The Free Press - Volume 4, Summer 2007

Report from the Chair

By Beau Hays, Esq.

Beau HayesThis is the issue of the Free Press which traditionally has been published before the annual meeting in July.  But there is no annual meeting in July, no League event on the calendar for the staff and the volunteers to be working on.  Summer is here and it is hard enough to focus on work, without having to consider whether the League and the Section could use a hand.  So the question for now is what can we do better?

The two meeting schedule leaves lengthy gaps of time that need to be used to keep the momentum of the League moving forward.  CRS needs to keep working to provide value to the membership, right through the summer.

Our education at meetings is excellent.  If you can’t find six to ten hours of education credits to take back home from each New York and Chicago meeting, you just aren’t trying.  But even here, there is room for improvement.  Every meeting, it seems, requires a herculean effort on the part of a couple of members and League staff.  The process needs to be made more regular and less reliant on member-volunteers.  As I am writing this, the plans for in New York for November ’07 are rounding into shape.  As ever, the education alone will be worth the price of admission.  But at the organizational level, CRS should be talking about what education to offer in New York for 2008; the programs for the current year should have been long ago finalized.  The upcoming year’s education should be something that comes with your annual dues notice. 

What else can this section do better?  After education at meetings, I think that the answer is “just about everything.”  A few years back, CRS helped underwrite an FDCPA training video.  That is precisely the kind of product that CRS should be producing, not merely facilitating.  Chairs going back for several years have tried to generate a forms bank, as a resource for our members who come across a case, or defense, which is new to them but probably not new to the practice.  But the effort has been thwarted by the massive scale of the task.  I believe that it is worthwhile, but it simply isn’t something that can be done by CRS as it is currently constituted, without substantial assistance from the rest of the organization.  In other words, until it becomes more than merely a CRS priority, this effort will not reach maturity.

In recent months, we have taken long strides in development of the utility of the CLLA website with the Forums.  If you haven’t been to www.clla.org  lately, you need to look in.  We have created an easily accessible chat room for issues of interest to the League as a whole and CRS in particular.  One of our best resources is the knowledge base that comes from hundreds of attorneys with decades of experience.  Anyone with a question of interest to them can post it, and then be notified when someone adds a reply.  Like the forms bank concept, the goal is to provide value by providing information.  It is modest now, at the outset, but it has the potential to develop into a true forum of ideas.

We need to reach out beyond our membership.  We need to educate more than attendees at our meetings.  Efforts to build a presence for the League, and CRS, in the credit community have suffered from the same lethargy that afflicts many of our worthwhile aims – it has depended too much on the energy and drive of the member-volunteers, all of whom have paying business to take care of.

These efforts, and several more, are the objectives being set for implementation, League-wide, in the developing Strategic Plan.  CRS is going to be called upon to help develop the League’s overall education strategy.  CRS is going to be called upon to assist in developing the public profile of the CLLA, as a resource for information to the credit community.  CRS is going to be asked to develop best practices for its members, to enhance their ability as speakers, presenters, as lawyers.  CRS is going to be expected to provide its input into how we can improve the profession.

CRS will be given a handful of steps to take in moving the League-wide strategy forward.  Meanwhile, the rest of the League is going to be given a handful of steps that can help us move CRS forward – they’re not written that way, of course, but a commitment from the rest of the League to improve other education initiatives, be more aggressive in providing amicus support on appeals, and increasing the chances for CRS members to rub elbows with the credit community can only work to the benefit of the League. 

“That sounds nifty.  But when’s it all going to happen.”  A meeting on July 19 – 22 in Orlando is set to hammer out the final plan, which will then be circulated to sections, regions and committees to get busy making parts of it work.

Starting in the second half of the year, we will be working to implement better education, better meeting experiences, better publicity and outreach efforts, and a better profession the goals of the League through this section.  CRS will be expanding some of its efforts as well – and if there is an area of interest to you, please step and say so.  Successful implementation of the plan being developed will provide answers to the question of “what can we do better” for several years to come.

Editor’s Note:  Beau Hays, Esq., Chair of the Creditors’ Rights Section, is a partner in the Atlanta, GA law firm of Hays & Potter, P.C., practicing in the areas of creditors’ rights, construction law, bankruptcy, business law, commercial law, collections and civil litigation.

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PENNSYLVANIA ENACTS AMENDMENTS TO MECHANICS' LIEN LAW

By Nicholas D. Krawec, Esquire

The first amendments to Pennsylvania Mechanics' Lien Law in forty-four years, were signed into law by Gov. Ed Rendell on June 29, 2006, and apply to contracts entered into on or after January 1, 2007, the effective date of the amendments.  If you have a client who supplies labor and/or material to Pennsylvania construction projects, you should become familiar with the amendments to the statute.  Probably the best way to explain the impact of the amendments, is to compare the provisions of the amendments, with the state of the Pennsylvania Mechanics' Lien Law of 1963 prior to the amendments.

COMPARISON OF THE PRIOR STATUTE TO THE AMENDMENTS

Who’s covered?

Pre-Amendments:  Under the prior version of the statute, contractors in privity of contract with owners (and the term “contractor” also includes an architect or engineer who, by contract with the owner, in addition to preparing drawings, specifications and contract documents, also superintends or supervises the construction, alteration or repair); and subcontractors in privity of contract with the contractor (but the term excludes an architect or engineer who contracts with a contractor or subcontractor, and any person who contracts with a subcontractor or with a materialman) had statutory Mechanics' lien rights.

Amendments:  After the amendments to the statute, the above coverage still applies, but the Amendments expand the definition of subcontractor to include a party who has a “contract with a subcontractor in direct privity of contract with a contractor.”  In plain language, this means a sub-subcontractor, or second-tier subcontractor, and a material supplier to a first-tier subcontractor.  Also, under the amendments, the term “subcontractor” excludes an architect or engineer who contracts with a contractor or a subcontractor, and excludes a person who contracts with a materialman or a person who contracts with a subcontractor not in direct privity of contract with a contractor.  In short, the Amendments have expanded the protection of the statute to second tier subcontractors, and to material suppliers to first tier subcontractors.

Lien Waivers

Pre-Amendments:  Under the prior version of the statute, a contractor or subcontractor could waive his right to file a Mechanics' lien claim by a written instrument signed by him, or by any conduct which operates to equitably estop him from filing a claim.  Also, a written contract between the property owner and the contractor, or a separate written instrument signed by the contractor, which provides that no claim shall be filed by anyone, is binding on subcontractors if the subcontractor is proven to have actual notice of such a no lien agreement or lien waiver before any labor or materials were furnished by him, or proof that the no lien contract or lien waiver was filed in the office of the prothonotary of the Court of Common Pleas of the county where the work is done, prior to the commencement of work on the ground, or within 10 days after the execution of the principal contract between the contractor and the owner, or not less than 10 days prior to the contractor’s contract with the claimant subcontractor.  These were the only conditions applied to effective lien waivers, and it did not matter whether the construction project was commercial or residential.

Amendments:  The provisions regarding lien waivers have been made a little more complex in the amendments, and the lien waiver provisions are based on whether the project is a residential or non-residential project.

            Residential Buildings
            The amendments have adopted a new category, labeled “residential building” property.  Such property is now statutorily defined as “property on which there is a residential building, or which is zoned or otherwise approved for residential development, planned development or agricultural use, or for which a residential subdivision plan or planned residential development plan has received preliminary, tentative or final approval” pursuant to the Pennsylvania Municipalities Planning Code.  (Therefore, you may need to look to the zoning, or other more detailed information, rather than simply whether the proposed buildings are single family homes or apartment buildings).

            A contractor may waive his right to file a Mechanics' lien claim against property for the erection, construction, alteration or repair of a residential building, in which the total contract price between the Owner and Contractor is less than $1 million, under the following circumstances:
(a) by a written instrument signed by him; or
(b) by any conduct which operates to equitably estop him from filing a claim

A subcontractor may waive his right to file a claim against property for the
erection, construction, alteration or repair of a residential building in which the total contract price between the Owner and Contractor is less than $1 million, under the following circumstances:

  1. by a written instrument signed by him; or
  2. by any conduct which operates to equitably estop him from filing a claim.

The above provisions should sound familiar.  They are the same as the lien waiver
provisions under the prior version of the Pennsylvania Mechanics' lien law.  Thus, on residential buildings, where the contract price between the contractor and owner is less than $1 million, the lien waiver rules are unchanged. 

HOWEVER, a subcontractor may waive his right to file a Mechanics' lien claim against property, where the contract price between the Owner and the Contractor is in excess of $1 million, for the construction of a residential building under the following circumstances:
(a)  by a written instrument signed by him; or
(b)  by any conduct which operates to equitably estop him from filing a claim,

PROVIDED, that the Contractor has posted a bond guaranteeing payment for labor and materials provided by subcontractors.  Thus, under the amendments, a subcontractor’s (or sub-subcontractor’s) waiver of lien rights on residential construction contracts where the principal contract price is in excess of $1 million, is conditioned upon the contractor’s posting of a payment bond.  This is a major change effected by the amendments.

            Non-Residential (Commercial) Buildings
           
On non-residential construction projects, a contractor’s waiver of lien rights is void, unlawful and against public policy, unless:

  1. given in consideration for the labor or materials provided; and
  2. only to the extent that such payment is actually received.

On non-residential construction projects, a subcontractor’s waiver of lien rights is void, unlawful and against public policy, unless:

  1.  given in consideration for the labor or materials provided; and
  2. only to the extent that such payment is actually received; or
  3. unless the contractor has posted a bond guaranteeing payment for labor and materials provided by subcontractors.

This payment bond requirement as a pre-requisite for lien waivers on non
-residential construction is also a major change to the Pennsylvania Mechanics' lien law.  Thus, Pennsylvania has, to some extent, joined several other states, statutorily prohibiting the prior waiver of Mechanics' lien rights as void and against public policy.

Filed lien waivers

Provided that lien rights may be waived in accordance with the requirements described above, a written contract between the property owner and the contractor, or a separate written instrument signed by the contractor, which provides that no claim shall be filed by anyone, still shall be binding on subcontractors only if the subcontractor was proven to have actual notice of such a no lien agreement or lien waiver before any labor or materials were furnished by him, or proof that the no lien contract or lien waiver was filed in the office of the prothonotary of the county where the work is done prior to the commencement of work on the ground, or within 10 days after the execution of the principal contract between the contractor and the owner, or not less than 10 days prior to the contractor’s contract with the claimant subcontractor.  However, the frustration caused to many subcontractors by these filed lien waivers, is eliminated by the requirement of the posting of a payment bond by the contractor, in order for such a filed lien waiver to be effective.

Pre-filing notice requirements for subcontractors

Pre-Amendments:  In cases of alterations and repairs, a subcontractor was required to serve a Preliminary Notice of Intention to file Mechanics' lien claim upon the property owner, on or before the date of completion of his work.  Imagine the negative impact this requirement had.  Quite often, this preliminary notice of intention to file a Mechanics' lien claim was received by an owner, often before any payment was due, let alone before anybody was in default of its obligations.  Indeed, quite often this preliminary notice would be received by the property owner prior to the work at the jobsite even being done.  Despite all of the efforts by the subcontractor or its attorney to “sugar coat” the language in the preliminary notice, the owner would invariably focus in on the “intent to file a Mechanics' lien claim.”  The angry phone calls and nasty letters would start, and ill-will would needlessly taint the relationship between contractors and subcontractors on alteration and repair jobs.  In addition to the preliminary notice, a subcontractor was required to serve the property owner with a Formal Notice of Intention to File Mechanics' Lien claim, after the completion of his work, and at least 30 days prior to filing a Mechanics' lien claim.  In new construction situations, the much maligned preliminary notice was not required, and the subcontractor was only required to give the property owner a Formal Notice of Intention to File Mechanics' Lien Claim at least 30 days prior to filing a Mechanics' lien claim.

Amendments:  Much to the delight of contractors, owners and the attorneys for subcontractors (including this author), the Preliminary Notice requirement for subcontractors has been eliminated.  (Now there are fewer angry phone calls from owners and contractors to deal with!)  Subcontractors (and now, sub-subcontractors as well) need only serve the property owner with a Formal Notice of Intention to File Mechanics' Lien claim, after the completion of their work, and at least 30 days prior to filing their lien, regardless of whether the project is a new construction or alteration or repair.

Statute of Limitations

Pre-Amendments:  Under the prior version of the statute, Mechanics' lien claims had to be filed within four (4) months after completion of the claimant’s work.

Amendments:  Under the Amendments, Mechanics' lien claims must be filed within six (6) months after completion of the claimant’s work.  (Note: because of this extension of the statute of limitations, a formal notice of intention to file a Mechanics' lien claim can now be served up to 5 months after the last furnishing date; keep in mind that the formal notice must be served on the owner at least 30 days prior to filing the lien).

Priority of the lien
Pre-Amendments:  Prior to the amendments, on new construction jobs, the lien shall have priority from the date of visible commencement on the ground of the work of erecting or constructing the improvement.  For alterations and repairs, the lien had priority as of the date of filing of the claim.  The old provisions for lien priority on new construction jobs often were a source of concern for banks and lenders, because if visible erection or construction work commenced on the ground before the recording of a mortgage, any Mechanics' lien claim filed against the job site property would be superior to the lien of the bank’s mortgage.  Banks had to be very careful that their purchase money mortgages or construction mortgages were filed prior to the first visible commencement of work on the ground.

Amendments:  With the amendments to the Mechanics' lien law, the above lien priority provisions remain the same, but they are also subject to a new provision, which states that any lien obtained pursuant to the statute, shall be subordinate to a purchase money mortgage as defined in 42 PA.C.S. Section 8141(1), and an open-end mortgage as defined in 42 PA.C.S. Section 8143(f), typically a construction mortgage, the proceeds of which are used to pay all or part of the cost of completing erection, construction, alteration or repair of the mortgaged property secured by the open end mortgage.  Therefore, with these new provisions, banks need not be concerned that their purchase money mortgages or open-end mortgages would be subordinate to any Mechanics' liens for new construction projects, as any Mechanics' liens filed under the Amendments will be subordinate to such mortgages.

Other major provisions are unchanged

It is important to note that the Amendments do not change the post-filing, service and perfection requirements.  Even after the enactment of the Amendments, a contractor or subcontractor still must serve the property owner with a Notice of Filing of Mechanics' Lien Claim within 30 days after it is filed; they still must file an Affidavit of Service of Notice of Filing within 20 days after service of the Notice of Filing is effected.  Contractors and subcontractors still must file a Complaint to Obtain Judgment on Mechanics' Lien Claim within 2 years after filing the lien, and they still must prosecute the Complaint to judgment within 5 years after filing the lien in order to perfect it.  Missing any one of these deadlines will still be grounds for striking the Mechanics' lien.

Summary

In summary, the amendments to the Pennsylvania Mechanics' Lien Law, with the new provisions regarding prior lien waivers and payment bond requirements, will benefit contractors and subcontractors.  Moreover, they clearly will benefit sub-subcontractors and material suppliers to subcontractors who did not have any lien rights under the pre-amendment version of the statute.  Lenders and banks can now feel comfortable that these expanded lien rights, and prohibition of prior lien waivers in most circumstances, will not adversely affect their mortgages’ priority over Mechanics' lien claims.  The amendments may also have the effect of increasing the cost of new construction contracts, as contractors now must factor into their bids and proposals, the costs associated with obtaining the statutorily required labor and material payment bonds.  Finally, contractors are likely to pay closer attention to whether their subcontractors are paying their sub-subcontractors and material suppliers.  They may be more inclined to issue joint checks or direct payments to sub-subcontractors and material suppliers, so as to avoid litigation associated with defending against a Mechanics' lien on behalf of the owner, in those limited situations where no bond is required, or to prevent payment bond claims in those situations where a payment bond has been posted.  This is good news if your clients are primarily sub-subcontractors and material suppliers.

Editor’s Note:  Nicholas D. Krawec, Esquire, is a partner at Bernstein Law Firm, P.C., in Pittsburgh, PA, where he specializes in creditors’ rights, commercial collections, Mechanics' lien and payment bond law and commercial litigation.  He is Board Certified in Creditors’ Rights by the American Board of Certification.

EDUCATION COMMITTEE REPORT

By Matthew J. Burkinshaw, Esq. and Lorna Walker, Esq.

The Education Committee is currently in the process of planning programs for both the Eastern Meeting in New York in the Fall and the Chicago National Meeting next Spring.  In November, the CRS is planning a feature program on commercial arbitration techniques and strategies.  The Committee is also working on programs on mechanics’ liens and “debtor dodges” which include frivolous counterclaims and unusual defense tactics. 

For Chicago, the CRS will present a mock trial demonstrating trial techniques learned over the past two years from our feature speakers.   We have received several offers from members to participate in the trial as witnesses or attorneys.  We would welcome any other volunteers. Also planned are programs on post-judgment collections and electronic discovery issues in litigation.

As always, the Committee wants and needs input on past, present and future education programs from all CRS members. We encourage you to approach us with an idea for a program or to volunteer to speak at an upcoming convention.  Speaking at a convention is a great way to raise your profile in the League which can in turn lead to more business for you and your firm.  If you hear someone speak for another group who you think would be a good speaker for the CLLA, we would love to hear about that speaker too.  Please feel free to contact Matt Burkinshaw at mburkinshaw@burkinshawlaw.com or Lorna Walker at lorna@sweetwalker.com.

Editor’s Note:  Lorna Walker, Esquire and Matthew J.Burkinshaw are Co-chairs of the CRS Education Committee.  Matthew Burkinshaw, Esq. serves on the Executive Council of the CRS and Co-Chairs the Education Committee.  He is the principal attorney of Burkinshaw Law Offices, P.C. in Milford, MA.  The firm concentrates in handling commercial and retail collection matters throughout Massachusetts.  Lorna Walker, Esq. is a principal in the firm of  Sweet & Walker in San Francisco, CA, specializing in commercial collection.  The firm handles all collection matters, including insurance premiums collections, trucking claims, etc.  Lorna has been practicing for 15 years and has specialized in collections litigation for the last 13 years.

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TIPS FOR A GOOD SPEECH

By Donald B. Kramer, Esq.

As I speak throughout the country on subjects like "Latest Developments in Collections" and "Internet Marketing for Law Firms", I have learned some lessons about public speaking that I would like to share with you:

  1. Find out the size and background of your audience.  You would not want to use an "off color" joke in the "Bible Belt".
  2. Check the site of the presentation.  Make certain the microphone works properly and that your voice can be heard at the back of the room.  Arrange the chairs so that there will be just enough for the anticipated audience, with more chairs available stacked on the side or facing in the opposite direction in the back, forcing the audience to use the front of the room, and giving the appearance of a sold-out performance.  Make sure there will be no distractions during the presentation, such as music or loud noises in an adjoining room or kitchen.  If slides are to be shown, check in advance to make sure they work.
  3. If someone is going to introduce you, work with that person on the content of the introduction, perhaps even preparing the introduction for that person, since often the person gives an incorrect description, or just gives your name without any background details.
  4. Prepare an outline of your presentation, and DO NOT READ the speech.  If you give a handout or agenda to the audience, do it on your stationery which will put your name and contact information in front of the audience throughout the presentation.
  5. Avoid the use of big words or legal words.  Assume your audience is at the 8th grade level.
  6. Dress so your outfit is not distracting.  If the presentation is being taped, check in advance with the camera people for the best colors to use.
  7. Do not stand in one place, and vary the tone of your voice to avoid it becoming boring.  Try to insert a few stories into your presentation, to lend interest.
  8. If you are allowing questions, announce it at the beginning, so the audience will know whether they can ask during the presentation, or after.  If questions are to be asked after the speech, arrange with someone in the audience to ask the first question, to avoid a monumental silence at that point.  Once the first question is asked, generally others will follow quickly.
  9. At the beginning of your presentation, if the audience is large and there is a lot of talking, use the microphone and start counting slowly  10, 9, 8, 7, 6, 5, 4, 3 , 2, 1   and almost always the audience will be quiet by the time you reach 1.

Editor's Note:  Donald B. Kramer is Founder and President-Emeritus of Kramer & Frank, P.C. of St.Louis, MO.  He is the Founder and Chairman-Emeritus of the National Association of Retail Collection Attorneys (NARCA) , and was the recipient of the 2007 President's Cup of the Commercial Law League of America.

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SPOTLIGHT ON THE CLLA PRESIDENT:  Wanda Borges

Interview by Liviu Vogel, Esq.

 

Full Name: Wanda Teresa Carmen Borges

Residence/Hometown: 19 Sound Avenue, Stamford, CT

Education:      St. Simon Stock grammar school
                        St. Catharine Academy high school
                        Mercy College
                        Did not attend law school as I clerked for the bar
                       
Family:           Husband – David H. Zell
                        Mother (86 yrs. Old) – Ada C. Mady
                        Sister -Cynthia La Monica (married to Peter La Monica)
                        Sisters/brothers-in-law, etc:  Barbara Paccetti/Frank Paccetti, Cheryl Zell Gottfried/Richard Gottfried
                        Nieces and nephews:  Dawn La Monica, Peter Anthony La Monica, Dara Paccetti, Michael Paccetti, Erica Gottfried, Carly Gottfried

Areas of practice and specialties: creditors’ rights in bankruptcy, commercial litigation, commercial collections

What year did you join CLLA?:  1989

What other offices have you held in the CLLA?: 
Bankruptcy Section Executive Council
Bankruptcy Section Secretary/Vice-Chair/Chair
Bankruptcy Section Representative to the Board of Governors
Eastern Region Executive Council Member (6 yrs)
Nominating Committee Chair
National Membership Committee Chair
Board of Governors Attorney Board member (3 years)
CLLA President-Elect

Tell us about your life activities away from the office:  Music has always played a major part in my life.  I have been a member of the Fairfield County Chorale since 1976, have served on its board and have served as its Vice-President and President.  The FCC performs chorale masterworks throughout the year in CT and NY.  I am one of the soloists and currently direct the Youth Music Ministry at Our Lady Star of the Sea in Stamford, CT where I live.  Gardening and cooking are my other hobbies.  During our 16 years in our house, my husband and I have torn-up various parts of our yard to create distinct flower gardens and we enjoy browsing the garden centers to find new or unusual plants.  Gardening to me is therapeutic – a total change from practicing law – I can lose myself for hours in the garden.  I do hate weeding, however.  Cooking is also therapy for me.  Of course, David says it is my fault that he has gained weight since we are together.  I will often invent recipes or take a recipe from a book or website and then change it.  Sometimes we do this with our close circle of friends.  We take turns being the test-subjects.  On the rare occasion that we have nothing to do, David and I enjoy watching movies (usually at home) and reading.  On a beautiful summer afternoon, I might join him for a motorcycle ride.

Tell us about the path you followed within the League that helped to get you to this position:  As I just wrote in my first President’s column, committee work is the way to become active and known in the League.  My first active involvement was with the Bankruptcy Section and there was one time that Mary Whitmer, Cathy Pike and I alternated writing the Case Law Updates for almost two years.  I am glad to say that the Bankruptcy Section now has many people clamoring to write for the Newsletter.  After a while, I became a member of the Bankruptcy Section Council and that is most likely where I really got known throughout the League.  In fact, it was just a few years ago that people still said to me “I didn’t know you did collection work.  I just know you as a bankruptcy practitioner.”  Little by little I became involved with various National and other Committees including the Membership Committee, the Nominating Council, the President’s Cup Committee, the Elections Committee, the Communications Committee and the National Meetings Committee.  I was also on the Board of Advisory Editors for a period of time which required submitting articles to the Bulletin (now Debt 3) or Journal.  And, one can never omit one’s own Region.  I served on the Eastern Region Council for six years and continue to attend almost every function of the Eastern Region. 

A concurrent path I followed was participating in educational programs.  I have spoken on and written for many of the CLLA educational programs – generally on bankruptcy topics – and have even participated in the CLLA’s educational program “Hot and Emerging Topics” at the National Conference of Bankruptcy Judges.

What qualities do you feel that you will bring to the job of President of the CLLA?:  The CLLA was in turmoil for several years.  I was proud to serve on the Communications Committee with Gary Plotkin and Gary Lewis to help resolve many of the conflicts.  I have always felt that my ability to mediate an issue was useful in putting to rest some of the difficult issues which the League was facing.  While I do not believe that every issue becomes resolved by total consensus, I pride myself at being able to facilitate discussions to reach an end result that is satisfactory to most.  I believe that I am a capable leader.  In the past, I have served as Chair of the Board of Trustees of Mercy College, Vice-Chair of the Board of Trustees of Regents College (now Excalibur College), President of the Fairfield County Chorale and have served as Chair of various other organizations or committees.  During my tenure as Chair at Mercy College, we were engaged in reaccreditation, which we achieved and an attempt by a union to take over the facility, which was defeated.  During my tenure as Vice-Chair at Regents College, the process was being undertaken to separate Regents College for the NYS Board of Regents and that was successfully done.  I have learned that a leader should never dictate to her constituents but rather, a leader should encourage honest discussion of the issues and recommend a path to be followed.  A leader should carefully choose the recommended path after listening to what it is that the constituents really want.  I believe I have the ability to do that.

What goals would you like to achieve for the League during your term in office?:  To finalize a revitalized Strategic Plan for the CLLA is my first goal.  This process was begun in September when I accepted the task of Chair of the Strategic Planning Committee.  From September to March, the Strategic Plan Steering Committee and Strategic Planning Committee met diligently and worked enormously hard to put together a draft Strategic Plan.  The Board of Governors approved that Plan in concept and we are moving toward a finalization thereof.  I am looking forward to a successful Strategic Planning and Leadership Conference in Orlando in July.  I am confident we will come out of that meeting with a final Strategic Plan that will guide the CLLA for the next three to five years.  The last time the League reviewed its Strategic Plan was in 2001.  I anticipate we will emerge from our July meeting with a Strategic Plan that will be meaningful; and I look forward to the Sections and Regions keeping the Plan vibrant and fresh in the years to come.

What advice would you give to young attorneys who join the League, and who aspire to a leadership role such as yours?:  My recommendation to new attorneys and others joining the League is to become involved.  Attendance at meetings is where you put the faces to the names, you get to know people in social settings, at meetings, sitting in educational sessions, all of which are completely different settings than your everyday involvement with a fellow colleague from across the country.  My next recommendation is to share your talents.  If you are a great writer, then contribute an article.  If you are a great speaker, offer to participate in an educational program.  If you are a great organizer, offer to set up some kind of extracurricular activity.  And, of course, as I’ve already said, get involved with committees.  Working with a small group of people on a distinct project is fulfilling and will get one known to others.

When you’re not practicing law, or tending to League matters, what do you do for fun and relaxation?:  Well, that would go back to my life away from the League.  My fun and relaxation comes from music, gardening, cooking and reading novels.  After reading law all the time, I just devour novels whenever I get a chance to do so.  I am a certified scuba diver and love the water, but don’t get the chance to enjoy that activity as much as I would like.  Actually, I have to share this.  The three dives which I took in Hawaii at the CLLA summer conference were the best in my lifetime.  Two years later, I dove in Belize and it could not compare to Hawaii.  I also love to dance, but don’t do that as much as I would like to either.

If you did not become a lawyer, what do you think would have become your life’s work?:   Education and music combined would have been my career choice.

What one thing do you think we would be surprised to know about you that most people don’t already know?:    Boy, this is a tough one.  After telling my hobbies and life away from the League, what else is there?  I play guitar and a bit of piano.  And, my greatest fear is fire.

What is your favorite quote or “words to live by”?:  Actually there are two.  The first, I have shared with the League – “Ever Upward and Onward, but only Step by Step.”  My third grade teacher wrote that in my graduation book and it makes infinite sense to me.  That will be the theme of my year as president of the CLLA.  The second is “In serviendo consumere”.  This is the motto of the Sisters of Mercy, from whom I received most of my education.  It means “In service consumed”.  I have lived my adult life with this motto.  I am always serving something – my church – my community – my professional organizations.  Truly, the more I serve, the more I seem to get out of what I do.

Did you have any role models when you were growing up and in your career in practicing law thus far   If so, who are they and why were they your role models?:  Jules Teitelbaum was my first boss in the legal field and definitely my role model.  Jules had his own practice.  It was he who offered me the opportunity to clerk for the bar and then worked with me on that project for four years.  Jules would encourage me to attend creditors’ committees with him so I could learn how to conduct a committee meeting.  I learned many of my negotiating skills from Jules.  Even today, there are times that I take a step back and say to myself “how would Jules have handled this”.  Jules gave me the opportunity to lecture to others when I wasn’t sure I was ready to do that.  All in all, he was my boss, my mentor, my partner, my friend.

As to a role model growing up, it was my mother.  She raised my sister and me with little outside help.  I would accompany her to work on school vacations from the time I was six and sit quietly reading or cleaning up the file room while she got her job done.  I watched her grow from assistant to paralegal to librarian of the law library to the senior paralegal in charge of the legal department at Paramount Pictures.  She was dedicated, diligent, honest, and accepted no excuses.  She taught me all her traits and certainly inspired my love for the law.

If you could have dinner with one famous person in history, and one famous person alive today, who would they be, and why?:   This is a tough one. There are so many to choose from and I’ve never thought about this before.  I’m not sure I can come up with an answer.

What is your favorite:

Car:     Jaguar                      
Food:   My favorite “comfort food” is steak and onions with rice, red beans and sweet plantains            
Vacation spot:  Hawaii was the best ever – but I’d like to go back to Belize
Movie:   I’m a child at heart.  I love all the Harry Potter movies.  I also love The Fellowship of the Ring, the Twin Towers and the Return of the King.
Holiday:   Christmas.  I love the religious and secular aspects of Christmas.  I love the food preparation – I bake up a storm.  And, I love being with family at Christmas time and the surrounding days. 
Musical group/Singer:   Placido Domingo and Jose Carreras
Book:       Anything by Cussler or Patterson                  

Editor’s Note:  Liviu Vogel, Esq. is a partner in the New York City based law firm of Salon Marrow Dyckman  Newman & Broudy LLP. He heads the commercial collection department of his firm and his practice includes civil and commercial litigation, construction, real estate, and corporate transactions as well as business formations.

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Letters to the Editor:

We have no letters this issue.  Letters or comments can be sent to LVogel@salonmarrow.com or  brendam@kohnlaw.com.   In case you haven’t received the word, The Free Press has instituted a "Letters to the Editor" column. If you don’t want to take time out of your busy schedule to do research for a scholarly article, if you have a suggestion, recommendation, or constructive criticism to direct to the Section leadership or the Free Press editorial board, or if you just want to "vent" (in a non-abusive manner, of course), you will now have a forum. You can submit a letter any time it suits your fancy, and you need not wait until just prior to the publication of an edition of the Free Press. Submissions will be kept on file for future publication. Please submit your letters to Liviu Vogel, (lvogel@salonmarrow.com) co-chair of the CRS Newsletter Committee.

Washington Legislative Report

By David P. Goch, Esq.

Social Security Number Access

In the closing days of the 2006 legislative session, S.F. 3132, an omnibus, 22-section bill was passed by the Minnesota legislature.  Section 19 of the bill prohibits a person from "selling Social Security numbers obtained from individuals in the course of business."  The provision was to be effective July 1, 2007. 

Many people were concerned about the breadth of this language.  Fortunately, industry was successful in delaying implementation until July 1, 2008.  But this is only a temporary reprieve and the issue will crop up again.
On May 16th, Tennessee Gov. Bredesen (D) signed H.B. 200 which:

  • Requires businesses and government agencies to protect Social Security numbers from unauthorized disclosure by prohibiting  public displaying or posting of SS#;
  • Prohibits requiring a SS# to be transmitted over the Internet unless a secure connection was provided and from requiring users to enter a SS# to enter a Web site, unless it was used in combination with a password/authentication device;
  • Prohibits printing a SS# on any mailed materials to consumers, unless legally required to do so or if the mailed document is a form or application;

The requirements take effect Jan. 1, 2008; failure of a covered entity to follow the law after January 1, 2009 will be considered a Class B misdemeanor.

Debt Collection

The CLLA has been actively working with the Federal Trade Commission developing the FTC’s unprecedented workshop on the FDCPA scheduled for October 11 and 12 in DC. The workshop is intended to explore changes in the debt collection industry and examine their impact on consumers and businesses. The event will bring together consumer advocates, industry representatives, state and federal regulators, and others with relevant expertise to provide information on a range of issues, including the effects of technological, economic, and legal changes on the debt collection industry and whether the Fair Debt Collection Practices Act and other laws have kept pace with the developments.
Inconsistent with the glowing remarks by ranking Senate Finance Committee member Sen. Grassley (R-Iowa), who has publicly stated the program is not only working and successful but should be expanded, at a House Ways and Means Committee hearing on the IRS private tax collection program, May 23rd, Committee Chair Rangel (D-N.Y.) indicated he intends to work on the program with the IRS and, in the meantime, possibly place a moratorium on new collector contracts until some of the program's problems are addressed.
The hearing focused primarily on the mechanical difficulties collectors have had in finding the many of the 37,000 taxpayer/cases they have been given.
According to GAO testimony, collectors are slowed without the phone numbers of the taxpayers they are trying to reach. Not providing the numbers was an IRS policy decision because the cases, generally at least three years old, may not contain correct numbers. Conversely, an IRS employee who works on delinquent tax collections testified the IRS operates differently, being provided with taxpayer names, confirming the taxpayer's SS#, and citing case numbers.
Opponents of the program at the hearing focused on harassing and confusing phone calls to individuals concerned about identify theft. Private collectors had called them attempting to identify them as the ones that owed money. At the request of House Ways and Means Oversight Committee Chairman Lewis (D-Ga.), tape recordings of calls were played, with one taxpayer repeatedly questioning who the private debt collection agency caller was and why they were asking for his SS#.
Lewis advocated ending the program, citing "a cat and mouse game" by collectors in efforts to gain an agreement from taxpayers to pay.

Bankruptcy

The end of April, the Government Accounting Office released a report, GAO-07-203, entitled: “Bankruptcy Reform: Value of Credit Counseling Requirement is Not Clear”.  Quoting from the report, “The counseling was intended to help consumer make informed choices about bankruptcy and its alternatives. Yet, anecdotal evidence suggests that by the time most clients receive the counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy. As a result, the requirement may often serve more as an administrative obstacle than as a timely presentation of meaningful options.”

Subsequent to that, on May 1st, on the 2nd birthday of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held a hearing where the views on the success of the legislation varied greatly. 
Subcommittee chair, Rep. Sanchez (D-CA), in her remarks, opined how bankruptcy has gone from a safety net to "gotchas." Exemplifying this point, Sanchez stated how a consumer, in order to satisfy the means test, must complete Form 22, which has 57 sections.
Generally, witnesses pointed out flaws and failures in the new law including, by way of example, Shirley Jones Burroughs of Gastonia, N.C., provided insight into her Chapter 13 filing experience while attempting to save her house under the Act. After losing her job, her husband’s income reduced when called up as a reservist and deployed to Iraq, and being informed by an attorney that her house refinancing was predatory mortgage lending, she testified that the process "wasn't easy," with " a lot of paperwork."
In other news, according to a recently released Administrative Office of the U.S. Courts study, “baby boomers”, Americans age 55+ , are filing bankruptcy at a faster rate than the rest of the population and that this will continue to increase as they grow older. 
The median age for bankruptcy petitioners in 1994 was 37.7, in 2002 it increased to 41.4 years. The study also concluded that Chapter 7 petitions are becoming more prevalent for older filers. Between 1994 and 2002, the percentage of filers opting for Chapter 7, as opposed to Chapter 13, proceedings increased 87.1%.

Editor's Note:  David P. Goch, Esq., is the CLLA Washington Legislative Counsel.

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Newsletter Committee Report:

This newsletter is circulated three times per year electronically in the Spring, Summer and Fall (and via fax for those not online).  Members are encouraged to submit articles of interest or letters to the editor for inclusion along with a short bio for publication.  The annual Best Feature Article award is noted elsewhere in this issue.  The award and gift will be presented at the CRS meeting in New York.   Current co-editors are Liviu Vogel, Esq., Salon Marrow Dyckman Newman & Broudy LLP, New York, NY  and Brenda Majewski, Administrator, Kohn Law Firm S.C., Milwaukee WI. 

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PREVENTING THE OFFICE DISASTER:  A checklist for your review

By Donald B. Kramer,Esq.

Perhaps the only ones who thrive on disasters are the news media and construction companies.   Law firms need to learn from the history of those who suffered from unexpected events.  Here are some thoughts for your consideration:

  • FIRE…..Fire extinquishers should not be hidden.  They should particularly be in areas where files and paper products are kept.   Watch out for excess use of electrical outlets.   In addition to 911, the phone number of the nearby fire station should be on a visible poster.  While fireproof filing cabinets are expensive, used units are often available, particularly through internet sources.
  • THEFT…Many employees have contact with money.  Bonding of employees and partners is appropriate in all offices.  Alarm systems are needed, particularly in the evening hours, to prevent theft of computers containing valuable personal details, and many creditors are now insisting upon alarms as well as cameras in strategic places.  Maintain an alarm system in the event of a robbery.
  • FLOOD….If the office is in a flood plain, or subject to flooding for any reason, try to avoid using the lowest drawer of the filing cabinets for essential files.  This will also help prevent back problems of file room personnel.
  • MEDICAL EMERGENCIES…Have available the phone number of the nearest emergency room, to alert them to the arrival of a critical case.  Know the location of the nearest trauma facility.  Have several employees skilled in the Heimlich Maneuver and CPR.   Many states now provide "Good Faith Immunity" from civil liability if a defibrillator is kept at the office and used by a trained person for cardiac arrest situation.  This is particularly important in offices where older employees are working.  Make certain a good First Aid Kit is on your premises in a location well known to personnel.
  • EARTHQUAKE AND TORNADO….Personnel should be instructed as to the place in the building which can sustain high winds or earthquake.  If the office is not on the first floor, a "buddy" system should be designed to assist any employees with physical disabilities.  This also applies to fire situations.
  • COMPUTER  DISASTERS….Have a firewall in place to protect your network from outside hackers.  Implement Zero hour virus protection to protect from malformed messages before a definition can be developed.   Backup should be instituted at least daily, with backup tapes kept in a secure location off-site, as a protection from flood, fire, earthquake, tornado, etc..  A bank vault is an option for storage, but an offsite tape vault should also be considered, since the tapes might be needed at night, on weekends, on a holiday, or when bank entry is restricted.   Care should be taken to make certain that the backup tapes do not contain a virus. Some first suggest tape backup every night, with tapes archived every year and kept for at least a two year duration.    Watch the temperature in the room where servers are kept, since the proper action of some servers may be hindered by heat or very cold air.  A recommended temperature is 60 degrees.  A gas fire suppression system is preferable in server rooms (Check with your local fire department as to what they would recommend).
  • PHONE THREATS….Instruct personnel how to record a phone conversation in the event of a threat of any type, including a bomb scare.  Set us an emergency plan for evacuation of the office in the event of a threat.
  • BATHROOMS…..These are areas that tend to have flooding problems.  The phone number of a nearby available plumber should be kept available. Know what nearby facilities are available for use by employees during the emergency.    Employees should be warned about what can or cannot be flushed.

AND IN THESE DAYS OF UNUSUAL EVENTS….…JUST KEEP ALERT !

Editor's note:  Donald B. Kramer is Founder and President-Emeritus of Kramer & Frank, P.C. in St.Louis, MO. He is founder and Chairman-Emeritus of the National Association of Retail Collection Attorneys (NARCA) and was winner of the 2007 President's Cup awarded by the Commercial Law League of America.

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Award of Excellence 

NOMINATIONS SOUGHT FOR AWARD OF EXCELLENCE

The Creditors' Rights Section of the Commercial Law League of America is seeking nominations for its Award of Excellence, which was established to recognize outstanding contributions in the field of law affecting creditors' rights.  The first recipient of this award, in 2005, was Professor James J. White who, along with Robert Summers, published the most widely recognized treatise regarding the Uniform Commercial Code.  The recipient must a lawyer, legislator, professor of law, or judge, whose work has substantially and positively made an impact on creditors' rights.  Nominations are being accepted through August 1, 2007, and should be submitted to the CLLA, including an explanation of those qualities and accomplishments that qualify the nominee for consideration along with the nominee’s Curriculum Vitae.  The recipient will be selected for presentation of the Award at the Annual Meeting of the League held in Chicago in May, 2008. 

The Commercial Law League of America is the nation's oldest organization of attorneys and other experts engaged in the field of commercial law, bankruptcy and reorganization.  The League objectives include elevating the standard and improving the practice of Commercial Law; encouraging an honorable course of dealing among its members and in the profession at large;  and promoting uniformity of legislation in matters affecting Commercial Law.  The Creditors' Rights Section shares in these objectives, and strives to promote high standards of professionalism, integrity and excellence in this area of the law while advancing the interests of creditors.  The candidate for the Award of Excellence should have made substantial career contributions to further these goals.

Please return Nominations to: 

The Commercial Law League of America,
ATTN CRS Award of Excellence

150 North Michigan Avenue, Suite 600,
Chicago, Illinois  60601-7524

or by fax (312) 781-2010

Deadline for Nominations to be received by the CLLA:  August 1, 2007

Name of Nominee:

Address:

Phone:

Fax:

Nominated By:

Address:

Phone:

Fax:


Explanation of contributions and qualities that support your nomination (attach additional pages as necessary and a copy of the nominee’s curriculum vitae):





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Calendar of Events

July 19, 2007 – July 22, 2007
Orlando Strategic Planning and Leadership Meeting

November 15, 2007 – November 18, 2007
New York Meeting:  Sheraton Hotel and Towers, New York, NY

 

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