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KPMG legal services division reports record revenue growth

KPMG’s legal services division revenue rose by more than 30 percent in 2018 in a record-setting performance, according to the firm that expects growth to continue in a burgeoning market that’s stoking concerns among traditional law firms about potential competition.

Such fast-paced expansion into the legal sector is in line with the three other Big Four accounting firms—Deloitte, EY, and PwC. Each has made major inroads into global legal services recently in jurisdictions outside the US where these firms are allowed to practice law.

KPMG said in a press release that its legal practice added 20 partners last year, expanding to more than 2,300 legal professionals worldwide.

The Big Four differ from most traditional law firms in that they offer many other services to clients aside from just legal advice, often leveraging their capabilities in tax, audit, technology and consulting.

The 30 percent growth includes revenue stemming from various legal services offerings, including mergers and acquisitions, tax law, global entity management, compliance matters, and legal tech solutions, Jurg Birri, KPMG’s global head of legal services, told Bloomberg Law in a written statement.

When asked how legal services growth at KPMG compared with that of other Big Four players, Birri said, “We are focused on providing forward-thinking and technology-led approaches and solutions for clients, in addition to more traditional legal services offerings. I can’t speak for the other firms, but at KPMG Global Legal Services, we have seen tremendous growth in terms of revenues and headcount, and expect that to continue.”

Birri added in a press release that he expects future activity for KPMG’s legal arm to come in part from “high-growth markets like China.”

KPMG said last month that it had expanded its law offerings to Hong Kong through its new affiliated legal practice, SF Lawyers. KPMG hopes to grow that office to 20 attorneys in its first year. At the same time, the firm expects to open an associated office in Shanghai later in 2019.

KPMG attributes part of its legal sector progress to the launch of its new Legal Operations and Transformation Services units that aim to assist legal departments in streamlining their operations.

That service is available across KPMG’s global network of lawyers and offers departments help with advancing their legal technology and finding proper sourcing for their work.

KPMG’s announcement comes as its professional services peers have made similar entrees into legal markets in Asia, South America, and the Middle East. Last September, for example, EY touted its extended legal services reach to more than 2,200 legal practitioners in more than 80 countries.

The Big Four are restricted by regulations and state bar rules from opening law offices in the US that serve domestic clients. Yet some have managed to gain a foothold, which has served to stoke concerns among US law firms about the possibility they may someday face tough competition from companies with significant size, international scope, advanced technology, and revenue advantages.

For example, PwC opened ILC Legal in Washington on 2017. That firm’s five lawyers—referred to on the firm’s website as partners and “special legal consultants”—only advise clients on international matters, and do not offer clients US legal consultation.

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New York gets more worker-friendly

Last week, Suffolk County became the latest jurisdiction in New York State to pass a so-called salary history ban law.

The county joins New York City, Westchester, Albany and other municipalities in the state in prohibiting employers from asking job applicants about their prior salary.

The intent of the salary history ban law, which takes effect in Suffolk on June 30, 2019, is to reduce pay inequality for women and minorities, and it is part of a larger trend on the state and local levels to increase workplace protections for employees.

“There have been several new laws passed in the state, and more so in New York City, over the last year or so that create added challenges for employers,” said Tony Dulgerian, a senior associate in the labor and employment practice group in the Jericho office of national law firm Nixon Peabody.

New laws come with compliance requirements and added costs, which “can be very challenging for small employers,” said Gregg Kligman, an associate in the employment law practice at Meyer, Suozzi, English & Klein in Garden City.

New York State passed a new law in April requiring all employers who operate in the state to have a sexual harassment prevention policy in place by this past October and to conduct annual, interactive training of all employees. All workers in the state must be trained by Oct. 9, 2019, and by April 1, 2019 in New York City.

“The training has to be interactive, and that’s the key,” Dulgerian said. “In-person training is the best option, but for employers with a scattered workforce or tens of thousands of employees, it’s hard to do it in-person.”

Paid family leave took effect in New York State this year, and it will be stepped up in 2019. Employers were required at the start of this year to ensure that all eligible employees have paid family leave coverage, which is set up through an insurance policy and financed through employee payroll deductions.

In its inaugural year, eligible employees were entitled to eight weeks of leave at 50 percent of their average weekly wage or 50 percent of the state’s average wage, whichever was lower. In 2019, the coverage increases to 10 weeks at 55 percent of pay, with a cap of $746.41. The maximum employee contribution for the year is $107.61.

With paid family leave, employees can take leave for bonding with a new child, whether biological, adopted or foster; caring for a sick family member, which could be a child, parent, parent-in-law, grandchild, grandparent, spouse or domestic partner; or spending time with a spouse, child, domestic partner or parent on active military duty or who has been notified of an impending call or order of active duty.

Many employers continue to have questions about the interplay between paid family leave and benefits on the federal level.

“PFL interacts with the Family Medical Leave Act, short-term disability benefits, employee vacation and sick time, and if the company has its own paid parental leave policy, it interacts with that,” Dulgerian told LIBN earlier this year. “It’s like a gigantic Venn diagram. Everything has to work together, and it has been really challenging for clients.”

Both FMLA and PFL require that the employee’s job (or an equivalent one) be guaranteed upon his or her return, but there are important differences between the two. Unlike PFL, FMLA is unpaid. Also unlike PFL, FMLA allows for leave for the individual’s own health issue, but not to care for grandparents, grandchildren or domestic partners. And PFL covers all private-sector employers regardless of size while FMLA only applies to larger employers (there must be 50 employees within a 75-mile radius of the office).

Many Long Island employers are not large enough to be impacted by FMLA and therefore have no experience dealing with protective leave. And employers with small teams may struggle disproportionately if they have to keep a job open for an extended period.

“Larger employers generally have the capacity to handle it,” Dulgerian said. “But employers have to figure it out. There’s no exception for undue burden under the PFL. Employers would be well-advised to prepare for it, such as having a temporary staffing firm at the ready. You don’t really know when you will receive a request for leave. A lot of people think it’s only for new parents, but it could be taken for many reasons, such as to care for a family member who is seriously ill or if a family member is about to go to the military.”

Dulgerian added that there is pending legislation to add bereavement as a reason for taking PFL.

The minimum wage will go up again this January, “and that has a whole bunch of issues associated with it,” Kligman said.

Large employers in New York City will have to pay workers at least $15 per hour, while their smaller counterparts will have to pay a $13.50 hourly minimum. Employers in Long Island and Westchester will have to cough up at least $12 per hour, up from $11 in 2018, and elsewhere in New York State, the minimum wage rises to $11.10 per hour.

While employees who make slightly above the minimum wage may expect an increase, as well, “that’s up to the employer’s discretion,” Kligman said.

The minimum salary for employees to be classified as exempt from overtime will also go up at the start of the year, Kligman said. In New York City, the minimum will be $1,125 per week for large employers and $1,012.50 for small employers, while the minimum on Long Island will rise from $825 to $900 per week. Employees whose earnings fall below that threshold must be eligible for overtime pay, regardless of their job description or responsibilities.

On the federal level, the complex web of laws governing the employer-employee relationship became more worker-friendly during the eight years of Barack Obama’s presidency. When the administration changed, the pendulum began to swing back in the other direction – in favor of employers. For instance, several worker-friendly National Labor Relations Board decisions from the Obama years have been overturned.

But as a new president can’t change all the policies and laws right off the bat, “the pendulum swings slowly on the federal level,” Dulgerian said.

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A look at Kentucky’s new Power of Attorney statutes

Kentucky’s Power of Attorney (“POA”) laws just received an update. Effective July 14, 2018, Kentucky adopted portions of the Uniform Power of Attorney Act (2006) drafted by the Uniform Law Commission (“ULC”). Even though Kentucky did not adopt Articles 2 or 3 of the uniform act (which address specific powers granted to the agent and a sample form), the new statutes will provide much needed clarity in replacing our previously sparse statutes.

Generally speaking, a POA is an instrument by which a person (called, the principal) designates another (called, the agent or attorney-in-fact) to deal with the principal’s property and act on the principal’s behalf, either out of necessity or mere convenience. Often, a POA will be designated as “durable,” meaning it remains in effect even after the principal loses the capacity to manage his or her property.

POAs are governed by state law, which can mean that a single instrument can be interpreted in very different ways from one state to the next. The ULC has promoted the adoption of a uniform law across the country in an effort to reduce these potential inconsistencies for principals who move from one state to another or own property in multiple states. According to the ULC, Kentucky will join 26 other states that have already adopted portions of the uniform law, meaning a POA drafted to comply with the new Kentucky law should be interpreted similarly in a majority of states.

Kentucky’s new statutes are located in Chapter 457 of the Kentucky Revised Statutes (the “KY UPOAA”) and they replace KRS 386.093. KRS 386.093 was a bare-bones statute that dealt with only three issues related to POAs: (i) durability, (ii) the default method of determining a principal’s incapacity, and (iii) when an agent is authorized to make gifts of the principal’s property.

On the whole, the new laws adopted in Kentucky will provide substantially more guidance on the drafting, interpretation, and use of POAs than did KRS 386.093. Below are some of the items addressed in the new statutes:

  • Execution. A POA must be signed in the presence of two disinterested witnesses. This is a change from the prior law and uniform act, which do not require any witnesses. In addition, we recommend that the POA is signed before a notary public so it is an acknowledged POA capable of being filed to transfer real estate and for acceptance by a third party discussed below.
  • Durability and Coordination with Guardianship or Conservatorship Proceedings. Under the new act, a POA is durable unless the instrument specifically states otherwise. In addition, a principal may nominate a person for consideration by the court to serve as the principal’s guardian or conservator, if necessary. However, in a break from the uniform act and prior law, the POA terminates upon the appointment of a guardian or conservator unless the court specifically provides that it shall remain in effect.
  • Co-Agents. If a principal designates two or more persons to act co-agents, each co-agent may act independently unless the POA provides otherwise. This is different from the typical rule that require co-agents or co-fiduciaries to act by a majority.
  • Agent compensation. By default, an agent is entitled to reasonable compensation. To the extent the principal does not wish the agent to receive compensation, the principal would need to say so explicitly in the POA.
  • Fiduciary duties. At a minimum, an agent must act in good faith, within the scope of the authority granted to him or her, and in accordance with the principal’s reasonable expectations or best interests. However, a principal may waive certain other duties such as the duty of loyalty and to avoid conflicts of interest, which may not be appropriate when a close family member or personal friend is serving as agent.
  • Acceptance by a Third Party. In response to difficulties some agents face persuading banks, insurance companies, or other institutions to accept an otherwise valid and enforceable POA that may not match up with the institution’s internal policies and procedures, a third party must accept a POA that was acknowledged by a notary or may ask for a certification, translation into English, or opinion of counsel regarding authority granted to the agent in the instrument. However, the third party may not require an additional or different form of POA for authority granted in the POA presented.
  • Gifting. Curiously, unlike its predecessor, the KY UPOAA is entirely silent on whether or under what circumstances an agent has authority to make gifts of the principal’s property, except that the agent shall attempt to preserve the principal’s estate plan including the minimization of taxes. Accordingly, unless a specific grant of authority is included in the POA, it may be unclear whether an agent is authorized to make gifts.

Any POA validly executed in Kentucky prior to July 14, 2018, will continue to be valid under the new law. However, the new act will apply a judicial proceeding concerning a POA commenced on or after July 14, 2018.

Contact a member of SKO’s Trust and Estates practice to discuss how best you can use this opportunity.

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Emerging Lawyers List: We introduce Catherine “Cat” McCulle

Catherine “Cat” McCulle started at Lindy Korn PLLC as a legal assistant. She is now an associate there and a new member of the Erie County Bar Association’s Young Lawyers Committee Executive Council. This fall she will become a board member of the Evans Senior Center.

McCulle grew up in Angola, resides in Derby and is a labour and employment attorney specialising in employment discrimination, wage and hour matters and class-action lawsuits.

To help with time-management, she uses Excel spreadsheets with color-coded to-do lists.

When not in the office, she enjoys cooking, fishing, playing ice hockey and golf, going to the beach and spending time with her dog.

What bit of advice do you wish you had known before entering the workforce? Don’t be afraid to ask for help. Make friends. You need to find light where you can.

Do you prefer working from home, in the office or somewhere else? It depends on the task but I love having the flexibility to do work from home or in the office. Overall, I prefer being home so I can work alongside my beloved dog.

Where do you see yourself in your career in 10 years? Honestly, I have no idea. I just want to be doing something I love and (hopefully) doing so successfully and I will be content.

What is your ideal type of workplace? Diverse, with interesting people. Working with people who have different opinions or outlooks on life and on legal matters is incredibly beneficial for growth and successful collaboration.

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Attorney: Montville council, not mayor, should hire labour lawyers

After a monthlong dispute between Town Council members and Mayor Ron McDaniel, an outside law firm recently found that the council has the authority to pick an attorney for all town matters, including labour issues.

For years, the issues were handled by lawyers selected by the mayor’s office.

A majority of councillors last month objected to any continued use of Suisman Shapiro, the former town attorney, beyond some ongoing personnel matters for which the firm had already provided legal assistance. The councillors argued that according to the charter, the Town Council-selected Halloran Sage law firm should handle all town matters moving forward, including labour and personnel issues.

McDaniel and councillors Joe Jaskiewicz and Billy Caron argued the charter authorizes the mayor to pick a legal team for labour matters.

In a letter sent to Town Council Chairman Tom McNally and McDaniel last week, which Advisory Excellence obtained Friday after filing a Freedom of Information Act request, Jerome O’Malley of Tobin, Carberry, O’Malley, Riley and Selinger provided an outside opinion on the divergent charter interpretations.

O’Malley argued that while the charter allows the mayor to hire a professional labour negotiator for collective bargaining agreements, “The broad and plain authority conferred upon the Town Council (by the charter) to appoint a town attorney for ‘all matters affecting the town’ exceeds the limited authority of the mayor.”

McDaniel on Friday said while he maintains “that 99 percent of the labour issues that require legal assistance stem directly from collective bargaining agreements,” he would abide by the third opinion provided by O’Malley.

The mayor noted he is not bound to use Halloran Sage as a labour negotiator.

“I will make that decision when the time comes, but I will use the town attorney for other labour issues,” he said.

O’Malley said that “a professional labour negotiator need not be an attorney,” and added that the council’s final call on a town attorney superseded the past practices of the mayor’s office.

“It sounds like this firm has agreed with what the five of us have been saying since day one,” McNally said Friday, referencing the Republican majority on the council.

Wills Pike, deputy Town Council chairman, said he thought the third opinion was the right one.

“The council always trumps the mayor in terms of the charter,” Pike said. “I think the charter’s pretty clear.”

The manner in which the dispute was resolved, however, could arise again between councillors.

McDaniel noted that McNally chose Tobin, Carberry, O’Malley, Riley and Selinger without consulting him, and Jaskiewicz and Caron argued the Town Council should have voted on the choice of outside legal counsel for the third opinion.

“This item was discussed and tabled in August,” Jaskiewicz said, arguing it didn’t matter whether McNally had discussed getting a third opinion with the mayor. “The legislative body votes on this.”

McNally countered that “additional use of attorney” is within the budget “and does not require a special vote.”

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Napthens selected to help farmers with legal advice

Napthens solicitors has been reappointed by the National Farmers’ Union as one of just two panel firms for the North West, meaning it will continue to work with members across Cumbria.

The news comes after a six-month review by the NFU of its panel firms, looking at factors including services, fee structures, commitment to NFU members and feedback.

This year is a landmark one for the NFU panel, which was established in its current format 10 years ago, with Napthens as one of its founding firms.

Napthens, which has an office in Kendal, will remain a panel firm for a further three years.

Andrew Holden, head of the rural team at Napthens, said: “As one of the original panel firms we are delighted to continue our relationship with the NFU and its members by being reappointed to the legal panel.

“We understand the challenges faced by the sector when planning, sometimes decades in advance, for succession and look forward to working with NFU members in the region for a further three years.”

NFU North West regional director David Hall said: “Our members are facing an ever-increasing regulatory burden so it’s essential we have the right firms in place on our legal panel, with strong agricultural and rural teams, to provide the support they need.

“Napthens has strength and depth of expertise in both farming and non-agricultural issues.”