Every year we survey lawyers from across the state to gain insight into current trends in different areas of practice. Against the backdrop of a global health pandemic with no end date in sight, attorneys have responded to the ongoing call to stand up for their clients while addressing the disruptions the pandemic has caused in their own lives.
The ongoing pandemic has affected companies in different ways. Northern Wisconsin is booming with vacationers moving remotely, adding real estate value to their homes, while failing to give local commercial, retail, or real estate the boost they need. Business owners want to leverage tax rules that allow certain taxpayers to receive exclusions from federal profits, as well as other provisions in tax law that encourage investment in opportunity zones.
Hope is also on the horizon for people who want to legally immigrate to Wisconsin or solve longstanding criminal cases. Companies are also taking advantage of the opportunity created by the pandemic to work remotely, invest in technological infrastructures and return their attention to customer satisfaction.
Home Sales Up, Business Patronage Down
“For years, vacationers have wanted to spend more time in the Rhineland. Due to COVID, we have seen a tremendous influx of people moving here from major cities in Wisconsin and neighboring states. You are driving downtown now and it is no exaggeration to say that sometimes at least a third of the license plates are outside of the state, ”said John M. Cirilli, President of Cirilli Law Offices S.C., Rhinelander.
Christopher C. Shattuck, Univ. of La Verne College of Law 2009, M.B.A. U.W.-Oshkosh 2015, is the manager of Practice411 ™, the prosecution's law firm utility. If you have any questions about the business aspects of your practice, call (800) 957-4670.
“Every house in every condition has pretty much sold out. Empty land sells and it would sell faster, but many of the established home builders have several years to build new homes. Because of my discussions with local real estate agents and the high volume of real estate transactions that my company handles, I do not see a trend stop, ”added Cirilli.
The influx of out-of-towers has not increased the number of people available to fill vacancies or professional positions. “Most moving companies already work remotely for a company. Specialist jobs remain unfilled and the number of professional companies is falling. Over the past 10 years we have closed several established law firms and now there are few law firms left in town that can legally represent the community, ”said Cirilli.
The growing population has helped support local businesses, but not enough to keep all businesses profitable during the pandemic.
"I get a lot of calls from commercial / residential customers who are experiencing severe financial COVID stress and those who are in worst shape are those with pre-existing debt. We have a unique demographic in this space as many of the companies do who enjoy visiting tourists, supper clubs, recreational businesses like snowmobile shops, marinas, ski shops and the like, and locally owned specialty stores. If you only have about five months a year to make a profit and you are losing the summer season to COVID, Seeing a lack of snow in the winter season and a sustained trend in online shopping makes it difficult for these companies to survive, ”said Cirilli.
The dangerous situation for commercial businesses has influenced the stigma of filing for bankruptcy protection. “A lot of companies in financial trouble are there, preparing to potentially file for bankruptcy, but only as a last resort. Before the start of this year, companies were hoping that a winter of early snow and a good summer season would help avert bankruptcy. However, the ongoing effects of COVID have left many business owners feeling futile because they can get everything right. However, if people don't get to their businesses, it won't make any difference. Unfortunately, a lot of these business owners are doing everything right, it just doesn't make a difference, ”said Cirilli.
Most resettlers (to Northern Wisconsin) already work remotely for a company. Specialist jobs remain unfilled and the number of professional companies is falling. Several established law firms have closed over the past 10 years and there are now only a few law firms left in town legally representing the community. – – John M. Cirilli, President, Cirilli Law Offices S.C., Rhinelander
Tax law changes create incentives for investors
Changes to federal income tax laws since 2010 have an existing tax rule, I.R.C. Section 1202, which allows certain holders of qualifying small business shares who acquire and hold shares in C companies ("recognized by the owners as a separate taxable entity") for at least five years to receive an exclusion from federal personal income from federal tax profits the sale of the share.
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"Because most states, such as Wisconsin, generally follow federal income tax laws for the purposes of their own state income tax laws, investors may also receive an exclusion from state income tax gains on sale of the shares, but should be aware of changes such as Wisconsin, which has the exclusion for." shares acquired on December 31, 2013, ”says Hamang B. Patel, partner at Michael Best & Friedrich LLP, Madison.
“Section 1202 is starting to get a lot of attention for good reason. This is an example of a clear incentive by Congress to channel dollars that might otherwise flow into a mutual fund to help these small businesses thrive and attract capital. If a client's business model is such that they can attract investors who can put cash or real estate in this C company and expect to hold that stock for at least five years, then this is a really favorable situation for investors. Imagine a situation where you or your clients were unaware of this provision, when an LLC was formed and then had to pay tax on the sale of the LLC equity, which grew in value, ”added Patel.
Another tax incentive scheme that is becoming increasingly popular concerns qualified opportunity zones, which are codified in 25 US states. Section 1400Z, enacted with the passage of the Tax Cuts and Jobs Act 2017. “Section 1400Z allows a taxpayer selling a capital asset and recording a profit to invest cash equal to the profit made in a self-certified company within 180 days as a qualifying fund for opportunity zones. If the taxpayer holds the Qualified Opportunity Zone Fund investment for at least 10 years, the taxpayer can later sell that equity stake and not make a profit on the increase in value that would have occurred over the time of the investment, ”said Patel.
Tax treatment that has recently been detrimental to careless business owners can be traced back to taxpayers relying on online or borrowed LLC works agreement forms that are not suitable for an LLC that chooses to be an S corporation to be taxed for income tax purposes.
“In recent years, the IRS has stepped up scrutiny of LLCs who choose to be taxed as S companies but use standard or online templates of LLC company agreements. This can inadvertently lead to a prohibited second class of LLC stock. Since a second class of equity is fatal to maintaining S-company status, an LLC taxed as an S-company needs a special language for operating agreements. Using the wrong version of an LLC operating agreement can not only cause an LLC to lose S corporation status, it can also be subject to corporate income tax as if it were a C corporation. Put another way, owners who believed they were using tax planning to reduce total tax liability found that their use of inapplicable boilerplate language in LLC operating documents resulted in their company being a different company for income tax purposes, and they were also had to pay an additional corporation tax. It is therefore always important to coordinate tax planning with the relevant documents, ”said Patel.
Patel hopes that in the future, tax laws will become easier and more understandable for laypeople. In this case, Patel predicts that more people will take advantage of the incentives contained in the tax code and avoid common mistakes that lead to higher tax penalties or tax liabilities.
Section 1202 … (as a tax incentive) … is an example of a clear incentive by Congress to channel dollars that might otherwise flow into a mutual fund to help these small businesses thrive and attract capital. If a client's business model is such that they can attract investors who can put cash or real estate in this C company and expect to hold that stock for at least five years, then this is a really favorable situation for investors. – – Hamang B. Patel, Partner, Michael Best & Friedrich LLP, Madison
Greater efficiency, customer communication and reform of sentencing
“When the pandemic hit and we all figured out how to safely conduct legal proceedings, all hearings were canceled. The lack of court appointments resulted in no legal representation being hired and for a few months my criminal defense practice stalled, ”said May Y. Lee, solo practitioner at Lee Law Firm LLC, Milwaukee. "When we started pushing zoom phenomena cases, things picked up again."
“The Zoom appearances have made my legal practice extremely efficient, especially since many criminal court appointments are used for planning purposes. Instead of taking the time to drive downtown to the courthouse, find parking spaces and the courtroom, and then wait for your case to be called, you can now log in and do other work while you wait for yours Case is called. I think the efficiency of Zoom has also allowed the judges to have more control over their calendars, ”explains Lee. "In addition, the extra time has given me more time to focus on communicating with my customers."
Communication with customers is important, especially because each person brings a variety of expectations and life experiences. When asked how diversity affects the customer perspective, Lee says, "I can't remember a time when I was specifically disregarded as an Asian or Hmong lawyer. In some situations, clients have deliberately sought lawyers from different backgrounds to because they see these lawyers as people who can relate to the challenges they have experienced themselves. "
“However, there are certainly situations when dominant personality types think they can steer the narrative of where things are going. In these cases it is my philosophy to approach the individual and the situation as professionally as possible. "
“In my customer interactions, I try to identify and overcome stereotypes, have clear communication that sets expectations on both sides, and respect the fact that people build trust in different ways. I also try to put myself in the shoes of customers who are in difficult situations and understand when they say or react outside of the norm, ”Lee added.
"In a way, COVID has had a positive impact on the judicial system from a criminal conviction perspective," said Lee. “The case law in Gallion1 states that the Circuit Courts should start with probation as the first alternative. However, the recommendations prior to the Milwaukee County's COVID conviction for misdemeanor cases such as the OWI's second offense or carrying a hidden weapon resulted in a substantial jail sentence. Now the recommendations seem to be more aligned with nonviolent case law. "
"I hope this trend continues in the future, not just because I'm a criminal defense attorney, but also as a taxpayer who sees this from a societal perspective and has our desperate need to convert the billions of dollars we spend in Wisconsin." To be imprisoned, individuals reduce. "
In some ways, COVID has had a positive impact on the judicial system from the point of view of criminal conviction. Gallion case law states that the Circuit Courts should begin probation as the first alternative. However, the recommendations prior to the Milwaukee County's COVID conviction for misdemeanor cases such as the OWI's second offense or carrying a hidden weapon resulted in a substantial jail sentence. Now the recommendations seem to be more aligned with the case law for nonviolent cases. – – May Y. Lee, a solo practitioner with Lee Law Firm LLC, Milwaukee
Immigration delays and implications for blanket issues
“Congress makes immigration laws, and the President of the United States has ultimate responsibility for enforcing those laws. However, the executive controls the United States Citizenship and Immigration Services (USCIS), the federal agency responsible for naturalization and immigration, ”says Amaro Lopez, a Cottle Pasquale Laborde S.C. in Sheboygan. "My customers are confident that the Biden administration will undo some of the changes made by the previous administration."
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Immigration cases can be delayed in situations where the government does not agree to a common solution (consent to citizenship). “I hope that the prosecutors will return, who will agree to a joint solution if the petitioners have little or no criminal record. Failure to do so, even in cases involving petitioners with no criminal record, could result in significant legal delays in those who have the right to become citizens, ”Lopez said.
“Another positive change to internal policy concerns situations where a spouse enters the United States from another country with no criminal record and marries a citizen and initiates immigration proceedings without first going through the required USCIS process. Under the Obama administration, prosecutors would agree that the pending immigration case be closed with the court so that the spouse can go through the USCIS process, return to court following due process, and the spouse allow the spouse to return for two weeks back home for an interview before finally returning to the United States. In the past few years, prosecutors have spoken out against these types of requests, resulting in customers waiting months in their home country before they can return, ”added Lopez.
The pandemic has added additional delays in immigration case timeframes as USCIS offices have been temporarily closed. “The decision on green card and work permit applications takes several months. When the offices were temporarily closed and no interviews were taking place, I had several customers who were frustrated. For example, two clients were supposed to be interviewed last April who ended up being interviewed in mid-January, ”Lopez said.
Customers aren't the only group feeling frustrated by delays. Lawyers handling flat-rate cases have also felt the impact of COVID on their businesses. "If you do agree to deal with pre-pandemic blanket cases, don't expect your entire schedule to be delayed by several months or even a year," Lopez said. "The delay has taken more time to respond to customers on cases that should already be closed and to reconcile that time with requests from new customers whose cases need to be filed."
Looking ahead, Lopez is confident that Congress will pass new laws that will allow workers already in the US, but without proper working papers, to get a path to apply for citizenship. “Right now there is nothing I can do for an immigrant who works here and doesn't have the proper papers. These immigrants have unique tax identification numbers and pay taxes. You just don't get the benefits of federal programs like social security. I hope that Congress will take action and provide a way for these workers to work with the right papers in the United States, ”said Lopez.
I hope for a return of prosecutors who will agree to a joint solution in (immigration) cases where petitioners have little or no criminal record. Failure to do so, even in cases involving petitioners with no criminal record, can result in significant legal delays in the case of individuals who have the legal right to become citizens. – – Amaro Lopez, Associate, Cottle Pasquale Laborde S.C., Sheboygan
Leverage technology and increased demand for estate plans
"At the beginning of last year and even before COVID, we were looking for ways to update our internal server or replace it with a cloud-based server," says Robyn J. De Vos, partner at Crooks, Low & Connell SC, Wausau. “When the pandemic broke out, it became clear that we had to switch to a cloud-based server to support the remote work. After we decided to switch, the market demand for cloud-based servers also increased dramatically. We recently had our cloud-based server installed. "
With cloud-based servers, employees can access and edit documents remotely. In addition to document management, compatible case management systems can be used with cloud-based servers. “As a general practitioner, we have been very fortunate to be able to continue using our current case management system, Tabs3, in our cloud-based server environment,” added De Vos. "Practice management technology helps me to be more efficient, keep an eye on client files and have important notes and milestones of my cases available."
Although companies have improved their IT infrastructures, the inability to witness certain estate planning documents2 remotely2 has led many companies to find creative solutions for personal signatures. “I think we have a different practice atmosphere in northern Wisconsin than in other urban parts of Wisconsin. I have participated in the signing of estate plans on porches, through windows, and of course, participated in roadside signatures. "
In the past, estate planning clients tended to underestimate the importance of health and financial powers, but the pandemic has changed that mindset. “The pandemic has really shifted the perceived need to have health and financial powers. Rather than simply planning the distribution of assets after death, people began to realize the need to have documents that make healthcare or financial decisions in case of incapacity or even for convenience. I think this trend will continue into the future once we are over this pandemic, ”explained De Vos.
On the horizon, De Vos is hoping Wisconsin will pass legislation that will enable the remote witnessing of estate planning documents and the continued efficiency of their company for investments in their IT infrastructure.
Instead of just planning the distribution of assets after death, people (with COVID-19) began to realize the need to have documents in place that dictate healthcare or financial decisions in the event of incapacity to act or even for convenience. I think this trend towards understanding the meaning of these documents will continue in the future. – – Robyn J. De Vos, Partner, Crooks, Low & Connell, S. C., Wausau
Conclusion
The pandemic affected everyone; Lawyers are no exception. As lawyers, we have a responsibility to stand up for our clients, and sometimes those obligations take precedence over managing our own lives. As we remain optimistic about an end to the global health pandemic, we must take care of ourselves. If you or your colleagues need assistance, please contact the State Bar's Wisconsin Lawyers Assistance Program at (800) 543-2625. If you have any questions about practice management, please contact me at Practice411 ™, (800) 957-4670 or org Prakticehelp wisbar wisbar Prakticehelp org.
Endnotes
1State v. Gallion, 2004 WI 4, 678 N.W.2d 197, 270 Wis. 2d 535.
2See the issue of contingency procedures for testamentary wills, codes of conduct, powers of attorney, and statements to health professionals during the COVID-19 pandemic.