether the “organization has established a written succession plan.” The information required by (2)-(4) above will remain confidential.

Amended Rule 756 is here and the Supreme Court’s press release announcing the Rule change is here.

Thursday, May 14, 2015

Limited Scope Representation Retainer Agreements

Illinois has recognized limited scope representation for a long time. In 1983, an Illinois State Bar Association opinion (here) approved the preparation of pleadings for a pro-se litigant in a dissolution of marriage proceeding. But the real impetus behind unbundled legal services came with the adoption of Rule 1.2(C) of the Illinois Rules of Professional Conduct in 2010. Rule 1.2(C) specifically authorizes the provision of discrete legal services: “A lawyer may limit the scope of representation if the limitation is reasonable under the circumstances and the client gives informed consent.”

Several sample limited scope retainer agreements are available. The Chicago Bar Association offers one here. The ABA provides templates here. These and other sample agreements nicely define the scope of representation through a “check-the-box” format. But the forms do not directly address the requirement of Rule 1.0(e) that to obtain informed consent a lawyer must explain the “material risks” and “reasonably available alternatives” to the limited scope representation. While each case has its own particular risks and alternatives, it seems that the usual alternatives to be discussed include (1) the client handling the entire case without counsel; (2) full representation by counsel; and (3) the possibility of representation by a legal aid or pro bono attorney. Material risks might include that the lawyer’s factual and legal investigation will not be as complete as when the lawyer provides full representation and that the client’s lack of understanding of laws, rules, and court procedures may adversely affect the client’s ability to introduce evidence; explain his position to the court; present and respond to pleadings, notices, and motions; understand court rulings; and properly evaluate settlement offers.

Best practices would seem to dictate that the limited scope retainer agreement contain at least a summary of the alternatives and material risks discussed with the client.


Friday, May 8, 2015

Can a driver legally make a u-turn to avoid a DUI checkpoint?

Criminal defense attorney Samuel Partida, Jr. publishes a tremendous criminal law blog and podcast located at Illinoiscaselaw.com. He's also a great follow on Twitter (here). 

One of last week's podcasts analyzed whether a police officer would have reasonable suspicion to make a traffic stop if a driver made a u-turn to avoid a DUI checkpoint. The podcast was inspired by the Illinois criminal court case People v. Timmsen, 2014 IL App (3d) 120481

The answer may surprise you. I don't practice DUI or criminal law, so I don't know how this typically plays out in the real world, but I'd be willing to bet that 100% of the people who try to avoid checkpoints get pulled over even though the vast majority should not.  

Samuel's podcast is timely in light of the article in this morning's Tribune about DUI checkpoints (here). It turns out that the large majority of roadside checkpoints are conducted in areas populated mostly by minorities, whereas predominately white communities actually have higher rates of drunken driving accidents and fatalities. The Tribune article states that Chicago's policies regarding the location of DUI checkpoints probably violate federal guidelines. I'd be very interested in a Tribune investigation into improper traffic stops for legal u-turns in front of roadside checkpoints. 

Anyway, Samuel is blogging and podcasting about plenty of other fascinating issues for criminal law practitioners. His website is also approved for MCLE credit by the Illinois Minimum Continuing Legal Education Board, so if you still need any CLE hours check out his website here.  

Tuesday, May 5, 2015

That didn't take long.

A class action lawsuit was filed today against Manny Pacquiao and several of his promoters for failing to disclose the fighter's alleged shoulder injury prior to the fight. The complaint alleges fraudulent concealment and violations of Nevada's consumer fraud act. The plaintiffs allege that defendants committed deceptive trade practices when they failed to disclose a material fact in connection with the sale of goods or services. 

I'm not too sure this one is going to fly. I don't think it was material whether Manny's shoulder was at full strength. If Manny was going to fight, everyone was still going to purchase the pay-per-view. But maybe if he would have disclosed the injury, the boxing commissioner would have cancelled the fight and everyone would have got their money back. I don't know. 

The complaint also cites a section of the Nevada statute which prohibits "false representations" in consumer transactions. I saw other news reports today that the Nevada Athletic Commission is considering perjury charges against Pacquiao for failing to disclose the shoulder injury on a pre-fight medical questionnaire. That count may have a little more traction if Pacquiao's people did sign a document under oath. However, I still think this lawsuit fails because the general public was not privy to that medical questionnaire and could not have relied upon it when deciding to purchase the pay-per-view. As usual, I will continue to monitor this case and I will keep you apprised of any interesting developments.