Verifying Accredited Investors in a Rule 506(c) Offering

Companies raising capital that are relying on Rule 506(c) (often informally called “Accredited Investor Crowdfunding”) for their offering of securities have several options as to how to verify whether their investors’ are indeed “accredited investors.” Since most offerings of securities generally rely on Rule 506(b) which allows for the investor to self-verify (e.g., through a simple questionnaire), founders are not as familiar with the verification process of Rule 506(c). This post will briefly explain Rule 506(c) and describe some of the options companies have to verify its investors as accredited investors.

Generally, Rule 506(c) provides an exemption from registering an offering of securities when the company issuing securities (usually called an “issuer”) only sells securities to accredited investors (previously defined here) and the issuer takes reasonable steps to ensure that each purchaser is an accredited investor. The benefit of Rule 506(c) compared to Rule 506(b), is that, under Rule 506(c), an issuer may generally solicit potential investors, which allows issuers to engage in a variety of public solicitations, such as internet postings, presentations at conferences, or other forms of advertisement. Under a Rule 506(b) offering, engaging in any such activity could result in a loss in the ability of the issuer to rely on the exemption.

The biggest hurdle to using Rule 506(c) successfully is usually complying with the requirement to take “reasonable steps” to verify each investor’s status as an accredited investor. The most straightforward way to meet this requirement with any particular investor is to use one of the enumerated methods provided in Rule 506(c) (often called a “safe harbor”). If the issuer uses one of those methods, the issuer will be deemed to have taken reasonable steps to verify the investor’s status as an accredited investor. Broadly speaking, there are three ways to fit within a safe harbor to Rule 506(c), with the following generally illustrating these safe harbor requirements1:

  • if the accredited investor status is based on income, the issuer would need to review IRS forms (excluding certain forms for foreign investors) that show the investor’s income for the two most recent years and obtain a written representation that the investor has a reasonable expectation of reaching the required income level during the current year.
  • if the accredited investor status is based on net worth, the issuer would need to review certain documents evidencing the investor’s assets and liabilities, dated within the past three months, (including a consumer report with respect to liabilities) and obtain a written representation from the investor that they have disclosed all liabilities necessary to make a determination of the investor’s net worth; or
  • regardless of whether the accredited investor status is based on net income or net worth, the issuer may obtain written confirmation from an individual (e.g., attorney, CPA, or others specifically listed in the rule) that such person has taken reasonable steps to verify that the investor is an accredited investor (based either on net income or net worth) within the prior three months and has determined that such investor is an accredited investor.

But, practically speaking, how does an issuer fit within one of these safe harbors and thus, comply with Rule 506(c)? There are essentially three approaches: (1) the issuer itself can verify each investor’s status, (2) the investor’s accountant, lawyer, or another professional can verify the investor’s status, or (3) the issuer can hire a third-party verification service to verify each investor’s status.

At first glance, verifying investors yourself may seem like the easiest path. However, in practice, numerous issues may arise which can divert resources away from important aspects of an issuer’s business. Appropriate due diligence will need to be exercised to ensure that the correct documents were reviewed and that the review indeed establishes that the investors are accredited investors. Issuer’s counsel would usually perform this task. But often complications arise. The investors may be resistant to providing the documentation needed. For example, an investor may not want to disclose its tax returns for the past two years or submit to a credit check to verify its liabilities. Or, the investor’s net worth may stem from its ownership in a business which is very difficult to value without an appraisal (and it’s almost certain an investor will not pay for an appraisal just so they can invest in your offering).

Other difficulties occur when an investor is an entity. An entity is an accredited investor when either (i) all of its equity owners are accredited investors or (ii) its assets exceed $5 million and the entity was not formed for the specific purpose of investing in the issuer. In this situation, the issuer would then need to either (1) follow the above safe harbors for each equity holder or (2) verify the entity has over $5 million in assets (and obtain a representation that the entity was not formed for the specific purpose of investing in an issuer).

The two alternatives to an issuer verifying its investors’ accredited investor status itself provide much easier solutions for a busy entrepreneur. The first alternative is requiring an investor to provide a letter from his or her accountant or lawyer (or other professional) which makes the representation that the professional has taken reasonable steps to verify the investor’s net income or net worth and that the professional has determined that the investor is an accredited investor. The second alternative is the issuer could outsource all verification to a third-party verification service. This would entail contracting with a third-party verification service to obtain and review the information needed from potential investors and verifying each investors’ status. The added benefit of either option is that these third-parties make the representation that they have taken reasonable steps to verify the investors’ status in compliance with Rule 506(c). Thus, the issuer has shifted the burden of taking “reasonable steps” to a third-party.

As you can see from a few brief examples, while Rule 506(c) has distinct advantages, the verification process can prove difficult. Before deciding to pursue an offering in reliance on Rule 506(c), you should consult with your attorney.


Footnotes

  1. Although these are not the only methods to verify accredited investor status, rarely would an issuer want to stray from using these safe harbors.

This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

What Consumer Tech Can Tell Us About The Future Of Legal Tech

If you spend any time at all online, you have almost certainly experienced a form of data targeting. You know the drill: you log onto your Amazon account to search for an item you want to buy, and less than ten minutes later, that item and items like it are showing up in the sidebars of other websites you’re browsing. A half hour after that, you’re seeing ads at the top of your personal email inbox for the same merchandise. It’s not a coincidence — it’s the result of targeting technology from consumer sites that can track your searching and purchasing behaviors, actively trying to get to know your preferences in order to better serve you content that you are likely to consume or purchase. If you’re not expecting this sense of “connectivity” between vendors, the experience may seem annoying or even downright creepy depending on the context.

When targeting works well though, it provides an amazing sense of convenience and reduces the overall work required by the consumer — sometimes even driving to a better outcome. Imagine booking airfare for a weekend getaway and then having an offer for a great hotel deal (that you otherwise would not have found) show up in your inbox. Fewer mouse clicks, information that you need at your fingertips, and an optimal outcome. Sounds much like the holy grail of knowledge management to me.

The mechanisms that make this possible are similar in form — albeit, more sophisticated — to some of the technologies we have discussed in this column before. AI tools, specifically machine learning and data analytics, are two common technologies used by marketers and content providers to analyze information and deliver content at the right moments to the right audiences. A wide range of online consumer content, from the product suggestions you get on Amazon to the movie recommendations you see on your Netflix account, are generated by algorithms that have identified commonalities in your search history and preferences.

Many of the technologies that we enjoy today — the Internet, mobile phones, and GPS to name a few — rose out of military investments as part of the Cold War. The trend I think we will increasingly start to see is the consumer marketplace (which seems worlds ahead of the business marketplace) start to influence the business-to-business (B2B) market. In recent years, AI tools have become more common and ingrained in B2B technology — including legal content and solutions. As specific use cases for these technologies become more developed and more widely used, I believe that there are some trends that we’re likely to see in B2B tech moving forward — and with those trends, there are lessons that the B2B community can learn from the consumer tech world as well.

Using Algorithms for Recommended Content

When you conduct a search for a product on Amazon, the site uses an algorithm to learn about you and your customer journey based on the items you search and the keywords you use. This same mechanism could become a tool for technology providers to find recommended content for their users – including attorneys. An attorney managing a $1B deal in the health compliance space might find it useful to have recommended news stories and resources served to her on her dashboard based on her search history. We already know that algorithms can be built to do such a thing — and if applied in a legal tech platform, it could prove to be a useful tool for legal professionals.

Demographic Data

If you use streaming sites like Hulu, Spotify or Pandora, you’ve probably come across one or two recommendations that, from your point of view, make absolutely no sense based on your preferences. This is probably because a) the algorithm hasn’t been that well trained yet, or b) your preferences range so widely that it’s difficult for the algorithm to identify recommendations for you accurately. For situations where the behavioral data is not sufficient to get a good “fit” with customer preferences, demographic data can fill the gap. In the legal context, it’s helpful to know who the attorneys / researchers are, what their area of specialty is, and (potentially) who their clients are / what matters they are actively working on. This data, when combined with behavioral data, can help to refine search / recommendation results.

Security Obligations

As mentioned above, the tracking ability of consumer sites can be alarming for many people — particularly as vendors get aggressive in collecting additional demographic data for each of us. The nature of many white collar professionals’ work — and especially that of legal professionals — is often very sensitive, and as such, tech providers should be mindful of their obligations to their clients from a privacy standpoint. Providers could look into making auto-generated recommendations something that could be enabled or disabled, based on their individual clients’ comfortability with that kind of feature.

Consumer sites continue to develop AI tools that not only harness large amounts of data, but also make that data actionable. We may not see these trends moving into B2B tech overnight, but the foundation has already been laid for B2B tech tools to reach new levels of sophistication. As AI becomes more embedded in the fabric of legal technology, tech innovators could learn a thing or two from what’s already out there.


Dean E. Sonderegger is Senior Vice President and General Manager of Wolters Kluwer Legal & Regulatory U.S., a leading provider of information, business intelligence, regulatory and legal workflow solutions. Dean has more than two decades of experience at the cutting edge of technology across industries. He can be reached at Dean.Sonderegger@wolterskluwer.com.

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Court Rules Candidate Probably Tried A Racist Trick To Win An Election, But It’s Fine

It turns out, nobody actually gives a crap about the integrity of our electoral process. Not the President. Not the Congress, either chamber. Not the media. Not Facebook or Twitter. And, it turns out, not the courts.

We know that the 15th Amendment has never meant anything to the Supreme Court. We know that the courts will allow voter suppression under the guise of “voter ID” laws. We know that John Roberts has incredibly ruled that gerrymandering is a non-justiciable issue. But even when the courts catch somebody in the act of manipulating an elections, they don’t care. Nobody cares.

Michael Madigan is the Speaker of the Illinois House of Representatives. He’s the longest serving state or federal leader in the entire damn country. He’s an old-school, machine politics Democrat, the kind I’d like to believe that God sent Alexandria Ocasio-Cortez to Earth to destroy.

Over time, the demographics of his Southwest Chicago district have changed. It’s now 70% Latino, which is different from when he first won the seat in 1971. In 2016, he got a primary challenge from Jason Gonzales. Gonzales was a political consultant with degrees from Duke, Harvard, and MIT, running his first campaign. Gonzales alleges that soon after he announced, two additional Latino candidates also announced primary challenges: Joe Barboza and Grasiela Rodriguez. Thing is, neither Barboza or Rodriguez actively campaigned for the seat. Gonzales alleges that the two were planted by Madigan to dilute or split the Latino vote in the district.

Madigan beat Gonzales by about 10,000 votes, the other two Latino candidates combined for around 2,000 votes. Mathematically, they were not dispositive in the outcome.

Still, Gonzales sued, because putting fake candidates on the ballot to dilute the minority vote is surely not how representative democracy is supposed to work.

The district court in Illinois AGREED with Gonzales, that there was significant evidence that Madigan orchestrated the placement of additional Latino candidates on the ballot to hurt Gonzales. The district court simply determined that it didn’t care. From Courthouse News:

[U.S. District Judge Matthew Kennelly] found substantial support for Gonzales’ claims.

“A jury could reasonably conclude that individuals closely tied to Madigan’s campaign manager convinced Barboza and Rodriguez to enter the race — against Madigan. … This evidence supports a reasonable inference that Madigan authorized or at least was aware of the recruitment effort,” Kennelly wrote.

He continued: “A reasonable jury could find that Barboza and Rodriguez’s purported candidacies for Madigan’s office were orchestrated by Madigan’s associates, working on Madigan’s behalf.”

But Madigan’s dirty tricks were not a secret from voters. On the contrary, Gonzales’ campaign focused heavily on Madigan’s deceptive tactic: that Madigan placed sham candidates on the ballot in an effort to keep his seat.

“This publicity placed the alleged misconduct squarely within the political realm, enabling voters to rebuke Madigan by electing his challenger. Instead, Madigan prevailed by a substantial margin,” Kennelly ruled.

I find this to be a consistent problem with judicial opinions about electoral integrity that I don’t like: courts refuse to punish electoral wrongdoing on the theory that voters knew about the wrongdoing when they went to the polls.

The “informed voting public” is a legal fiction. Voters are ill-informed. Even when you try to inform them, we live in a world choking on so much fake news that we can’t even agree on a common set of “facts.” Refusing to punish candidates or campaigns for electoral shenanigans is an INVITATION for unethical campaigners to engage in more shenanigans.

Michael Madigan didn’t even GET a primary challenger in 2018. Let me say that again: this 77-year-old white man who has been in office for 48 years and represents at district that is 70% Latino DIDN’T GET A PRIMARY CHALLENGER IN 2018 DURING A PROGRESSIVE WAVE YEAR! That’s not a fucking compliment. It’s an indication that the Chicago machine is still plenty strong enough to snuff out opposition. What the hell good is an informed voter if the system allows powerful incumbents to silence dissent? Or, as Agent Smith might say, what good is a phone call if you are unable to speak?

Chicago politicians have been doing this for a long, long time. Maybe next century courts will finally decide to do something about it, cause they’ve dropped the ball on the last two.

Dirty Tricks Don’t Change Illinois Election Result [Courthouse News Service]


Elie Mystal is the Executive Editor of Above the Law and a contributor at The Nation. He can be reached @ElieNYC on Twitter, or at elie@abovethelaw.com. He will resist.

Live From ILTACON Part II: Developments In Legal Technology

The sentiment across the legal technology community is that this year’s ILTACON was a smashing success. More than 1500 members and 1700 exhibitors attended the conference in Orlando this year. Their vibe was energetic and people were definitely in good spirits.

The need for and growth of technology continues and that’s ultimately why we were there. We spent time in the exhibit hall and demo rooms talking to companies in the legal technology space to identify what’s new and interesting. Below, again, in no particular order, is our second installment.

Knovos, which provides legal information management solutions, announces the development of Knovos Academy, an interactive certification and training program. The curriculum and instructional approach offers the latest in microlearning, just-in-time and scenario-based learning, with a focus on client-specific workflows. “Continuing the innovation and development of our solutions over 16 years, Knovos Academy provides an engaging training experience that enables clients to quickly benefit from our advanced functionalities,” said Knovos CEO Dharmesh Shingala. With customizable courses, interactive videos and instructor-led, self-directed and blended delivery methods, Knovos Academy optimizes the learning experience for legal professionals. Users can select from a full series of product and role-based training programs for each of Knovos’ solutions: eZReview, eZManage, nayaEdge, Cryptacomm, Arbicomm and Cascade. To learn more or schedule training, visit their site.

Disco announces their new AI-powered managed review offering and promises 60 percent faster review outcomes compared to other review platforms. Hot on the heels of IDC Marketscape naming the company a leader in the e-discovery market for cloud-based platforms, Disco recently used some of a recent $83 million capital infusion to invest in a new 100+ seat review center in Austin, TX to provide a managed TAR service that promises at least 88 documents per hour, per reviewer. They use continuous active learning in the Disco platform to consistently push relevant documents to reviewers, thus making the review more efficient. Chief Innovation Officer Catherine Casey told me that for every managed review project Disco has undertaken “they have estimated the cost of the review up front and delivered below budget every time.”

Disco now also features a new self-service offering called Disco for Enterprise that enables users of the platform to rapidly upload and ingest ESI into the platform. Ms. Casey boasts that Disco ingests up to 4 terabytes per day. And even better, while the files are being ingested, they are processing in parallel, which means they are quickly available for review.

Primer, a San Francisco based machine intelligence company, has been quietly building a brand for a couple years. Born out of three-letter organizations in Washington, D.C., Primer is poised to supercharge discovery and legal business development with machines that read and write. Within a few minutes of sitting down with Jon Kerry Tyerman, Primer’s VP of Business Operations, it was easy to discern the utility of the software.

Primer is expanding into the legal market with products that have been deployed and tested by the US intelligence community and a Fortune 50 global retailer. First, whereas most e-discovery products today require that machine learning models be built from scratch with each new matter, Primer uses a transfer learning approach that enables every model to be transported and used from one dataset to another, delivering instant insight into the most relevant data.

Primer’s second product debut is an automatic document summarization technology. It is difficult for lawyers to remain abreast of events that impact their clients, so Primer removes the bottleneck by organizing, analyzing, and summarizing real-time news from millions of sources, synthesizing the data, and drafting a briefing memo summarizing its findings. Primer’s proprietary Natural Language Generation technology also lends itself to a variety of other legal use cases — from summarizing documents in a DMS or litigation database to automatically generating matter narratives both during and after the close of a case.

Luminance introduces a full-fledged e-discovery workflow to their platform. Many people know Luminance as the M&A due diligence, compliance and contract management tool that uses machine learning to speed contract review and comparison. Now they offer an e-discovery solution designed to assist litigators in reviewing and coding documents in discovery. It’s refreshing, too, to have a women-run company in the legal tech space.

Other Developments

Meetings with several other companies during ILTACON yielded little nuggets of information. Many companies are well-known, while others are toiling along doing the good work of e-discovery. NexLP, led by CEO Jay Leib, continues to grow their AI-powered Story Engine software that enables users to derive actionable insight from data. I also chatted briefly with Andy Reisman, CEO of Chicago-based Elijah, the digital forensics, cybersecurity and IT company. Andy’s got a slew of awards and 20,000 hours of forensics expertise. Everlaw is another cloud-based e-discovery platform that is doing some creative things with pricing models and offers top-notch support.

Finally, word is that in the wake of last week’s Live from ILTACON article I overlooked other developments and companies. Of course, that’s a fair criticism. But the truth is we cannot possibly cover all the developments of all the companies exhibiting at ILTA. If you have an announcement about a new technology development, feel free to reach out to me.


Mike Quartararo

Mike Quartararo is the managing director of eDPM Advisory Services, a consulting firm providing e-discovery, project management and legal technology advisory and training services to the legal industry. He is also the author of the 2016 book Project Management in Electronic Discovery. Mike has many years of experience delivering e-discovery, project management, and legal technology solutions to law firms and Fortune 500 corporations across the globe and is widely considered an expert on project management, e-discovery and legal matter management. You can reach him via email at mquartararo@edpmadvisory.com. Follow him on Twitter @edpmadvisory.

Kim Kardashian Thinks Her Whole Life Up Until This Point Might Be Why People Aren’t Taking Her Law School Studies Seriously

Kim Kardashian West (Photo by Neilson Barnard/Getty Images)

Kim Kardashian is seeking a law degree to complement the work she’s been doing advocating for victims of America’s out of control mass incarceration is a far better reason to go into this profession than most law students have. “Because I flunked organic chemistry,” may be honest but hardly noble. Kardashian’s approaching the profession for all the right reasons.

Yet she still has detractors and in an upcoming interview with Vogue Arabia — previewed by Fox — Kardashian zeroes in on why people aren’t taking her seriously:

Although the star is in a good place with her lifestyle now, she admits that she was initially motivated by less-than-stellar goals.

“Money was always the goal but I was obsessed with fame, like, embarrassingly obsessed… I do agree that fame can be addictive,” she revealed.

The Kardashian brand was built upon a relentless drive for attention — a drive that relished frivolity — and that’s a double-edged sword for a grown-up trying to retool as a serious advocate for people in need. Still, the fact that the show still exists isn’t exactly helping. When Rogers Stevens switched gears to Biglaw, it’s not like he was still touring with Blind Melon every week. It’s not hard to grasp how people might question the serious motives of a law student when every week we have to hear them complain about invite screw-ups to a giant celebrity bash as if that’s the greatest travesty in the world.

That said, she can and does use her platform for her advocacy. In some ways her fame has locked her good intentions in golden handcuffs — she can walk away and be seen as someone who really eschewed fame to be a lawyer or she can keep showing the world the petty disputes that make for drama among the super rich so she can leverage that to raise awareness. That’s actually a tough spot to be in and she’s trying to navigate those waters while dealing with the pressure of the entire world following her bar exam scores.

But despite generally supporting Kardashian’s bid, there is one consistent criticism I’ve made throughout this process and this latest interview confirms that she still doesn’t quite get it:

“There is a misconception that I don’t actually have to study and that I’ve bought my way into getting a law degree – that’s absolutely not true,” she explained in an excerpt from the interview. “Being underestimated and over-delivering is my vibe.”

Ugh. How is this not reaching her? There may be some people clueless enough to think the California bar doesn’t require studying, but most criticism of her “buying” her law degree isn’t about buying her way out of her study obligations, but buying her way into the process at all. Not every prospective law student gets to find high-quality attorneys willing to take on an apprentice. But the rich and famous can. How many other mothers of 4 kids under 7 are tackling a law school load? With a schedule they more or less get to set around their other obligations? Pretty much just one and that’s because it’s a ridiculous burden that only her wealth allows her to pull off.

And that’s not necessarily a bad thing, but so long as she pushes back on this idea that her position in life is how she’s able to do this, it comes across as though she still isn’t grappling with the important socio-economic issues that underlie the whole practice she’s looking to go into.

Say stuff like, “I can have a client who was a dropout and ended up locked up because of the desperation they faced while I dropped out and got to come back with a law degree I studied for entirely on my own schedule — that’s a problem!” Or “Yeah, I’m able to do this because I’m swimming in money and it’s completely messed up that I needed to go to these lengths to help people.”

Anything but, “I’m studying hard.” We know the law is hard.

Kim Kardashian admits she was ‘embarrassingly obsessed’ with fame, isn’t being taken seriously studying law [Fox News]

Earlier: Kim Kardashian Complains About ’14-Hour Day’ Proving She’s Totally Ready To Be A Lawyer


HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

Challenging A Will Based On Unequal Treatment Of Sons And Daughters

(Image via Shutterstock)

Cultural norms and religious values often guide testators when considering provisions for their last wills and testaments. In some cultures the eldest child is deemed to receive more as a result of his birth order. In other cultures sons receive more than daughters. The latter practice was the center of a recent lawsuit in British Columbia, Canada wherein four sisters challenged a last will and testament wherein they were bequeathed only 1.7 percent of their parent’s estate worth $6.8 million (U.S. Dollars). Their two brothers were bequeathed 93 percent between them.

Last month a British Columbia Supreme Court granted each sister approximately $1 Million, overturning the contested last will and testament, to bring each one’s share to 15 percent. The brothers each received 20 percent as a result of the ruling.

The last will’s fairness was challenged on the basis of “tradition-based preference.” British Columbia’s Wills Estates and Succession Act (WESA) includes a provision that allowed the sisters to challenge their parent’s last will because of unequal treatment based on their sexes. In response to this kind of objection, certain parents argue that based on their tradition, it is common to treat sons and daughters differently under a last will and testament and such inequity should be allowed. In British Columbia, this has been a recurring issue especially amongst the East Asian population.

In the instant case, the East Indian family owned a farm. Although the parents’ wills did not explain the imbalance between the sons’ and daughters’ bequests, in prior legal documents pertaining to the family farm, the father referenced the custom of leaving property just to sons. Although the last will and testament was silent on the imbalance, the British Columbia court held that the distribution “fell far short of the moral standards of Canadian society, which provide for men and women to be treated equally.” The daughters aptly noted that there was no actual reason given in the testamentary document  for their unequal gifts, e.g. a failed relationship or disappointment. Often children are disinherited because of lack of contact, dispute or other issues. In this case, there was no reason for the imbalance in the testamentary scheme except for the parents’ cultural views of son and daughter inheritance which gave them standing to object under the WESA statute. The Court readjusted the percentages, ultimately giving little more to the brothers than their sisters, a nod to the parents’ cultural beliefs.

This case and others like it demonstrate the tension between testamentary intent and what is acceptable under the law. For example, one cannot disinherit her spouse. Jurisdictions have statutory mechanisms, often called a “right of election” to allow a disinherited spouse to claim one-third of a deceased spouse’s estate. This includes assets passing through a will and also outside of a will, via operation of law (notably WESA does not pertain to assets passing outside of probate). In right of election and WESA cases, public policy dictates how you may or may not treat your closest family members.

The British Columbia case highlights issues that arise in estate planning for individuals in many cultures and religions. Throughout  history we have seen different variations of the concept of priomogeniture, the right, by law or custom, of the firstborn son to inherit the parent’s entire estate which was a common practice in various monarchies.

The directive to give a firstborn son “extra” is rooted in the Book of Deuteronomy: “He (the father) must acknowledge the firstborn . . . and give him a double share in all that he possesses, for he (the firstborn son) is the first fruits of his strength; the right of the firstborn is his.” Deuteronomy 21:17. For observant Jewish testators the practice of giving the eldest son a double portion, is an issue that must be resolved in light of the parent wanting sons and daughters (who do not inherit under Biblical law) to be treated equally. There are several mechanisms employed to equalize the inheritance including the creation of a debt to the children (who receive a lesser share in accordance with the law) for a significant sum of money, larger than the expected value of the estate. The debt becomes due one hour preceding the testator’s death. The debt passes to the legal heirs and it includes a provision voiding the debt if the legal heirs equally share their inheritance with the others.

Inheritance is already a source of tension without religion and cultural customs interfering. In addition to the actual property at stake, so are emotions and feelings. It would behoove all testators to consider the ramifications of any unequal treatment in a last will and testament as it will surely give rise to some form of conflict among the family.

–CORI A. ROBINSON

Reminder: DOJ And Other Honors Program Applications Are Due Soon

The U.S. Department of Justice building in Washington, D.C., aka “Main Justice” (photo by David Lat).

Even though we’re not even into the fourth quarter yet, many folks are looking ahead to 2020 — and beyond. For example, the political and journalistic worlds are intensely focused on the 2020 presidential election right now, even though it’s more than a year away. Many people are ready for a new administration (and not just die-hard Democrats, but independents and even Republicans who are tired of Donald Trump).

If and when we see President Trump replaced by a Democrat — say, President Joe Biden or President Elizabeth Warren — expect the U.S. Department of Justice to be flooded with applications from young (and not-so-young) lawyers. Whether justified or not, many attorneys who would otherwise be interested in government service are steering clear of the DOJ right now, either because they disagree with the Trump DOJ agenda or because they don’t want to be accused of complicity with the regime (even though Honors Program spots are career positions rather than political appointments, and most of what line attorneys do in the DOJ, which includes U.S. Attorney’s Offices as well as Main Justice, has nothing to do with Trump).

How can you get into the federal government before the stampede begins? Try applying now, while applications might not be at peak volume — and, if you’re eligible, consider the DOJ Honors Program.

As I’ve explained in the past, the Justice Department’s Attorney General’s Honors Program is “the largest and most prestigious federal entry-level attorney hiring program of its kind.” Unlike fellowships of a defined length (e.g., Skadden Fellowships for public interest work), Honors Program positions are generally positions of permanent employment (subject to just a few exceptions). So once you enter the DOJ through the Honors Program, you can build your entire legal career in government if you so choose. (One famous example: former Deputy Attorney General Rod Rosenstein, who joined the Department through the Honors Program in 1990 and remained in DOJ employ for the next three decades or so, until stepping down as DAG this past May.)

For the 2019-2020 Honors Program, there appear to be 221 positions (not counting the 20 to 22 possible slots for informal participants, mainly at U.S. Attorney’s Offices — which generally don’t hire entry-level attorneys, making the Honors Program especially enticing). This figure of 221 represents a slight uptick from last year’s cycle, when there were around 195 positions. The application deadline is September 8, 2019 — so if you’re interested, get a move on.

In writing about last year’s program, Elie Mystal complained about the high number of slots in the Executive Office for Immigration Review (EOIR), which he branded Trump’s “Deportation Forces” — 131 out of 195 positions . This year, the total number of Honors Program jobs is up, and the number of EOIR jobs is down — 102 out of 221 positions. So EOIR posts have gone from representing more than two-thirds of Honors Program slots (67 percent) to under half (46 percent).

(It should be noted that EOIR’s domination of Honors Program hiring is not a Trump Administration phenomenon. For example, back in 2016, the final year of President Barack Obama’s administration, EOIR slots also amounted to 46 percent of Honors Program openings.)

If you’re interested in government opportunities beyond the Justice Department, you have options as well. For example, here are other governmental honors programs and their deadlines (click on each department’s or agency’s name for more information):

These are just examples. For more opportunities, surf over to USA Jobs. Some of the deadlines are almost here, so act fast.

What about the Consumer Financial Protection Bureau? Whether the CFPB will be doing any Honors Program hiring remains unclear.

In December 2017, the CFPB renamed its Honors Program, changing it from the Louis D. Brandeis Honors Attorney Program to the Joseph Story Honors Attorney Program (i.e., going from a liberal legal icon to a conservative one). In 2018, it seems that the renamed program didn’t do any hiring. As of now, the CFPB website tells prospective applicants to “check here starting fall 2019” (even though historically the CFPB Honors Program is usually taking applications by now, ahead of a mid-September deadline).

So has the Trump Administration quietly killed off the CFPB Honors Program? It wouldn’t be shocking, given the administration’s mixed feelings about the agency itself.

But if so, don’t count on it being dead forever. I’d expect robust hiring at the CFPB — for both the Honors Program and otherwise — under a President Elizabeth Warren.

The Attorney General’s Honors Program [U.S. Department of Justice]


DBL square headshotDavid Lat, the founding editor of Above the Law, is a writer, speaker, and legal recruiter at Lateral Link, where he is a managing director in the New York office. David’s book, Supreme Ambitions: A Novel (2014), was described by the New York Times as “the most buzzed-about novel of the year” among legal elites. David previously worked as a federal prosecutor, a litigation associate at Wachtell Lipton, and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@laterallink.com.

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The “pizza” chain’s estranged dad isn’t coming home.

The Latest Advancements From Everlaw: How One Company Continues To Revolutionize The eDiscovery Game

There’s no question that advanced technology, and machine learning in particular, has revolutionized the way attorneys handle discovery and trial prep. Few legal tech companies have made greater advances in this area than the folks at Everlaw.

As always, Everlaw is committed to providing attorneys with a quick and easy-to-use experience that allows them to get the most value out of their time, while at the same time ensuring security and understanding the vital importance of keeping confidential data confidential. Everlaw has always kept the end user in mind when developing its tools, and it shows in their latest enhancements and features.

From making core discovery even easier, to implementing more machine learning capabilities, to adding a number of features to ease the burden of managing large eDiscovery projects, Everlaw has been busy making their sophisticated platform better than ever.

Enhancements to Core Discovery Functions

Everlaw shines when it comes to the basics of eDiscovery, perfecting the tasks that lawyers and discovery professionals have been doing for years — uploading files, getting them in useable formats, finding the relevant information within them, and producing them. By incorporating the power of machine learning, Everlaw allows attorneys to create ideal workflows from early document searching and review all the way through trial prep.

Maintaining its focus on simplicity of design, Everlaw has reimagined the way attorneys find relevant information, creating visual results out of intuitive drag-and-drop searches. Searches follow the logic you use to determine the documents you want to see, which makes it easy to craft even complex searches and get quick results.

What really sets Everlaw’s results apart from the competition is its customizable dashboards that offer visualizations of your searches broken down by factors like custodians, dates, coding parameters, or document types.

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 You can select and order the visualizations you most want to see in order to obtain a quick understanding of any given set of documents with just a glance. From within the visualizations you can run filters or make changes to the documents making up your search set. 

Users can also customize their full-screen document review page, choosing what information or tools are most relevant to their workflows for a given matter. Even better, Everlaw has rebuilt its PDF viewer to decrease load time and make it easy to scroll through documents rather than having to click page by page.

Predictive Coding Through Machine Learning

Recognizing that most eDiscovery tasks are still performed by people, Everlaw aims to provide the best tools to help those people get the most out of their review within limited time constraints. This is where machine learning plays a vital role. 

It’s often cost-prohibitive to review every single possible document, particularly in complex cases, so Everlaw uses predictive coding derived from models that use active learning to help identify the documents that are most likely to be responsive.

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Users don’t need a background in data analytics to effectively use the predictive coding tool. The tool automatically prioritizes documents so users see first the ones that are most likely to be relevant but have not yet been reviewed. Through a combination of statistics that show how well the tool is working in terms of accuracy and how many relevant documents may have been missed due to the thresholds you set, you can determine with confidence whether your review is complete.

In order to approach opposing counsel or the court with that determination, you need the most rigorous statistics possible. That’s why Everlaw has introduced a new Rigorous Mode, which automatically enforces a particular ordering on your document set that requires you to have viewed all the documents necessary to make sound decisions about your review.

Building Your Case

Everlaw continues to offer users the most effective tools for building a case once review is complete. With the game-changing StoryBuilder tool, your team can collaborate to use your documents to tell the best story of your case.

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StoryBuilder starts with a chronology and overlays key events, so you can see exactly where your documents fall in relation to those particular events. You can organize your documents, add descriptions, retitle them, and export them to deposition, cross-examination, or other outlines. There’s no easier way to collaborate with colleagues and co-counsel to use your documents to actually argue your case, all in one easy place.

New Features that Make eDiscovery Management Even Easier

Many of Everlaw’s newest developments revolve around the goal of making the management of eDiscovery easier. Particularly for those at larger organizations, coordinating multiple projects and large review teams can quickly become an administrative hassle. Everlaw has introduced a number of new features to help alleviate those burdens and ensure consistency across reviews and teams.

Everlaw’s new administrative view gives users who are managing projects and overseeing teams better tools for all aspects of a review — the ability to manage lists of users and projects, project sizes, and uploads, as well as seeing reviewer activity and access history.

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The platform now also includes project templating, which allows administrators to copy settings from previous projects or from pre-set templates when creating the parameters for a new review database. This not only saves time, it ensures consistency from project to project.

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What you want to copy is up to you — users, project settings, user groups, permission settings, coding sheets, or production protocols.

With respect to permission settings, Everlaw has overhauled those, too. Administrators now have granular control over the access permissions given to users or groups, allowing them to tailor different permissions for internal employees, contract employees, outside counsel, or even individual users.

Finally, Everlaw has removed one of the major roadblocks to coding consistency by adding new auto-code settings that apply conditional coding based on how certain documents relate to other documents. 

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Now, administrators can ensure that reviewers code consistently across document families or attachment groups by setting rules that will automatically code all documents in such groups the same way. These auto-coding rules are also an invaluable tool for protecting privilege, as the settings can be used to automatically code duplicate documents as privileged as soon as the first document receives that tag.

Everlaw’s newest features and enhancements are game-changers for clients with large teams and several concurrent matters, including sensitive Data Subject Access Request (DSAR) matters that require quick, accurate, and consistent treatment of PII for GDPR compliance.

Everlaw was already making it easier to handle your eDiscovery and build your case. Now they’ve made it possible to be even more confident in the accuracy, efficiency, and consistency of your review. When you want the most cutting-edge eDiscovery suite on the market, you want Everlaw.