About Your ACC South/Central Texas Chapter Inside 3Q2019

Home , Frost Bank, NuStar Energy, USAA

Inside 3Q2019 2...... The Modern Partnership: In-house and Outside Counsel 3...... ACC News 4...... 2019 ACC Board of Directors 4...... Notice to ACC Members Regarding 2020 Proposed Slate of Officers 5...... ACC Luncheon Dates 5...... Upcoming Events 7...... Ethics Follies 8...... Partnership/LLC Audit Rules 10.... Welcome New Members! 11.... Past Events 12.... Chapter Leadership FOCUS About Your ACC South/Central Texas Chapter

ACC South/Central Texas IS: • Made up of members who represent the following diverse companies: Acelity Goodman Koontz PETCO Animal Southwest A professional organization of nearly 200 American Networks, Inc. Corporation Supplies, Inc. Research Institute members who serve as in-house counsel Trucking & Government Lewis Energy Propel Financial TaskUs, Inc. for nearly 80 area companies, with Transportation Personnel Mutual Group Services TechRadium, Inc Insurance Life Insurance Liberty Oilfield Rackspace approximately 40 members serving as Company, RRG Company Tower Life Services Hosting, Inc. Insurance General Counsel. Andeavor H- E- B Grocery Life Healthcare Randolph- Company Company Argo Group US Partners Brooks Federal Travelers • The leading source of continuing legal BeiGene, Ltd. Harland Clarke Lone Star Credit Union Holdings Corp. Trinity University education, legal and business eth- BP America Inc. Bakery Inc. Rush Enterprises HEB Grocery United Allergy ics awareness, pro bono activities and C.H. Guenther Lumin Health, San Antonio Services Company, LP LLC Board of networking opportunities for in-house & Son, Inc. United Services Howard Energy Marathon Oil REALTORS CalTex Protective Partners Automobile counsel in San Antonio and South Texas. Coatings, Inc. Company San Antonio Association iHeartMedia, Inc. Mesilla Valley Housing Authority • Focused on meeting the unique, profes- CaptureRx University of the InGenesis, Inc. Transportation Scantron Incarnate Word CeloNova Corporation sional needs of attorneys who practice Biosciences, Inc. Innotech Services Mission City USAA Company Management, Inc. Sea Island in the legal departments of corpora- Chase Manhattan Development USAA Real Bank InterLinc Mission Pharmacal Estate Company tions. Mortgage Company Company Chicago Title Services, LLC Security Service UTSA of Texas, LLC MUY Brands, LLC • An award-winning chapter, having been Investors Title Federal Credit Valero Energy CPS Energy National Investors Union Corporation awarded ACC’s Chapter of the Year on Insurance Title Insurance numerous occasions and recently being Diebold, Inc. Company Company Silotech VP Racing Group, Inc. Fuels, Inc. recognized under ACC’s new award DPT James Avery NatureSweet Laboratories, Ltd. Craftsman, Inc. South Texas Whataburger NuStar system as a “Gold Level Chapter of Jordan Foster Money Restaurants, LLC Frost Bank Energy L.P. Management, Ltd. Distinction” and being awarded ACC’s Construction, Zachry Group Frozen Beverage LLC OCI Enterprises Southwest distinguished “Innovative Program- Dispensers Inc. Business Zachry Kinetic Concepts, Industrial, Inc. ming” award for Ethics Follies®. Genesis Inc., an Acelity Packers Sanitation Corporation Networks Company Services, Inc. The Modern Partnership: In-house and Outside Counsel By Cathy Landman and Margo Wolf O’Donnell

As lawyers take on increasingly sophisticated business advisor roles in today’s marketplace, the partnership between in-house and outside counsel has become more important than ever. And while every lawyer wants to provide the best possible service to the client, the practical steps for achieving outstanding service in this context are not always clear. Drawing on our shared experience, we have identified four key steps lawyers on both sides of this relationship can take to help them build their credibility and deliver solutions that advance their business.

1. Develop a commercial point 2. Educate each other and Always be thinking not just about of view, and base the legal constantly reflect on what you communication between the inside and strategy on business goals are learning outside teams, but also how to enable the So many skilled lawyers bring a It is crucial for both sides of this in-house team to present ideas to their nuanced understanding of the law to partnership to make time to educate internal clients, the business leaders. each other — for the outside counsel to their work, but when it is time to apply 3. Build a shared roadmap that educate the client on the most pressing that knowledge and counsel to the can evolve, and demonstrate legal issues they may face, and for the company’s business strategy, they have good judgment difficulty bridging the divide between in-house team to educate the outside the worlds of law and business. The key counsel on how their business works. To The in-house counsel is continuously to becoming a valued business advisor facilitate communication that extends juggling big priorities with the day to and in-house lawyer is understanding beyond just the discovery phase, develop day responsibilities of the job. The best not just the legal risks for the company a work process that includes shared outside counselors help their clients on a given matter, but also the interplay folders, files, timelines, and project anticipate what is on the horizon and between those risks and the company’s plans, and encourage both teams to determine whether the current approach larger business goals. check in regularly. and practices will put the company on the right trajectory. In a legal practice, that means having Designate time for reflection at important a conversation early on to ensure an milestones throughout the project so that Timeliness is an important factor in understanding of the desired result. And the in-house and outside teams may ask building a workable roadmap. Good that conversation needs to continue as of themselves and each other what they business advisors understand how to a matter unfolds and new information have learned and how it might alter the foreshadow what is to come so business comes to light. goals or process going forward. Finally, leaders have time to digest information make sure both teams are speaking the and then decide. The partnership also An understanding of what the company same language by using the right tools depends on crystal clear communication is trying to achieve — where they are and a shared vocabulary. and a willingness to use technological now and where they want to be — should tools to improve efficiency. drive the legal strategy and lead you While written word is the order within to the legal remedy that furthers those law firms, the business community Because skillful navigation involves goals. That may mean litigating or not, tends to rely on tools like PowerPoint looking both at your feet and the path finding a resolution outside of litigation, for communication. Sometimes ahead, teams must constantly be asking or coming at the problem from another translating a lengthy document into what’s coming next, what’s the precedent angle, such as a new approach to a deal a more visual mode can facilitate if we do X, and what are the potential or contractual language. understanding and even yield creative, costs and benefits? This is where creative new solutions to the problem. problem solvers can demonstrate significant value. Nothing beats good

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2 South Central Texas Chapter FOCUS 3Q19 continued from page 2 judgment, a great strategy, and a The in-house counsel can create these We need both perspectives to create thoughtful plan to execute it. connections by inviting everyone on innovative legal strategies. By embracing the team to an on-site visit to learn the the key steps we have outlined above, 4. Move beyond a transactional business and understand the goals of lawyers can build a thriving, long-lasting mindset and nurture the the project. This is an investment in the inside-outside partnership that yields relationship outside team, which is just an extension creative solutions for the company and its Good client service cannot be merely of the in-house team, and the work outside partners. transactional, so outside counsel can will be more efficient and effective if Authors: truly demonstrate their worth by everyone works together as one entity. providing value outside the billable The complex legal matters businesses Cathy Landman is the chief legal and human hours. That means making time to learn face today require that everyone is on resources officer at Corelle Brands. their client’s business, conduct on-site board and invested in achieving the Margo Wolf O’Donnell is the partner and visits, and make themselves available as optimal outcome. co-chair of the labor and employment practice group at Benesch. a resource. It’s also important for other In-house and outside counsel see legal members of the outside team beyond the and business challenges through distinct billing partner — including associates lenses that are shaped by their respective and paralegals — to take ownership of training and approach to problems. the work.

ACC News

2019 ACC Annual Meeting: Rates Drive Success with Business In-house Counsel Certified (ICC) Increase after September 25 Education for In-house Counsel Designation Mark your calendars for October 27-30 To become a trusted advisor for business If you are an in-house lawyer seeking to in Phoenix, AZ for the 2019 world’s executives, it’s imperative for in-house become proficient in the essential skills largest event on in-house counsel. Earn counsel to understand the business identified as critical to an in-house legal up to a year's worth of CLEs, get the operations of your company. Attend career, the In-house Counsel Certified essential knowledge and insights you business education courses offered by (ICC) designation is precisely what you need to navigate today's increasingly ACC and the Boston University Questrom need. To be eligible for the designation, complex business environment, and make School of Business to learn critical business you’ll need to participate in the ACC meaningful connections with your in-house disciplines and earn valuable CLE credits: In-house Counsel Certification Program, peers from around the globe. No other which includes live instruction, hands-on • Mini MBA for In-house Counsel, Sep- event delivers such a wealth of education experience, and a final assessment. Those tember 9-11, and November 4-6 and networking opportunities for corporate who successfully complete the program counsel all in one place at one time. Group • Finance and Accounting for In-house will earn the ICC credential. Attend one of discounts are available. Check out the full Counsel, September 23-25 these upcoming programs: program schedule at am.acc.com. Learn more and register at acc.com/BU. • Amsterdam, Netherlands, Law Department Leadership: September 10-13, 2019 Strategic Decision Making for Connect Your Circles… Expand Your Reach! • Berkeley Heights, New Jersey, In-house Counsel November 4-7, 2019 Making effective decisions is arguably When your in-house peers join ACC, For more information visit your most critical responsibility as a you create opportunities to engage with acc.com/certification. professional manager. In uncertain colleagues, expand your professional and changing business situations, you network, and share ideas and expertise. need a practical framework to make Now through 30 September, you are effective decisions quickly. Attend the automatically entered into a us $100 Law Department Leadership program monthly drawing when you recruit a new (23 September, Toronto, ON) to gain member. As an added bonus, your new influence and advance your career by recruit is automatically entered into a learning how to make better business separate drawing, too! Learn more at decisions. Register today at acc.com/LDL. acc.com/MemberConnect.

2019 ACC South/Central Texas Chapter Board of Directors

President Assistant Treasurer Vice President Zandra Pulis Kelly Curll Monica Lerma CPS Energy Southwest Research iHeartMedia Deputy General Counsel Institute Senior Corporate Cost Counsel, Employment AnnualPhone Chapter (210) 353 -Benefits2351 : Senior Attorney Phone: (210) 832-3503 [email protected] [email protected] [email protected]$12,000 • Guaranteed Luncheon CLE Presentation before ACC Membership.

2019 ACC South/Central Texas Chapter Firm Board may send of up toDirectors eight additional representatives to develop personal 2019 ACC South/Central Texas Chapter Board of Directors

contacts with ACC members. Any written materials from presentation will be Presidentposted Elect on the chapter web site. Vice President Vice President Rodé Moore2019 ACC Board ofMike Directors Dillinger Christina Markell-Balleza • President Assistant Treasurer Zachry 1 GroupRoundtable SponsorshipVice President of your choice Exewithcutive opportunity Director to moderate South Texas Money Management Zandra Pulis Kelly CurllPresident •Business Rotating Group Counsel Banner Ad Monicaon ACC LermaAssistant Chapter Treasurer webSenior site Counsel Vice President General Counsel Zandra Pulis Phone: (210) 588-6003 Kelly Curll Phone: (210) 918-2091 Monica Lerma (210) 245-2685 CPS Energy Southwest Research iHeartMedia •[email protected] Newsletter Article in one of the ACC [email protected] newsletters [email protected] Deputy General Counsel Institute CPS Energy Senior CorporateSouthwest Counsel, Research Employment iHeartMedia Cost AnnualPhone Chapter (210) 353 -Benefits2351 : SeniorDeputy Attorney General Counsel• Opportunity to host aPhone: Cocktail (210)Institute Party 832-3503 for ACC Membership and spouses Senior Corporate Cost Counsel, Employment AnnualPhone Chapter (210) 353 -Benefits2351 : Senior Attorney Phone: (210) 832-3503 [email protected] [email protected] [email protected]$12,000 [email protected]• 8 tickets to our annual Mission’[email protected] Baseball Game Event [email protected]$12,000 • Guaranteed Luncheon CLE Presentation before ACC Membership. • • Guaranteed LuncheonInvitation to CLE Board Presentation of Directors’ before Annual ACC Planning Membership Retreat Cocktail. Party Secretary Vice President Vice President Firm may send up to eight additional representatives to develop personal Firm may send•Javier Invitation Arandaup to eight for fouradditional to attend representatives any non-attorney toKay develop vendor Mary Harrell personal sponsored luncheons (if vendor approvesCourtney McKendrick). Green contacts with ACC members. Any written materials from presentation will be USAA [email protected] Jordan Foster Construction contacts with• ACCFacebook, members. Twitter, Any and written Ethics materials Follies® from Web presentation site Recognition will be Presidentposted Elect on the chapter web site. Vice President Attorney Vice President General Counsel Rodé Moore Mike DillingerPresidentposted Elect on the chapter web site. Christina MarkellVice President-Balleza Vice President Rodé Moore •(210) Invitation887-4343 to provide SponsorMike Spotlight Dillinger Feature for ACC Web page DuringChristina Month Markell of PresentationPhone:-Balleza (210) 375 -1260 •Zachry 1 GroupRoundtable Sponsorship of your choice ExewithcutiveDIAMOND opportunity Director to Javier.Aranda@usaa.commoderate South Texas Money Management •Zachry 1 GroupRoundtable Sponsorship of your choice Exewithcutive opportunity Director to moderate South Texas Moneycmckendrick@jordanfosterconstruction Management .com Business Group Counsel Senior Counsel • Opportunity to provideGeneral web Counsel cast on legal topic of choice to ACC Chapter Members (arrangements made by • Rotating Banner Ad on ACC Chapter web site Business Group Counsel Senior Counsel General Counsel Phone: (210) 588-6003 Phone:• (210) Rotating 918-2091 Banner sponsor) Ad on ACC Chapter(210) web 245- 2685site •[email protected] Newsletter Article in one of the ACC [email protected] newslettersPhone: (210) 588 -6003 [email protected]: (210) 918-2091 (210) 245-2685 • [email protected] [email protected] Newsletter • ArticleOpportunity in one of to the work ACC with quarterly chapter’s newsletters Pro Bono Committee and ACC [email protected] on a Pro Bono Project (Ask an • Opportunity to host a Cocktail Party for ACC Membership and spouses • Opportunity toAttorney host a Cocktail Event) Party for ACC Membership and spouses • 8 tickets to our annual Mission’s Baseball Game• Event • Diamond Sponsor’s legal expertise will be offered to ACC Membership’s in-house law departments as a private 8 tickets to our annual Mission’s Baseball Game Event • Invitation to Board of Directors’ Annual Planning Retreat CocktailTreasurer Party Vice President Immediate Past President Secretary Vice President• Invitation toScott Board legalShreder ofupdate Directors’ to General AnnualVice CounselPresident Planning and Retreat staff,Jessica heCocktailld Lerma at the Party offices of the member upon sponsorsBrenna Nava request Secretary Vice President Vice President •Javier Invitation Aranda for four to attend any non-attorneyKay vendor Mary Harrell sponsored USAA luncheon s (if vendor approvesCourtney McKendrick). GreenVP Legal Affairs & General Rackspace Hosting •Javier Aranda • Sponsor may elect to send aKay “thank Mary Harrellyou” message to program/event attendeesCourtney followingMcKendrick their Green program(s) in USAA [email protected] Invitation forExecutive four to Director, attend any nonJordan-attorney Foster Constructionvendor sponsored Counsel luncheons (if vendor approves). Senior Director, Legal • Facebook, Twitter, and Ethics Follies® Web site Recognition [email protected] Attorney •USAA Attorneycoordination with theGeneral ACC CounselSouth/Central TXGrunt administrator. Style Jordan Foster ConstructionPhone: (210) 312-9316 Facebook, Twitter, and Ethics Follies® Web site Recognition General Counsel •(210) Invitation887-4343 to provide Sponsor Spotlight Feature Attorneyfor ACC Web Phone:page (210)During 498 -Month5690 of PresentationPhone: (210) 375 -1260 [email protected] [email protected]

DIAMOND • [email protected] (210) Invitation887-4343 to [email protected] provide Sponsor Spotlightcmckendrick@jordanfosterconstruction Feature for ACC Web.com page During Month of PresentationPhone: (210) 375 -1260 • Opportunity to provide web castDIAMOND on legal topic [email protected] choice toEthics ACC Follies®Chapter MembersBenefits: (arrangements made by [email protected] • Opportunity to provide web cast on legal topic of choice to ACC Chapter Members (arrangements made by sponsor) sponsor) • Playbill Sponsor (a $3,500 value) • Opportunity to work with chapter’s Pro Bono Committee and ACC volunteers on a Pro Bono Project (Ask an • Opportunity toIncludes: work with Guaranteed chapter’s Pro great Bono seats Committee for 8 attendees and ACC for eithervolunteers performance on a Pro and Bono catered Project Networking (Ask an Reception; Attorney Event) Executive Director Attorney Event)•Special half-page recognition in Playbill (program): •Recognition of your organization with logo and approved • Diamond Sponsor’s legal expertise will be offered to ACC Membership’s in-house law departments as a private Treasurer Vice President• Diamond Sponsor’scopy; •Alllegal the expertise benefitsImmediate willof a be Table offered Past Sponsorship. President to ACC Membership’s [Diamond sponsors in-house may law upgrade departments their Ethics as a privateFollies® Scott legalShreder update to General Counsel and staff,Jessica heldTreasurer Lerma at the offices of the member upon sponsorsBrenna Nava requestVice President Immediate Past President Scott legalShreder update tosponsorship General Counsel to the “Producer”and staff,Jessica he levelld Lerma at for the an offices additional of the $1500 member or to uponthe “Community sponsorsBrenna Nava request Leader” level for an additional •USAA Sponsor may elect to send a “thank you” messageVP Legal Affairs to program/event & General attendees followingRackspace their Hosting program(s) in Executive Director, Counsel•USAA Sponsor may elect to send a “thankSenior you” Director, messageVP Legal Legal Affairs to program/event & General attendees followingRackspace their Hosting program(s) in coordination with the ACC South/Central TX administrator.Executive Director, Counsel Senior Director, Legal Attorney Grunt Style coordination with the ACC South/CentralPhone: (210) TX 312administrator.-9316 Phone: (210) 498-5690 [email protected] [email protected] Style Phone: (210) 312-9316 [email protected] Phone: (210) 498-5690 [email protected] [email protected] Ethics Follies® Benefits: [email protected] Ethics Follies® Benefits: Amber S. Clark

217 Winchester Dr. • Playbill Sponsor (a $3,500 value) • Playbill Sponsor (a $3,500 value) Bergheim, Texas 78004 Phone: 210-723-8769 Includes: Guaranteed great seats for 8 attendees for either performance and catered Networking Reception; Executive Director Includes: Guaranteed great seats for 8 [email protected] for either performance and catered Networking Reception; •Special half-page recognition in Playbill (program) : •Recognition of your organizationExecutive with logo Director and approved •Special half-page recognition in Playbill (program): •Recognition of your organization with logo and approved copy; •All the benefits of a Table Sponsorship. [Diamond sponsors may upgrade their Ethics Follies® copy; •All the benefits of a Table Sponsorship. [Diamond sponsors may upgrade their Ethics Follies® sponsorship to the “Producer” level for an additional $1500 or to the “Community Leader” level for an additionalPAST PRESIDENTS: sponsorship to the “Producer” level for an additional $1500 or to the “Community Leader” level for an additional Wes Sharples (2017) Monica Trollinger (2016) Kathy Yates (2015) Rich Reynolds (2014) Mike Gibbs (2013) Dan Lopez (2012) Kelli Cubeta (2011),

Ingrid Etienne (2010), Kay L. Grimes (2009), Diane Hirsch (2008), Reagan S. McCoy (2007), Lee Cusenbary (2006), Michael B. Clark (2005), Mary Brennan Stich (2004), Linda Drozd (2003), Todd Silberman (2002), Becky Rainey (2001), Richard Reed (2000),

Amber S. Clark Carol Morrow (1999), Jerry King (1998), Stan McCormick (1997), Bruce Clements (1996), Merrie Cavanaugh (1995) Amber S. Clark 217 Winchester Dr. Bergheim, Texas 78004 217 Winchester Dr. Phone: 210-723-8769 Bergheim, Texas 78004 [email protected] Phone: 210-723-8769 [email protected]

PAST PRESIDENTS: PAST PRESIDENTS: Wes Sharples (2017) Monica Trollinger (2016) Kathy Yates (2015) Rich Reynolds (2014) Mike Gibbs (2013) Dan Lopez (2012) Kelli Cubeta (2011), NoticeWes toSharples ACC (2017) Monica Members Trollinger (2016) Kathy Regarding Yates (2015) Rich Reynolds 2020 (2014) Mike ProposedGibbs (2013) Dan Lopez (2012) Slate Kelli Cubeta of (2011), Officers Ingrid Etienne (2010), Kay L. Grimes (2009), Diane Hirsch (2008), Reagan S. McCoy (2007), Lee Cusenbary (2006), Michael B. Clark (2005), Ingrid Etienne (2010), Kay L. Grimes (2009), Diane Hirsch (2008), Reagan S. McCoy (2007), Lee Cusenbary (2006), Michael B. Clark (2005), Mary Brennan Stich (2004), Linda Drozd (2003), Todd Silberman (2002), Becky Rainey (2001), Richard Reed (2000), Our chapter’s membershipMary willBrennan get Stich a (2004), LindaProposed Drozd (2003), 2020 Todd ACC Silberman Board (2002), of Directors:Becky Rainey (2001),Vice Richard Presidents: Reed (2000), Carol Morrow (1999), Jerry King (1998), Stan McCormick (1997), Bruce Clements (1996), Merrie Cavanaugh (1995) chance to vote on next year’sCarol Morrow ACC (1999),South/ Jerry King (1998), Stan McCormick (1997), Bruce Clements (1996), Merrie Cavanaugh (1995) President: Rode Moore, Zachry Group Mike Dillinger, Nustar Energy Central Texas chapter officers at our President-Elect: Javier Aranda, USAA Jessica Lerma, Grunt Style annual business meeting, which will take place on September 18, 2019 during our Treasurer: Scott Shreder, USAA Christina Markell-Balleza, South Texas September luncheon. Assistant Treasurer/Treasurer-Elect: Money Management Pursuant to the chapter’s bylaws, the Kelly Curll, Southwest Research Institute Courtney McKendrick-Green, Jordan Foster nominating committee proposes the Secretary: Monica Lerma, iHeartMedia Construction following slate of officers for 2020: Immediate Past President: Zandra Pulis, [New] David Kilgore, Rackspace CPS Energy [New] Shelayne Clemmer, Harland Clarke

4 South Central Texas Chapter FOCUS 3Q19 Our 2019 ACC Board will be meeting in November to plan for next year. SEEKING CHAPTER We will be looking for volunteers to help with our various committees and activities. Please let us know if you would be interested in volunteering a small VOLUNTEERS amount of your time to help keep our chapter running strong. FOR 2020! We will work with you to line you up with a project that interests you! Contact Amber Clark at [email protected] for more information.

Don’t Miss! 2019 ACC Luncheon Dates Our 2019 our monthly luncheons will take place at The Quarry Golf Course! September 18 September Luncheon October 9 October Luncheon Labor & Employment Topic, sponsored by Ogletree Deakins 444 East Basse Road, San Antonio, 78209 The cost to attend the luncheons is $15.00 for members November 13 and $25.00 for non-member guests. (In-house counsel November Luncheon and sponsoring firm only, please.) Check out our Chapter web page for our current calendar of events December 11 and registration information. December Luncheon No other professional organization in San Antonio offers better CLE programs at a more affordable price For more information, or to register for any of these events, that is specifically geared to meeting the needs and contact Amber Clark at [email protected] issues of in-house counsel.

More Upcoming Events:

Monthly CLE

Luncheon SEPTEMBER 18, 2019

ACC MONTHLY CLE LUNCHEON

10 Family Law Questions Every In- House Lawyer Needs Answered September 18, 2019 11:45-1pm Please join us at our September CLE luncheon on

September 18, 2019 where Kristal Thomson of Langley & Banack will be giving a presentation entitled “10 Family Law Questions Every In-House Lawyer Needs Answered.” Quarry Golf Club 444. E. Basse Road Presenter: San Antonio, Texas 78209 Ms. Thomson is a family law specialist, board certified in family law by the Texas Board of Legal Specialization. She focuses

on divorces with complex or high net worth estates and complicated custody issues. Ms. I Hour CLE Thomson has tried numerous cases, but is

also highly experienced in negotiated settlements. Her expertise is recognized state-wide through her numerous writing and speaking engagements and involvement in $15 Members & various family law related leadership Students positions. Ms. Thomson is one of only ten $25 Non-Members lawyers in San Antonio elected as a fellow to & Corporate Guests the prestigious American Academy of Free Parking! Matrimonial Specialists.

Kristal C. Thomson Practice Areas • Family Law Sponsored by: Shareholder Education San Antonio • St. Mary's University School of Law, (210) 736-6600 J.D., 2002 (210) 735-6889 fax • University of Texas, B.A., 1995 [email protected] Bar Admissions • State of Texas, 2002

• United States District Court, Western District of Texas, 2003

Board Certifications Seating is Limited! • Family Law, Texas Board of Legal Reserve your spot Specialization, 2009 today!

RSVP by email here or pay online with a credit card here.

Your RSVP counts! While we understand that unexpected matters arise that prevent attendance, absences (no-shows) do have a financial impact on our chapter. If you have registered but cannot attend and cannot send someone in your place, please contact Amber Clark by email at [email protected]. Likewise, if you did not RSVP but decide to attend at the last minute, please try to let Amber know ahead of time so that we can arrange to have enough seating! Walk-ins who do not give advance notice cannot be guaranteed seating.

Feel free to invite individuals from your company who are not attorneys but may benefit from learning more about this subject! 6 South Central Texas Chapter FOCUS 3Q19 Ethics Follies By Lee Cusenbary, General Counsel of Mission Pharmacal

Ethics Follies® is in full production mode with backdrops ordered, set design in the works and a cos- tumer on board to bring Illegally Blonde to the Empire stage October 23 and 24th. We need your help to invite your executives, middle managers, attorneys and accountants to attend this year’s show which is packed with current ethics issues and some wonderful performances. I’d also like to ask your for help this year if you can spray paint a set piece on a Saturday in October, gather props from our prop list (ACC will pay for them of course), sing and dance, or help us with the craft table (setting out food for actors at rehearsals), we would really appreciate it. There is a place for everyone who wants to be part of ACC’s ethics conference. Times available to participate range from an hour or half the day to every week night for four weeks (if you are in the show itself). Ethics Follies also helps us fulfill our Chapter’s pro bono mission since we donate net proceeds to the Community Justice Program. The show will be a lot of fun and we hope to see you and your team there since “good ethics is good for business.”

Attorney actors: Ingrid Etienne, Kyle Goetz and Rosa Cabezas-Gil

ACColades Kelly Curll, formerly with Marathon Petroleum Corporation (f/k/a Andeavor), has joined Southwest Research Institute’s Legal & Patent Office as Senior Attorney. Mike Dillinger has been promoted to Executive Director at NuStar Energy. In this role, he will focus on and lead NuStar’s regulatory permitting team. In connection with the recent acquisition of a majority interest in Whataburger by BDT Capital, former Chapter President Mike Gibbs, General Counsel, has also been promoted to Executive Vice President at Whataburger.

Have you received a promotion lately? Changed jobs? Do you know of someone who is new to in-house or who deserves a little recognition for a job well done? Please email us at [email protected] with your “ACColades” tips.

7 Partnership/LLC Audit Rules – Considerations for Updating Your Operating Agreement By Asel Lindsey and Robert Nelson, Dykema

On November 2, 2015, the U.S. Congress and substantially overhauled partnership the IRS is not required to provide a notice passed the Bipartisan Budget Act (“BBA”), audit procedures by centralizing assess- of an audit to other partners and the which established new audit procedures ment and collection of tax at the partner- partners have no legal right to participate for partnerships and limited liability com- ship level. As the result of the new audit in an audit and negotiate their own settle- panies taxed as partnerships (collectively regime, certain provisions of existing ment with the IRS. referred to as “partnerships”), which partnership operating agreements may no Given the broad binding authority of fundamentally changed the procedures longer be relevant and there may be sub- the Partnership Representative, partners for how partnerships are audited and how stantial risks of adverse consequences to should give serious considerations to the the tax adjustments are implemented (the current and former partners and investors appointment of the Partnership Represen- “BBA audit rules”).1 Prior to 2018, audit acquiring interests in partnerships in the tative in the operating agreement. In the examinations by the Internal Revenue case of an income tax audit by the IRS. case of an individual acting as a Partner- Service (the “IRS”) were generally gov- Thus, it is important that businesses taxed ship Representative, the operating agree- erned by the procedures set forth in the as partnerships update their operating ment should provide for procedures to Tax Equity and Fiscal Responsibility Act agreements by taking into consideration revoke such designation or appoint a suc- of 1982 (“TEFRA”), which provided for the BBA audit rules.2 Since partnerships cessor Partnership Representative. In the the designation of one of the partners as vary in size, operations, management, case of an entity acting as a Partnership a tax matters partner (“TMP”) who was number and types of partners and have Representative, which can be the Partner- charged with representing the partner- other unique characteristics, there is no ship itself, the operating agreement should ship in dealings with the IRS and in any standard approach to updating an operat- name a designated individual, as required judicial proceedings. Under TEFRA, the ing agreement. However, in this article by regulations, through whom the IRS had to provide a notice of audit to all we highlight significant changes in the Partnership Representative will act, and the partners and, once the IRS made audit audit procedures and discuss how these provide for the process of replacing such adjustments to the partnership’s return, changes should be addressed in the oper- person. The operating agreement should any resulting tax deficiency was assessed ating agreements. also discuss the extent of control that the and collected from the individual part- partners could exercise over the Partner- ners who were partners in the year under Partnership Representative ship Representative and the limitations to audit. Under TEFRA, individual partners Under the BBA audit rules, a TMP was be imposed on the Partnership Represen- had the right to participate in the audit, replaced by a partnership representative tative’s authority in dealings with the IRS. challenge the IRS’s adjustments if not (the “Partnership Representative”) who done so by the TMP and negotiate their can be a person or an entity, including the In addition, since partners are not own settlement with the IRS. This led to partnership itself, and who is not required entitled to receive notices from the IRS, inconsistent tax reporting by the partners to be a partner of the partnership.3 The the operating agreement should include and created an administrative burden Partnership Representative is designated notice provisions, which could require for the IRS. Thus, Congress enacted the annually on the partnership’s tax return that the Partnership Representative keep BBA audit rules, which were designed to and if a partnership fails to designate a other partners reasonably informed of streamline the audit process. Partnership Representative, the IRS can the audit and any material developments, 4 consult with the partners prior to taking The BBA audit rules, set forth in sections select any person to serve in that role. certain actions, and/or provide each part- 6221 through 6241 of the Internal Rev- Unlike a TMP, a Partnership Representa- ner with an opportunity to participate in enue Code, which are generally applicable tive has the exclusive authority to act and discussions with the IRS. to partnerships beginning with tax year bind the partnership and all the partners in an audit proceeding vis-à-vis the IRS,5 2018 and thereafter, repealed TEFRA continued on page 9

1See BBA, P.L. 114-74, Section 1101 (Nov. 2, 2015). Following the passage of BBA, the BBA audit rules have been amended by the Protecting Americans from Tax Hikes Act of 2015, P.L. 114-113 (Dec. 18, 2015) and the Consolidated Appropriations Act, P.L. 115-141, Technical Corrections Related to Partnership Audit Rules (March 23, 2018). In addition, the IRS and the Treasury issued several sets of final regulations clarifying and providing additional guidance on application of the audit rules to partnerships. 2The operating agreements for partnerships in existence prior to 2018 should retain TMP provisions until the statute of limitations for such years expires and should also include provisions covering the BBA audit rules. 3Any individual will qualify as a Partnership Representative if this person has a U.S. tax I.D., address and phone number and has substantial presence in the United States by making themselves available to meet in person with the IRS. In the case of an entity acting as a Partnership Representative, it must have a designated individual through whom the Partnership Representative will act. See Code § 6223; Regulation § 301-6223-1. 4See Regulation § 301.6223-1(f). 5Code § 6223(a). 8 South Central Texas Chapter FOCUS 3Q19 continued from page 8

Partnership Level Assessment case the IRS will audit, assess and collect (i) whether the Partnership Representa- Another fundamental change under the the tax at the individual partner levels. tive should cause the partnership to elect BBA audit rules involves assessment In order to qualify for election out, (i) out of the BBA audit rules, push out the and collection of tax at the partnership the partnership must have 100 or fewer adjustments to the audit year partners, level. Under TEFRA, once the IRS made partners, which is determined by the pay the imputed underpayment at the determinations of the tax deficiency at the number of Schedules K-1 the partnership partnership level, or whether the manag- partnership level, it made corresponding is required to furnish for the year, and ers, the board of directors, the partners adjustments and assessed the tax against (ii) the partnership’s partners may only or the Partnership Representative should individual partners who were partners in consist of individuals, C corporations, S have the authority to decide as to the the year under audit. The BBA audit rules, corporations, estate of deceased partners elections and the payment of imputed however, provide for assessment and col- or foreign entities treated as C corpora- underpayment on an annual basis; tions if they were a domestic entity.7 Non- lection of any additional tax liability (the (ii) whether the partnership could seek eligible partners include partnerships, “imputed underpayment”) at the partner- payment and collection of imputed tax disregarded entities, trusts (grantor and ship level, calculated at the highest income liability from the partners, including nongrantor, revocable and irrevocable), tax rate, in the tax year the audit is finalized former partners, who were partners in the 6 estates other than of deceased partner, as opposed to the tax year under audit. year under audit or the year in which final certain foreign entities and nominees. Given this change, in the case of an adjustments are made; Such election must be made on a timely assessment of imputed tax liability against (iii) whether the partnership may offset filed tax return for the taxable year to the partnership, the partnership may not any portion of the tax liability against any which the election applies and it must have sufficient funds to pay the tax and distributions made to the partners; the partners may not be necessarily obli- include all information about each part- gated to reimburse the partnership for ner requested by the IRS, including such (iv) whether the partnership can require the payment of imputed tax liability. In partner’s name, U.S. taxpayer identifica- that partners file amended returns in addition, since the assessment is made in tion number (“TIN”), federal tax clas- order to seek modification of the imputed the year the audit is finalized, current or sification and an affirmative statement underpayment; that such partner is an eligible partner. A incoming partners of a partnership, who (v) whether the partnership should may not have been partners in the year partnership electing out of the BBA audit rules must notify each partner of the elec- establish a default threshold amount for under audit or may have held a smaller imputed underpayment, which would ownership interest in the given year, may tion within 30 days in a manner elected by the partnership.8 determine whether the Partnership Rep- be indirectly liable for the taxes attribut- resentative should pay the tax at the part- able to former partners, absent any pro- Push-Out Election nership level or make a push out election; tections under the operating agreement. After an audit is finalized, a partner- (vi) provide for a requirement that part- Also, the imputed underpayment is assessed ship may elect to push out the imputed ners, including former partners, cooper- at the highest individual or corporate underpayment to the reviewed year ate with the Partnership Representative in income tax rate without taking into account partners thus shifting the burden for connection with any proceeding with the any tax attributes of the individual partners, any tax, penalties and interest to the IRS, including providing any information such as a tax-exempt status of a partner, partners.9 The push out election must be reasonably requested by the Partnership unless the partnership seeks to modify the signed by the Partnership Representa- Representative to comply with the BBA imputed underpayment amount. As the tive, filed within 45 days of the final audit audit rules or to assist the partnership in result, the tax assessed at the partnership adjustment mailed by the IRS and it must reducing any imputed tax liability; level may be substantially higher than if include, among other things, the name (vii) provide for the timeframe for the such tax liability was properly included and and TIN of each reviewed year partner. partners to pay their share of imputed reported by the partners in the audit year. It is important to note that the push-out underpayment or respond to any other election requires that the partners pay any Election Out requests in connection with an audit tax deficiencies for all the years between procedure; While the BBA audit rules are applicable the reviewed year and the year in which to all the partnerships, certain partner- the adjustment is made. In addition, the (viii) establish the penalty, if any, for ships with eligible partners may elect interest imposed on any imputed tax lia- partners and former partners who fail to out of the new audit regime, in which bility of a partner is two percentage points cooperate with the Partnership Repre- higher than the interest rate imposed on sentative in connection with BBA audit 6Code § 6225. the imputed liability of a partnership.10 procedures. 7Regulation § 301.6221(b)-1(b)(3). 8Regulation § 301.6221(b)-1(c)(3). Based on the foregoing, the operating 9Code § 6226. agreement should be updated to address continued on page 10 10Code § 6226(c). the following: 9 continued from page 9

Other Provisions Indemnification Provisions revised to provide for the BBA audit rules in order to protect former, existing In light of the Partnership Representa- Transfer Restrictions or incoming partners from unwanted tive’s broad authority, there may be more surprises and adverse results of an audit. Existing operating agreements may lack resistance from individuals or entities to Likewise, when selling or investing in a the required provisions to ensure that serve in that role due to concerns about business taxed as a partnership, former the partnership has eligible partners legal liability for the decisions and actions partners and incoming partners should to be able to elect out of the BBA audit taken vis-à-vis the IRS. Thus, a partner- review the respective audit provisions of rules if such election is desired. In some ship agreement should include indemnifi- the operating agreements of such part- cases, operating agreements may contain cation provisions with respect to the partnerships to ensure that their interests are transfer restrictions that may potentially nership, the Partnership Representative, properly protected. disqualify the partnership from electing or the designated individual, if any, to out. For example, a permissible transfer indemnify such persons against liabilities Authors: of partnership interest from an individual arising out of their service in their respec- Asel Lindsey and Robert Nelson are Mem- to his or her trust, if implemented, would tive roles aside from actions committed in bers in Dykema’s Taxation and Estates Group make the partner an ineligible partner bad faith or gross negligence. and are resident in the San Antonio office. under the BBA audit rules. Thus, part- They counsel their clients on business tax ners and partnerships should carefully Conclusion planning, partnership tax planning, estate plan- examine and, if necessary, update transfer ning, international tax planning, and federal and According to a statement by an IRS provisions and put restrictions on the state tax controversy. official, partnership audits under the number and type of partners the partner- new audit regime may begin this sum- ship may have if they desire to elect out of mer. Thus, it is important that partner- the application of the BBA audit rules. ship operating agreements are timely

Welcome New Members!

Vivian Ethridge Isaac Johnson Tessa Somers Louis Vetrano USAA USAA USAA TechRadium, Inc Van Hoang Robert Mason Monica Thompson Daniel Wybenga Security Service Federal Southwest Research USAA USAA Credit Union Institute

Don’t Miss! Is Your ACC Member Profile

This year our monthly CLE luncheons will continue to take Up-To-Date? place at the Quarry Golf Club. You may edit/update your contact or personal information, etc. The cost to attend the luncheons is $15.00 for members by logging into www.acc.com and selecting “My ACC.” Then and $25.00 for non-member guests. (In-house counsel and click on “My Contact or My Personal Info.” Scroll to the bottom sponsoring firm only, please.) Check out our Chapter web of your profile and click on “Edit My Info.” It’s that easy! page at http://www.acc.com/chapters/sanant.php for our current calendar of events and registration information. No other professional organization in San Antonio offers Job Openings? better CLE programs at a more affordable price that is Is your company looking to fill an in-house position? Do you specifically geared to meeting the needs and issues of know about a current in-house job opening? If so, please let us in-house counsel. know so that we can advertise the position to our membership. For more information, or to register for any of these events, Send an email to our Chapter Executive Director at contact Amber Clark at [email protected] [email protected].

10 South Central Texas Chapter FOCUS 3Q19 Past Events June Luncheon Sustainable Compliance with Privacy & Data Security Regulations, sponsored by Jordan Lawrence

July Family Volunteer Event Luncheon at the Food Bank’s Urban Farm sponsored and presented by Norton Rose Fulbright

WIN Wine Tasting Event

ACC Running Club- “Team Accelerate” News

The ACC Running Club is in the process of planning some great runs for this year. If you would like to be included on the running club’s email list and receive notices of events, please contact Amber Clark at [email protected].

11 Chapter Leadership

President Zandra Pulis CPS Energy 1025 Connecticut Avenue, NW, Suite 200 210.353.4370 Washington, DC 20036-5425 [email protected] President Elect Rodé Moore Zachry Group 210.588.6003 [email protected] Vice President Michael Dillinger NuStar Energy L.P. 210.918.2091 [email protected] Vice President Courtney McKendrick-Green Jordan Foster Construction 210.375.1260 [email protected] Vice President Kay Mary Harrell [email protected] Vice President Jessica Lerma [email protected] Vice President Monica Lerma iHeartMedia, Inc 210.832.3503 monica.lerma@iheartmedia.com Let Us Know… Vice President Christina Markell-Balleza • What CLE presentation topics interest you? South Texas Money Management [email protected] • How can we help you make the most out of your ACC membership? Secretary Javier Aranda • Would you like to serve on a committee? USAA 210.887.4343 • Are we meeting your needs? Treasurer • Do you know someone interested in joining? Scott Shreder USAA • Do you have some Corporate Counsel 210.498.5690 related news you’d like to share? [email protected] • Do you know someone who would be interested in becoming a speaker and/ Assistant Treasurer Kelly Curll or sponsor? Southwest Research Institute • Would you like to join or lead one of our shared interest groups (running, [email protected]. theatre, dinner, etc.)? Immediate Past President Brenna Nava Email your comments to [email protected]. Rackspace Hosting, Inc. 210.312.9316 [email protected] ACC South/Central Texas!

Chapter Administrator Chapter Web Page: www.acc.com/chapters/sanant/ Amber Clark 210.723.8769 Ethics Follies Web Page: www.ethicsfollies.com [email protected] Look for us on Facebook and https://twitter.com/#!/ACC_SCTX

12 South Central Texas Chapter FOCUS 3Q19