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Los Angeles Daily Journal Features Eric Early in Cover Story
Category: News, Press | Monday, March 11th, 2013 | Comments Off on Los Angeles Daily Journal Features Eric Early in Cover Story
Eric Early is one of the managing partners of law firms featured in Ryne Hodkowski’s Daily Journal cover story about the bright future for smaller firms. Download the PDF on the right to read the full article.
Sophia Lau Quoted in Law 360
Category: News, Press | Friday, March 8th, 2013 | Comments Off on Sophia Lau Quoted in Law 360
Chinese RE Investments Require Cultural, Tax Savvy
Law360, New York (March 08, 2013, 8:52 PM ET) — With rumors of a housing bubble swirling and values down across China, real estate attorneys expect to see more and more wealthy Chinese families and corporations looking to the U.S. to diversify their real estate holdings, bringing with them unique tax, liability and cultural issues.
Chinese sovereign wealth funds and high net worth individuals have been increasingly making their way to the U.S. real estate market over the last several years, but experts say that worries of a potential Chinese housing bubble — borne out in dipping stocks — are pushing even more investors to put their money into U.S. property.
“Our properties present a better value for them right now; it makes sense for them to put their money here,” Sophia Lau, a partner at Early Sullivan Wright Gizer & McRae LLP said Friday.
No other recent deal may have exemplified this more than the reported arrangement between a group of Chinese real estate investors led by the family of billionaire Chinese CEO Zhang Xin with owners of the General Motors building in Manhattan for a 40 percent stake.
Zhang Xin hasn’t commented on the deal, but sources have said they expect it to value the 50- story building at a massive $3.4 billion.
This could be a harbinger of things to come, experts say, and while many are thrilled by the prospect of more, and in some cases bigger, deals, they say it also means more complicated structures and tax headaches and brings about a necessity for cultural sensitivity that might not exist in other deals.
In China, transactions are handled differently than they are in the U.S., and it can be easy to offend someone and potentially spoil a deal before it’s begun if the attorneys involved haven’t done their homework, according to Lau.
The aggressive nature with which many U.S. deals are approached and negotiated can be off- putting to a Chinese investor; the practice of laying all of one’s expectations for a deal out on the table at the outset is not accepted in China, where experts say investors like to get to know potential sellers and become comfortable with them before getting down to the details.
The speed with which U.S. deals — real estate transactions in particular — generally take place can also be off-putting, according to John Opar, a partner at Shearman & Sterling LLP.
“Those deals move very quickly. Sometimes people have to do diligence in a very short period of time, have to negotiate a contract literally overnight, and I think that is probably something that is not the norm in the home jurisdiction,” he said.
When it does come down to the details of the deal, McKenna Long & Aldridge LLP partner Andrea Chang said Chinese investors are generally worried about two main things: privacy and liability.
“They don’t want everybody to know who they are or how much money they have,” she said.
This is not an uncommon refrain from high net worth investors, but for cultural reasons it can almost be considered a staple of any real estate deal involving a Chinese investor, Chang said.
This generally means hiding the investor’s name by structuring the deal so that they buy the property through a trust with a generic name or through a limited liability company. LLCs are preferable over corporations, according to Chang, because there is more flexibility and there are better creditor protections.
When an LLC is registered with the secretary of state in the state where the property is located, however, the LLC officer’s identity is often exposed. Attorneys say they often create a structure in which a state LLC owns the real estate and a Delaware LLC acts as its manager, disguising fully the name of the Chinese individual, family or fund.
On the issue of liability, an LLC is also the best vehicle through which the make the investment from a Chinese perspective because it gives creditors zero basis for piercing the corporate veil, providing better asset protection, Chang said.
The biggest potential source of complex work in a real estate investment deal involving a Chinese player, however, is likely working around the tax issues that surround foreign investment, experts say.
There’s a flat tax of 30 percent on investments made by nonresident aliens, or foreigners with no green card who aren’t present in the U.S. for at least 183 days in a three-year period or 31 days in the current year. The tax applies to fixed or determinable income not connected to a trade or business, so attorneys on these types of deals say they often find themselves working out a structure that will allow a lesser tax burden.
Chinese investors typically aren’t looking for one-off deals, experts say, and they often invest in a piece of property in order to improve it and lease it later. Improvement plans can convey active investment status and free up deductions not available to passive property investors.
The number of real estate deals in major U.S. cities is likely to continue to rise, experts say, and those looking to take advantage of the trend should be sure they’re not only prepared to jump through complex liability and tax hoops but also have a sense of the cultural variations.
“It helps for a firm or attorney to either be familiar with those issues or have people of Chinese descent or who speak Chinese on their team to help facilitate that process,” Lau said.
Source: Kaitlin Ugolik, Law360
Trump may have trouble collecting on $5 million orangutan bet
Category: News, Press | Monday, February 11th, 2013 | Comments Off on Trump may have trouble collecting on $5 million orangutan bet
Bryan Sullivan was quoted in Joseph Ax’s article titled “Trump may have trouble collecting on $5 million orangutan bet,” which appeared in Reuters. The full article can be found here.
It also appeared in The Globe and Mail.
Homeowners facing foreclosures should be wary of scams
Category: News, Press | Monday, February 4th, 2013 | Comments Off on Homeowners facing foreclosures should be wary of scams
Scott Gizer was featured in Lew Sichelman’s article titled “Homeowners facing foreclosures should be wary of scams,” which appeared in the Los Angeles Times on February 3, 2013. The article discusses how the government is coming down hard on swindlers who cheat owners willing to try almost anything to avoid foreclosure. The article can be found here.
YouTube May Begin Nickel-and-Diming Viewers
Category: News, Press | Thursday, January 31st, 2013 | Comments Off on YouTube May Begin Nickel-and-Diming Viewers
Bryan Sullivan was quoted in Erika Morphy’s E-Commerce News article titled “YouTube May Begin Nickel-and-Diming Viewers,” which discussed the possibility of YouTube charging for some of it content.
The full article can be found here.
Lawsuit Over ‘Rebecca’ Musical Now Focuses on Role of Publicist
Category: News, Press | Wednesday, January 30th, 2013 | Comments Off on Lawsuit Over ‘Rebecca’ Musical Now Focuses on Role of Publicist
Bryan Sullivan was quoted in Eriq Gardner’s article “Lawsuit Over ‘Rebecca’ Musical Now Focuses on Role of Publicist,” which appeared in the January 30 issue of Hollywood Reporter.
Bryan discussed “whistleblowing,” and how its legal application is not as broad as people think.
The full article can be found here.
Recognize foreclosure scams for what they are
Category: News, Press | Thursday, January 24th, 2013 | Comments Off on Recognize foreclosure scams for what they are
Scott Gizer was quoted in Lew Sichelman’s article “Recognize foreclosure scams for what they are,” which appeared in the January 24, 2013 issue of The Chicago Tribune.
Scott discusses how many people are being conned out of a great deal of money trying to save their homes.
How Lance Armstrong’s Oprah Confession Could Lead to His Bankruptcy
Category: News, Press | Thursday, January 17th, 2013 | Comments Off on How Lance Armstrong’s Oprah Confession Could Lead to His Bankruptcy
Bryan Sullivan was quoted in Eriq Gardner’s article “How Lance Armstrong’s Oprah Confession Could Lead to His Bankruptcy,” which appeared in the January 16 online edition of The Hollywood Reporter, and will appear in the January 25 THR print issue.
The article can be found here.
Scott Gizer Quoted in Herald Tribune
Category: Press | Wednesday, January 9th, 2013 | Comments Off on Scott Gizer Quoted in Herald Tribune
Scott Gizer was quoted in syndicated columnist Lew Sichelman’s article: “Recognizing foreclosure scams for what they are,” which appeared in the Herald Tribune.
Copyright Termination For ’70s Hits Won’t Spark Lawsuit Fever
Category: Press | Friday, November 30th, 2012 | Comments Off on Copyright Termination For ’70s Hits Won’t Spark Lawsuit Fever
Law360, New York (November 26, 2012, 10:00 PM ET) — Musicians who recorded hit songs in the late 1970s will gain the right to reclaim ownership of their work starting in January under a 1978 copyright law provision, and while record labels are expected to fight to retain control of lucrative music, 2013 is unlikely to bring a flood of litigation, attorneys said.
Revisions to the Copyright Act that took effect at the beginning of 1978 gave authors of new works the ability to terminate the assignment of rights to entertainment companies after 35 years. As a result, termination rights will become available on Jan. 1, 2013, for any sound recordings for which the rights were assigned on Jan. 1, 1978, and will kick in for other 1978 works throughout the year.
Although termination rights give artists the potentially valuable ability to control distribution of their works — which labels will seek to curtail as much as possible — the cost of litigation and other factors likely will mean a court battle over the issue may not arise for some time, said Paul Fakler of Arent Fox LLP (/firms/arent-fox).
“There are very few albums that are worth so much money where it even remotely makes sense to fight with the label,” he said. “There are so many things that have to line up to get one of these cases that it could be we don’t see one for a couple of years, even though 2013 is here.”
Rather than taking the fight to court, it is far more likely that a copyright termination notice from an artist will serve as a jumping-off point for negotiations with the label on a new contract, said Eric Custer of Manatt Phelps & Phillips LLP (/firms/manatt-phelps).
“New deals will be made, and it won’t lead to litigation unless the artist really can’t stand their label or really wants to take control of their work,” he said. “There will be some examples where people want to prove a point, but whether the case will proceed to a resolution on the legal issues is hard to say.”
Congress created the copyright termination right to allow authors to renegotiate their deals once the true value of the work becomes known, since many artists often sign over their copyrights to record labels without any idea of whether the work will be successful.
Even if most artists never actually reclaim the rights to their work and use the threat of termination to leverage a better deal, the copyright termination provision may have served its purpose of improving the bargaining power of artists, said Ken Basin of Greenberg Glusker Fields Claman & Machtinger LLP (/firms/greenberg-glusker).
“I don’t think this will create a massive upheaval for the industry, but with respect to really popular works, it could realign the revenue-sharing balance between companies and artists,” he said.
The copyright termination statute requires artists to notify the label two years in advance of their intent to terminate the rights, so labels have been aware since at least 2011 of any potential terminations next year, providing time to reach a new deal.
In addition, the 35-year mark is “less like a deadline than an opening bell,” said Dori Ann Hanswirth of Hogan Lovells (/firms/hogan-lovells). The termination window lasts five years, so a copyright grant made in 1978 can be terminated any time between 2013 and 2018, giving artists who have not yet served a termination notice plenty of time.
“With that much time in hand, it is unlikely that all, or even most, of the 1978 grants will be disputed next year,” Hanswirth said. “A gradual stream of increased termination activity is the more likely outcome.”
A copyright termination dispute that may lead to litigation likely will involve an album that still is selling enough today for it to be worthwhile for the artist to invest in the legal cost of reclaiming it, attorneys said.
In addition, it would likely have to be recorded by an artist who is no longer releasing music, since anyone from the 1970s who is still popular today probably has enough pull to secure a new deal without going to court and may not want to antagonize their label.
“It would have to be an artist with deep pockets as well,” said Bryan Sullivan of Early Sullivan Wright Gizer & McRae LLP. “But if it’s valuable enough, there’s going to be an artist who will fight it.”
Even in cases where a lawsuit is filed, it may be more advantageous to both the artist and the label to negotiate a new deal rather than pursue the case to a resolution, Custer said.
“Presumably there will be some splashy case filed in 2013, but how quickly it will move and how strongly they’ll want to litigate is hard to say,” he said. “I wouldn’t be surprised if there’s a settlement for improved deal terms and the parties are not prepared to fight to the ends of the earth.”
There are a few situations in which a copyright termination lawsuit may arise, attorneys said. For instance, an artist could notify the label of his or her intent to terminate the copyright, leading the label to file a suit seeking to have the termination declared invalid.
If the label ignored a termination notice, the artist could sue, claiming that continued sales of music for which the rights have been reclaimed constitutes infringement. Or if the artist reclaimed the rights and started selling the music themselves, the label might sue them for infringement.
Any termination suit that is fully litigated will be closely watched, as it will establish precedent on important areas of music copyright law that have never been examined by a court, attorneys said.
For one, termination rights do not apply to works made for hire, which the Copyright Act defines as a work done by an author in the scope of his or her employment. Record labels are expected to fight back against termination notices by arguing that the musician’s work was made for hire, but whether that designation can apply to sound recordings has never been legally resolved.
The record industry has taken the position that sound recordings fall into two categories of works that the law identifies as per se works for hire: compilations or contributions to collective works. Artists maintain that neither of those categories apply to albums by most musicians, and a termination suit will provide a test case on the issue.
Essentially the only way a copyright termination wouldn’t be effective would be if the work is found to have been made for hire, so “it’s close to inevitable that we’re eventually going to hit a case that deals with that,” Fakler said.
While artists would prefer a court ruling that says sound recordings can never be considered a work made for hire, it will likely have to be resolved on a case-by-case basis, he said.
“Work for hire can be so fact-specific that whether one decision will stick and solve the whole problem seems unlikely,” Fakler said.
Another unresolved question, particularly for cases involving songs from 1978, is whether the termination right attaches to the date the song was assigned to the label after it was recorded or the date when the artist signed with the label, Custer said.
Labels are expected to argue that artists don’t have a termination right to albums recorded in 1978 if it was made under a record deal signed years before, he said. The courts will have to address the issue because the statute is not clear on that point.
The intricacies of copyright law present many complications like that, and labels can be expected to “argue everything under the sun,” Custer said. At a certain point, it may not be worth it for artists to fight out every point, leading to a settlement, he said.
There is so much uncertainty around how copyright termination for sound recordings will work that disputes will be resolved without litigation whenever possible, Hanswirth said.
Any artist that has a valuable recording from the late 1970s should be filing a notice to reclaim the rights now and using that to negotiate a new agreement, she said.
“In a reasonable, rational world, that’s what would happen in the next year, but there will always be disputes,” she said.
Source: Ryan Davis, Law360