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Welcome to the Salisian | Lee LLP Newsletter
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Welcome to the spring edition of our newsletter. As always, we aim to provide you timely and useful insights into recent legal, regulatory and industry news in a brief, accessible and interesting way. We look forward to your feedback and to any suggestions you might have on how we can improve our efforts in this regard.
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Firm News
New Hire: A new associate, Tyler Sanchez, joined our team in January. Read his bio to find out more.
Advancement: Natalie Rastegari has been elevated to Senior Counsel. Read her bio to find out more.
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Legislative Update: New and Notable California Laws
Assembly Bill 2345: Effective as of January 1, 2021, AB 2345 amends the Density Bonus Law to expand and enhance development incentives for projects with affordable and senior housing components. The law aims to boost housing production and provide developers more incentives to build affordable housing units.
Minimum Wage Increase: On January 1, 2021, California's minimum wage was increased to $13 per hour for employers with less than 26 employees, and $14 per hour for employers with more than 26 employees. The state minimum wage is set to keep increasing by $1 every January until 2023, when all employers, regardless of size, will be required to pay employees at least $15 an hour.
Senate Bill 973: Beginning March 31, 2021, a private employer with 100 or more employees must file an annual Employer Information Report to the California Department of Fair Employment and Housing (DFEH) that includes information about race, gender, and wages. The law aims to help determine whether minorities are being discriminated against in pay.
Assembly Bill 3075: Under AB 3075, companies have expanded successor liability for labor code judgments. Specifically, if a business acquires another business, whether by a merger or through consolidation (and with whom they have similar operations), it could be held liable for any wages, damages and/or penalties owed by the the previous owner to employees. This law became effective January 1, 2021.
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Topics Making Headlines
▪ To Remote Work and Beyond: Four Tech-spectations from the Post-Pandemic Legal Community
▪ Embracing the Momentum of the 2020 Protests to Advance Racial Diversity for CA Businesses
▪ No Easy Path to Risk Mitigation in the Age of COVID-19
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To Remote Work and Beyond: Four Tech-spectations from the Post-Pandemic Legal Community
By Tyler Sanchez, Associate
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The legal industry embraces technological change about as quickly as the Titanic avoiding an iceberg... or perhaps even as slowly as that iceberg melted in the North Atlantic. In March 2020, however, widespread lockdown orders resulting from the COVID-19 pandemic forced the legal industry to sink or swim. Law firms – large and small – scrambled to adapt and survive. Many did so by finally modernizing their ancient infrastructure. Others discovered as unfounded their long-held fear that work from home would cause a precipitous decline in productivity. And others still questioned the high overhead costs of expensive office space, parking, and travel. Even in the court system, judges and officers surprised us all by embracing the efficiency and effectiveness of using remote appearances.
While a return to pre-COVID "normalcy" may still feel distant or impossible to many, the legal industry should first ask if returning to that archaic normal is ideal. It is, of course, neither realistic nor desirable that constant remote work should continue, in its current form, after the pandemic ends. A major downside of the lockdown orders, from a legal practice perspective, is the loss of face-to-face interaction that fosters the collaborative spirit that sets great attorneys apart from good attorneys. There are, however, ways to blend the pre-pandemic legal world with some of the innovations advanced by the legal industry's adaptation to the pandemic. Here are four to expect in the post-pandemic legal community:
1. Effective Integration of Technology within Law Firms
The pandemic and lockdown orders exposed the legal industry’s failure to stay current with technology. Forced to comply with stringent orders keeping most of the work force at home, law firms quickly discovered that their technological infrastructure was woefully inadequate for effective remote work. Some, of course, had already seen the value of technology and, thus, were better equipped to transition their teams accordingly. Those who had not, however, were left with a choice to either weather the pandemic or invest in updating their technological infrastructure. Moreover, with courts mandating or strongly encouraging the use of remote technology, even the most ardent opponents of using technology were forced to at least adopt some new systems, like videoconferencing, for the first time. Hearings, depositions, and even trials were conducted via videoconferencing technology.
Once the pandemic begins to loosen its grip on society, the legal community will reopen to in-person business. Most hearings, depositions, and trials will return to their pre-pandemic forms. Employees will once again fill offices and downtown streets. Firms who overhauled their technological infrastructure, however, will not be keen to let such a significant investment of time and capital sit dormant after the pandemic. Rather, the legal community will likely more effectively integrate technology with tradition.
Video depositions and hearings are here to stay, even if curtailed by the roll back of pandemic emergency orders. Employees will continue to expect greater flexibility using technology to maintain effective workflow inside and outside the traditional office setting. Courts will expect attorneys to be able to use the new technology to lessen the burden on the court system. The systems accentuated and advanced over the last year will help firms to find cost-saving measures. Simply, the technology used to keep the legal industry afloat over the past year is here to stay, in some form or another, indefinitely.
2. Greater Flexibility for Employees and Employers
Prior to the pandemic, much of the legal industry valued the traditional in-office model and disapproved of remote work. A major concern was that employees’ productivity and reliability would suffer if not within the confines of a structured, overseen environment keeping employees on task. While some firms allowed for flexibility, most strongly encouraged the traditional model. After the pandemic forced many employees to work from home, many law firms discovered that, in fact, there was very little difference in the overall productivity of their employees.
For employees, the benefit was apparent: time. Employees were able to regain lost time resulting from dressing for, and commuting to and from, work. Some of that regained time went into self-care, family time, and more work. Of course, there were exceptions. Forced remote work amid a pandemic brought some disadvantages, including feelings of isolation, childcare issues, and lack of effective work environments.
Going forward, widespread remote work, as currently constituted, is unlikely to continue. Firms will call most of their employees back to the office and some employees will be happy to separate work from home once more. Other employees, however, will lament the loss of flexibility that work from home created. The best firms will balance these two factions by implementing greater flexibility for employees to blend the traditional in-office model with the newly discovered work from home model. Moreover, the most desirable candidates will expect such flexibility from firms in deciding where to work.
3. Expanded Use of Remote Appearances in the Courts
Once the pandemic shut down much of society, the court system had the unenviable task of balancing constitutional and statutory obligations with the health and safety of court staff. The immediate, and continuing, effect was a significant increase in the use of remote appearances. While courts allowed remote CourtCall appearances pre-pandemic, in-person appearances were the preferred method. After the pandemic shutdown, however, remote appearances were either mandated or strongly encouraged by courts. LA Superior Court even forged ahead with its own remote video appearance platform, LA Court Connect, and mandated its use.
Remote appearances allowed mundane appearances, such as case management conferences, to be less strenuous and time consuming for both attorneys and the court. Further, there seemed to be an increase in the use of informal discovery conferences to avoid unnecessary motion practice by allowing courts and parties to conduct them efficiently during "off hours".
The transition to remote appearances, however, was not without its issues. The technology was often difficult to use and troubleshoot. The lack of technological prowess on the part of judges and attorneys caused frustration. The oratory skill of attorneys and judges alike were diminished by poor sound quality and awkward pauses while parties often talked over one another – either unintentionally or not. The effectiveness of presenting arguments and evidence to judges and juries was questionable. Even the appropriateness of remote appearances is still being challenged.
In the post-pandemic world, in-person appearances, especially on dispositive motions and trials, will again become normal. Remote appearances, however, will not return to their pre-pandemic lows. Rather, the legal community, both practitioners and courts, will be much more comfortable with the use of remote appearances to efficiently unclog the court of in-person appearances at case management conferences and status conferences. Parties will be able to continue to use remote appearances to get judicial assistance, short of motion practice, to quickly resolve discovery disputes. While it is doubtful that courts will mandate the use of remote appearances in these situations, it is likely that, if not outright encouraged, remote appearances will become more acceptable.
4. Reassessment of Overhead Costs in the Legal Industry
The most unknown effect of the pandemic-caused remote work for the past years is the long-term ripple effect it will have on staples of the legal industry: office space and travel. Having office space – often opulent office space in high priced, desirable locations – was essential to law firms in the pre-pandemic world. Firms spent fortunes on rent, parking, design, and decor. These kinds of offices were essential both as a comfortable workspace for employees and as a selling point to potential clients.
Now that much of that expensive office space sits as a dormant money pit and firms are reconsidering integrating remote work after the pandemic, many firms are reassessing the need for such offices. Firms are considering significantly reducing the number and size of offices. They are also thinking innovatively to implement such strategies as "hoteling" offices – book a day, a week, a month etc. in a shared office with a view.
The shift by the legal industry of its focus away from prime office real estate will have an astounding domino effect ending in litigation, economic ruin for some real estate ventures, and an eventual repurposing of office space. It will also result in a windfall for law firms in significantly reducing their overhead expenses. Whether those savings will trickle back to clients or employees will be the most interesting question.
Similarly, the "new normal" created by the pandemic coupled with the integration of technology will cause firms, and clients, to question the necessity of business travel in the legal industry. Prior to the pandemic it was commonplace for an attorney(s) to fly across the country for a deposition, even ancillary depositions. The cost of flights, food, hotel space, and other travel expenses were shifted to clients or absorbed into the firm budgets. Both firms and clients will now have to think twice about whether to spend hundreds, or thousands, of dollars for a deposition that could be done via videoconference.
It is undeniable that the COVID-19 pandemic has reshaped the world, generally, and the legal industry, specifically. Effectively implementing new strategies and policies integrating technology and focusing on flexibility and cost-saving will determine the success of firms in the post-pandemic world. For the traditionally sluggish, change-adverse legal industry, the pandemic-necessitated remote work has moved it lightyears ahead.
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Embracing the Momentum of the 2020 Protests and Advancing Racial Diversity for California Businesses
By Glenn Coffman, Associate
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The year 2020 will not only be remembered rather infamously for the coronavirus pandemic, but also potentially as a significant turning point for many other aspects of American society. In addition to issues of public health and shifts in workplace operations, the summer of 2020 served as a moment of racial reckoning for many.
Due to a combination of national and statewide lockdowns, business and school closures, rising unemployment, a particularly polarizing election year, the inundation of media coverage, and a generally homebound public, the summer months created a perfect climate for the manifestations of these frustrations to be heard, and culminated in a refusal to allow them to be ignored any longer. While the main trigger for these protests undoubtedly revolved largely around problematic, systemic issues in policing, the civil unrest also forced Americans to reckon with the more deeply-rooted and greater injustice of systemic racism generally. And as Americans know, or are now becoming aware, such systemic injustices permeate our everyday life whether we know it or not, and permeate beyond to individual to stain the corporations and businesses in our midst.
On September 30, 2020, California Governor Gavin Newsom signed into law A.B. 979. Prior to this, existing law required publicly held domestic or foreign corporations whose principal executive offices are located in California to have a minimum of one female director on their boards by the end of 2019. By the end of 2021, corporations with 5 or more directors would need to have a minimum of 2 female directors, and those with 6 or more directors to have a minimum of 3 females on the board. AB 979 now supplemented these requirements, such that by the end of 2021, all such corporations were to have at least one director from an "underrepresented community," and by the end of 2022, all boards with four to nine members must have at least two such members, and boards with more than nine members must have at least three members from an underrepresented community. The bill further defined "Director from an underrepresented community" to mean "an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender."
The passage of AB 979 marks a victory for racial equality in the context of mandating more ethnically-diverse corporate boards. However, the mandates of AB 979 are merely a starting point, and it will be on California's companies and businesses to carry the commitment to diversity and promote real change. Throughout the summer protests, companies and businesses throughout the nation publicized support for the Black Lives Matter movement and the general idea of diversity and social justice through various displays, press releases, monetary donations and pledges, and various symbolic gestures. The extent to which these gestures amount to more than hollow statements deemed by these companies to be "necessary" in the moment remains to be seen. Early criticism of AB 979 already points to the requirements lacking clearly articulated standards for compliance, setting the stage for litigation down the road.
Prior to the summer protests, and due to the harsh economic realities of the pandemic, many companies were forced to make adjustments to their budgets. One area that many feared would be negatively impacted was companies' diversity programs, despite overwhelming evidence of the overall benefits to companies of diversity in the workplace. However, due at least in part to the protests, this fear has largely not materialized.
Many companies have taken such efforts seriously – either before, throughout, or following the summer protests. Monetary contributions in the short term have manifested, but a focus on long-term investment in diversity should be the goal. Tangible steps for companies to take are not always clear as many diversity programs have drawn criticism for generating much talk, but little change.
One way to promote and stimulate diversity in the workplace is to reassess and improve the diversity and inclusion programs that already exist in the workplace. While many, larger companies already have the infrastructure in place for championing diversity – the programs tend to focus on mentorship, or on the needs of underrepresented employees as they arise. Industry professionals suggest that the effectiveness of such existing programs can be enhanced with more of a focus on hearing from employees and members of these programs on issues of outreach, addressing certain bias-related blind spots, and overall feedback from more diverse perspectives.
Another initiative to address the concerns of racial equality and opportunity in the business landscape is to modernize and require unconscious bias training. Such trainings work to change and improve existing workplace culture, to allow for a more inclusive environment and opportunities for all employees to thrive. Many larger companies already have tried to incorporate bias training in the past, the programs have often lacked authenticity or the requisite input from underrepresented groups, and, accordingly, often lack in appreciable return on investment for underserved groups.
Next, while laws like California's AB 979 work to increase diversity at the board level, companies should also, and perhaps more importantly, focus diversification efforts company-wide through more effective recruiting. This includes recruiting in more diverse spaces and seeking to attract more diverse talent. Once recruited, these employers should benefit from concrete steps to nurture and retain that talent.
As the nation evolves – and California continues to lead – in promoting diversity and eliminating systemic injustices, California businesses should embrace the momentum created by the summer protests, and remain proactive in embracing and promoting diversity across all industries.
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No Easy Path to Risk Mitigation in the Age of COVID-19
By Isabelle Vidro, Associate
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Since the outbreak of the novel coronavirus in March of 2020, it feels that the onslaught on all us – businesses, individuals and institutions – has been relentless. Globally, we have faced what seems like back-to-back historical events. With the ever-changing social and political landscape of our country alone, it can be difficult to best understand how to protect oneself and one's family, much less one's livelihood or business, from unnecessary risk. Litigation in particular, is on the rise.
As the pandemic continues, businesses should consider developing an action plan in the event of litigation or a COVID-19 related litigation-precipitating event. The re-opening of businesses presents many litigation risks for businesses. Fortunately, there are many ways for businesses to limit the potential risk of litigation related to COVID-19.
For example, a business may elect to retain legal counsel from whom to gain strategic and legal advice. A qualified attorney may be able to assist in evaluating risk in potential litigation. Additionally, he or she may be useful in negotiating with public authorities and guiding public relation statements. In any potential litigation, decisions will be made better with the guidance of experienced and knowledgeable counsel – but this is especially true in a time when compliance requirement alterations and legislative changes are set to warp speed.
Alternatively but similarly, it may be useful for businesses to engage a third-party to audit COVID-19 safety policies, practices, and daily operations. Civil liability is largely based on a failure to act with reasonable care. In the context of COVID-19, reasonable care may be demonstrated by compliance with guidelines set by the CDC and relevant state agencies. An effective audit should include a comprehensive review of a company's compliance with the CDC and state guidelines and, if necessary, recommendations for compliance improvements. A demonstrated fidelity to legal compliance will significantly improve a business's ability to defend against civil liability.
It may also be useful for businesses to ensure that they have complete and current copies of their insurance policies. Notably, businesses should confirm whether the policies need to be renewed or reviewed to account for specific COVID-19 related risks. Additionally, businesses should become aware of, and comply with, any obligations of their insurance policies to insure compensation eligibility in the event claims present themselves.
Unfortunately, however, insurers and their associations have indicated that most policyholders have not acquired insurance coverage that will respond to business interruption losses resulting from COVID-19 business closures. In most countries, business interruption coverage is provided as an optional coverage attached to commercial property insurance. If applicable, such coverage is triggered only as a result of damage to the physical property. About 15 years ago, an exclusion was developed specifically with the aim of excluding coverage for losses due to virus. Although, some explicit coverage for business interruption losses resulting from a pandemic has become available, it might still be limited.
While insurers agree that not everything is insurable and that predictability is a central tenet of insurance, pandemic exposures were never intended to be covered by business interruption policies. Insurance may not be a workable solution in this area given the widespread effect of COVID-19 on most countries, the number of infected persons, the broad effect of the virus, and the difficulty in devising an equitable premium that would be both affordable and provide meaningful coverage benefits to buyers.
Another important way to mitigate a business's risk is to identify, locate, and preserve records relevant to potential litigation or litigation-precipitating events. Records can aid in a business’s defense in the event that litigation does arise. If a business is unsure of which records may be relevant, legal counsel can help provide some guidance.
Finally, in the event that a probable or confirmed case of COVID-19 occurs in a business, it is best to respond according to a strategic plan that is based on federal and state standards. Many states have a particular protocol that must be followed in the workplace. Even if such standards are not in place, an organized framework with clearly defined policies and well-established criteria for compliance is the best way to manage anything from a confirmed case to a serious outbreak of COVID-19 in the workplace.
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Legal Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of California.
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