Dallas Bar Association HEADNOTESHEADNOTES July 2021 | Volume 46 | Number 7 Focus | Business Litigation/Franchise & Distribution Law

Living Legends Focus Franchise & Distribution Law Avoiding the “Accidental” Franchise includes 23 disclosure items), and BY ERICA MAHONEY copies of the franchisor’s standard Franchise, distribution, and forms of agreement. Many states license agreements have signifi- have also enacted state franchise cant commonalities in their trans- laws, which may define “franchise” actional objectives: a person has more broadly than the federal fran- developed certain goods or ser- chise rule or impose additional vices under a trademark and seeks requirements on the franchisor. If to expand its revenue potential a state’s franchise laws apply, the by allowing another person to sell franchisor may be required to reg- these goods and services using the ister with the state. Failing to meet same trademark for a fee. This these requirements creates liability arrangement is particularly popular exposure. with businesses seeking to expand While no private right of action without the additional liabilities exists under the federal rule, many attributable to self-expansion, such states provide avenues for asserting as real estate and payroll. claims against a franchisor, whether On May 21, the DBA presented the next program in the DBA Living Legends series featuring Hon. Elizabeth Despite the overarching com- based on violations of state busi- Lang-Miers, of Locke Lord LLP, interviewed by Jennifer Ryback, McGuire, Craddock & Strother, P.C. Be on the monality in these agreements, the ness-opportunity acts or a state’s lookout for the next program. legal distinctions between them “little FTC Act.” In Texas, a fran- can have significant consequences chise will often constitute a busi- on the grantor’s obligations and ness opportunity under the Texas liabilities. Practitioners who are Business Opportunities Act. Texas faced with preparing such an agree- franchisors are exempt from com- ment should be familiar with these plying with this act if they com- Focus Business Litigation distinctions to ensure they provide ply with the federal franchise rule. the appropriate agreement and, if However, if the franchisor fails to necessary, appropriate disclosures. comply with the federal franchise A “franchise” is legally defined rule and the disclosure require- “Breaking Up is Hard to Do”: by federal rule. If the transaction ments under the Texas Business meets the definition of a franchise, Opportunities Act, the franchisee franchise laws and regulations will can potentially bring a claim under How to Settle Business Cases apply regardless of the agreement’s the Deceptive Trade Practices Act, name or the parties’ intent. A fran- possibly asserting treble damages. soned that the placement of “predecessors” among BY DAVID COALE AND BARIRA MUNSHI chise is defined under the amended Unlike franchise agreements, words like “officers, directors, shareholders, employ- Federal Trade Commission fran- distribution and license agree- “Breaking up is hard to do,” says the song. End- ees, agents … and representatives,” unambiguously chise rule as an arrangement that ments generally do not include sig- ing a business dispute is hard enough without trouble describes a corporate predecessor. includes: (1) the grant of the right nificant control or assistance. The caused by ambiguities in the settlement agreement The two cases remind us how important it is to to use a trademark, service mark, primary objective of a distribution about exactly what is being released. Fortunately, determine just what is in dispute between the parties, or trade name in relation to the agreement is for a manufacturer to two 2021 Dallas Court of Appeals opinions offer key and how simple changes in language can significantly offer, sale, or distribution of goods grant others the ability to sell the points to remember in drafting and litigating settle- affect the scope of a settlement. or services; (2) significant control manufacturer’s branded products. ment agreements. While Gharavi did not address the degree of rela- or assistance; and (3) the payment Usually, the distributor provides In Gharavi v. Khademazad, the court considered tionship an “indirect” claim must have to a settled of at least $615 to the franchisor other goods and services in addi- an agreement that released all claims “directly or indi- dispute to be released, it teaches that broad terms before or within six months after tion to the manufacturer’s branded rectly attributable to the transaction or occurrences” such as “indirect” can raise the risk of a party inadver- beginning operations. products. Additionally, the manu- involved in an earlier arbitration. The plaintiff subse- tently releasing tangentially-related claims that it may “Significant” control or assis- facturer generally has little or no quently sued for libel about a Yelp post in which the intend to pursue later. Conversely, by expanding the tance relates to the overall method control over the distributor’s busi- defendant voiced frustration over the unpaid arbitra- scope of a release, such phrases can “buy peace” for a of the franchisee’s business opera- ness or operations, although there tion award. The court found that, “[w]ithout question, client from a broader range of potential disputes. tion and has been determined to is some control over the quality the Yelp review was, if not directly, then indirectly Headington turned to traditional canons of con- exist when the franchisor requires and standards for distributing the attributable to [the] failure to pay” for services that struction to determine the meaning of an unclear participation in marketing cam- branded products. In some cases, gave rise to the arbitration. Thus, the court found that term in a release. While it reached an answer, a less- paigns; provides training or site the distributor may pay a fee to the release covered any claims related to the Yelp post, detailed agreement might be less instructive and could approval or design requirements; become a distributor. In other dismissed the libel claims, and entered judgment in lead to even more uncertainty about how to interpret dictates hours of operation, produc- cases, the distributor may only pay favor of the defendant. a release. In a complex multi-party setting such as the tion, or service techniques; or per- for the products the distributor pur- In Headington Royalty Inc. v. Finley Resources, Inc., one presented by that case, the opinion instructs draft- sonnel or accounting procedures. chases for distribution. an oil-and-gas case, the court addressed the meaning ers to carefully consider all potential claims and parties The term “payment” is construed Under a license agreement, a of “predecessors” in a release. One side asserted that contemplated by a release. The discerning drafter will broadly but does not apply to cer- licensor grants a licensee the right the term referred to anyone in the chain of title. The identify the claims or parties it seeks to either include tain inventory purchases. to use the licensor’s intellectual other claimed that it referred to predecessors in a par- within, or carve out from, a broad release and will If a transaction meets the defi- property, which may or may not ticular corporate composition or structure. negotiate terms using ordinary and specific language to nition of a franchise and an exemp- include a trademark. The licen- The court agreed with the latter position, relying ensure that its intent is unambiguously captured. HN tion or exception does not apply, sor retains some degree of quality on the so-called “associated words canon,” or “birds of the franchisor must provide a fran- a feather” construction rule, which means that words David Coale and Barira Munshi are attorneys at Lynn Pinker Hurst & Schwegmann LLP. chise disclosure document (which continued on page 22 are known by the company they keep. The court rea- They can be reached at [email protected] and [email protected], respectively.

Inside Need Help? You’re Not Alone.

Texas Lawyers’ Assistance Program…………...(800) 343-8527 14 Pretrial Rule Provides Alternative Procedure to Resolve “Legal Matters” Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 19 Business Interruption Coverage for COVID-19 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE 23 Full Disclosure: Reducing Risk for LLC Managers Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 More resources available online at www.dallasbar.org/content/peer-assistance-committee 2 Headnotes l Dallas Bar Association July 2021

All CLE and Section programs are presented virtually. Check the DBA Online Calendar (www.dallasbar.org) for webinar links and the most up-to-date information.

Calendar July Events Visit www.dallasbar.org for updates on Friday Clinics and other CLEs.

Available, Strategic Considerations, and Potential Environmental Law Section Pitfalls,” Hon. Barbara Houser, Michaela Crocker, Topic Not Yet Available FRIDAY CLINICS and Mark Moore. (MCLE 1.00)* JULY 16 Intellectual Property Law Section Noon “Autonomous Vehicles,” Quentin Brogdon. (MCLE 1.00)* Friday Clinic “COVID-19 Vaccine Shortages: Are “Autonomous Vehicles,” Quentin Brogdon. Intellectual Property Waivers the Answer?” Real Property Law Section (MCLE 1.00)* Sapna Kumar. (MCLE 1.00)* Topic Not Yet Available THURSDAY, JULY 1 Minority Participation Committee 2:00 p.m. Publications Committee MONDAY, JULY 19 TUESDAY, JULY 13 Noon Labor & Employment Law Section Morris Harrell Professionalism Committee FRIDAY, JULY 2 Noon Business Litigation Section “Hot Topics in Gender Discrimination: COVID/ “Discovery Topics,” Bob Wise. (MCLE 1.00)* Pregnancy Issues, Title IX Expansion, Me Too, No Events Scheduled and More!” Paige Melendez. (MCLE 1.00)* FRIDAY, JULY 23 Immigration Law Section Noon Law Student Professionalism Program “Consular Processing Updates in a COVID & Senior Lawyers Committee “A Virtual Program for Law Students & MONDAY, JULY 5 Post-COVID World,” Michelle Alonzo and Lisa Recent Law Graduates.” Sponsored by DBA Offices closed in observance of Independence Day Sotelo. (MCLE 1.00, Ethics 0.25)* Morris Harrell Professionalism Committee. More information at dallasbar.org. Legal Ethics Committee TUESDAY, JULY 20 Noon Antitrust & Trade Section TUESDAY, JULY 6 “No Poach, No Solicit, No Good: How to Avoid No Events Scheduled Criminal Antitrust Liability For Labor-Related MONDAY, JULY 26 WEDNESDAY, JULY 14 Agreements,” Thomas York. (MCLE 1.00)* No DBA Events Scheduled Noon Family Law Section WEDNESDAY, JULY 7 Topic Not Yet Available International Law Section 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact Blockchain Law Study Group Topic Not Yet Available TUESDAY, JULY 27 [email protected]. No DBA Events Scheduled "Blockchain Issues – Cyber, Tax, and Crime,” Community Involvement Committee 4:30 p.m. Equality Committee Jason Freeman, Sean Whyte, and Peter Vogel. Bench Bar Conference Committee Entertainment Committee WEDNESDAY, JULY 28 THURSDAY, JULY 8 Public Forum/Media Relations Committee Noon Collaborative Law Section Noon CLE Committee 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact WEDNESDAY, JULY 21 Topic Not Yet Available Criminal Justice Committee [email protected]. Noon Energy Law Section Entertainment Art & Sports Law Section “Case Law Update,” Charles Sartain. (MCLE 1.00)* Topic Not Yet Available FRIDAY, JULY 9 THURSDAY, JULY 15 Health Law Section Noon Trial Skills Section Noon Living Legends Program “Ethical and Legal Issues Facing Healthcare “Kim Askew, interviewed by Alison Ashmore.” During COVID-19 including Cloud, Cyber, AI, THURSDAY, JULY 29 “How to Tell Your Story at Trial,” John Adams No DBA Events Scheduled (MCLE 1.00)* Pre-recorded program. (Ethics 1.00)* and Blockchain,” Rachel Rose and Peter Vogel. and Sara Chelette. (MCLE 1.00, Ethics 0.50)* 3:30 p.m. DBA Board of Directors Law in the Schools & Community Committee FRIDAY, JULY 30 MONDAY, JULY 12 No DBA Events Scheduled Noon Alternative Dispute Resolution Section FRIDAY, JULY 16 Pro Bono Activities Committee “Topic Not Yet Available,” Michael F. Pezzulli. Noon Bankruptcy Tips, Installment III (MCLE 1.00)* “Bankruptcy Schedules: The Information THURSDAY, JULY 22 Noon Criminal Law Section “Parole Fundamentals,” Joseph Padian. (MCLE 1.00)*

BENEFIT EXCITED TO FREE Room Rental in 2021 & 2022 SEE YOU SOON

Book a personal or professional event by The DBA plans to open to smaller December 31, 2021 and the rental fee will be waived. meetings such as committees in July, and Event must be held by December 31, 2022. to reopen for all meetings in September. Keep your eye on DBA Online and Headnotes for reopening information. Contact Dawn Finley to book your event today. 214-220-7472 or [email protected]

Rental fee waived for current DBA Members and their firms. Membership will be verified by the Dallas Bar Association. Events must be booked by 12/31/21 and held by 12/31/22.

If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Alicia Hernandez at (214) 220-7401 as soon as possible and no later than two business days before the seminar. All Continuing Legal Education Programs Co-Sponsored by the DALLAS BAR FOUNDATION. *For confirmation of State Bar of Texas MCLE approval, please call the DBA office at (214) 220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact [email protected]. July 2021 Dallas Bar Association l Headnotes 3 4 Headnotes l Dallas Bar Association July 2021

President’s Column Headnotes Published by: DALLAS BAR ASSOCIATION

2101 Ross Avenue Dallas, Texas 75201 We Are Ready to Meet (In Person) Phone: (214) 220-7400 Fax: (214) 220-7465 Website: www.dallasbar.org Established 1873 The DBA’s purpose is to serve and support the legal profession in Dallas and to promote good relations among lawyers, the judiciary, and the community. Here are some events to look forward to upon reopening BY AARON TOBIN in the fall. The annual meeting will be early this year on Fri- OFFICERS President: Aaron Z. Tobin In January, I released a column, Until We Meet (In Person) day, October 29 at 3:30 p.m. While not at the building, we President-Elect: Krisi Kastl Again. I actually drafted the column in November, and at the are pleased to announce that the bench bar conference will be First Vice President: Cheryl Camin Murray Second Vice President: Bill Mateja time, it was still quite uncertain when we would start to come in person this year November 3-5 at our usual location, Horse- Secretary-Treasurer: Ebony Rivon out of the pandemic and what that would look like. I remem- shoe Bay. Our lead bench bar chair, Joel Crouch, his co-chairs, Immediate Past President: Robert L. Tobey ber questioning whether reopening the building would happen and the committee have put together an outstanding lineup of in 2021 at all. Fortunately, the vaccine is out, the country is speakers and programming for our return to an in-person event. Directors: Vicki D. Blanton (Chair), Rob Cañas, Jonathan Childers (Vice Chair), Stephanie G. Culpepper, reopening, and it is time for us to be together in person again. The DBA Public Forum Committee has planned a special Whitney Keltch Green (President, Dallas Association Starting this month, the Dallas Bar Association will gradually series around the 20th Anniversary of 9/11. On September 2, of Young Lawyers), Marissa Hatchett (President, J.L. Turner Legal Association), Stacey Cho Hernandez reopen the building and resume in-person programming for the Phil Zelikow, Executive Director of the 9/11 Commission, will (President, Dallas Asian American Bar Association), first time in over 15 months. present a virtual program, and then on September 10, at an in- Hon. Martin Hoffman, Kate Kilanowski, Jennifer King person program, DBA Past Presidents Harriet Miers and Bob (President, Dallas Women Lawyers Association), Hon. Audrey Moorehead, Javier Perez (President, Dallas Jordan will discuss their roles in the Bush Administration dur- Hispanic Bar Association), Hon. Monica Purdy, Lindsey A Gradual Reopening ing 9/11 and its aftermath. Ms. Miers was Chief White House Rames, Kelly Rentzel, Bill Richmond, Sarah Rogers, The building will open and be available for committee and Legal Counsel and Ambassador Jordan was Ambassador to Saudi Mary Scott, Amy M. Stewart, and Mary Walters leadership meetings in July and August. Then, starting Septem- Arabia at the time. Advisory Directors: Ashlei Gradney (President-Elect, ber 1, regular in-person programming will resume to include sec- While we were away, several new judges were elected or J.L. Turner Legal Association), Andy Jones (President- tion meetings and all special events. appointed and took their respective benches. As is a tradition, Elect, Dallas Association of Young Lawyers), Jonathan Koh (President-Elect, Dallas Asian American Bar We know many have become accustomed to taking advan- judicial investitures will take place this fall as we welcome new Association), Elsa Manzanares (President-Elect, Dallas tage of our online virtual/Zoom platform. Rest assured, many faces to the bench. The first investiture is for the Honorable Hispanic Bar Association), Derek Mergele-Rust events this year will be a hybrid format so that our members will (President, Dallas LGBT Bar Association), and Marisa Rhonda Hunter (Past President, 2004) and is scheduled for O’Sullivan (President-Elect, Dallas Women Lawyers enjoy the best of both worlds—in-person and real-time remote September 2 at 3:30 p.m. A joint investiture for our new 5th Association) programming for those who prefer to attend virtually. District Court of Appeals Justices is planned for October 4 at Food service will be available through our partner, Culinaire. 3:30 p.m. Delegates, American Bar Association: Rhonda Hunter, Mark Sales Initially, there will not be a buffet. Instead, prepackaged gour- Not to worry, there will be plenty of exciting virtual pro- met lunches will be offered. We will, of course, follow CDC gramming to take in this summer before the building reopens Directors, State Bar of Texas: Chad Baruch, Rebekah guidelines so that our building is a safe environment for our fully. Our Living Legend interview series continues on July 15 Brooker, Michael K. Hurst, Mary Scott, Robert Tobey members to gather and collaborate. Our DBA Support Team, at noon featuring one of our most decorated practitioners, Kim HEADNOTES led by, Alicia Hernandez, have worked very hard and have done Askew, of DLA Piper. Executive Director/Executive Editor: Alicia Hernandez an outstanding job during the entire pandemic to maintain a Bar None will come to us once again virtually with Remotely Communications/Media Director & Headnotes Editor: safe environment at the building, and to prepare the building Jessica D. Smith Entertaining and will run this summer, so be on the lookout for In the News: Judi Smalling for reopening. The DBA did not miss a beat thanks to Alicia’s those announcements. Martha Hardwick Hofmeister, Tom Display Advertising: Annette Planey, Jessica Smith leadership and our team’s tremendous effort. Mighell, and a cast of many have been working hard to bring this year’s production to our members. Proceeds, as always, ben- PUBLICATIONS COMMITTEE Co-Chairs: James Deets and Beth Johnson efit the Sarah T. Hughes Diversity Scholarship fund. Vice-Chairs: Elisaveta (Leiza) Dolghih and Joshua When We Reopen, We Will Have a New Name The Minority Clerkship Program will take place on June Smeltzer As many of you are aware, the DBA Board of Directors Members: Logan Adcock, Benjamin Agree, Dallas 25 at noon. Our third installment of Bankruptcy for the Non- Andersen, Andrew Botts, David Brickman, Catherine recently voted to change the name of the building. A special Bankruptcy Practitioner will take place virtually on July 16, Bright Haws, Ian Brown, Srinivasan Chakravarthi, committee has been appointed and is hard at work vetting featuring the Honorable Barbara Houser, Michaela Crocker, Lindsay Drennan, Alexander Farr, Dawn Fowler, potential names. It is anticipated that the committee will have Candace Groth, Ted Huffman, Neil Issar, Alexandra and Mark Moore speaking on the bankruptcy schedule process. Jones, Krisi Kastl, Katherine Kim, Brian King, Jared a proposed name to recommend to the DBA Board and the And finally, please do not forget that our building remains Knight, John Koetter, Margaret Lyle, Majed Nachawati, Board of Trustees for the Dallas Bar Foundation (the owner of Keith Pillers, David Ritter, Carl Roberts, John Shipp, one of the most beautiful settings in town for special occasions Jared Slade, Sarah Spires, Jay Spring, Sarah-Michelle the building) this summer in time to unveil the new name by and corporate events. Please take full advantage of our home Stearns, Scott Stolley, Robert Tarleton, Paul Tipton, September 1 when the building reopens fully. and book your firm events and special occasions. No matter the Anastasia Triantafillis, Pryce Tucker, Kathleen Turton, Peter Vogel, Benton Williams, Jason Winford size of the gathering, Culinaire has a special and safe experience A Busy Fall that you and your guests will enjoy. DBA & DBF STAFF With the building reopening and the outstanding program- Executive Director: Alicia Hernandez There is a lot happening at the DBA this fall, starting with a big ming on tap, it remains an exciting time to be a DBA member. I Accounting Assistant: Shawna Bush party! Mark your calendars for September 18, a DBA Celebration— Communications/Media Director: Jessica D. Smith look forward to seeing you (in person) soon, my friends. Controller: Sherri Evans when we have a back to the building party with food and entertain- Events Director: Rhonda Thornton ment. Space will be limited so do look for the invitation to RSVP. Executive Assistant: Liz Hayden Aaron Executive Director, DBF: Elizabeth Philipp LRS Director: Biridiana Avina LRS Program Assistant: Marcela Mejia LRS Interviewer: Viridiana Rodriguez Law-Related Education & Programs Coordinator: Melissa Garcia BANKRUPTCY Marketing Coordinator: Mary Ellen Johnson Membership Director: Kimberly Watson for the Director of Legal Education: Kathryn Zack Non-Bankruptcy Practitioner Publications Coordinator: Judi Smalling TIPS Receptionist: Araceli Rodriguez Staff Assistant: Yedenia Hinojos A Dallas Bar Association 2021 Bankruptcy Program Series DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Michelle Alden Managing Attorney: Holly Griffin PROGRAM 3 Mentor Attorneys: Kristen Salas, Katherine Saldana Thursday, July 15 | Noon - 1:00 PM Paralegals: Whitney Breheny, Miriam Caporal, Star Bankruptcy Schedules: Cole, Tina Douglas, Carolyn Johnson, Andrew The Information Available, Strategic Musquiz, Alicia Perkins MCLE: 1.00 Ethics Community Engagement Coordinator: Marísela Martin Considerations, and Potential Pitfalls Hosted virtually on Zoom. Register at Dallasbar.org. Copyright Dallas Bar Association 2021. All rights reserved. No reproduction of any portion of this publication is allowed without written permission from publisher.

FRIDAY, JULY 16, 2021 • NOON - 1:00 PM Headnotes serves the membership of the DBA and, as such, editorial submissions from members are HOSTED ON ZOOM • MCLE: 1.00 welcome. The Executive Editor, Editor, and Publications Committee reserve the right to select editorial content to be published. Please submit article text via e-mail to [email protected] (Communications Director) at Kim Askew least 45 days in advance of publication. Feature articles DLA Piper LLP FEATURED SPEAKERS: should be no longer than 750 words. DISCLAIMER: All legal content appearing in Headnotes is for Hon. Barbara J. Houser informational and educational purposes and is not Interviewed by Interviewed by intended as legal advice. Opinions expressed in articles United States Bankruptcy Judge Alison Ashmore with Dykema are not necessarily those of the Dallas Bar Association. Michaela Crocker All advertising shall be placed in Dallas Bar Association Katten Muchin Rosenman LLP Headnotes at the Dallas Bar Association’s sole discretion. Sponsored by: Mark Moore Headnotes (ISSN 1057-0144) is published monthly by the Dallas Bar Association, 2101 Ross Ave., Dallas, Foley & Lardner LLP TX 75201. Non-member subscription rate is $30 per year. Single copy price is $2.50, including handling. Periodicals postage paid at Dallas, Texas 75260.

Register at Dallasbar.org POSTMASTER: Send address changes to Headnotes, 2101 Ross Ave., Dallas, TX 75201. July 2021 Dallas Bar Association l Headnotes 5 6 Headnotes l Dallas Bar Association July 2021 IOLTA Matters: Correct Course and Compliance Today

into a business or personal account before where official IOLTA account informa- to record your trust transactions—that is, BY JEANNE M. HUEY they are used for any purpose. You cannot tion for both attorneys and financial insti- software that connects to your account- Every Texas attorney knows that their pay operating expenses directly out of an tutions is available. ing program and automatically records obligation to keep the property of others IOLTA or trust account, nor can you use Second, put policies and procedures trust transactions through “double entry” in a separate trust (IOLTA) account in an IOLTA or trust account as a savings in place to ensure compliance with the accounting—consider doing so. It will accordance with ethics Rule 1.14 is abso- account by failing to move funds as soon rules by everyone in the office. Rule 5.01 simplify the process and avoid the many lute and not waivable. However, strict as they are earned. governs situations where partners and mistakes that tend to occur with double compliance with IOLTA rules can seem What about a check or direct deposit supervisory attorneys are responsible for entry accounting when it is attempted overwhelming and unintentional IOLTA that is partially earned and partially for the conduct of other attorneys in the firm. manually. If these terms and processes are violations are common despite the rules trust? That check or deposit must go Rule 5.03 requires attorneys to take “rea- unfamiliar to you, now is the time to read being clear, unequivocal, and readily directly into trust and then the portion sonable efforts” to ensure that non-attor- up, invest in appropriate software, and available. owed to the firm can then be transferred ney staff comply with an attorney’s pro- learn how it works. Whether you are managing your prac- to an operating account. You cannot do it fessional obligations. Institute a written Using the right software will also allow tice or have staff, outside professionals, the other way around because client funds procedure for timekeeping, billing, and you to produce up to the minute records and/or software to handle client funds, can never be deposited in a non-trust the transfer of earned funds from trust. Be showing the transactions in the entire there are three things you should do to be account. specific about who is responsible and the IOLTA account, as well as for each indi- confident you are compliant or to correct These are the basic rules that most dates each month that each action is to vidual client who has had funds in IOLTA course if you are not. often cause trouble, but you should review take place, and then follow it. or trust. First, understand the rules. The basic all the rules at least once a year. For exam- Also, don’t forget that your fee agree- It may seem obvious, but proper rule is simple: Money not belonging to ple, I have used the general term “IOLTA” ment must reflect proper handling of cli- IOLTA accounting requires that you rec- you that comes into your possession must to refer to trust accounts here, but if the ent trust funds. It should state how often oncile your IOLTA and trust account(s) be in an IOLTA or separate trust account client reasonably expects to earn inter- you will invoice the client and let them every month. Keeping accurate individual in the client’s name. Money belonging to est on their funds the rules require that know that you will not transfer funds from trust records is much easier if you avoid you must not be in those accounts. Failure the funds go into a separate client trust the trust without notifying them first. The group deposits and withdrawals from to comply with this most basic require- account instead of the IOLTA account. best practice is to make sure that the client your IOLTA account; by making sepa- ment is a breach of your ethical duty to You will find the guidelines in the State approves the bill before transferring funds rate deposits and withdrawals it becomes safeguard client funds under Rule 1.14. Bar’s Guide to Trust Accounts, at the State from the trust to the operating account. much easier to assign each transaction to Once you earn, and therefore own cli- Bar of Texas website, and the Texas Equal Once you have an acceptable fee the right client. ent funds, they must promptly be moved Access to Justice Foundation website agreement and procedures in place, it is Because the penalties for trust and crucial that you and anyone working for IOLTA rule violations can be severe, you follow those procedures. including disbarment, every Texas attor- Third, don’t put off IOLTA account- ney should take whatever steps are nec- Spanish for ing. Firm accounting issues can be com- essary to become and remain compliant Lawyers plicated and tedious and IOLTA account- today. HN ing is doubly so because it must be so 2021 Fall Session: precise. If you are not already using an Jeanne M. Huey, of Hunt Huey PLLC, can be reached at jhuey@ August 10-October 13 integrated attorney accounting software hunthuey.com. Held online via Google Meet/Video conference. Learn how to read, write, and speak Spanish Need Help? You’re Not Alone. at an adult continuing education level, with emphasis on legal terminology at the Texas Lawyers’ Assistance Program…………...(800) 343-8527 intermediate and advanced levels. Alcoholics Anonymous…………………………...(214) 887-6699 Register online at Narcotics Anonymous…………………………….(972) 699-9306 www.dallasbar.org/spanishforlawyers Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 Guess what’s back, More resources available online at www.dallasbar.org/content/peer-assistance-committee Let's Keep it Social. back again... Follow us!

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November 3-5, 2021 HORSESHOE BAY RESORT Statewide Up to 7 Hours MCLE including Ethics DAY OF CIVILITY Meet your Judges SEPTEMBER 17, 2021 Awesome networking Trial Lawyer of the Year Award A SPECIAL PROGRAM PROMOTING CIVILITY

Karaoke Sponsored by the Morris Harrell Professionalism Committee July 2021 Dallas Bar Association l Headnotes 7

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2021 DBA 100 CLUB - WE WANT YOU!

What is the DBA 100 Club? The DBA 100 Club is a distinguished membership recognition category that consists of Firms, Law Schools, Organizations and Government agencies with two or more attorneys as well as corporate legal depart- ments that have 100% membership in the DBA. Recognition is FREE and given to the 2021 DBA 100 Club members in our Headnotes publication and at our Annual Meeting.

Please note that the DBA 100 Club is FREE recognition and open for renewal annually. We do not automatically renew an organization’s membership due to changes in attorney rosters each year.

Do you see your name on the list? If not, you need to GET ON THE LIST! To become a 2021 DBA 100 Club member, please submit your request via email and in- clude a list of all lawyers in your Dallas office to Kim Watson, [email protected]. We will verify the list with our member records and, if eligible, we will add your firm to the 2021 DBA 100 Club!

If we receive your qualifying list by July 7th, your firm will be included on the August DBA 100 Club recognition list in Headnotes. Send in your list TODAY!

DBA 100 Club Members Johnston Tobey Baruch, P.C. Calabrese Budner LLP The Hartnett Law Firm as of June 14, 2021 Kastl Law, P.C. Canterbury, PC Tollefson Bradley Mitchell Kellett & Bartholow PLLC Cavazos Hendricks Poirot, P.C. & Melendi, LLP 2 to 5 Attorneys Langley LLP Cobb Martinez Woodward PLLC Touchstone Bernays Adair, Morris & Osborn, P.C. Law Office of Jodi McShan, PLLC Condon Tobin Sladek Thornton Winstead PC Adam L. Seidel, P.C. Law Offices of Maduforo & Osimiri Nerenberg Ziegler Gardner Bell, PLLC Addison Law Firm P.C. Lawrence Law PLLC Cooper & Scully, P.C. Albert & Stobaugh, PLLC Marshall & Kellow, LLP Cowles & Thompson, P.C. Corporate Legal Departments Aldous Walker LLP Mincey-Carter, PC Cozen O’Connor Arcosa, Inc. Anderson & Brocious P.C. Murchison Law Firm DeHay & Elliston, L.L.P. Borden Dairy Company Anderson & Riddle, LLP Pace & Pace, L.L.P. Durham, Pittard & Spalding, LLP Capital Senior Living, Inc. Anderson Grossman PLLC Peeples & Kohler, P.C. Estes Thorne & Carr PLLC Compatriot Capitol Inc. Arnold & Freeman Prager & Miller, P.C. Godwin Bowman PC Dunhill Partners, Inc. Ashcraft Law Firm Quaid Farish, LLC Griffith Barbee PLLC El Rancho Inc. Atkins, O’Toole & Briner, L.L.C. RegitzMauck PLLC Guida, Slavich & Flores, P.C. Gaedeke Energy Atwood Gameros LLP Riney Packard PLLC Hall Render Killian Heath & Lyman GFR Holdings, LP Avant Law Firm Russell & Wright, PLLC Harper & Bates LLP HomeVestors of America, Inc. Ayres Law Office, P.C. Sawicki Law Hayward PLLC LALA U.S., Inc. Balekian Hayes, PLLC Sheils Winnubst, PC JAMS North Texas Tollway Authority Bisignano Harrison Neuhoff LLP Skierski Jain PLLC Johnston Clem Gifford PLLC Rosewood Resources, Inc. Blankenship, Wiland & O’Connor, P.C. Smith, Stern & Friedman, P.C. Jones, Allen & Fuquay, L.L.P. Tenaska, Inc. Booth Albanesi Schroeder PLLC Spencer & Johnson, PLLC K&L Gates LLP The Rosewood Corporation Bower PLLC Thomas, Feldman & Wilshusen, L.L.P. Kilgore & Kilgore, PLLC Chen Dotson, PLLC Turton & Pinkerton, PLLC KoonsFuller Government Agencies, Law Schools Chris Lewis & Associates, P.C. Voge Rohe PLLC McGuire, Craddock & Strother, P.C. & Organizations Clark Law Firm Walker & Long Meadows, Collier, Reed, Cousins, City of Irving City Attorney’s Office Crain Brogdon Rogers, LLP Waranch & Nunn PLLC Crouch & Ungerman, L.L.P. CitySquare LAW Davenport & Epstein, P.C. Westerburg & Thornton, P.C. Parsons McEntire McCleary PLLC Dallas County Community College District Fisher & Welch, P.C. Wisener Nunnally Roth LLP Passman & Jones, P.C. Dallas County Probate Courts Fuller Mediations Wolff Law, PLLC Payne Mitchell Ramsey Law Group L.L.P. Federal Reserve Bank of Dallas FurgesonMalouf Law PLLC Woolley <> Wilson, LLP. Peckar & Abramson, P.C. Mosaic Family Services Inc. Gauntt Koen Binney & Kidd, LLP Yarbrough & Elliott, P.C. Sargent Law, P.C. UNT Dallas College of Law Hitchcock Evert LLP Scroggins Law Group, PLLC Horton & Archibald, P.C. Law Firms with 6 or More Attorneys Shackelford, Bowen, McKinley & Norton, LLP Special Recognition Hosch & Morris, PLLC Ackels & Ackels, L.L.P. Stacy Conder Allen LLP Student Members of UNT Dallas Howard & Spaniol, PLLC Bradley Arant Boult Cummings, LLP Staubus & Randall, L.L.P. College of Law Howell & Willingham, PLLC Bragalone Olejko Saad PC Steed Dunnill Reynolds Bailey JMA Firm, PLLC Burford & Ryburn, L.L.P. Stephenson LLP

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irmadeadnotesfin.indd 10 Headnotes l Dallas Bar Association July 2021

Focus Business Litigation/Franchise & Distribution Law Personal Jurisdiction in the 21st Century: Time for New Int’l Shoes?

ing. The appeal was a consolidation tive a view of specific jurisdiction. musings about whether the Interna- BY DAVID KENT of two personal injury cases involving Even if the plaintiffs’ claims did not tional Shoe method for analyzing juris- After decades of losses before the claims by plaintiffs who resided and directly “arise out of” Ford’s activi- diction “is well suited for the way in Supreme Court of the United States, were injured in the forum states of ties in the states, they at least “related which business is now conducted” and plaintiffs finally won a case upholding Montana and Minnesota. The inju- to” those activities. Justice Kagan also commended Justice Gorsuch’s the jurisdiction of state courts over ries were caused by accidents involv- explained: “The first half of that stan- “thoughtful” concurring opinion on non-resident corporate defendants. In ing used Ford vehicles that were dard asks about causation; but the that subject. a decision in which all voting justices purchased in the forum states. Ford back half, after the ‘or,’ contemplates For his part, Justice Gorsuch, with agreed on the result, the court found argued there was no general jurisdic- that some relationships will support Justice Clarence Thomas joining, that state courts in Montana and Min- tion because it was not “at home” in jurisdiction without a causal show- expressed even greater concern about nesota had specific jurisdiction over either Montana or Minnesota (a term ing.” Ford employed “every means the continued viability of International Ford Motor Company for in-state of art coined in Goodyear Dunlop Tires imaginable” to market its products Shoe, describing its conceptualiza- accidents involving used vehicles, Operations, S.A. v. Brown, 564 U.S. and services to residents of the forum tion of general jurisdiction as “almost despite the absence of in-state activi- 915 (2011)). Ford also claimed there states, which Justice Kagan concluded quaint,” and stating that “some of the ties directly connecting Ford to the was no specific jurisdiction because created a “strong ‘relationship among old [personal jurisdiction] guardrails specific vehicles involved. Ford Motor it had not designed, manufactured the defendant, the forum, and the liti- have begun to look a little battered.” Co. v. Montana Eighth Jud. Dist. Ct., or sold either vehicle in Montana or gation’—the ‘essential foundation’ of While he had complete confidence in 141 S. Ct. 1017 (March 25, 2021). Minnesota. specific jurisdiction.” the correctness of the result reached Does this decision suggest the winds Ford essentially urged a “but for” Justice Kagan’s parsing of the in the Ford case, he candidly admitted of change are blowing in the jurispru- version of specific jurisdiction, rely- phrases “arises out of” and “related to” to leaving the case “with even more dential fields of personal jurisdiction? ing on the long-established and oft- is interesting in and of itself, because questions than I had at the start,” and Perhaps. quoted phrase that the plaintiff’s it raises questions of whether courts invited “future litigants and lower For three-quarters of a century, claim must “arise out of or be related will now broaden the view of specific courts” to help the Court “face these first-year law students have discussed to” the defendant’s contacts with the jurisdiction by focusing on a defen- tangles and sort out a responsible way personal jurisdiction in terms of forum. By Ford’s reasoning, this meant dant’s general activities in the state, to address the challenges posed by “minimum contacts” and “traditional the plaintiffs’ claims had to arise from even if unconnected to the contro- our changing economy in light of the notions of fair play and substantial Ford’s in-state activities related to the versy before the court. In years past, Constitution’s text and the lessons of justice,” thanks to the venerable U.S. specific vehicles involved in the acci- defendants could fairly readily wall history.” Supreme Court case of International dents. Since all of Ford’s involvement off those unconnected activities. How In sum, from uncomplicated facts Shoe Co. v. Washington, 326 U.S. with the specific vehicles occurred out well that will work in the future is not and an unremarkable holding, Ford 310 (1945). “Minimum contacts” in of state—i.e., designing, manufactur- so clear. Motor Co. may well indicate that the turn has yielded discussions of “gen- ing, and selling—Ford reasoned that Of even greater interest, however, Court may be ready to try on some new eral jurisdiction” and “specific juris- the plaintiffs’ claims did not “arise out were the concurring opinions of Jus- “personal jurisdiction shoes” to replace diction.” But the world has changed of or relate to” anything Ford did in tice Samuel Alito and Justice Neil the time-worn footwear of International since International Shoe, decided just the forum states. Gorsuch. After explaining the rea- Shoe. HN after the end of World War II. Ford The Court decided 8-0 (Justice sons why his view differed from Jus- Motor Co. may signal that the Court is Amy Coney Barrett not participating) tice Kagan’s analytical approach to David Kent practices with the Dallas office of Faegre open to reconsidering how to analyze that Montana and Minnesota had spe- the “arises out of or be related to” Drinker Biddle & Reath, LLP. He may be reached at david. personal jurisdiction. cific jurisdiction. Justice Elena Kagan, language, Justice Alito added some [email protected]. The facts in Ford Motor Co. were writing for five justices, readily dis- not particularly complicated, and the pensed with Ford’s arguments, finding holding was not particularly surpris- that the arguments offered too restric- Save the Date Judicial Investiture of the Hon. Rhonda Hunter 303rd District Court September 2, 2021 3:30 PM at DBA Headquarters

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www.dallasbar.org/careercenter July 2021 Dallas Bar Association l Headnotes 11

HIGH FIVE FOR TURNING 5

TEXAS & LOUISIANA CAR WRECK LAWYERS

Myles Lenz Ramez Shamieh Laura Rivas 2021 Rising Star 2021 Texas Super Lawyer 2014-2020 Rising Star Texas Lawyer "Lawyer on the Rise" D Magazine Top Lawyer under 40

We are grateful for all of your referrals the last five years which have been an integral part of our growth and achievements. 12 Headnotes l Dallas Bar Association July 2021

Column Ethics The Dilemma of the Paid Fiduciary for those of us who litigate. Our clients are based on hourly billing, the fees BY GENE DUBOSE are rarely experienced enough to perceive Situation No. 2 stop when the case settles. Once you It is curious that an attorney’s most fun- what is necessary and what is not. In the Your firm has been hired to repre- are involved in an active lawsuit, do you damental ethical obligation is not found in main, they will follow our advice. Let me sent your client in a business matter explain to your client the virtues and, the Texas Rules of Professional Conduct, pose some questions to ask ourselves about where $150,000 is in dispute. The facts for all practical purposes, inevitability of although it is fleetingly adverted to. That our fiduciary duties in some common situ- are straightforward, and the area of law settlement to resolve the case? Do you obligation arises from the fact that our rela- ations. is one where you are experienced. Will try to settle the case as early as possible? tionship with our clients is a fiduciary rela- you bring in other members of your firm Do you stop discovery when you have tionship. The rules of professional conduct to help you on this case? If you are think- pretty much everything you need for deal with some of the common problems Situation No. 1 ing about doing that, have you requested mediation? that arise in the business of being a lawyer, Your client wants you to bring a suit your client’s consent to do so? Have you In these questions about the fiscal but they do not define the nature of the to collect $15,000 for damage done to her explained the need for doing so? Have aspects of your fiduciary responsibilities attorney-client relationship. Our role as a home by a repairman. Do you tell her that you brought along an associate for hear- to your client, the Texas Rules of Pro- fiduciary, however, shapes everything we do. she can bring her case in small claims court ings or depositions? Have you explained fessional Conduct are blessedly quies- Our fiduciary duty informs us that we without a lawyer? Do you give her an esti- to the client the need for the associate’s cent. A fee only becomes a subject for must always act not for our own benefit, mate of what your fees will be for trying presence? Is your decision on staffing a a grievance if it is illegal or unconscio- but solely for the benefit of our client. We the case? Do you tell her that Texas is the case determined by the wealth of the cli- nable, and a fee is unconscionable only are, however, paid fiduciaries, and most of most debtor-protective state in the union, ent or by your need for assistance? Is all “if a competent lawyer could not form a us are paid via an hourly rate. Our every and if she gets a judgment, she may not be the work you do on a case necessary? Do reasonable belief that the fee is reason- action will cost the client. At the outset, able to collect on it? As you can see, put- you stand up to your managing attorney if able.” Rule 104(a). As you can imagine, of course, we must inform our client what ting all these issues before your client could he pressures you to do more billable work this is a standard rarely met. In ordinary our actions will cost per hour, but there- lead her to decide either (1) she does not or to take on more lawyers than you think matters of drawing the line between your after we must be satisfied that we are not want to bring a suit or (2) she will bring her necessary? bills and your client’s interest, it is just multiplying our tasks or our client’s costs suit pro se. In this vein, are you unwilling up to you and your conscience. HN unnecessarily. The debate on how we put to take a case where you perceive that your Situation No. 3 our obligations before our interests will in client will simply be throwing good money Gene DuBose, of DuBose Legal, P.C., may be reached at large part be an inner monologue, at least after bad? For litigating attorneys whose fees [email protected]. 2021 Stephen Philbin Award Winner Announced winners, judges consider educational value, hundreds of other people—sometimes over story at http://lockedinlimbo.com. STAFF REPORT accuracy, resourcefulness, as well as the jour- a year—for a bed in a state hospital to get The Philbin Awards were established in The Dallas Bar Association hosted the nalist’s initiative in pursuing the story and help they need. As Texas’ population booms, 1983 in honor of Stephen Philbin, an active 2021 Stephen Philbin Awards this spring the story’s contribution to public debate. leaders have recognized this problem is also member of the Dallas Bar Association and a and the winner has been selected. The The KXAN team’s story “Locked in growing, but their efforts to shrink the back- leading authority on media law, who lost his KXAN, Austin, investigative team of David Limbo,” highlighted the struggle of mentally log have failed. In 2019, the number of peo- battle with leukemia in 1982. The competi- Barer, Arezow Doost, Josh Hinkle, and Chris ill men and women in Texas’ county jails. ple stuck on the waitlist—with cases stalled tion is state-wide, and the winner receives a Nelson were selected by this year’s judges to A summary of the story: “Incapable and constitutional rights possibly violated— $5,000 cash award. receive the prestigious award. In selecting the of standing trial, they wait in line behind reached historic levels. KXAN highlighted The winners will be recognized at the families caught up in this system and the Dallas Bar Foundation’s Fellows Luncheon state’s struggle for solutions.” Read the whole on Thursday, November 11, 2021. HN FFRREEEE MCCLLEE Interested in opening your own practice and bringing justice to everyday people? APPLY NOW! OneO onef othf teh em maannyy MMeemmbebre Bre nBeefintsefits Visit www.dallasbar.org/incubatorprogram to apply. thtahta t hthee DBBAA o offeffres rs is mois rmeo trhe athna n4 0400 C CLLE ccoouursresse esa ceha ycehar y, ear, Application deadline: Friday, July 16, 2021 mosmt osft wofh wichhic ha arree offffeerered dat anto nchoa crghea. rge.

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KOONSFULLER SHAREHOLDERS

ROW 1: Liz Porter,* Charla Bradshaw,* Ike Vanden Eykel (CEO),* Rick Robertson,* Heather King*

ROW 2: Sean Abeyta,* Neda Garrett,* Brian Loughmiller,* Sally Pretorius,* Chris Meuse,* Jessica Janicek,* Fred Adams,* Julie Crawford,* Rob McEwan*

As recognized among Tier 1 U.S. News – Best Lawyers® “Best Law Firms” in Dallas/Fort Worth for Family Law by U.S. News & World Report L.P. FAMILY LAW IS NOT ONLY WHAT WE DO. IT’S ALL WE DO. With more than thirty proven attorneys in four offices across North Texas, KoonsFuller is one of the largest family law firms in the Southwest. We offer clients a level of legal representation and range of resources unmatched by any other family law firm. Working together, as a fully integrated team, there is no case too large or complex for us to manage. To learn more about KoonsFuller, visit koonsfuller.com.

DALLAS** | 1717 McKinney Avenue, Suite 1500 | Dallas, Texas 75202 | 214.871.2727 DENTON | 320 West Eagle Drive, Suite 200 | Denton, Texas 76201 | 940.442.6677 PLANO | 5700 W. Plano Parkway, Suite 2200 | Plano, Texas 75093 | 972.769.2727 SOUTHLAKE | 550 Reserve Street, Suite 450 | Southlake, Texas 76092 | 817.481.2710

*Board certified in family law by the Texas Board of Legal Specialization. **Principal office.

KOONSFULLER: DIVORCE, CHILD CUSTODY, POST-DIVORCE MODIFICATIONS, CHILD SUPPORT, MARITAL PROPERTY AGREEMENTS, ENFORCEMENTS, GRANDPARENT’S RIGHTS, PATERNITY, COLLABORATIVE LAW, AND APPEALS 14 Headnotes l Dallas Bar Association July 2021

Focus Business Litigation/Franchise & Distribution Law Pretrial Rule Provides Alternative to Resolve “Legal Matters” a party has standing, whether the contract is ment to the trial court delaying its ruling danger of an attorney’s fees award that might BY CHERYL MANN AND MIKE NORTHRUP enforceable, whether the contract is ambig- until as late as the conclusion of voir dire. be incurred in connection with a Rule 91a Texas Rule of Civil Procedure 166(g) uous, whether the contract was breached, But, there is no restriction against setting a motion to dismiss or an anti-SLAPP motion. authorizes trial courts to decide “legal mat- and whether the contract is subject to the pretrial hearing early in the life of the case Rule 166(g) imposes no requirement on ters” before trial. Paragraph (g) is under- statute of frauds. Defamation cases involve to get a trial court’s ruling on a legal matter. evidence that may be considered or the form utilized. Though current Paragraph (g) was many questions of law such as whether a An early ruling by the trial judge on a piv- of evidence presented. In fact, trial courts added in 1990, just over a dozen appellate statement concerns a public or private issue, otal issue often can help to focus discovery have examined deposition testimony and opinions have mentioned the provision in whether the statement referred to the plain- and other case developments on important heard live testimony in order to understand the succeeding 30 years. This authoriza- tiff, whether the plaintiff is a public or pri- issues. the legal issue and make a ruling. tion offers litigants a simpler and less-costly vate individual, whether the publication is A motion filed under Rule 166(g) has Although a Rule 166(g) order has the approach to resolving pivotal disputes than an actionable statement of fact, whether some procedural advantages over other potential to be case-dispositive, ordinarily some other available procedures, such as a the statement is defamatory, whether the devices such as a motion to dismiss or a the ruling would narrow the scope of issues motion to dismiss or motion for summary statement is defamatory per se, and whether summary-judgment motion. Rule 166(g) for trial, to the benefit of the court, the par- judgment. a qualified or conditional privilege applies. imposes no requirement of 21 days’ notice ties, and the jury. As with any trial court rul- “Legal matters” that can be resolved Pivotal questions relating to affirmative of the hearing on the motion. Thus, if the ing, the ruling would be subject to challenge under Rule 166(g) include both factual mat- defenses might also be resolved. The accrual opposing party has filed a motion for sum- at the conclusion of the case. On appeal, a ters and questions of law. However, if it is date of the cause of action for limitations mary judgment and set it 21 days out, thereby Rule 166(g) ruling is treated like a summary a factual matter, Rule 166(g) allows a trial purposes could be decided. Defenses such as precluding a cross-motion, Rule 166(g) may judgment order or directed verdict and is court to decide it only if it is an undisputed privilege or justification could be resolved. offer a solution. Or, if a motion for summary reviewed de novo. HN fact or a conclusively-established fact. There Questions involving the proper measure of judgment cannot be filed because of a cut-off are innumerable questions of law that could damages could also be resolved. date in the pretrial order, or because there is Cheryl Mann is Of Counsel at the Law Offices of Brad Jackson. She be resolved in a judicially efficient man- A Rule 166(g) hearing may be held at insufficient time prior to trial, Rule 166(g) may be reached at [email protected]. Mike Northrup is ner, allowing judges to streamline the focus any time before the case goes to trial. In fact, may provide an alternative pathway to get- a Shareholder at Cowles & Thompson, P.C. He may be reached at of the litigation and the trial. Examples of it appears that so long as the hearing begins ting a ruling. Also Rule 166(g) avoids the [email protected]. questions in a contract case include whether prior to the start of trial, there is no impedi-

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DBA 100 Club

WHAT IS THE DBA 100 CLUB? The DBA 100 Club is a special membership category that recognizes firms, agencies, law schools, and organizations that give 100% membership support to the DBA!

WHAT IS THE COST TO JOIN THE DBA 100 CLUB? IT’S FREE!

HOW DO YOU JOIN? Firms, government agencies, and law schools with two or more lawyers as well as corporate legal departments can qualify if all of their Dallas office attorneys are DBA members. To join the 2021 DBA 100 Club, please submit a list of all lawyers in your Dallas office to Kim Watson, [email protected]. Once approved, we will add your organization to the 2021 DBA 100 Club member recognition list!

WHAT ARE THE PERKS? Our 2021 DBA 100 Club members will be recognized in Headnotes, the 2022 DBA Pictorial Directory, and at our Annual Meeting.

Join today! July 2021 Dallas Bar Association l Headnotes 15 16 Headnotes l Dallas Bar Association July 2021 Procedures and Best Practices for Closing a Solo or Small Firm

their clients in a sudden cessation. A popular Chinese proverb tells us, “The can always pick their lawyer regardless BY GREG SAMPSON But sudden cessations without plan- best time to plant a tree was 20 years ago. of any expectation by the lawyers to the Lawyers with solo or small firm prac- ning do not afford an opportunity to place The second-best time is now.” The sooner transfer. tices contemplating retirement primarily clients with a preferred successor attorney you start the better your results. When setting a price, factors such ask two questions. When and how should and rarely provide compensation for the Second, with a clear vision of how you as the amount and duration of recurring I transition out of my practice? And how value of the practice. Early and thought- want to exit, you need to decide which of fees, transition of referral sources and can I optimize the value of the practice for ful planning for succession should accom- the three most common methods of tran- periods of mentoring or client relation- myself and my family when I do decide to plish both of those objectives. And like sition best fit you and your clients. One ship transfer should be considered. And exit? Simply put, the answers lie in early the solution for sudden cessation of prac- is bringing a younger lawyer into the firm when selling a practice, do not underes- preparation and planning. tice, the State Bar’s Law Practice Manage- and gradually transferring files and clients timate the value of a longstanding phone Before outlining best practices for suc- ment Program in tandem with the Work to him or her with some retirement com- number, website, blog, and any valuable cession, all solo/small firm lawyers need Group for Succession Planning are work- pensation worked out as you gradually office equipment. The condition of your to assure their practice does not become a ing to provide guidance online in the suc- exit. Another is to merge with a larger files, including up to date contact infor- casualty of sudden cessation without any cession planning portal. There you will firm and arrange a compensation and/or mation and status summaries, with easy- planning. Fortunately, Rule 13.04 of the find several articles providing guidelines, retirement plan that adequately pays for access digitization, can also enhance the Rules of Disciplinary Procedure makes it checklists and suggested forms for best the clients you bring to that firm. A third value of your practice. more attractive to name your own cus- practices to transition or sell your prac- option is an outright sale of your ongo- Documents in the sale of a practice todian online. The new rule outlines a tice. Below are some of those insights. ing practice to another lawyer or lawyers, include client consent letters, a purchas- custodian’s authority to act without court First, you need to set a time when you which may or may not include a transi- er’s letter of intent, non-disclosure agree- supervision and limits their liability the would like to exit your practice. This may tion period. ment during the due diligence analysis, same as custodianships supervised by a not mean full retirement, but if not, then Sales of practices or practice areas are and a contract of sale. The terms of sale court under the other provisions of Part it is important to envision what a reduced permissible in Texas, provided you adhere should address the price, manner of pay- XIII of the Rules. All solo and small firm practice will look like and for how long. to the Disciplinary Rules of Professional ment, representations and warranties, lawyers should avail themselves of this The shorter the time to exit the faster Conduct. The Committee on Disciplin- non-compete/non-solicitation provi- easy step to protect their practice and you will need to implement your plans. ary Rules and Referenda is now consider- sions, handling IOLTA accounts, indem- ing for referendum ABA Model Rule 1.17 nification and other essential terms. The on sale of a practice, which is still good seller must also arrange for malpractice ethical guidance in the meantime. insurance (e.g., tail coverage). Terms of Each of the transition methods require sale can be very much like other business RENEW YOUR MEMBERSHIP DUES careful attention to several ethical rules sales, except for the element of protecting that might be tripped inadvertently. A the client’s interests and adhering to rel- Don’t risk being dropped from the DBA membership - renew your dues! few of the key rules addressed extensively evant ethical rules. on the succession planning portal include Details on these issues can be found (1) confidentiality, (2) conflicts of inter- on the Law Practice Management web- Renew TODAY in order to continue receiving all your member benefits est, (3) competence, (4) client commu- page for closing a practice, found at www. including access to FREE online CLE programs. nication, and (5) fee setting (including texasbarpractice.com/law-practice-man- avoidance of impermissible fee splitting). agement/plan/. HN The risk of violating these rules are mini- Look for an email reminder with links to renew online if you have not mized to some degree when the transfer Greg Sampson is Senior Counsel at Gray Reed, Board Certified done so already or go online now and click on My DBA to log in to involves hiring a successor lawyer into in Estate Planning and Probate Law, and Co-Chair of the State your firm or merging with another firm. Bar of Texas Work Group on Succession Planning. He may be check your status and renew your Membership! And it must be remembered that clients reached at [email protected]. Thank you for your support of the Dallas Bar Association! DVAP’s Finest TU NGUYEN Tu Nguyen is a sole practitioner. 1. How did you first get involved in pro bono? After law school, I took a brief pause from the law to focus on family and a family business. When it was time to return to my legal practice full-time, I wanted to focus on ways to continue giving back to the community. DVAP was a great fit. The support staff and mentoring attorneys provided the necessary guidance to help me confidently move forward with all my cases. 2. Describe your most compelling pro bono case. It was an estate planning case involving an elderly woman. The referral was actually for the standard will and power of attorney documents. Once we met and started talking, I realized she had some assets which needed management. As I listened to her concerns, I realized there was much more I could do to help ease her mind. She was concerned about what would happen to her estate and, more importantly, how she could continue to help her family and goddaughter even after her death. It was very rewarding to see her whole demeanor change after we finished everything. Without DVAP, she would have missed out on strategic ways to protect her assets and continue her wishes after death. 3. Why do you do pro bono? My family was part of what is referred to as the «boat people» - the Vietnamese refugees who started arriving in America around 1980 after the Vietnam War. We arrived in America with nothing but the clothes on our backs. It was through the kindness of volunteers that my family was able to survive. When we needed legal services, the legal aid office provided volunteer attorneys who worked tirelessly to help us. Although I was very young, I still remember the impact it had on my family. Now I am in a position to give back and complete the circle of kindness. 4. What impact has pro bono service had on your career? Lots of people readily make time to offer guidance when they learn you are handling a case pro bono. Those opportunities for growth are invaluable to a solo attorney managing her legal practice on her own. It›s embarrassing to admit, but I›ve met wonderfully talented and incredibly smart attorneys who have graciously answered a lot of my «dumb» questions.

5. What is the most unexpected benefit you have received from doing pro bono? Unexpectedly, doing pro bono service is not just a selfless act. It actually is quite selfish in a way. I have gained so much personally and professionally. When we help others with genu- ine kindness in our hearts, that kindness is returned tenfold in so many different ways. Pro Bono: It’s Like Billable Hours for Your Soul. To volunteer or make a donation, call 214/748-1234, x2243. July 2021 Dallas Bar Association l Headnotes 17

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BUSINESS LITIGATION • EMPLOYMENT LITIGATION • BUSINESS RESTRUCTURING 18 Headnotes l Dallas Bar Association July 2021 The DBA is Your One-Stop CLE Shop! With free CLEs, webinars, and the www.dallasbar.org for more information. DBA Online CLE Catalog, you can find We look forward to seeing you again in all the CLE credits you need. Log on to person soon!

On April 23, the DBA presented the second in a series on Bankruptcy Tips. Amber Carson, Gwendolyn Hunt, Davor Rukavina, and Jerry Alexander spoke on the topic of “Just the Tip of the Iceberg: Understanding the Scope of the Automatic Stay.”

The Dallas Asian American Bar Association and the DBA Minority Participation Committee presented “Past, Present, and Future – Hate Crimes, Asian American Jurisprudence, and Civil Rights.” The program was co-sponsored by the DBA Equality Committee and the Asian American Bar Association of Houston.

On April 26, the Health Law and Intellectual Property Law Sections hosted “The Science, Ethics, and Law of Gene Editing in a CRISPR World,” with speakers (left to right): Eric N. Olson and Tom Mayo, and moderator Kate Morris.

Professor Gerry W. Beyer gave his annual Case Law Update to the Probate, Trusts & Estates Law Section on April 27. He was joined by Shannon Guthrie and Brandy Baxter-Thompson.

On May 11, the Business Litigation Section presented “Winning Tips for Remote Trials, Hearings, Arbitrations, and Mediations in Complex Commercial Cases,” with (left to right): Alan Dabdoub, Josh Sandler, Will Snyder, Josh Lang, and Danielle Vera.

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Focus Business Litigation/Franchise & Distribution Law Business Interruption Coverage for COVID-19 for coverage to apply. recently filed in federal court have been ate coverage where coverage for losses BY RYAN K. MCCOMBER Although there is strong precedent, dismissed, despite considering some related to COVID-19 were expressly The economic impact of the in a majority of jurisdictions, requiring of the arguments in favor of coverage, excluded in the business’ policy. COVID-19 pandemic has been devas- a “physical loss,” several courts have because the businesses failed to plead Because the sports and entertain- tating to many industries, and sports not followed the majority rule. In fact, that COVID-19 was present and dam- ment industries have experienced and entertainment industries are no businesses outside of Texas have had aged the property. However, the same unprecedented losses due to the exception. While the monetary losses limited success in arguing that their court recently denied a motion to dismiss COVID-19 pandemic that will likely from cancelled or postponed concerts, business interruption policies were similar claims brought by a theatre chain continue into the near future, busi- empty sports stadiums, and the clos- either ambiguous regarding the physi- because it had pleaded that COVID-19 ness interruption coverage disputes will ing of everything from movie theaters cal loss requirement or that contami- was present and damaged the property by undoubtedly continue. This creates an to Broadway and the associated job nation resulting from the COVID-19 changing the content of the air. opportunity for potential changes in losses made the headlines, the mone- virus may be tantamount to physical These recent cases, and existing the law. Sports and entertainment law- tary losses for the hospitality and other damage. In cases where the business Texas precedent, suggest that a busi- yers, and their clients, must stay up to businesses that depend on these indus- interruption policies are silent with ness will have to plead and prove “dam- date on case law interpreting and apply- tries have been equally as staggering. respect to physical damage, businesses age to property” to establish coverage ing the “direct physical loss” coverage Not surprisingly, the losses gener- have had some recent success argu- in Texas, unless the policy expressly requirements in COVID-19 related ated by businesses negatively impacted ing that traditional exclusions dealing provides coverage for losses caused litigation. Also, they should monitor by the COVID-19 pandemic have with pollutants or contamination are by communicable diseases. However, the interpretation and application of caused many businesses to file claims too imprecise to exclude coverage for unlike many of the recent non-Texas exclusions for virus-related losses to under their business interruption insur- COVID-19. cases where businesses have success- understand their coverage under either ance policies. Indeed, many businesses The legal landscape in Texas does fully pursued claims for coverage, many new or existing business interruption in the sports and entertainment indus- not appear to be changing based on business interruption insurance policies insurance policies. HN tries simply had no financial options to these decisions, but some recent deci- issued in Texas have specific exclusions survive other than to present claims for sions suggest that it could. Two Texas for virus-related losses. Therefore, the Mr. McComber is a Partner at Figari + Davenport, LLP and their losses under their business inter- business interruption insurance cases foregoing precedent would still not cre- may be reached at [email protected]. ruption insurance policies. While a limited number of business interruption insurance policies specifi- cally provide coverage for virus-related losses, many either do not provide such coverage or are silent as to whether a business interruption, due to a pan- demic or a pandemic-related shutdown, AT THE HEART OF DALLAS is covered. Moreover, many business interruption insurance policies contain coverage exclusions for contamination and other pollutants, which do not appear to squarely address viruses such THE RIGHT MOVE as COVID-19. Furthermore, due to the infrequency of pandemics, there is also Juanita DeLoach, PhD sparse legal precedent providing guid- Intellectual Property Litigation Partner ance. The unprecedented number of claims and coverage denials has resulted When Juanita DeLoach joined Barnes & Thornburg, she got a crash course in lateral integration. in a wave of litigation concerning busi- ness interruption insurance coverage Soon after she started, DeLoach was assigned to in Texas and across the country, which a major client matter with a team of attorneys has led to inconsistent results. In most representing offices and practices from across cases, businesses have not been success- the firm. “My first trip as a lead on the project was ful in claiming benefits under business to China,” she says. “When you spend long days interruption insurance policies that do together, you get to know people in a way you not expressly cover virus-related losses. otherwise would not.” These unsuccessful claims include those filed by various concert promot- DeLoach was immediately struck by the caliber of ers and professional sports teams. The attorneys at the firm. “One of the partners on my team most prevalent argument against claims has his own Wikipedia page!” she says. “And for this for coverage under business interrup- project, I was supposed to be leading him.” tion insurance policies for COVID- 19 losses is that such policies do not But the level of collaboration and collegiality she provide coverage for purely economic experienced put any concerns to rest. DeLoach says, “Although it was a little intimidating, it was harm suffered by a business when its also an opportunity. He couldn’t have been more operations are suspended because such supportive. Getting the chance to ‘lead up’ is rare, policies require a “direct physical loss” so I took advantage of the opportunity to showcase my organizational and leadership skills.

“Compared to other firms where I’ve practiced, especially in Big Law, I’ve grown to feel more comfortable speaking up for myself and others, and affecting change.”

And she’s made a big impact, from organizing virtual programs to keep summer associates engaged during the pandemic, to serving on the Diversity, Equity and Inclusion committee, to launching and hosting a popular Zoom interview series with firm talent and leaders.

NEED TO REFER “I try every day to pay it forward by making others here feel valued, included A CASE? and part of the team.”

The DBA Lawyer Referral Service Can Help.

Juanita DeLoach is a proud partner in the Dallas office Log on to www.dallasbar.org/ of Barnes & Thornburg, one of the largest law firms in the See what sets us apart in Dallas country, with more than 700 attorneys and other legal lawyerreferralservice at btlaw.com professionals serving clients worldwide. or call (214) 220-7444. 20 Headnotes l Dallas Bar Association July 2021 How to Improve Client Experience with Frictionless Billing

steps in the process. instant gratification for your clients, who party funds. BY EMILY BURNS With frictionless billing, there is no wait- can receive immediate automated payment In the earlier days of electronic pay- People have grown accustomed to the ing for a paper invoice to come in the mail, confirmations to know that their payment ments, lawyers did not necessarily have the convenience of electronic payments and no need to get out a checkbook, no need to has been received by their attorney. No option to divert client payments into trust online bills in every aspect of their lives. So put a check in the mail, and no uncertainty more need for both lawyer and client to accounts. However, in recent years, the much so, that it has become second nature about whether payment has been sent or wonder where the client’s payment may be. legal industry has seen the launch of elec- to pull out their phones or credit cards at received. Facilitating preferred payment meth- tronic payment processors targeted spe- every business they enter. ods: The overwhelming majority of people cifically for law firms, offering lawyers the If your practice is committed to provid- prefer paying by credit or debit cards or other ability to separate payments into earned ing a 21st century law firm client experi- 4 Ways Tools Reduce Friction electronic means. This includes payments and unearned funds and send funds to their ence, you have to adopt frictionless billing for Clients not only for consumer goods but also for any proper accounts. payment processes. Not only will adopt- bills they receive, including invoices from Processing fees from electronic payments Electronic payment solutions simplify ing frictionless billing give your clients the professional service providers like attorneys. also posed ethics and operational issues for the billing process for your firm and increase service they want and deserve, it will also Allowing clients to pay on their own law firms. However, payment processors for the ease of submitting payment for your cli- set you apart from firms who have not yet schedule: The advent of electronic pay- lawyers like LawPay allow firms to ensure ents by reducing friction in four major ways: stepped into the modern era with electronic ments has given every consumer the conve- that fees and expenses are appropriately Eliminating paper bills: First and fore- billing and payments. nience of being able to pay their bills on their deducted from operating accounts rather most, electronic payment solutions clean up own schedule—at any time 24 hours a day, than client funds. the clutter of old payment methods. User- seven days a week. Implementing electronic From a practical perspective, payment friendly online platforms make it easier What is Frictionless Billing? payments in your firm means clients can pay processing fees also represent an expense for clients to access invoices and payment Frictionless billing is a payment pro- invoices on their own schedule rather than or overhead that lawyers have resisted. But records to see whether they need to make cess that involves fewer steps and simpler solely during your business hours. more and more firms are recognizing that payments or to find information that they interactions. In the law firm context, fric- payment processing fees should be looked may need. tionless billing refers to making it easier for at as just another cost of doing business and Offering instant confirmation: Elec- clients to pay by reducing the number of factored into the firm’s financials accord- tronic payments create opportunities for What to Consider When ingly. Many lawyers also note that the mini- Accepting Electronic Payments mal costs of electronic payment processing Of course, lawyers face unique issues in are far outweighed by the benefit of immedi- Be Sure to accepting electronic payments that many ate, confirmed payment. HN other retailers or service providers do not. Visit Your This mostly stems from attorneys’ ethical Emily Burns is a Content Writer at LawPay. She can be reached at E-Communities obligations with respect to client and third- [email protected]. E-Communities on the DBA website are a great place to view current information on your Sections and Committees. Texas Rangers Baseball Officers use these Communities to post and send announcements. DBA Discount Tickets Now Available! If you are interested in Season Tickets, To access, log in to your My DBA Page and find your E-Communities Suite Rentals or Group Tickets, please contact under the My E-Communities tab. Jeremy Christopher at (817) 273-5173.

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Focus Business Litigation/Franchise & Distribution Law 2021 Rule Changes: Texas Rules of Civil Procedure as well as any documents they may use to Rule 195.5 now requires certain dis- sworn to before a notary or made under BY NICOLE WILLIAMS AND MACKENZIE WALLACE support their claims or defenses. Rule 194.3 closures regarding experts. These required penalty of perjury that traditional methods also now provides that testifying expert dis- disclosures include the expert information of service were not successful—to authorize While the Texas Rules of Civil Procedure closures will be made in conformance with previously required in Rule 194 and addi- substituted service by social media, e-mail, are amended yearly, the amendments to the Rule 195. tional information for retained experts: (a) or other technology that will be reasonably Texas Rules effective January 1, 2021 materi- the expert’s qualifications, including a list of effective to give the defendant notice of suit. ally impacted discovery and expert litigation all publications authored in the previous 10 Thus, lawsuits can now be sent by email or practice in Texas state courts. Specifically, Broadened Applicability of years, (b) a list of all other cases in which, posted on Facebook, Instagram, Twitter, or the amendments significantly affected (1) Expedited Action Procedures during the previous four years, the expert tes- any other available social media platforms as Rule 194 initial disclosures, (2) the appli- tified as an expert at trial or by deposition, long as some type of evidence indicates the cability of Rule 169 expedited action pro- Under Rule 169 and (c) a statement of the compensation to defendants will learn of the case and could cedures, (3) Rule 195 expert designations, Texas Rule of Civil Procedure 169 “expe- be paid for the expert’s study and testimony not be served through traditional methods. (4) Rule 106 service methods, and added dited action” procedures apply limited dis- in the case. (5) Rule 194.4 pretrial disclosures. Though covery and expedited trial settings for cases Prior Rule 195.2 required disclosure of there are additional amendments, this article under a certain amount in controversy. experts at the same time as initial disclo- Required Pretrial Disclosures is limited to these five important aspects of The maximum amount in controversy for sures. Although the information required as Under Rule 194.4 the 2021 amendments. For Rules 194, 169, part of the expert designation has expanded Rule 169 to apply was previously $100,000, Amended Rule 194.4 provides that par- and 195 these new requirements apply for all under Rule 195, the new timing rule could but amended Rule 169 has increased this ties file and serve information regarding cases filed on or after January 1, 2021. The have competing impacts on parties’ abilities amount and now applies to lawsuits in which witnesses, documents, and other exhibits new service options under Rule 106 became to quickly retain and prepare for rebutting the claimant seeks monetary relief aggre- (including summaries of evidence) that they effective on December 31, 2020. expert testimony. gating $250,000 or less (excluding interest, may present at trial other than solely for punitive or statutory damages and penalties, impeachment. Unless the court orders other- Initial Disclosures Now attorneys’ fees and costs). Any party may Expanded Service Under wise, these disclosures must be made at least still file a motion and showing of good cause, 30 days before trial. HN Required Under Rule 194 prompting the court to remove the suit from Rule 106 the expedited process. The court must still The amendment to Rule 194 replaces Amended Rule 106 expands the meth- Nicole Williams is the Managing Partner of Thompson Coburn’s “requests for” disclosures with a mandatory set the case for a trial date that is within 90 ods for service of citation. Specifically, Rule Dallas office. Mackenzie Wallace is a Partner at the firm. They can disclosure requirement similar to the dis- days after the discovery period ends. Further, 106(b) now specifically allows a court— be reached at [email protected] and mwallace@ closure requirement in the Federal Rules of amended Rule 190.2 increases the aggregate upon a motion supported by a statement thompsoncoburn.com, respectively. Civil Procedure. Under amended Rule 194, amount of oral deposition time permitted for disclosures are due within 30 days after the expedited actions from 6 hours to 20 hours. first answer is filed. Further, a party cannot serve discovery until after the initial disclo- Altered Expert Designations sures are due, unless otherwise agreed to by the parties or ordered by the court. Under Rule 195 Client Development—Speak at a DBA Program The initial disclosure-content require- Amended Rule 195.2 provides that par- Interested in sharing your legal knowledge and expertise with your colleagues? The CLE Committee ment under amended Rule 194 is similar to ties seeking affirmative relief must designate that required to be disclosed under the previ- experts 90 days before the end of the discov- is looking for speakers and hot topics for the Friday Clinic programs it holds throughout the year. ous version of Rule 194. However, the parties ery period, and all other experts must be des- Please submit a short bio, title, and 2-3 sentence description of your presentation to yhinojos@ must now also disclose a computation of each ignated 60 days before the end of the discov- dallasbar.org. Submissions will be discussed at monthly CLE Committee meetings. category of damages and provide copies of ery period, unless otherwise ordered by the documents in support of such computation, court.

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D U F F E E+ E I T Z E N FA M I LY L AW | D - E L AW.C O M 22 Headnotes l Dallas Bar Association July 2021

In The News

neys who represent corporate and insurance Rasor Boulevard, Suite 61, Plano, Texas Sadaf Abdullah joined Ericsson Inc. as In- KUDOS interests. 75024. (214) 556-3862. House Counsel. P. Lindley Bain, of GoransonBain Ausley, has been elected Managing Partner. Wendi Rogaliner, of Bradley Arant Boult Mackenzie Wallace joined Thompson Lindsay Hedrick joined Honeywell as Chief Cummings LLP, will serve on the Journal of Coburn LLP as Partner. Labor and Employment Counsel in their Vynessa Nemunaitis, of Weil, Gotshal & Health and Life Sciences Law editorial board. Houston office. Manges LLP, has been chosen as a member Patrick Knapp joined Jackson Walker as of the 10th anniversary class of Leadership Jennifer Ryback, of McGuire, Craddock & Partner. Amber Hamilton Gregg joined Suzanne I. Council on Legal Diversity Fellows. Strother, P.C., has been named 2020-2021 Calvert & Associates as In-House Counsel. DAYL Outstanding Young Lawyer. Michael Gaston-Bell has rejoined Haynes Frank Stevenson, of Locke Lord LLP, has and Boone, LLP as Counsel. Lawrence A. Waks joined Reed Smith LLP been elected President of the Western States Hilda Galvan, of Jones Day, received as a Partner. Bar Conference. the Sarah T. Hughes Women Lawyers of Elizabeth Ryan and Stephen Iya have joined Achievement Award from the State Bar of Weil, Gotshal & Manges LLP as Partner and Chisara Ezie-Boncoeur joined Barnes & Tom Leatherbury, of Vinson & Elkins LLP, Texas and Law Section. Associate, respectively. Thornburg LLP as Of Counsel in their received the Patrick Wiseman Award for South Bend, IN, Dallas, and New York Civil Rights in recognition of his outstand- Yvette Ostolaza, of Sidley Austin, has been Jason Weber joined Polsinelli PC as Share- offices. ing contribution to the civil rights and lib- named Chair-Elect of the firm’s Manage- holder. erties of all Texans from The Civil Liberties ment Committee. Mary Goodrich Nix joined Lynn Pinker & Civil Rights Section of the State Bar of A. Raylee Starnes joined Crowe & Dunlevy Hurst & Schwegmann LLP as Partner. Texas. Terry Bentley Hill, of The Law Offices of as an Associate. Terry Bentley Hill, has been appointed Vice Lisa M. Sotelo opened the firm Sotelo Immi- Rogge Dunn, of Rogge Dunn Group, PC, Chair of the State Bar’s Texas Lawyers Assis- Chandler Stephens joined Munck Wilson gration Law Group, located at 15455 Dallas has been recognized by SMU for his long- tance Program for 2021-2022 Mandala as an Associate. Parkway, Suite 600, Addison, TX 75001. time support and contributions with the (214) 732-1930. naming of the Rogge, Cathy and Ross Dunn Meyling Ly Ortiz, of Toyota Legal One, Nicholas Low joined Nicolaides Fink Thorpe Classroom in the James M. Collins Execu- Toyota Motor North America, Inc., received Michaelides Sullivan LLP as an Associate. Craig Carpenter joined BakerHostetler as tive Education Center. the Association of Corporate Council’s Pro Partner. Bono and Public Service Award. Former Justice Bill Whitehill joined Con- Chris Schwegmann, of Lynn Pinker Hurst don Tobin Sladek Thornton Nerenberg as a Holt Foster joined Sidley Austin as Partner. & Schwegmann LLP, has accepted an invi- Member. tation to join the International Association ON THE MOVE Chandler Winslow joined GoransonBain of Defense Counsel, the preeminent invita- Chris Kruppa Downs opened the firm Jessica Hammons and Wesley Williams Ausley PLLC. tion-only global legal organization for attor- Krupa Downs Law, PLLC located at 8105 joined Akin, Gump, Strauss, Hauer & Feld, L.L.P. as Partners. News items regarding current members of the Dallas Bar Association are included in Kirby Drake opened the firm, Kirby Drake Headnotes as space permits. Please send your Law PLLC, located at 3904A Elm Street, announcements to Judi Smalling at jsmalling@ July Friday Clinic Dallas, TX 75226. (214) 207-2286. dallasbar.org Friday, July 16, Noon “Autonomous Vehicles,”Quentin Brogdon | MCLE 1.00 Avoiding the “Accidental” Franchise Register online at www.dallasbar.org. often unclear. CONTINUED FROM PAGE 1 In summary, franchise, distribution, and control; however, unlike a franchise, the license agreements primarily differ based on licensor does not have a significant degree whether they include “significant” control SAVE of control over the licensee or provide or assistance. Practitioners should be cau- the licensee with significant assistance. tious of any control or assistance included Drafting a license agreement that bal- in these agreements to ensure that an acci- THE ances the licensor’s need to maintain its dental franchise is not created. HN intellectual property rights while avoid- DATE ing creating a franchise can be incredibly Erica Mahoney is an attorney at Mullin Rybicki, P.C. She can be difficult, and the line between the two is reached at [email protected].

Mark your calendars for Friday, July 23 | Noon - 1:30 PM Hosted Virtually DBA/DAYL Moms in Law Being a working mom can be challenging. Being a working lawyer mom In this program Law Students will: can be a different ballgame with its own unique challenges. Moms in Law is a no pressure, no commitment, informal, fun, support group for • Gain insights through a “Been there, did this” lawyer moms. focus on how to best position themselves in the unknown job market of 2021 and beyond Email [email protected] to join the Moms in Law email listserv. • Learn from a recent law school graduate who will present lessons learned as a new lawyer as well as the experiences of job transitioning

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• Attend breakout sessions facilitated by DBA ADVERTISE HERE! members that will include professionalism discussions through situations they may Don’t miss your opportunity to experience during school and in law practice advertise (print & online) in the #1 “Legal Resource & Expert Witness Guide” in Dallas County. Visit DallasBar.org for more details & registration information. For more information, contact (214) 321-3238 or [email protected] July 2021 Dallas Bar Association l Headnotes 23

Focus Business Litigation/Franchise & Distribution Law Full Disclosure: Reducing Risk for LLC Managers duty. See Tex. Bus. Orgs. Code §§101.451- an LLC to draft its company agreement BY WADE MCCLURE Practical Takeaway AND COURTNEY KENISKY 101.463. in a way that could “expand or restrict” Thus, either: (1) a redemption agree- any duties (including fiduciary duties) of In today’s business world, the entity of What Leads to a Breach of ment where a member’s interest is purchased a member, manager, officer, or other per- choice is often a Texas Limited Liability back by the LLC, or (2) a direct purchase son. See Tex. Bus. Orgs. Code §101.401. Company (LLC). Savvy business leaders Fiduciary Duty Claim? agreement where the managing member sells Although it is not clear whether this pro- tend to favor LLCs for their simplicity and Some examples of situations that could his interests in the LLC to another member, vision can be used to eliminate fiduciary lack of regulation. But as the LLC’s popular- lead to a claim for breach of fiduciary duty could open the door to potential claims for duties completely, including exculpatory ity continues to grow in Texas, so does the against a managing member include: (1) the breach of the fiduciary duties of full disclo- language in the company agreement when body of case law and legal issues associated managing member forgoes a business oppor- sure and loyalty. While Texas courts have the LLC is initially formed could provide with the LLC. Importantly, the business cli- tunity for the LLC, then enters into the same shown a reluctance to go further than the some protection. ent should understand the potential fiduciary opportunity for their personal benefit, or for specific facts of the case before them, the Because of uncertainty as to how far duties owed to the LLC and its members, as another Company they own or control; (2) trend in Texas case law is clear—the greater such a contractual limitation could pro- well as how those duties might impact other the managing member purchases a property the personal stake the managing member has tect the managing members, the best transactions between the LLC’s members. or product from one of the managing mem- in the transaction or occurrence at issue, the practice for the managing member is to Neither the Texas Limited Liability ber’s other companies for an inflated price; or more likely the court will find fiduciary duties document his or her “full disclosure” of Company Act (TLLCA) nor the subse- (3) the managing member sells a product to exist and have been breached. A potential all facts related to any transaction with quently-enacted limited liability provisions one of the managing member’s other compa- concern could also exist even when the another member of the LLC. The manag- of the Texas Business Organizations Code nies for a reduced price. managing member enters into a completely ing member may need that proof later on (TBOC) directly impose fiduciary duties on Other, less obvious transactions may also separate transaction with another member of if the other member suffers from “buyer’s an LLC’s managers or its members. However, lead to breach of fiduciary duty claims. In the LLC. No Texas case has gone this far, but remorse” and pursues a claim for breach of numerous Texas cases have found the exis- fact, any transaction between a managing a creative lawyer may attempt to “push the fiduciary duty. HN tence of fiduciary duties for managing mem- member and another member of the LLC envelope” here under the right fact pattern. bers of an LLC. While there is no bright-line can potentially lead to a breach of fiduciary Wade McClure and Courtney Kenisky are attorneys at Mayer LLP. test, Texas Courts have found that manag- duty claim. As a recent unpublished opinion Ways to MinimizeOffice Sp theace , RisksPosition WanTheyte dcan, be reached at [email protected] and ckenisky@ Office Space, Position Wanted, ing members owe fiduciary duties to the from the Dallas Court of Appeals warns, any Importantly,P othesit iTBOCons Av aalsoila ballowsle, Se rvimayerllp.com,ces respectively. LLC and the other members because of the situation in which the managing member Positions Available, Services amount of control and responsibility given to could be viewed as using his personal situa- Office Space, Position Wanted, the managing members, most often through tion to benefit him or herself will be exam- the LLC Company Agreement. Because ined. Cardwell v. Gurley, 2018 WL 3454800 PCositlioans Asvasilaiblfe,i Seervdices a manager or a member acts as the LLC’s (Tex.App.—Dallas 2018, pet. denied). Simi- Classified agent in many situations, some Texas courts larly, another court found that a managing Ads have imposed fiduciary duties on members member of an LLC owed a fiduciary duty ClaAsdsisfied and member managers of an LLC based on to another member of the LLC in connec- analogies to agency law. See, e.g., ERTG tion with the repurchase of the other mem- available Invs., LLC v. Hardee (In re Hardee), 2013 ber’s interests. That court reasoned that the Ads WL1084494 (Bankr. E.D. Tex. 2013). The managing member had powers and responsi- Online fact that the TBOC allows LLC members bilities akin to that of a general partner and Online to directly bring derivative proceedings also available ultimately held that a fiduciary relationship Contact Judi Smalling demonstrates that lawmakers intended to Contact Judi Smalling arises when the managing member has spe- [email protected] provide a mechanism to hold LLC manage- [email protected] cial knowledge and a personal interest in the 214-220-7452 ment accountable for breaches of fiduciary outcome. 214-220-7452 Cownwtawc.dt aJluladsi bSamra.olrligng [email protected] 214-220-7452

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