Understand Your Rights. Solve Your Legal Problems
In some cases, a prompt restructuring of the company's obligations is imperative for its survival. In order to minimise risks, delay and expense, and emerge from chapter 11 as quickly as feasible and in a manner that will facilitate the debtor's ability to move forward on a viable basis, the use of a support agreement can serve a crucial role. Restructuring support agreements, also known as plan support agreements, have been used with increasing frequency as a tool to advance chapter 11 cases toward the goal of plan confirmation. Such arrangements were sometimes referred to as lock-up agreements, but due to the potential associated negative connotation, the use of that term has fallen out of favour.
Restructuring support agreements provide clear direction and structure to a chapter 11 case and set forth negotiated terms of a chapter 11 reorganisation plan. They can be entered before or after a case is commenced. The core of a restructuring support agreement is the creditors' pledge to support the plan. Generally, the agreement will be between the debtor and key creditor groups. The agreements invariably include affirmative and negative covenants obligating the creditors to support and vote in favour of the plan so long as it is consistent with the terms of the restructuring support agreement and precluding the creditors from taking any action to delay or undermine confirmation of the plan. Creditors generally receive concessions from the debtor such as more favourable payment terms, deadlines for the debtor to achieve various significant milestones in advancing the case, and greater certainty regarding the timeline and outcome of the restructuring.
When a restructuring support agreement is entered prepetition, the debtor typically files a motion with the court requesting approval of assumption of the agreement as an executory contract under Section 365 of the Bankruptcy Code. Support agreements are considered executory contracts, with all parties to the agreements having significant material, unperformed obligations. Courts approve assumption of executory contracts when the debtor has exercised reasonable business judgement in determining to move forward with assumption. See Agarwal v. Pomona Valley Medical Group, Inc. (In re Pomona Valley Medical Group, Inc.), 476 F.3d 665, 670 (9th Cir. 2007). In such circumstances, assumption benefits the debtor's estate. Courts are reluctant to second-guess the debtor's business judgment when evidence is presented supporting that the debtor is acting reasonably. In In re Genco Shipping & Trading Ltd., 509 B.R. 455 (Bankr. S.D.N.Y. 2014), the court approved assumption of a restructuring support agreement pursuant to section 365, stating that "[u]nder the 'business judgment' test, a debtor must simply put forth a showing that assumption or rejection of the executory contract or unexpired lease will benefit the Debtor's estate" and that "[t]he Debtors' decision to assume the RSA clearly meets the 'business judgment' standard." Id., at 463 (citations omitted).
When seeking court approval of a restructuring support agreement, the debtor will invariably assert that it exercised sound business judgment in negotiating and entering the agreement.
Restructuring support agreements entered after the commencement of chapter 11 cases are subject to court approval pursuant to Bankruptcy Code Sections 363(b) and 105(a) and Bankruptcy Rule 9019. Section 363(b) requires court approval of a debtor's use of property of the estate outside of the ordinary course of business. Section 105(a) provides that the “court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” Taken together, these sections provide bankruptcy courts with the power and discretion to approve post-petition restructuring support agreements. When the proposed agreement satisfies the business judgment rule in that it was made on an informed basis, in good faith, and in honest belief, and is in the best interest of the company, it will be approved under section 363. Further, in conjunction with section 105, courts have routinely found that approval of restructuring support agreements is consistent with applicable provisions of the Bankruptcy Code and the goal of confirming a chapter 11 plan.
Under Bankruptcy Rule 9019, the court may approve compromises and settlements. The chapter 11 process is intended, when feasible, to drive parties toward consensual resolution of disputes. Settlements are approved when fair and equitable and in the best interests of the debtor's estate. This leaves the court with considerable discretion when considering approval of proposed settlements. The primary factors considered by the courts when determining whether to approve a settlement in the form of a restructuring support agreement generally include: (1) the probability of success in the litigation; (2) the complexity, delay, and cost of the litigation; and (3) the best interests of creditors and the bankruptcy estate. Further, courts generally defer to a debtor's judgment with regard to settlements, unless the settlement falls below the lowest point in the range of reasonableness in terms of benefits to the estate.
When seeking court approval of a restructuring support agreement, the debtor will invariably assert that it exercised sound business judgment in negotiating and entering the agreement. It is important that the agreement is the product of arms-length negotiations. Further, it will frequently be asserted that the support agreement is necessary in order to ensure the support of key creditor constituencies during the chapter 11 case and/or a condition of necessary funding for the reorganisation plan. Additionally, the case for approval also usually includes the assertions that the support agreement will help provide direction and structure for the reorganisation, and allow the debtor to expeditiously advance its chapter 11 case, avoid delay, minimise expense, eliminate potential litigation, and successfully emerge from chapter 11 on a viable, restructured basis. In some cases, approval of the support agreement will also help the debtor avoid the significant risks associated with a “free fall” chapter 11 case (one where no identified exit is in place).
Further, restructuring support agreements routinely recite that the agreement is not a solicitation for consents to the plan.
Before their use became common, there was some uncertainty whether post-petition restructuring support agreements would be found to violate the requirement of the Bankruptcy Code that post-petition solicitation of votes on a chapter 11 plan can only occur after a disclosure statement approved by the court as containing adequate information is approved and circulated. Bankruptcy Code Section 1125(b) provides that "[a]n acceptance or rejection of a plan may not be solicited after the commencement of the case under this title from a holder of a claim or interest with respect to such claim or interest, unless, at the time of or before such solicitation, there is transmitted to such holder the plan or a summary of the plan, and a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information." Courts, however, have generally determined that "solicitation" must be read narrowly so that the debtor's post-petition negotiations with creditors are not chilled. Essentially, courts usually find that the way to effectively move cases forward in chapter 11 is to encourage post-petition negotiation, even in the absence of a disclosure statement.
Further, restructuring support agreements routinely recite that the agreement is not a solicitation for consents to the plan. Such typical language provides that the support agreement is not and shall not be deemed to be a solicitation for consents to the plan. Additional typical disclaimer language in support agreements provides that the votes of the holders of claims against and interests in the debtor will not be solicited until such holders who are entitled to vote on the plan have received the plan, the disclosure statement, as approved by the Bankruptcy Court as having adequate information in accordance with section 1125 of the Bankruptcy Code, and related ballots, and other required solicitation materials. While the language may be self-serving, the use of restructuring support agreements has become accepted, common, and generally not subject to serious challenge.
Finally, the obligations of the debtor under a restructuring support agreement should be subject to a “fiduciary out” allowing the debtor to terminate the agreement in the reasonable exercise of its fiduciary duties. When entering the support agreement, it should be the debtor's belief that the restructuring contemplated by the agreement is the best available alternative in light of the then-existing facts and circumstances. Further, by explicitly allowing the debtor to terminate its obligations under the agreement if a superior alternative presents itself, the support agreement does not conflict with the debtor's fiduciary duty to maximise the value of the bankruptcy estate.
David S. Kupetz, a partner in SulmeyerKupetz, is an expert in restructuring, business reorganization, bankruptcy, and other insolvency solutions. He can be reached at dkupetz@sulmeyerlaw.com.
‘Rich crooks net vast legal aid sums’. Although this headline sounds distinctly tabloid, this is a BBC News story from November 2012 which still appears online. More than eight years later, the Law Commission seems set to try and remedy the position that led to this BBC report by changing the rules for legal aid being funded by frozen assets.
But first, the BBC story - a joint-investigation between BBC Inside Out and the London Evening Standard - found that nearly 50 defendants with more than £1m in illegally obtained assets had received legal aid, averaging £300,000 a head. The BBC reported as follows: “Dozens of super-rich criminals - some worth tens of millions - have received vast sums in legal aid despite their illicit fortunes, an investigation has revealed. Rich criminals receive legal aid because their assets have been frozen. But there is evidence many of these crooks remain wealthy despite the asset-freezes.”
The idea that ‘rich crooks’ should be entitled to receive such ‘vast sums in legal aid despite their illicit fortunes’ to fund their criminal defence costs remains a complete anathema, both to lawyers and to the general public.
Offering a more broadsheet assessment of the problem in January 2013, Lord Judge, the then Lord Chief Justice, told the Lords Constitution Committee: “We are talking about people with big money. One of the things that is completely daft is where somebody perceived to have big money is charged, there is almost always an application to the court to prevent him dissipating his assets. Very sensible, but one of the conditions which is always sought and granted includes the dissipation of assets by paying for his own legal advisers.”
He added: “There should be an order which says so much of these assets can be used for the purposes of your defence. That is the answer. That is not very difficult.”
The Proceeds of Crime Act 2002 (POCA) is, of course, the contentious piece of legislation at the heart of the consultation’s reform proposals.
Although not very difficult, according to Lord Judge, it has still taken many years for the Law Commission finally to address the problem under broad terms of reference from the Home Office. Work formally commenced on the project in November 2018, and in September 2020, a 744-page consultation document was published, Confiscation of the proceeds of crime after conviction
In proposing a comprehensive overhaul of the current system, the consultation states that ‘consideration of reform was timely, if not overdue’. It confirms that ‘there are significant problems with the current regime’ adding that ‘academics, practitioners, financial investigators and many other groups of stakeholders have questioned whether the current strategy meets its objectives’.
The value of outstanding confiscation orders is a clear indicator of the scale of the challenge: in 2019, the total exceeded £2bn. In terms of rich defendants with frozen assets, the consultation suggests that some of this money should be used to pay their defence costs rather than them being funded by legal aid.
Such a change will ‘save the state from having to supply legal aid to defendants who have sufficient means to pay legal fees’, according to the Commission’s consultation document, and ‘redress any public perception about the use of legal aid where it may seem to be unnecessary.
The potential risk of ‘reckless dissipation of restrained assets in legal fees’ which have been frozen pending confiscation, is also addressed in the consultation, which suggests that this can be prevented by judicial monitoring of the amount of money which is released in order to pay for suspects’ legal costs. The consultation concludes: ‘The submission and approval of a costs budget by the judge would protect against unreasonable dissipation.
The Proceeds of Crime Act 2002 (POCA) is, of course, the contentious piece of legislation at the heart of the consultation’s reform proposals. The Commission is seeking to reverse the position which was implemented by POCA in respect of defendants funding their legal costs with their restrained funds.
Prior to POCA’s enactment, the situation was different. Under previous legislation - the Drug Trafficking Act 1994 and the Criminal Justice Act 1999 - a person who was made subject to a Restraint Order was permitted to fund his case from his restrained funds. The advent of POCA prohibited a defendant from funding his criminal case if he was made subject to a Restraint Order.
Right from the outset, this prohibition was subject to widespread criticism, not least from the legal profession. Numerous lawyers have argued that it is completely at odds with the principle of being "presumed innocent until proven guilty", as Sir William Garrow first noted in 1791 during the course of an Old Bailey trial.
There is an obvious contradiction between the idea that you are innocent until proven guilty by a Court of Law, while at the same time, you are not able to use your assets to contest the charges against you because the Court believes that you are guilty. Proof of the latter is that those assets need to be preserved so that they can be made subject to a confiscation order once you are convicted.
The revolutionary change that POCA brought about shifted the emphasis on what the confiscation regime was designed to achieve. Historically, it was used to strip a defendant’s ill-gotten gains, whereas the new focus centred instead on maximising the recovery of assets for the State.
Under POCA, a defendant who had privately funded his case (whether he was made subject to a Restraint Order or not) could recover all or some of his costs in the event that he was acquitted of all or some of the charges which he faced. Should a defence costs order be made in favour of a successful defendant, his legal costs would then be reimbursed from the public purse.
There is also a long-established principle in every area of the law that costs follow the event. Schedule 7 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO significantly amended this principle, completely preventing the recovery of legal costs by a successful defendant in the Crown Court). This has since been slightly amended, enabling a defendant who was refused legal aid in the Crown Court to recover legal costs limited to legal aid rates under a defence costs order.
There can be little doubt that the Law Commission’s proposed changes, as outlined in its consultation document, would be very much welcomed by the legal profession. In having to provide legal aid funding for cases where defendants have the means to pay their own costs, these changes fully acknowledge that it would create significant savings for the public purse. They would also redress the obvious conflict with the current position in relation to the presumption of innocence, but still ensure that the spirit of the confiscation regime remains intact, which is to strip a convicted defendant of the proceeds of their crime.
The consultation process ended in December. Lawyers now eagerly await the next stage, policy development, before a Law Commission report is finally published later this year. Given the strong sentiment of the consultation, its conclusions are anticipated to meet lawyers’ expectations. Hopefully, what it recommends in terms of rectifying the shortcomings of POCA will be fully implemented through subsequent legislation.
Brian Swan is a partner at Stokoe Partnership Solicitors.
The European Commission drafted and approved a plan for Horizon Europe to raise EU science spending levels by 50% over the years 2021-2027. Below, we speak to two experts that discuss what Horizon Europe 2020 is all about and what it could mean for inventors and investors, alike.
What is new in Horizon Europe?
Significant new changes and improvements have been introduced into the newest Horizon Europe 2020 programme as compared to its forerunner.
The thematic programme parts "Leadership in Enabling and Industrial Technologies" (LEIT) and "Societal challenges" are now structurally combined in the programme area: "Global challenges and European Industrial Competitiveness". In addition, six areas (“Clusters”) have been created which bring together the 13 thematic areas of Horizon Europe 2020.
The European Innovation Council (EIT) has been institutionalised and a “Strategic Planning Process” and “Missions” have been introduced.
Partnership initiatives have been reduced from around 120 under Horizon Europe 2020 to now fewer than 50.
In addition, Horizon Europe and the EURATOM research and training programme are working towards effective and operational synergies with other EU programmes and EU mechanisms.
What does it aim to achieve?
The primary purpose of the new changes is to promote knowledge and innovation-driven society, build a competitive economy and create the conditions for sustainable development. Horizon Europe will play a vital role in the much needed digital and green transformation. It will also play its part in implementing the policy guidelines of the European Commission.
Through institutionalisation, innovation will translate into tangible results faster and bring about growth and employment.
Let us now take a closer look at certain of the changes:
a) Strategic planning process
The introduction of the strategic planning process is primarily intended to achieve continuity and coherence of the funding mechanisms. The Strategic Plan sets out the basis for Horizon Europe and is actually composed of two separate plans. The first plan will initially cover four years (2021-2024) and is followed by another plan for the remaining three years of the programme.
The Strategic Plan for the years 2021 to 2024 defines four so-called “Key Strategic Orientations”. These four key strategic orientations” form a crucial part of the work programme until 2024.
The missions and partnerships that have been introduced are an essential part of the first Strategic Plan.
b) Missions
The missions are divided into five thematic areas (“Mission Areas”):
- Adapting to climate change, including societal change
- Cancer (oncology)
- Healthy oceans, seas, coastal and inland waters
- Climate-neutral and smart cities
- Soil health and food
These five "mission areas", which are embedded in the Strategic Plan, are intended to address the ambitious goal of rising to current societal challenges through interdisciplinary innovation. The term “mission areas” was conceived by the Apollo 11 mission in the 1960s. Predicated on this concept, the missions are clearly limited in time to a maximum of 10 years and have ambitious goals. The missions are intended to exploit synergies with other policy instruments of the Framework Programme and cover all activities from basic research to studies carried out prior and subsequent to market launch.
c) Partnership initiatives
Coordination between the individual partnerships and interaction with other instruments of the Framework Programme has been improved to take into account the important contribution of the partnership initiatives towards the implementation of policy priorities in the EU. Transparency is to be imposed on the partnerships with respect to the circle of participants, the scope of activities, and the results. The aim is to simplify and rationalise the European partnership landscape, the main emphasis being on the impact it has.
d) Synergies
The idea behind synergy with other EU programmes and mechanisms is to achieve a more efficient implementation of common research objectives and results. Synergies also promote a more rapid uptake of innovation concepts.
Synergies include the Connecting Europe Facility (CEF), Digital Europe, Erasmus+, LIFE-EU funding instrument for the environment and climate action, Innovation Fund (European Emissions Trading System, EU ETS) and InvestEU.
How will it differ from the institutionalisation of the European Innovation Council (EIC)?
Supporting innovation at the EU level provided by the European Innovation Council (EIC) is the principal raison d’être of Horizon Europe. Through institutionalisation, innovation will translate into tangible results faster and bring about growth and employment.
Previous funding instruments formerly part of Horizon 2020 have been outsourced to the InvestEU Programme. These include indirect support via guarantee funds and counter-guarantees, as well as access to credit or equity facilities.
Companies with registered offices in an EU member state or in an associated country are eligible to apply.
What is new is that the European Innovation Council (EIC) is bringing together the main EU funding instruments: EIC Pathfinder, EIC Transitions, EIC Accelerator and EIC prizes.
The EIC Pathfinder supports visionary and high-risk projects that are still in the early stages of development. The primary goal is to tap into breakthrough ideas and open up new areas of investigation having a clear technological objective. This so-called “proof of concept” is underpinned by science-based evidence and should verify the innovation potential of ground-breaking new technologies. EIC Pathfinder’s targeted audience comprises universities, research institutions and high-tech companies.
EIC Transition is designed to take results from EIC Pathfinder into a higher level of development by refining and optimising the technology and the business idea. The task of further development will go to small and medium-sized enterprises, start-ups, research institutions and universities. The aim is to achieve commercial viability with the help of the EIC Accelerator.
The EIC Accelerator is aimed at small and medium-sized enterprises that develop particularly high-risk innovations with strong market potential. A distinguishing feature of these companies is their high growth potential as well as their presence in the European and international markets.
EIC prizes are the final EU funding instrument to reward schemes focused on solving societal challenges through pioneering technological innovation.
Who are the potential beneficiaries of this initiative?
Companies with registered offices in an EU member state or in an associated country are eligible to apply. According to the Partnership Agreement concluded between the European Union and the United Kingdom on 24 December 2020, the United Kingdom is also considered an associated country.
Further eligibility is oriented towards the Horizon Europe pillars. Within the framework of scientific excellence, funding is primarily provided for science-driven basic research and includes individual researchers, consortia and research infrastructures, the latter being larger research institutions with certain characteristics that distinguish them from other research institutions.
The second pillar (Global Challenge and European Industrial Competitiveness) directs funding towards areas that include health, culture, inclusive society, civil security, digital, industry and space, climate, energy, mobility and bioeconomy.
Innovative Europe is supported by the third pillar. In particular, innovative products, processes and services will be eligible for support.
Experience shows that such projects often raise a large number of legal questions and may contain not a few pitfalls, which need to be detected and addressed as early as possible.
How do you see this initiative impacting your work as an attorney?
As a boutique IP firm specialising in legal advice to clients engaged in research and technology, we are pleased that European research and development will receive more funding in many important areas through H2020.
Having in mind the objectives of H2020 and at the same time the many potential legal pitfalls, we are glad to advise and support our clients to enable them to derive optimal benefits from the funding opportunities and to effectively implement and exploit the results of their research and development work.
Experience shows that such projects often raise a large number of legal questions and may contain not a few pitfalls, which need to be detected and addressed as early as possible. This starts with initial advice on funding opportunities and the application criteria, followed by the drafting of development, collaboration and in some cases joint venture contracts. Increasingly, EU competition rules have also to be considered and, of course, the R&D outcomes must be protected (for e.g., by registering IP rights such as patents and utility models, not forgetting know-how) and regulating the respective exploitation rights between the parties involved.
Furthermore, in many cases, the resultant products need to be approved and marketed. In an increasing number of industries, most particularly in life sciences, there are a multitude of regulatory requirements to be observed, already at the development stage and even more so when launching and distributing a product. Further in this regard, national and European law has grown even more complex in recent years and requires in-depth legal expertise and far-sighted advice based on decades of experience.
If successful, what could Horizon Europe mean for clients/inventors?
H2020 makes additional financial resources available to companies for R&D. In addition to direct funding for research and development projects, Horizon Europe also provides at the very least a degree of foreseeability for applicants. The priorities and objectives of European research and innovation policy are set out in four key items in the first Strategic Plan (2021-2024). These key items provide companies with a framework within which to drive forward their innovations. This foreseeability can be a benefit in long-term planning and in this way be a help to applicants in the proper preparation of applications.
Creating new perspectives and opportunities strengthens the European Research Area (ERA). Innovation is more valued, which heightens the competitiveness of the European economy internationally and at the same time, underlines general political goals such as environmental protection and health care as a common goal of the European community of states.
Maiwald Patentanwalts- und Rechtsanwalts-GmbH
Elisenhof, Elisenstraße 3 | D-80335 München
T +49 (0)89 747266-0 | F +49 (0)89 776424
www.maiwald.eu
Marco Stief
Marco Stief is a partner and the head of legal at Maiwald. He is an internationally recognised expert in the field of intellectual property and has extensive experience in advising clients in R&D projects and the negotiation of a wide variety of technology-related contracts, in particular cooperation, R&D and licence agreements. Marco also regularly advises companies on complex IP transactions and in the field of patent infringement litigation.
For many consecutive years, IAM has listed Marco among the top 300 "World's Leading IP Strategists" as well as among the top 1000 “World’s Leading Patent Professionals”. He is mentioned in the German JUVE-Handbook as one of the top 8 German patent lawyers under the age of 50, emphasising that his clients, in particular, praise his pragmatic approach. In 2018 Marco was admitted to the circle of the best 6 patent litigators in Germany by Who is Who. The German “WirtschaftsWoche” praised him as one of the best lawyers for IP law in Germany, and Legal500 recommends him as “pragmatic, fast, results-oriented and always meeting the highest professional standards”.
Marco teaches IP law at the University of Dresden as well as pharmaceutical, patent and international contract law at the University of Marburg.
Eva Ehlich
Eva Ehlich is a partner and managing director at Maiwald. She is an internationally well-known and esteemed German and European patent attorney focused on overall IP strategies including drafting applications, building and prosecuting large worldwide portfolios, enforcing and defending patents as well as establishing and implementing freedom-to-operate strategies. She has also passed the US patent agent examination and has global prosecution experience, which allows her to advise for global strategies in particular in the pharmaceutical sector.
Several times, Eva got honoured and listed as “IP Star” by Managing International Property (MIP) magazine as well as being recommended as “Germany’s Best Lawyer” by Handelsblatt and as "Frequently recommended Lawyer" by JUVE, Legal 500 Germany and Legal 500 EMEA, the latter in 2020 mentioned Eva as “stands out due to the rare ability, to combine thoroughness and pragmatism. She delivers excellent results". Last year, Eva was among the top 1000 “World’s Leading Patent Professionals” by IAM (Intellectual Asset Management).
Over the past 15 years, Eva has built a very stable group of attorneys that constantly work with her, currently five attorneys and two trainees. In particular, she takes pride to encourage and promote female attorneys.
How can you protect yourself from money laundering?
This type of federal offence involves acquiring money through criminal actions and then funnelling the funds through a legitimate company to make the money appear “clean”. In order to convict someone for money laundering in the United States, the prosecution must show that the defendant concealed money in order to cover up the source, nature, location, and identity of the illegally obtained funds. This does not mean putting the money in a safe or another hidden place. Rather, money laundering involves depositing money in a bank or business to make it appear that it came from a legitimate source. The government must also prove that the money originated from a specific federal offence, such as those mentioned above. If the funds did not come from criminal activity, the prosecution cannot obtain a money laundering conviction. Getting convicted of money laundering is punishable by a maximum prison term of 20 years. The greater the amount of money involved in the alleged offence, the longer the prison sentence and the higher the fines. In order to defend yourself from a charge of money laundering, you must take steps to ensure the legitimate source of any deposits can be verified.
Establishing a defence usually starts with the strategy. What strategies are available here? How do you devise the right one?
A sound strategy is key to any successful criminal defence. Decisions concerning the most effective way to attack the prosecution’s case is step number one. Next, attention must be given to what evidence the defendant will present. Whether the defendant intends to testify is important to this consideration. And finally, it is necessary that you anticipate and plan accordingly for the prosecutor’s rebuttal of any evidence you present.
Small businesses are often the victims of money laundering schemes. Why is this the case?
Small businesses are often used as a target for money laundering schemes. This is particularly true if the small business regularly deals in cash transactions. The more legitimate cash transactions the easier it is for money derived from an illegal source to be commingled.
Criminals continually develop new tactics. Has the recent pandemic shown any new trends?
The recent pandemic has led to the development of several new schemes designed to take advantage of the current situation. We have seen a significant increase in prosecutions involving fraudulent loan applications or other schemes designed to take advantage of recently developed government assistance programs. Scams being perpetrated over the internet attempting to defraud victims are also on the rise.
How can businesses defend themselves from new and different strategies?
Businesses and individual need to exercise caution when applying for newly established loan and assistance programs. It is important that you clearly understand the criteria for the program and only provide verifiable information in support of your application. You should also be leery of any unsolicited contact by way of the internet requesting personal financial information from you. You should never respond to such inquiries without first assuring yourself that it is not a scam.
Robert L. Jenkins, Jr. Attorney at Law
Direct Dial: (703) 309 0899
Fax: (703) 229 8653
Email: RJenkins@BynumAndJenkinsLaw.com
Website: BynumAndJenkinsLawOffice.com
Address: 1010 Cameron Street; Alexandria, VA 22314
Mr Jenkins actively handles a variety of white collar crime matters in both state and federal courts. He is a graduate of the National Law Center at the George Washington University. Over the last 25 years, Mr Jenkins has successfully defended individuals accused of embezzlement, wire fraud, bank fraud, bankruptcy fraud, conspiracy, theft of government property, aggravated identity theft, and tax related violations. He has tried more than 100 jury trials. In addition, Mr Jenkins litigates matters on direct appeal as well as related post-conviction matters.
With more than 26 years of top-notch legal experience, the legal team at Bynum & Jenkins provides knowledgeable and personalised legal representation to clients facing federal criminal charges in Virginia or Washington D.C. They are available 24 hours a day and seven days a week to help you determine your available legal options and guide you through the legal process.
In what ways can handwriting flip a case upside down?
I have worked on cases when the handwriting result was peripheral to the central argument of the case. Other times, providing handwriting authorship on a key document was critical to the case. In many probate cases when a signed Will is in contest, proving authorship of the signature is usually a key component in the case. Complications involving elder abuse, illness, dementia, and use of medications are all factors that often occur when litigating an estate involving a deceased elder. Health factors can seriously affect proving the authenticity of the signature and can be difficult to navigate especially without the assistance of a forensic handwriting expert.
When should lawyers consider seeking an expert like yourself to assist them with their case?
Lawyers should seek expert services any time there is a questioned or disputed document. There are many factors involved in altered and forged documents, and with the advances in technology, a skilful forger can make documents look near perfect. If there is any question about the document, I recommend consulting a document examiner. I have seen cases where the lawyer or the client try to perform their own evaluation without fully understanding the extent of the forgery or how it was created. Sometimes clients are perplexed why the signature looks like their own, but they know they didn’t sign the document. Other times, signatures may look “forged” or not show any similarity to comparison signatures, yet they are genuine. Complications associated with health and medications can make signatures look dissimilar to genuine signatures. Electronically captured signatures are highly complex cases and require the services sometimes of both a forensic handwriting expert and digital evidence expert. Forensic document and handwriting examiners are equipped with instrumentation to detect, analyse, and differentiate paper, print process, signatures, alterations, pen ink, security documents, and more.
Forgery charges are highly complex and sometimes difficult for a prosecutor to prove in court. How do you assist?
Forgery is a complex process to prove and frequently involves the services of a fraud or forensic accountant. Forensic document and handwriting experts examine physical evidence to prove alteration and/or simulation. Simulation is the more accurate term that forensic handwriting experts use to describe the process of imitating or copying another person’s signature or handwriting. Access to original documents and adequate comparative evidence is important in providing strong opinions regarding questioned documents. Medical, accounting and other bookkeeping records can be complex documents. If forgery is suspected, it is important to consult a document examiner to assist in detecting if and where the forgery occurred. A document examiner is experienced in examining a wide array of different types of documents and has special instrumentation to detect alterations or written forgeries that go undetected to the unaided eye. I have worked on complex document cases where suspected forgery occurred, but the attorney and the client could not figure out how the document was created. Document examiners can assist in helping to examine the evidence and prove forgery.
What are the common telltale signs that forgery has occurred?
Forgery is a legal term involving the intent to defraud. Forensic document and handwriting experts do not use the term as they examine and opine on material evidence. Evaluation of intent or motive is decided upon by the trier-of-fact, not the forensic document examiner. Forgeries can be the product of altered documents or simulated handwriting or signatures where a person imitates the writing of another. In altered documents, misalignments of text or margins within the document or “floating” signatures that do not interact with any other part of the document are signs that a document may be altered. To detect a replaced page in a multi-page document may involve examination of the paper, print process, folds and wear on the paper, and even staple marks. The simulation of a signature, especially one that is carefully imitated by another writer, may look visually similar, but it may also look drawn and unnatural. Habitually, people write very quickly and automatically, so a slowly written signature is one of the signs that a signature has been imitated or traced.
What is the analysis process usually like? What do you need in order to get a sound judgement by the end of your report?
Establishing the methodology of the examination is as important as conducting the examination itself. When contacting a document examiner, it is recommended that very few details about the case are shared with the expert to minimise bias going into the case. A document examiner only needs to be supplied with a test question or reason for analysis and examine the documents in question and comparative material. The background of the case is not necessary and is discouraged. Adequate comparison standards in handwriting examination cases are critical. In disputed signature cases, rarely can any type of opinion be formed with only one comparison signature. Typically, a larger number of comparison signatures are required including signatures written during a contemporaneous time period to the disputed signature. Sometimes, comparison signatures are not available which frequently occurs in criminal cases. In such cases, handwriting experts schedule appointments with suspects to obtain handwriting exemplars in person. It is recommended that handwriting experts collect the exemplars as they use a variety of tests to gather different types of handwriting samples from the suspect. In cases where there may be multiple suspects (personnel cases, anonymous notes), we recommend using a handwriting “line-up” process where the handwriting of suspects is sent to the examiner without disclosing who the suspect is to eliminate bias in the examination process.
How often is your final conclusion definite?
In a perfect world, document examiners would provide a definitive conclusion every time, but definite conclusions are frequently dependent on the quantity and quality of comparative evidence and availability of original documents. There are several factors involved in reaching such a conclusion. An important first step in any forensic analysis is the evaluation of the evidence. It is much easier to arrive at a definitive conclusion if a signature is complex and consistent, while evaluation of initials and careless signatures that amount to little more than a quick loop or other overly simplified written form rarely lead to any type of definitive conclusion. The quality of comparative evidence is vital. Comparing a disputed signature against a single comparison signature is not sufficient to yield any result other than no conclusion.
How has the digital era changed your line of work? Is it now more difficult to spot forgery?
A few years ago, I wrote a book titled “Developments in Handwriting and Signature Identification in the Digital Age” (Routledge, 2014). That book outlines the various changes that have occurred in handwriting and signatures as affected by the digital era. Some of those changes include the decrease in teaching cursive handwriting and how that has changed the way we write, especially among younger generations. The book also explores how digital tablets have advanced research into the neural processes involved in the handwriting process. I discuss electronic signatures—what they are, how they are generated, how they differ from wet ink signatures, and how handwriting experts need to analyse these unique and novel signatures. I created a methodology or best practice standard for the examination of e-signatures.
In some ways, it is more difficult to spot a forgery now because there are so many methods in which a document can be generated. The technology available to create documents is a little overwhelming when we compare the way documents were generated just 40 years ago. The wide-spread availability of printing has created an ever-increasing need for advanced security features in currency and identification documents. The accessibility to document imaging software allows ease in manufacturing and altering documents.
For further information about forensic document examination, I can be contacted at:
Heidi H. Harralson, MA, BCDE, Dipl.
Board Certified Document Examiner
Spectrum Forensic International, LLC
Phone: 520-975-2275
Email: harralson@spectrumforensic.com
Email: spectrum008@aol.com
I am Heidi Harralson, managing partner of Spectrum Forensic International, LLC, a full-time forensic handwriting and document examination practice. I am court-qualified and am a board-certified forensic document examiner and diplomate through the National Association of Document Examiners. Our firm, which includes two document examiners, works on cases throughout the United States and internationally. We work on a wide range of cases, both civil and criminal, and have been consulted by the prosecution and defense. Our casework is not limited to traditional questioned documents (which include the normal course of business documents such as medical records, probate documents, contracts, deeds, etc.), but we are also consulted on works of art and historical documents. Publishing, research, and education have been an important part of our professional experience. I have lectured extensively to professional organizations and universities on the handwriting sciences internationally and I am an affiliate professor at East Tennessee State University where I teach courses in forensics and especially in forensic document examination. I have published original research in peer-reviewed journals and authored course textbooks on forensics. I hold a Master of Arts in handwriting science and forensic document examination and a forensic crime scene technician certificate.
Publications include:
Huber & Headrick’s Handwriting Identification: Facts & Fundamentals, 2nd ed. (CRC Press, 2018)
Developments in Handwriting and Signature Identification in the Digital Age (Routledge, 2014, also translated and published in China and Italy)
Crime Scene Investigation (Anderson, 2013, co-authored chapter on document examination)
Forensic Handwriting Examination of Motor Disorders & Forgery (VDM Verlag, 2008)
A complete list of my publications can be found on ResearchGate: https://www.researchgate.net/profile/Heidi-Harralson
The outlook for real estate is looking much brighter in 2021, however, as the global economy recovers, legal teams could once again see the sector as a good source of deals.
But will the exponential rise in the use of digital technology from people turning to their laptops during lockdown, result in greater use of technology in deals, essentially in an industry such as real estate which is known as a technology laggard?
To gauge how the pandemic impacted the adoption of digitisation in real estate, we surveyed the industry’s professionals in Europe*. The figures seem to show that the real estate industry is less deserving of its technophobe reputation than some might have thought. All our respondents had some degree of digitisation in place, with the highest proportion (37%) saying they had between 50% and 74% digitised. Only 1% claimed they had digitised all their processes, but none said they had no plans to introduce it.
Confidence in the power of digitisation is strong, with more than two in five (43%) saying it would increase the efficiency of businesses processes, a further 30% said that it could dramatically reduce costs and 27% said it could create significant competitive advantages.
Key weaknesses
Despite its positive potential, the technology currently being applied in the European real estate industry does have some key weaknesses. The lack of integration between systems and platforms was the most common complaint from our respondents, which was cited by 44% of them. A second key challenge identified by 29% was the lack of applications available to replace the paper-based processes that still exist quite widely. Around one in 10 (11%) said poor network resilience is the worst problem and 10% pointed to inadequate security.
More than one in three (36%) of our respondents said that remote working will be the most important theme for the real estate market in future.
Greater connectivity
The lack of integration that was identified is no surprise. Firms have been calling for greater connectivity in their business processes for some time, but it does require the practical use of interfaces between software solutions.
Drooms has addressed this by opening up its application programming interface (API) to its virtual data room (VDR) users, enabling them to connect the platform to other systems. The goal? To save time, workload, effort and reduce costs.
Virtual Data Rooms
Launched around 20 years ago, a VDR is an online version of the physical spaces in which confidential or sensitive information and documents were held and could be viewed by authorised parties. Thanks to major technological advances, they now provide a secure, online platform for accessing confidential documents and handling business processes with a range of added functionalities.
They lend tremendous efficiency and functionalities to M&As, IPOs and for non-performing loan and real estate transactions, they streamline due diligence processes and make divestment simple. In 2019, for example, Drooms hosted 70% of the largest real estate deals with a total volume exceeding EUR 8.7 billion in Germany. They can also be used effectively to manage real estate assets throughout their lifecycle.
Key themes going forward
The exponential rise in the number of people working remotely will likely be one of the strongest memories for most people about the pandemic. For many companies, it was a hurdle they had yet to cross on a large scale, perhaps because of uncertainty about its feasibility. But large numbers of companies had to make the switch and did so successfully, to the point that it could be a money saver if less office space is required after the pandemic is over.
More than one in three (36%) of our respondents said that remote working will be the most important theme for the real estate market in future. The second theme highlighted by our respondents was the expected arrival of more integrated technology that will improve efficiencies across the whole real estate value chain, which was cited by 28%.
Huge shift
One clear lesson from the pandemic is that those companies that already had digital technology installed were much better equipped to deal with remote working and closed offices.
It will also be true that those legal firms that have the right technology in place that can deliver greater efficiencies, lower costs and higher productivity, including managing transactions, will be better placed than their competitors to take advantage of the post-COVID recovery of the real estate market.
*The study was a quantitative survey using an online questionnaire consisting of seven questions. Customers and interested parties in Europe were invited to take part in September 2020 via email. A total of 538 real estate experts responded. The full survey can be accessed here: https://bit.ly/383EHYV
Jan Hoffmeister,
Managing Director & Chairman
Drooms GmbH
Eschersheimer Landstr. 6
60322 Frankfurt, Germany
www.drooms.com
The GameStop roller coaster is evidence that the Internet has democratised trading. When a hedge fund—as the professional agent of a group of investors—sells short with the intention of profiting from the decline of a particular company’s stock price, a group of non-professional investors can legally come together through the Internet and buy in to profit on the upward movement of the stock, extracting funds from the short-sellers. We should remember that trading differs from investing. All purchases and sales of securities are trades, but the holding period determines whether one is trading or investing. Trading is a short-term strategy, like house-flipping in real estate for gain. Investing, on the other hand, is a long-term strategy, like buying a house to lease it for income. The motivation of both groups—in trading—is to gain from the others’ loss.
We should remember that trading differs from investing.
To participate in the securities markets is to assume risks of various kinds. This is the principle of caveat emptor, which is the admonition to the buyer to conduct due diligence and exercise caution before purchasing, whatever the holding period will be. The federal securities laws are not, like some state blue sky laws, based on the merit of a company. Lawmakers and regulators have little if any expertise in valuing business ideas, practices, and enterprises. The federal securities laws do not guarantee that stocks listed on exchanges are good buys…the market decides.
The core principle in playing in the market is that one cannot put into that market material misinformation: you can’t lie. This principle provides the structural integrity for the roller coaster and the numerous decisions that construct the features of that company’s particular ride. The securities laws become relevant when information—public statements and manipulation schemes—that matters to decision-makers is false. Manipulation schemes are false statements because participants’ market decisions are considered information about perceived value.
Unless GameStop market participants made materially false statements or took “statement-like” actions—such as parking stock or using wash trades—the market will sort out the gains and losses.
The risk for which a party may seek legal redress is fraud. So long as the company makes sufficient and truthful disclosures and market participants do not make materially false statements or manipulate the market, the government will not interfere with transactions in that security, whatever the merits of any transactional decision. Unless GameStop market participants made materially false statements or took “statement-like” actions—such as parking stock or using wash trades—the market will sort out the gains and losses. In the end, the roller coaster car returns to the loading station—where the ride began—the investors are back to the start, and likely unaffected. The traders, however, may have enjoyed big gains or losses at each other’s expense because, in the end, trading is a zero-sum game (not including transaction costs).
Some suggest that the SEC should “step in” and regulate GameStop-type trading. We ask why and how? The so-called Limit Up Limit Down rule (a market-wide limitation designed to prevent trades in stocks listed on national exchanges from occurring outside of specified price bands, while allowing trading to continue when a price move is temporary), implemented after the 2010 “flash-crash”, and the alternative uptick rule for short-selling (restricting short selling from further driving down the price of a stock that has dropped more than 10 per cent in one day compared to the closing price on the previous day) are already in place. A patronage gate to market participation limits market gains to “professionals” and wealthy players. This is undemocratic and elitist. Limitations on messages posted in subreddit groups that urge members to pile into a specific stock such as GameStop truncates First Amendment rights to free speech that professionals exercise. Perhaps we should recognise that the term “abuse” can be used to characterise lawful conduct that causes the “wrong” party to lose money.
Otherwise, the SEC stands back and lets investors take risks in accordance with their own tolerances. Enforce the rules but let the players play—over time, this philosophy promotes fair markets.
Traders and investors are free to take financial risks that government agencies and public observers might not make, and this “regulatory respect” for the role of independent economic decision-makers is why the price-and-volume charts for publicly traded companies appear as roller coasters, moving up and down over any given time span. The differences in these roller coasters are the amounts and percentages in price changes and the positive and negative slopes over different periods of time. The shape of these rides over time represents thousands of buy, sell, and hold decisions, which are the outcomes of participants’ access to information about the company and about its market, experiences, investor risk-tolerances, and decision-making algorithms.
Another analogy that describes some aspects of the stock market is that of a casino, where gamblers risk their money in the hope that their good fortune will lead to a big return on a bet. Casinos are heavily regulated. Were a casino to be discovered to have magnetized the roulette wheel to dictate winners and losers, engineered a slot machine to never payout, or any number of other practices to further pad the casino’s odds, then the casino will be prosecuted. In the markets for company securities, the SEC will step in if the companies cheat by lying about their financial health or the state of their business, or if brokerage firms or traders engage in market manipulation. The SEC’s role is not to guarantee returns but to see that the market is fairly structured, operates effectively, and that participants play in accordance with the rules of disclosure and truthfulness. Otherwise, the SEC stands back and lets investors take risks in accordance with their own tolerances. Enforce the rules but let the players play—over time, this philosophy promotes fair markets.
Below, he explores how working from home has changed the workplace and why employers should still be proactive at preventing discrimination when employees are working remotely.
How has working from home changed the workplace?
Many potential and current clients have told me that they are working harder than they worked before the pandemic. Given that the pandemic has undoubtedly had a substantial economic impact on employers across the country, we have seen a surplus of layoffs and furloughs, along with new work from home scenarios. With this trend, there appears to be an emerging culture in the workplace where supervisors are more closely monitoring employees’ time, work product, and contributions. Consequently, the prospect of termination or furlough has many employees working harder, longer, and with more intensity to avoid the “chopping block”.
How has working from home impacted workplace discrimination?
Unfortunately, there has been no shortage of workplace discrimination, despite much of the country working from home. In fact, what we are seeing are more employers pretextually using COVID “economic impact” explanations to terminate employees for, what are really underlying, discriminatory reasons. This discriminatory conduct has appeared against many different protected classes, including discrimination based on pregnancy, disability, race, religion, gender, age, sexual orientation and sexual harassment. Additionally, remote working has underscored the efficiency of the “digital age” in the workplace. Through various technological platforms, we have seen that responses, assignment submissions, and other work related activities can happen very quickly. However, that speed and efficiency has also reared its head in the discrimination and harassment context. For example, harassers have become emboldened to send discriminatory text messages and emails, knowing that they do not have to face anyone in person. Along those same lines, we are seeing alarming rates of retaliation occurring within a short period of time after employees engage in protected activity such as complaining or reporting unlawful harassment.
I have also spoken to many mothers who have been impacted by the pandemic in an employment context. With schools closed, and most learning being conducted remotely, it has primarily been these mothers who have taken the brunt of childcare and remote learning responsibilities while also working their full-time jobs. I have repeatedly found that employers have discriminated against working mothers for their “familial status” as primary caregivers in their households by failing to promote them, disparately treating them as compared to their male colleagues, and/or peppering them with gender related comments such as, “women are so emotional” and “maybe you should be a stay at home mom instead of working here”. A frequent example of this disparate treatment is promoting males over females who are equally qualified solely because they are not mothers. Notably, this unlawful treatment had generally occurred remotely. Therefore, in the same way employers have evolved with the changing times to survive, so have harassers in the workplace.
What are some of the misconceptions people may have in terms of discrimination not occurring as much as it would in the office?
The biggest misconception is that it is practically impossible for any employer to create a hostile work environment remotely. However, this is false. Working from home has not discharged any employer’s legal obligations to maintain a workplace free of a hostile work environment. For example, the United States Equal Employment Opportunity Commission (“EEOC”) holds employers legally accountable for their employees’ discriminatory behaviour when that behaviour creates a hostile work environment. Employers are also liable when they knew of the harassment but failed to immediately address it and/or prevent future harassment. Some local statutes provide even broader protections than the EEOC. For instance, whereas the EEOC requires “severe and pervasive” behaviour to establish a claim of a hostile work environment, under the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”), the harassment no longer has to be severe or pervasive but rather, the burden is on the employer to show that the conduct at issue was no more than a petty slight or trivial inconvenience.
Despite these laws, in this new “work from home” world through Zoom, FaceTime, Skype, and text messaging, employers have still easily engaged in inappropriately harassing behaviour. Racial slurs, sexual propositions, and repeated comments about one’s pregnancy, age, or disability are no less offensive, or incendiary, merely because they are not done in person. As such, I have seen an influx of discrimination cases with an abundance of corroboration because of the “digital footprint” harassers have left behind.
Employers also appear to be veering away from their obligations to provide reasonable accommodations to employees. The laws protecting employees who request reasonable accommodations remain the same as they were prior to the pandemic. Employers are generally liable for disability discrimination under the NYSHRL and NYCHRL if an employee can show that: (1) he/she was a disabled person within the meaning of the statute; (2) the employer had notice of their disability; (3) with reasonable accommodation they could perform the essential functions of the position sought; and (4) the employer failed to make such accommodations. When employees request such accommodations, employers must engage in a good faith interactive process and/or cooperative dialogue. Thus, it is insufficient for an employer to flatly say “no” to an employee’s request for an accommodation without any further dialogue.
Despite these legal mandates, disability discrimination has rapidly increased during the pandemic. In the past year, many requests for reasonable accommodations have coincided with COVID-19 concerns, and have come from people with high-risk pregnancies, immune disorders, or preexisting respiratory conditions. We are seeing a growing number of employers rejecting employees’ requests for accommodations without any discussion or dialogue. Worse, many of these employees being demoted, suspended, or terminated shortly after making such requests. Given that the laws remain unchanged, and that the ease with which employers may still engage in discriminatory behaviour persists, employers should be wary of maintaining a false sense of security in remote work settings.
What are some of the precautions employers should still be taking due to remote working?
There are numerous factors that employers should consider with respect to remote working. First, employers should be mindful of the ease with which their employees can leave a “digital footprint”. Similarly, employers should be aware that text messages can be saved as screenshots, phone calls and Zoom chats can be recorded, and emails cannot be unsent. However, in the “age of the pandemic” where businesses are relying exclusively on technology to survive, employers must consider that the volume of this digital evidence is bound to increase. This means that employers will find more evidence that may corroborate claims of discrimination against them as cases increase.
Second, employers must be mindful of the legitimate medical implications COVID-19 may have on their employees. While it may not be economically beneficial to employers to have employees who need an accommodation, an employer is still liable for failing to provide a reasonable accommodation to its employees who may need an accommodation. Thus, employers cannot just broadly cite “economic” reasons for failing to provide a reasonable accommodation and expect that they will not be confronted with potential legal action.
Finally, employers must confront claims of discrimination within their organisations promptly and without retaliation. Too often in the last year, I have represented employees who were suspended, placed on “Performance Improvement Plans” (PIPs) or terminated shortly after complaining about discrimination in the workplace and/or requesting a reasonable accommodation.
Just because employees are working from home more than ever, they are still protected from harassment and discrimination, remote or otherwise. Employees should be aware of their rights, which really have not changed, and employers must take heed of those rights, regardless of whether workers are in the office or working from home.
Jesse Weinstein, Associate
Phillips & Associates, PLLC
45 Broadway, Suite 430
New York, NY 10006
P: (212) 248-7431
Jesse Weinstein is a Litigation Associate at Phillips & Associates. He is a sharp negotiator with a meticulous investigative approach to each one of his cases. As a result, he has secured millions of dollars in settlements for his clients through presuit negotiations, mediation, and litigation. Additionally, Jesse was recently selected by Super Lawyers as a "2020 Rising Stars Honoree" in the New York City region for his contributions in the field of employment discrimination.
Before the pandemic, and before video conferencing became a daily activity, UK law opened the door to transforming the way that legal professionals interact with their clients.
In 2019, the Law Commission confirmed the legal validity of electronic signatures, offering lawyers and their clients the opportunity to embrace a new, more efficient and more secure way of confirming contracts.
In parallel, my company, Videosign, redomiciled from New Zealand to the UK with the goal of working with lawyers and other professionals who were keen to embrace this technology and forge a new way of working to adapt to the ‘new normal’.
We are aware that the pandemic has forced global industries and individuals to rethink how they conduct business. The main conclusion remains: recognise the power and efficiency of using cloud services. This will allow contracts, for example, to be signed quickly and securely.
Cloud services allow professionals to meet directly with their clients in a virtual meeting room, while providing the tools to offer a purely digital experience of collaboration, remote signing and witnessing of documentation, by using the web browser and without the need to install additional software. By effectively being able to eliminate time-consuming paper processes, whilst making convenience and compliance top priorities, using advanced tech enables the legal industry and its professionals to adapt to the demands of the modern working environment.
Through COVID-19 and beyond, where contracts must be signed, virtual witnessing and electronic signatures can enable businesses to offer a more secure and compliant way of gaining legally binding contract agreements remotely, than if they are done in person. Think of the number of times that you have been waiting for an important document in the post or struggling to find time in your diary for a face-to-face meeting for a simple signature to progress an important transaction. The most exciting moments in our lives, such as buying a home or starting a new job, can be made so much easier, faster and less stressful when the need for pen, ink, post and travel is removed. Meanwhile, routine administrative tasks like hiring a car or taking out a loan can happen more effortlessly than ever.
Through COVID-19 and beyond, where contracts must be signed, virtual witnessing and electronic signatures can enable businesses to offer a more secure and compliant way of gaining legally binding contract agreements remotely, than if they are done in person.
Virtual witnessing and electronic signatures have already been widely embraced in the financial advice sector thanks to the improved customer experience they offer. There are also use cases for this approach in healthcare, insurance, banking, funeral arrangement, will writing, conveyancing, marketing, recruitment - the list goes on.
Legal recognition for both the electronic signature and automated verification means that remote systems can be used in all circumstances, with a couple of caveats for special cases: deeds can be signed online providing the process is witnessed in person; wills still require a ‘pen and ink’ signature, but the law allows for the witnessing to take place electronically.
Convenience and compliance are what customers regard as their top priorities and we must mirror this. Using an electronic signature means legal professionals can offer a more efficient service to their clients and save time and money while being confident that they’re using a system that’s safe, secure and legally compliant.
The ability to conduct business remotely is essential in the times we’re living in, but the real reason we have invested so much effort in pushing the development of the electronic signature centres back to efficiency and security. The traditional ‘wet’ signature has been vulnerable to forgery since the invention of ink, while a properly authenticated electronic signature offers more security and confidence than ever before. The additional security offered by the digital signature is immeasurable. The bottom line is that when a sheet of paper arrives in the post, marked with a squiggle of biro, you’re taking it on trust that it has genuinely been signed by the right person.
The virtually-witnessed electronic signature takes away almost any element of doubt, and a watertight system provides incontrovertible proof that the right person has signed a document. It can be used for all electronic signatures across multiple industries and provides an extra layer of assurance by recording video evidence and using facial recognition to verify the identities of all parties. Our ability to verify identities using artificial intelligence facial profiling and linking this to a digital signature can be a game-changer for a huge number of professions and industries.
For example, users registered with Videosign upload a ‘selfie’ along with a photo of their passport or driving licence and the system checks the likeness, inspects the document for authenticity and can link to external databases for credit checks, criminal record searches and more. We are very excited about this feature as it replaces the very costly and time-consuming process of having people confirm their identities by turning up in person or sending documents through the post, plus carrying out these checks electronically is much less prone to fraud and document loss or damage.
Metadata, combined with tamper-proof documentation, video evidence and facial recognition verification adds up to the most secure way possible to agree a contract. For those in the legal profession, the benefits will be obvious, but I suspect conveyancing will be the area where the electronic signature really captures the public imagination. For many people, buying a home will be their most important interaction with the legal profession, and this technology has the potential to reduce completion times by weeks.
The announcement in July that the Land Registry will accept digital signatures is destined to transform the conveyancing sector and will seriously advantage legal practitioners who embrace this important development. Environmental sustainability is also a key driver for moving away from paper-based systems to cloud based solutions. As more organisations aim to reduce their carbon footprint and operate on ethical terms, reducing the use of paper is an obvious win. Add a significant reduction in the sheer time, cost and journey of physical mail, as all documents are shared securely and stored online.
Efficiency and security are something that is applauded by lawyers and clients alike. No more waiting for documents in the mail. No more waiting for clients to visit the office. No more delays due to incorrect completion of documentation. With professionals now able to guide their clients through lengthy and complex documents in person – we’re hearing of measurably improved performance, as simple document signings that used to take a week are being reduced to just an hour or less.
The other interesting thing about our platform is that our clients are constantly finding new ways to use it that we hadn’t previously anticipated. For instance, a client in South Africa started using the platform for signing contracts, but soon discovered it was also useful for invigilating online financial services regulatory exams and verifying the identity of candidates. That has meant that even when exam candidates are overseas, it has been possible to verify their identity and supervise them during the test - reducing the chances of cheating substantially.
I have no doubt that new uses of the technology will continue to emerge, and with the changes we’re all living through, and expectations shifting, I believe the potential of the electronic signature is only just beginning to be understood. Any company that is holding off from adapting to the new way of doing business and waiting for life to return to ‘normal’ is likely to get left behind. Although no one could have foreseen how our lives would change during 2020, I believe that the desire for the simplicity and security of the electronic signature is here to stay.
Steven Tallant, CEO of Videosign, Videosign.co
What are the barriers to homeownership in California?
The state’s lack of housing supply has led to home prices skyrocketing throughout California, which in 2020 featured a median home price of $659,000. So that alone creates a barrier for many people. Additionally, the biggest barriers for low-income buyers – including people of colour – are lack of education about the process and the inability to save or get from their families the lump sum needed for upfront costs.
How is CalHFA helping low- and moderate-income Californians break those barriers and achieve the dream of homeownership?
CalHFA provides resources in the form of down payment and closing assistance. Our single-family homeownership division partners with a variety of private lenders throughout California, design conforming FHA and Conventional first mortgages to provide to qualified borrowers. First-time homebuyers that use these mortgages can pair them with CalHFA’s subordinate loans for down payment and/or closing costs assistance.
As part of the transaction, CalHFA requires borrowers to take homeownership education and counselling so that homebuyers learn how to get the right mortgage and become successful homeowners. We have special programs for fire department and school employees, as well as victims of disasters and buyers of manufactured housing. Last fiscal year, CalHFA helped more than 13,000 low- and-moderate income homebuyers use $4.1 billion in first mortgages and $229 million in down payment and closing cost assistance to achieve the dream of homeownership; two-thirds of those families are people of colour.
What are the biggest issues facing California residents looking for affordable rental housing?
Lack of supply is even more of an issue when it comes to rental housing in California, which has resulted in more than half our state’s renters considered rent-burdened (spending more than 30% of their income on rent). The lack of affordable rental housing is caused by a variety of factors including, but not limited to:
With resources always stretched thin, and the needs of California so large and varied, the Newsom administration, the California State Legislature, and agencies like CalHFA are constantly searching for innovative ways to finance new housing and to make existing housing more affordable.
How does California use public-private partnerships to maximize public funding?
I already mentioned our single-family partnerships with private lenders that helped more than 13,000 first-time homebuyers access down payment and closing cost assistance. On the Multifamily side, each affordable housing development is an intricate public-private partnership that can include cities, counties, multiple state agencies, nonprofits, affordable housing developers, lawyers and more all working together to get the project to the finish line.
The reason for this is the rising costs of land, labour, materials, impact fees and everything else that goes into the building of affordable housing require the stacking of multiple financing sources. Public resources alone will never be enough to finance the amount of housing California needs, which is why it is best used to leverage private investment through public-private partnerships.
An effective version of this is when an affordable developer can use permanent debt and subordinate financing from CalHFA, and whatever private investment they can get to leverage Private Activity Bonds and Tax Credits, which are administered by the California State Treasurer’s Office but are allocated from the federal government. Gathering all of these sources together to leverage off of each other allows the state to stretch its resources to make more housing available for vulnerable residents across California.
This reminds me of the potlucks my mother used to have with her friends at the end of every month when we were growing up in public housing. My sister and I used to think the purpose was just to have a fun get together, but we found out much later that these mothers were all running out of food at the end of the month. On their own, they didn’t have enough to feed their family but when they pooled those resources, everyone had enough to eat.
But for the affordable housing deals to work, for the resources to pool together, it takes a lot of work to get all of the entities aligned with each other. Some of the heaviest lifting is done by affordable housing lawyers and general counsel for the different state and local housing agencies, poring over the regulatory agreements and financing structures to make sure it is all legal, proper and financially sustainable.
What innovative products does CalHFA offer to address the state’s housing struggles?
With resources always stretched thin, and the needs of California so large and varied, the Newsom administration, the California State Legislature, and agencies like CalHFA are constantly searching for innovative ways to finance new housing and to make existing housing more affordable.
Some examples of the work we are doing at CalHFA, some of it in collaboration with our state and local partners, include a pilot program to finance Accessory Dwelling Units, an expansion of our Conduit Bond Issuance program and a Bond Recycling program.
The Conduit program is growing quickly because some affordable housing developers can find cost and time savings from CalHFA’s position as a statewide issuer that can move fast. Meanwhile, our new Bond Recycling program is the first of its kind in California and works because of a partnership with Apple, which provides a credit facility to preserve tax-exempt bonds from one project so they can be reused as additional financing for a second project.
Another innovative program that has been very successful for CalHFA is our Mixed-Income Multifamily Loan Program. This program provides subordinate financing to developers of new construction affordable housing that serves a mix of incomes between 30% and 120% of Area Median Income. The program won an award from the National Council of State Housing Agencies for producing more housing in less time and with less public subsidy.
How is the state of California making sure it produces affordable housing that is accessible to everyone?
The state’s entire housing finance system has been collaborating over the past 18 months on revamping its procedures and a key part of that effort was to lean into California’s focus on Affirmatively Furthering Fair Housing.
Some of the guiding principles of this new framework are: pushes to create units that stretch widely across the income brackets in lower-income communities; to build more deeply affordable units in high-resources areas that include more jobs; better education opportunities; healthy food options and transit; and to remove barriers and create additional opportunities for community-based BIPOC developers who will produce housing in areas where they are best suited to know the community needs.
Tia Boatman Patterson
California Housing Finance Agency
P. 916.326.8604 F. 916.322.2345
Tia Boatman Patterson has a law degree from McGeorge School of Law and has worked as a housing policy adviser to the Speaker of the California Assembly, General Counsel for Sacramento Housing & Redevelopment Agency, a private-sector housing lawyer, Senior Housing Advisor to Governor Gavin Newsom and spent more than six years in her former role as the Executive Director of the California Housing Finance Agency (CalHFA).
A self-supported state Agency, CalHFA serves as the state’s affordable housing lender, partnering with private lenders to provide first mortgages and down payment assistance to low- and moderate-income homebuyers as well as lending directly to developers of affordable rental housing.
