Alabama Lawyer · To Address Proportionality And ESI Page 96 No Batteries Required: A Primer On...

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Alabama SupremeCourt AmendsRules 26 and 37 To Address ProportionalityAnd ESIPage 96

No Batteries Required: A PrimerOn Gifts to Minors04

Navigating EstatePlanning Before,During and After aMarriagePage 116

Law Firm Marketing MythsPage 122

Mediation BestPractices in AlabamaPage 128

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c o l u M N s

President’s Page84

President-Elect Profile86

Executive Director’s Report88

Note from the Editor90

Important Notices92

Disciplinary Notices138

About Members, Among Firms

144

Opinions of theGeneral Counsel

146

Memorials148

The App ellate Corner150

Legislative Wrap-Up158

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F e a T u r e a r T i c l e s

Gregory H. Hawley, Birmingham ........................Chair and [email protected]

Wilson F. Green, Tuscaloosa ........Co-Chair and Associate Editor,[email protected]

Jonathan C. Hill (Rudy), Montgomery........................Vice Chair and Associate Editor, [email protected]

Allison O. Skinner, Birmingham.......AddendumChair and [email protected]

Linda G. Flippo, Birmingham..............AddendumVice Chair and Associate Editor, [email protected]

BOard Of EdiTOrs: J. Pratt Austin-Trucks, Wetumpka • Marc J. Ayers, Birmingham • G. Glasco Baxter, Tuscaloosa • Joseph K.Beach, Atlanta • Jennifer M. Bedsole, Birmingham • D. Edgar Black, Muscle Shoals • Henry L. Cassady, Jr. (Max), Evergreen • W.Lloyd Copeland, Mobile • Joi T. Christoff, Montgomery • Ashley H. DeGaris, Birmingham • Aaron L. Dettling, Hoover • ChristieLyman Dowling, Birmingham • Jesse P. Evans, III, Birmingham • Kira Y. Fonteneau, Birmingham • Leigh K. Forstman, Birmingham• Lloyd W. Gathings, II, Birmingham • Hon. William R. Gordon, Montgomery • Steven P. Gregory, Birmingham • Amy M. Hampton,Alexander City • Sarah S. Johnston, Montgomery • Margaret H. Loveman, Birmingham • Mignon A. Lunsford, Mobile • JenniferBrooke Marshall, The Woodlands, TX • J. Bradley Medaris, Montgomery • Allen P. Mendenhall, Montgomery • Rachel L. Miller,Montgomery • Anil A. Mujumdar, Birmingham • Blake L. Oliver, Opelika • Rebecca D. Parks, Mobile • William F. Patty, Montgomery• Sherrie L. Phillips, Montgomery • Katherine T. Powell, Birmingham • Julie H. Ralph, Baton Rouge • Preston Y. Register, Dothan •Tracy L. Richards, Mobile • Christopher E. Sanders, Montgomery • J. Beren Segarra (Ben), Mobile • Joel P. Smith, Jr., Eufaula • MarcA. Starrett, Montgomery • Mary H. Thompson, Mountain Brook • M. Chad Tindol, Tuscaloosa • Jason B. Tompkins, Birmingham •Henry J. Walker, Jr., Birmingham • Stephen A. Walsh, Birmingham • W. Gregory Ward, Lanett • David G. Wirtes, Jr., Mobile • BarrD. Younker, Jr., Montgomery

Alabama Supreme CourtAmends Rules 26 and 37 to

Address Proportionality and ESIBy Gregory C. Cook and

Sloane M. Bell

96

No Batteries Required: A Primer on Gifts to Minors

By James P. Naftel, II and Jessica S. Grover

104

Navigating Estate Planning Before, During and After a

MarriageBy Nancy Williams Ball

116

Law Firm Marketing MythsBy Jeremy W. Richter

122

Mediation Best Practices in Alabama

By H. Harold Stephens

128

2018-2019 Bench and Bar TaskForce: A Progress Report

By J. Flynn Mozingo and Clinton L. Wilson

137

On The CoverAfter 44 years on the circuitcourt bench, Judge Randall L.Cole recently retired from theNinth Judicial Circuit. As hepointed out to us, there hasn’tbeen a cover photo of DeSotoFalls on The Alabama Lawyerin many years. We are takingsteps to remedy that oversightwith this photograph taken byJudge Cole. Thanks Judge!

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The Alabama LawyerG R A P H I C D E S I G N

The Alabama LawyerP R I N T I N G

BOard Of Bar COmmissiOnErs 1st Circuit, Halron W. Turner, Chatom • 2nd Circuit, J. Levi

Nichols, Luverne • 3rd Circuit, Courtney R. Potthoff, Eufaula •

4th Circuit, Jana Russell Garner, Selma • 5th Circuit, Larry W.

Morris, Alex City • 6th Circuit, Place No. 1, Terri Olive Tomp-

kins, Tuscaloosa; Place No. 2, Scott Bradley Holmes, Tuscaloosa

• 7th Circuit, William H. Broome, Anniston • 8th Circuit, Emily

L. Baggett, Decatur • 9th Circuit, Dana Grimes, Ft. Payne • 10th

Circuit, Place No. 1, James M. Terrell, Birmingham; Place No. 2,

John A. Smyth, Birmingham; Place No. 3, Barry A. Ragsdale,

Birmingham; Place No. 4, Robert G. Methvin, Jr., Birmingham;

Place No. 5, LaBella S. Alvis, Birmingham; Place No. 6, Michael

D. Ermert, Birmingham; Place No. 7, Allison O. Skinner, Birm-

ingham; Place No. 8, Brannon J. Buck, Birmingham; Place No. 9,

Erik Stephen Heninger, Birmingham • Bessemer Cutoff, Ken-

neth Moore, Bessemer • 11th Circuit, Ralph E. Holt, Florence •

12th Circuit, Carmen F. Howell, Enterprise • 13th Circuit, Place

No. 1, Charles Zackery Moore, Mobile; Place No. 2, Frederick G.

Helmsing, Jr., Mobile; Place No. 3, William R. Lancaster, Mo-

bile; Place No. 4, Bryan E. Comer, Mobile; Place No. 5, James

Rebarchak, Mobile • 14th Circuit, Charles C. Tatum, Jr., Jasper •

15th Circuit, Place No. 1, George R. Parker, Montgomery; Place

No. 2, Patrick L.W. Sefton, Montgomery; Place No. 3, J. Flynn

Mozingo, Montgomery; Place No. 4, C. Gibson Vance, Mont-

gomery; Place No. 5, Jeffery C. Duffey, Montgomery; Place No.

6, David Martin, Montgomery • 16th Circuit, Bradley W. Cornett,

Gadsden • 17th Circuit, T. Thomas Perry, Jr., Demopolis • 18th

Circuit, Place No. 1, William Randall May, Birmingham; Place

No. 2, Mark S. Boardman, Chelsea; Place No. 3, Anne Malatia

Glass, Birmingham • 19th Circuit, Robert L. Bowers, Jr., Clanton

• 20th Circuit, R. Cliff Mendheim, Dothan • 21st Circuit, J. Kirk-

man Garrett, Brewton • 22nd Circuit, Manish H. Patel, Andalusia

• 23rd Circuit, Place No. 1, Tazewell T. Shepard, Huntsville;

Place No. 2, John A. Brinkley, Jr., Huntsville; Place No. 3, Re-

bekah Keith McKinney, Huntsville; Place No. 4, M. Clay Martin,

Huntsville • 24th Circuit, Amanda Walters Porter, Fayette • 25th

Circuit, B. Scott Shipman, Haleyville • 26th Circuit, F. Patrick

Loftin, Phenix City • 27th Circuit, Clint L. Maze, Arab • 28th Cir-

cuit, Place No. 1, James Lynn Perry, Daphne; Place No. 2, J.

Langford Floyd, Fairhope • 29th Circuit, Sally Clark Bowers, Sy-

lacauga • 30th Circuit, Erskine R. Funderburg, Jr., Pell City • 31st

Circuit, H. Thomas Heflin, Jr., Tuscumbia • 32nd Circuit, Roy W.

Williams, Jr., Cullman • 33rd Circuit, Robert H. Brogden, Ozark •

34th Circuit, Jeffrey L. Bowling, Russellville • 35th Circuit, Clin-

ton H. Hyde, Evergreen • 36th Circuit, Christy Williams Graham,

Moulton • 37th Circuit, Andrew D. Stanley, Opelika • 38th Cir-

cuit, Deborah L. Dunsmore, Scottsboro • 39th Circuit, Donald B.

Mansell, Athens • 40th Circuit, Gregory M. Varner, Ashland •

41st Circuit, Brett Ashley King, Locust Fork

aT-LargE BOard mEmBErsDiandra S. Debrosse, Birmingham • Raymond L. Bell, Jr., Mobile

• Latisha R. Davis, Chattanooga • Charles Price, II, Birmingham •

Karen Laneaux, Montgomery • Kira Y. Fonteneau, Birmingham •

Jeanne Dowdle Rasco, Huntsville • Hon. Monet McCorvey

Gaines, Montgomery • John Thomas Stamps, III, Bessemer

The Alabama Lawyer (USPS 743-090) is published six times a

year by the Alabama State Bar, 415 Dexter Avenue, Mont-

gomery, Alabama 36104. Periodicals postage paid at Mont-

gomery, Alabama and additional mailing offices.

POSTMASTER: Send address changes to The Alabama

Lawyer, P.O. Box 4156, Montgomery, AL 36103-4156.

The Alabama Lawyer is the official publication of the Alabama

State Bar. Views and conclusions expressed in articles herein are

those of the authors, not necessarily those of the board of editors,

officers or board of commissioners of the Alabama State Bar. Ad-

vertising rates will be furnished upon request. Advertising copy is

carefully reviewed and must receive approval from the Office of

General Counsel, but publication herein does not necessarily imply

endorsement of any product or service offered. The Alabama

Lawyer reserves the right to reject any advertisement. Copyright

2019. The Alabama State Bar. All rights reserved.

ALABAMA STATE BAR STAFF415 Dexter AvenueMontgomery, AL 36104 (334) 269-1515 • (800) 354-6154www.alabar.org ADMINISTRATIONExecutive Director ...................................Phillip McCallumDirector of Personnel & Operations.................Diane LockeAdministrative Assistant ..........................Katherine ChurchCommunications Coordinator ........................Alex Edwards

ADMISSIONS & ATTORNEY LICENSINGDirector of Admissions & Attorney Licensing ..Justin AdayAdministrative Assistant.......................Cathy Sue McCurryAdministrative Assistant................................Sonia Douglas

CENTER FOR PROFESSIONAL RESPONSIBILITYGeneral Counsel ..............................................Roman ShaulParalegal to General Counsel............................Robin EnnisAssistant General Counsel .........................Jeremy McIntireParalegal/Investigator..........................................Carol MottAssistant General Counsel...............................Mark MoodyParalegal/Investigator..................................Stacey MoseleyDisciplinary Commission Clerk ............................Kim EllisDisciplinary Clerk ........................................Bonnie MainorCSF Coordinator .............................................Laurie BlazerReceptionist ............................................................Julie Lee

ETHICS DIVISIONAssistant General Counsel ..............................Tripp VickersDirector of Practice Management

Assistance Program ..................................Eric Anderson

DIGITAL COMMUNICATIONSDirector of Information Technology .................Dolan TroutInformation Systems Manager........................Hunter HarrisDirector of Publications ...........................Margaret Murphy

PROGRAMSDirector of Programs ...................................Ashley PenhaleAdministrative Assistant ...............................Robyn Bernier

FINANCIAL/TRAVELDirector of Finance..........................................Merinda HallFinancial Assistant ..............................................Kristi Neal

LAWYER ASSISTANCE PROGRAM(334) 269-1515 • (334) 834-7576Director of Lawyer Assistance Program ......Robert ThornhillCase Manager .............................................Shannon KnightAdministrative Assistant..................................Joycelyn Hill

LAWYER REFERRAL SERVICELRS Representative.............................................John Dunn

PRINT SHOP/BUILDINGPrint Shop Manager/

Building Superintendent .......................Roderick Palmer

RECEPTIONIST..............................Stephanie Oglesby

VOLUNTEER LAWYERS PROGRAMDirector of Volunteer Lawyers Program............Linda LundIntake Clerk...................................................Debbie HarperIntake Clerk.................................................Doris McDaniel

OFFICERS AND EXECUTIVE COUNSELSam W. Irby, Fairhope ...........................................PresidentChristina D. Crow, Union Springs ................President-electAugusta S. Dowd, Birmingham .....................Past PresidentTazewell T. Shepard, Huntsville ....................Vice PresidentPhillip W. McCallum, Montgomery ......................SecretaryFrederick G. Helmsing, Jr., Mobile .......Ex Officio MemberHon. Monet M. Gaines, Montgomery..........Executive CouncilJana Russell Garner, Selma.....................Executive CouncilT. Thomas Perry, Jr., Demopolis .............Executive CouncilRachel L. Miller, Montgomery...................Young Lawyers’

Section President

a d V e r T i s e r s

ABA Retirement Funds ..................93

Alabama Court Reporting, Inc...........79

Alabama Family Trust......................161

Alabama Legal & Investigative Services, Inc. ................................151

Attorneys Insurance Mutual of the South ........................78

Birmingham School of Law .........139

Cain & Associates Engineers........141

Davis Direct......................................145

J. Forrester DeBuys, III ................141

The Finklea Group ...........................153

Freedom Court Reporting ................163

GilsbarPRO.......................................143

Huntsville-Madison County Bar Association...................................99

Insurance Specialists, Inc.................164

LawPay ...............................................95

National Academy ofDistinguished Neutrals ...................83

The Neutral Solution ....................159

Professional Software Corporation...................................141

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The motto of the alabama state bar is“lawyers render service.” There are twosides to this: the service which the barshould render to its members and thepublic, and the service which all of us aslawyers should render to our clients, ourprofession and our communities. Thefocus of this article is on this secondtype of service and how it can be ac-complished through always striving toact as servant-leaders.

There is a need for good leaders.lawyers are uniquely situated to fulfillthis need, whether it be through theirwork as judges, policy-makers, legalpractitioners, business owners, govern-ment officials, politicians, scholars andteachers, or through involvement withchurches and charitable organizations. Tome, professionalism includes not onlyhow lawyers treat each other, but also

our impact on the community as awhole. We can influence the bar and thefuture of our state by taking on leader-ship roles and serving well in those roles.

What is leadership and what does itmean to be a good leader? dictionariesare not much help. They define a leaderas a person who leads and leadership asthe office or position of a leader. To com-pensate for these circular definitions, dic-tionaries resort to providing examples ofleaders (e.g. political leaders, orchestraconductors, military leaders, etc.). it ap-pears as though dictionaries have thesame problem the rest of us have when itcomes to defining leadership–we know itwhen we see it.

i learned the term “servant-leadership”through my involvement with the asb asa bar commissioner and committeemember. This concept, which is part of

P r e s i d e N T ’ s P a g e

Sam [email protected]

(251) 929-2225

We can all be servant-leaders

the curriculum for the asb’s award-winning leadership Forum,actually encompasses much of what i have experienced overthe years. Talking about leadership as a type of servitude sim-ply provides a framework for understanding which charactertraits contribute to good leadership. Forum participants aretaught that servant-leaders recognize the value of sharingpower and helping others develop and perform to the best oftheir ability, and they are encouraged to strive to be servant-minded in all of their leadership capacities.

This servant-leadership ethic makes sense to me. Toooften leaders think of themselves as the powerful person atthe top of the pyramid. by comparison, the servant-leadershares power, puts the needs of the organization first andcreates a team environment. servant-leadership, in effect,turns the pyramid upside down. instead of the followersworking to serve the leader, the leader exists to serve the fol-lowers and, through them, the organization.

each of us has the potential to become an effective lawyer-servant-leader. self-awareness is key to this. We need to recog-nize that leadership is not about glorifying ourselves, but aboutbringing out the best in others. it is important to have passionand a vision or goal for the organization, but this can be accom-plished without coming across as arrogant, dogmatic or pushy.

as leaders, we should be ready to champion an environment ofcreativity and collaboration, which means not blindly followingthe status quo or encouraging divisiveness. and, we shouldcommit to developing the whole team and improving the or-ganization’s productivity. if we always hold ourselves to thehighest level of accountability, then other team members arelikely to follow our example. it is important, though, to keepthings fun and retain the ability to laugh at ourselves; we are allhuman and capable of making mistakes.

leadership should be viewed not as something to step inand out of, but rather as a state of mind and a way of living ourlives. We ought to be willing to take on various leadership rolesand should strive to be servant-minded in performing thoseroles. We must aspire to become models of ethical and profes-sional behavior, both within and outside the legal community.even though we are not always on the clock, we are always at-torneys and thus continuously represent our profession. by be-coming active servant-leaders in our communities as well as inboth local and state bar organizations, we can make our prac-tices better, our communities healthier and our bar stronger.

Thanks to Mobile lawyer Mary Margaret bailey for her assis-tance in preparing this article. i also thank my friend and lawyer,dennis harrison, for giving me his thoughts on leadership. �

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Thank You, greg hawleygreg hawley has served as the editor of The Alabama

Lawyer since November 2010. due to his leadership and thecountless hours he has devoted to this volun-teer position, The Alabama Lawyer has consis-tently been the best state bar publication inthe country. The motto of the alabama statebar is “lawyers render service” and i know ofno other lawyer who has provided more serv-ice to the members of the alabama state barthan greg hawley.

greg, thank you for your service. You willbe missed.

–President sam W. irby

Times Flies WhenYou’re having Fun!

That old saying is true–time truly does fly when you’rehaving fun. and the past eight years, with greg hawley atthe helm as editor of The Alabama Lawyer magazine, havebeen rewarding, enlightening and just plain fun!

greg quickly agreed to take over as editor only a fewweeks after the sudden and unexpected death of longtimeeditor robert huffaker and i instantly knew the magazinewas in good hands. actually, i knew it when everyone onthe unofficial search committee (executive director Keith

Norman, past President Mark White and President alycespruell) and i all came up with one name and one nameonly–greg hawley.

like robert was, greg is “scary smart,” but he also has away of putting those around him at ease, letting them know

that he is truly interested in what they have tosay. i always felt that my opinion matteredwhen it came to the content and look of theLawyer.

Talking to someone several days a week,every week, discussing where to place acomma or how much to cut from an au-thor’s bio, could get stale. it never did, evenafter producing 50+ issues of the magazine,and i think our different perspectiveshelped prevent that.

greg enjoys volunteering and giving back,so i know he will find another way in the verynear future to give of his time and talents,whether in bar work or a community project.

he stepped in during a stressful and unsure time and kepteverything and everyone on track. and, he continued to doso for the next eight years. The alabama state bar and i cannever truly thank him enough for his time, his patience andhis dedication.

i look forward to working with newly-selected editor gregWard and seeing how he continues the tradition of con-stantly striving for improvement, while also having fun! �

–Margaret Murphy, Managing editor

Hawley

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bob Methvin grew up in eufaula andattended the university of alabama,graduating in 1991 with a degree in fi-nance. he then obtained his law degreefrom cumberland school of law in 1994.

his family has been active in the legalprofession for many years, includingboth grandfathers–Thomas JamesMethvin, who practiced in georgia dur-ing and after the great depression, andJudge William g. lindsey, of the First Ju-dicial circuit in choctaw, clarke andWashington counties–and his brother,Tom Methvin, a Montgomery attorney.

after a year with a small firm in birm-ingham, bob decided to become a solopractitioner. in 2000, he and Phillip Mc-callum teamed up to start Mccallum &Methvin Pc. The firm later became Mc-callum, Methvin & Terrell Pc. in 2017,upon Phillip’s departure to take over asexecutive director of the alabama statebar, the firm became Methvin, Terrell,Yancey, stephens & Miller Pc, with bob’sserving as the managing shareholder.

With approximately 25 years of experi-ence in civil litigation, bob continues torepresent individuals and small busi-nesses across the nation in an array of liti-gation matters, including businessdisputes, complex litigation, class actionsand individual cases, often involving in-surance matters, contractual disputes orclaims of fraud and deceptive business

practices. he frequently lectures on busi-ness litigation and class action litigationand serves as consulting counsel and liti-gation counsel to a number of small busi-nesses in alabama and throughout thecountry. bob is also a registered mediatorwith the alabama center for dispute res-olution and regularly assists alabama at-torneys and their clients in this capacity.

early in his career, bob became in-volved with the Young lawyers’ section ofthe state bar and was elected president ofthe section in 2002. he was selected to bea member of the alabama state bar lead-ership Forum, class Two. With a strongappreciation for community leadership,he regularly serves on various commit-tees for both the alabama state bar andbirmingham bar association.

bob served on the alabama state barJudicial liaison committee and now ison the disciplinary Panel. he was electedto three consecutive terms as an ala-bama bar commissioner for the TenthJudicial circuit. he was the 2011 recipi-ent of the alabama state bar President’saward for Meritorious service. bob is co-chair of the state bar local bar commit-tee and serves on the bench and barrelations Task Force, unauthorized Prac-tice of law committee, Member benefitscommittee, 19th amendment centennialcelebration Task Force and Pro bono innovation Task Force.

P r e s i d e N T - e l e c T P r o F i l e

Robert G. Methvinget to Know Your President-elect

Pursuant to the Alabama State Bar’s rules governing the election ofPresident-elect, the following biographical sketch is provided of Robert G.Methvin. Methvin was the sole qualifying candidate for the position of presi-dent-elect of the Alabama State Bar for the 2019-2020 term and will assumethe presidency in 2020.

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When robert huffaker passed away in september2010, having served as editor of The AlabamaLawyer for 27 years, finding someone able to

follow robert was no small task. although robert’s deathwas untimely, he left as an enduring legacy one of thefinest professional journals in the country. he set the barvery high for the magazine’s next editor.

as i thought about the type of leader to be the Lawyer’seditor, i knew we needed someone who was a first-ratelawyer possessing a fine academic mind, highly regarded inthe legal community and who had the mettle to maintainthe editorial integrity of The Alabama Lawyer. Ponderingthese qualities, it soon became quite clear that the next edi-tor, who would be only its fourth in 70 years, ought to begreg hawley.

greg was the ideal person, not only because he pos-sessed the characteristics mentioned above, but also be-cause he had the ideal temperament to workcollaboratively with the long-time managing editor, Mar-garet Murphy, and the magazine’s board of editors, aswell as the ability to persuade and encourage lawyers toprepare articles to be considered for publication. Theicing on the cake was that greg had previously served onthe board of editors and written articles for the Lawyer.

Prior to calling greg to convince him to take the position, idiscussed my idea with Margaret and state bar Presidentalyce spruell. both were excited by the prospect and en-couraged me to call him. When i contacted greg, i could nothave wished for a better result. he said he was flattered tobe considered and would be honored to serve. i was be-yond elation. To have greg agree to become the new editormeant that the excellent bar publication which lawyers hadgrown to expect would continue.

For the past eight years, The Alabama Lawyer has becomea better publication than ever under greg’s leadership. The

subtle changes in format, more color photography and a re-newed emphasis on high-quality, substantive, but practicallegal articles have made the Lawyer an even more useful re-source for busy lawyers regardless of their area of practice.

i had the good fortune to work with greg for six yearsbefore my retirement as executive director in 2017. i canhonestly say that i never had a moment’s worry aboutany aspect of the publication. The editorial board withgreg at the helm and Margaret as the managing editor allworked smoothly to turn out excellent issues of the mag-azine every two months. as effortlessly as those issuesmay have seemed to materialize, greg was there with a“roll up your sleeves” attitude, thoroughly reviewing eacharticle and every section of the magazine before anyissue ever went to press. other than the president of thealabama state bar, no other bar volunteer has to spendtime virtually every day doing bar-related work except forthe editor of The Alabama Lawyer–and presidents onlyserve a one-year term!

Thank you, greg, for heeding the call when your fellowlawyers needed you. You have performed a valuable serv-ice to alabama’s legal profession. Through your selflessservice and leadership of The Alabama Lawyer, you havehelped make us all better lawyers. s

–Keith b. Norman, state bar executive director, 1994-2017

Thank You, greg

bob served on the birmingham bar association grievancecommittee, executive committee, Pro bono committee andbirmingham bar Nominating committee, and serves on thecourt liaison committee. he also chaired the crisis reliefcommittee in 2011, which set up free legal clinics and pro-vided extensive legal help to tornado victims in Pratt cityand Pleasant grove.

bob served on the board of the birmingham Volunteerlawyers Program and remains committed to its mission toprovide free legal representation to the poor. he supportsthe alabama civil Justice Foundation through its Pioneers ofJustice society and the alabama law Foundation through itsatticus Finch society.

bob works with several organizations to raise awareness ofand support for those with cystic fibrosis, including founding

and serving as chair of the board of cystic Fibrosis–hope foralabama, a local charity assisting low-income families withchildren suffering from cystic fibrosis. he has served as thechair of the cystic Fibrosis Foundation for alabama and onthe advisory board for laps for cF.

other volunteer work includes serving on the board of big-time Ministries, which is dedicated to teaching children chris-tian principles, and with the Jones Valley Teaching Farm, anactive farm in downtown birmingham providing inner-citystudents with hands-on food and nutrition education.

bob and wife lee have three daughters, hope (17), Kate(14) and laine (10). he and his family are active members ofsaint luke’s episcopal church. �

Greg will have more time now to enjoy this Tennessee view.

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our state bar is a unified bar and, assuch, presents a unique situation. Thebenefits of a unified bar enable our pro-fession to carry out our regulatory obli-gations and public services. You’rerequired to be a member in order topractice law, but how you choose to beinvolved after your admissions cere-mony is ultimately your choice. The factis we need volunteer support–not onlydo the regulatory and licensing func-tions require strong support, but so doour programs that benefit the profes-sion and the public.

This year, we embarked on a new jour-ney with the leadership Forum. as weannounced last fall, the leadershipForum is taking a “strategic pause” to

evaluate the program moving forward.The summits we are holding this springare the brainchild of past alumni, whoare volunteering their time to make theleadership Forum continue to be theaward-winning, innovative program thatit has been for the last 15 years. a lot ofthe forum’s success is due to ed Patter-son, who retired in January. We thank edfor the time he spent molding manyyoung legal minds over the years. Wevery much owe the future of the leader-ship Forum to the alumni who havespent the last several months crafting theprogram that will push it to new heights.by the time you read this, we will havecompleted at least one summit in Febru-ary and are looking forward to two more.

e x e c u T i V e d i r e c T o r ’ s r e P o r T

Volunteers are the backbone of the bar

Phillip W. [email protected]

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We also had longtime editor of The Alabama Lawyer, greghawley, retire after eight years of dedicated service. beingthe editor of a quality publication like The Alabama Lawyerrequires a significant amount of time working with contribu-tors, a graphic designer, the editorial board and our state bardirector of publications, Margaret Murphy. greg has directedthe publication of more than 50 issues of the Lawyer, allwhile practicing law.

a little insight into the positon of editor–it’s basically apart-time, but unpaid, extra job. For each issue, greg, likeevery editor before him, had to solicit and review prospective

content at least two months in advance of each edition. heand Margaret would go through several drafts, editing somepieces numerous times, in order to make sure they are readyfor publication. unlike other bar communications that aresent via email, the Lawyer is mailed to every member in goodstanding, plus approximately 100 additional subscribers.

it’s our legacy publication and we should be very proud ofits content each and every issue. Volunteers like greg hawleyare what make this organization tick–we appreciate his yearsof commitment to a job well done. This is greg hawley’s lastissue as editor, with greg Ward’s taking over with the Maymagazine. We look forward to many years of innovation andgrowth under his leadership.

Volunteers are the backbone of our bar. These last two ex-amples are just a snapshot of the work lawyers do each yearto help this organization run. being a member-based organi-zation, staff members, including me, understand the value ofreceiving input directly from lawyers. each year, the incomingpresident has the opportunity to populate committees andtask forces in order to carry out their initiatives for the year. ifyou have been serving on a section, committee or task force–thank you. Your time has been noticed and is appreciated. ifyou would like to get involved next year or in coming years,be thinking of how You can make an impact in this bar. s

My first reaction when i was askedto pen a few words about greg haw-ley was how? i like to write, i have ahistory of writing, and i was named ashis successor to do just that, but try-ing to say a few words to describe aman with whom i’ve so very much en-joyed working is asking a little much.

only after i was chosen to replacehim did i even begin to see the taskhe accomplished with such casualease. and accomplish it he did. sixtimes a year, year after year, heloomed large over a product thathas more than 18,000 readers scat-tered not only across alabama, butacross the united states, and eveninternationally. daunting, that task.

he bore the singular and heavy re-sponsibility of finding and publish-ing enough articles for every issue.For every article that came to him,he had to read every word, checkthe cites, and make certain that itmet the high standards we hold forThe Alabama Lawyer. sometimes hehad to ask the author to make

changes. sometimes he had to re-ject articles. and, he was able to ac-complish all of this with a lighttouch, without giving offense, withclass and with character.

i sent in an article once, and gregcalled me. he liked the article, hesaid–he has a way of making you feelgood, of bringing you inside–but hehad a question. could i tell him what imeant in one particular sentence? iread the sentence–it was an unimpor-tant sentence, firmly placed in themiddle of my article–and i, like all au-thors, thought that my words–my ba-bies–were perfect. With greatgentleness, he nudged me to give thewords a bit of a different read. Withthat i took his point–my words con-

tained a latent ambiguity. he helpedme to clear it up with the tiniest ofchanges. i gladly accepted his sugges-tion, and the article was better for it.

he invited us to look beyond him–to never see him, actually–eventhough he was on every page, inevery article, part and parcel of all thatis our state bar’s flagship magazine.greg made a tough job look easy.

he once told me that he was neversure who read The Alabama Lawyerfor more than the obituaries and thereprimands, and that sometimes hefelt like he was working for himselfand his mother. No, greg, you workedfor all of us. and you did a fine job.You left the magazine better thanyou found it (no mean task, consider-ing the editor you replaced), and youleft me with a daunting challenge: Dobetter than I did.

You will be a tough act to follow.all because you did the job so well.

enjoy your time away from the ed-itorial desk. You deserve it. �

–greg Ward, editor

greg hawley: class, character and clarity

Greg Hawley (left) and members of the program that reviewedDeepwater Horizon share a lighter moment at the 2011 ASBAnnual Meeting.

Hawley

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last fall, i informed sam irby that iwanted to retire as editor of The AlabamaLawyer. he and a committee conducted athorough search, and they nominatedand the bar commissioners selectedgreg Ward, who will bring fresh ideasand a new perspective and will do a ter-rific job. greg has been a member of theeditorial board for some time, and he isalready working hard to produce futureissues, starting with the May publication.

serving as editor of The AlabamaLawyer has been a rich, rewarding pas-sion. Thank you for the opportunity toserve for several years, working with theexcellent lawyers who serve on the edi-torial board. Thank you, too, for the arti-cles submitted and for the helpfulsuggestions made over the years.

Three women in my life deserve spe-cial thanks and praise. First, my wife,sally Hawley, was more than under-standing on those occasions when ichose to enjoy an afternoon at thebeach, sitting at the kitchen table with ared pen and a small pile of submissions.Fortunately, she enjoys her books as

much as i enjoy editing articles! second,my assistant, Tyler florence, kept a cal-endar of articles submitted, tracked myedits (and prodded me when necessary)and ensured that we sent final versionsin a timely manner to Publications di-rector Margaret Murphy. Finally, as someof you already know, margaret murphydeserves our appreciation for makingThe Alabama Lawyer a great publication.she handles the advertising, thebudget, the printing, law firm news, me-morials, staff-written pieces and dead-lines. oh, and she catches typos that imiss. it has been a joy to work with Mar-garet to produce a quality product.laughter has been the most consistentingredient in eight years of phone calls,emails and occasional meetings. No twopeople who live 90 miles apart have hadmore fun working together.

but, all good things come to an end.one of my favorite poems captures thelast eight years of collaboration, as wellas the closure that the publication ofthis issue of The Alabama Lawyer bringsfor me. s

N o T e F r o M T h e e d i T o r

Members of the bar, i thank you.

Gregory H. [email protected]

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Thank you, again,for the honor.

–gregory h. hawley

Nothing Gold

Can StayNature’s first green is gold,Her hardest hue to hold.Her early leaf’s a flower;But only so an hour.

Then leaf subsides to leaf.So Eden sank to grief,

So dawn goes down to day.Nothing gold can stay.

–robert Frost, 1923

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i M P o r T a N T N o T i c e s

� Local Bar award of achievement

� J. anthony “Tony” mcLain Professionalism award

� William d. “Bill” scruggs, Jr. service to the Bar award

� notice of Election and Electronic Balloting

� notice of and Opportunity forComment on amendments toThe rules of the United statesCourt of appeals for theEleventh Circuit

local bar award of achievementThe local bar award of achievement recognizes local bars for their outstanding

contributions to their communities. awards will be presented during the alabamastate bar’s annual Meeting.

local bar associations compete for these awards based on their size–large,medium or small.

The following criteria are used to judge the applications:

• The degree of participation by the individual bar in advancing programs to benefit the community;

• The quality and extent of the impact of the bar’s participation on the citizens in that community; and

• The degree of enhancements to the bar’s image in the community.

To be considered for this award, local bar associations must complete and sub-mit an application by June 1. applications may be downloaded from www.alabar.orgor obtained by contacting ashley Penhale at (334) 269-1515 or [email protected].

J. anthony “Tony” Mclain Professionalism award

The Board of Bar Commissioners of the alabama state Bar will receive nomi-nations for the J. anthony “Tony” mcLain Professionalism award through april15. Nominations should be prepared on the appropriate nomination form availableat www.alabar.org and mailed to:

Phillip W. Mccallumexecutive directoralabama state barP.o. box 671Montgomery, al 36101-0671

The purpose of the J. anthony “Tony” Mclain Professionalism award is to honor theleadership of Tony Mclain and to encourage the emulation of his deep devotion to pro-fessionalism and service to the alabama state bar by recognizing outstanding, long-termand distinguished service in the advancement of professionalism by living members ofthe alabama state bar.

Nominations are considered by a five-member committee which makes a recom-

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mendation to the board of bar commissioners with respectto a nominee or whether the award should be presented inany given year.

William d. “bill” scruggs, Jr.service to The bar award

The Board of Bar Commissioners of the alabama stateBar will receive nominations for the William d. “Bill”scruggs, Jr. service to the Bar award through april 15.Nominations should be prepared on the appropriate nomi-nation form available at www.alabar.org and mailed to:

Phillip W. Mccallumexecutive directoralabama state barP.o. box 671Montgomery, al 36101-0671

The bill scruggs service to the bar award was established in2002 to honor the memory of and accomplishments on behalfof the bar of former state bar President bill scruggs. The awardis not necessarily an annual award. it must be presented inrecognition of outstanding and long-term service by livingmembers of the bar of this state to the alabama state bar as anorganization.

Nominations are considered by a five-member committeewhich makes a recommendation to the board of bar commissioners with respect to a nominee or whether theaward should be presented in any given year.

Notice of election andelectronic balloting

Notice is given here pursuant to the Alabama State BarRules Governing Election and Selection of President-elect andBoard of Bar Commissioners that the election of these officerswill be held beginning Monday, May 20, 2019 and endingFriday, May 24, 2019.

on the third Monday in May (May 20, 2019), members willbe notified by email with instructions for accessing an elec-tronic ballot. Members who wish to vote by paper ballotshould notify the secretary in writing on or before the firstFriday in May (May 3, 2019) requesting a paper ballot. a sin-gle written request will be sufficient for all elections, includ-ing run-offs and contested president-elect races, during thiselection cycle. all ballots (paper and electronic) must bevoted and received by the alabama state bar by 5:00 p.m. onthe Friday (May 24, 2019) immediately following the open-ing of the election.

A different kind of retirement plan.

The ABA Retirement Funds Program is available through the Alabama State Bar as a member benefit. Please read the Program Annual Disclosure Document (April 2018) carefully before investing. This Disclosure Document contains important information about the Program and investment options. For email inquiries, contact us at: [email protected]. Securities offered through Voya Financial Partners, LLC (member SIPC).Voya Financial Partners is a member of the Voya family of companies (“Voya”). Voya, the ABA Retirement Funds, and the Alabama State Bar are separate, unaffiliated entities, and not responsible for one another’s products and services.CN1018-37928-1119D - 2017

The ABA Retirement Funds Program is different from other providers. It was established to meet the unique needs of the legal community.

• As a not-for-profit corporation led by volunteer lawyers, we ensure decisions are made in the best interest of law professionals who are saving for retirement.

• We leverage the size and scale of the legal community and our member clients to make retirement plans affordable for firms of all sizes, even solos.

• We provide law firms with the most comprehensive protection from fiduciary liability under ERISA.

Find out what many law firms like yours already know. It’s good to be different.Contact an ABA Retirement

Funds Program Regional Representative today.

800.826.8901

www.abaretirement.com

[email protected]

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i M P o r T a N T N o T i c e s

(Continued from page 93)

nomination and Election of Board of BarCommissioners

bar commissioners will be elected by those lawyers withtheir principal offices in the following circuits:

1st Judicial circuit

3rd Judicial circuit

5th Judicial circuit

6th Judicial circuit, Place 1










23rd Judicial circuit, Place 3




32nd Judicial circuit


additional commissioners will be elected for each 300members of the state bar with principal offices therein. Newcommissioner positions for these and the remaining circuitswill be determined by a census on March 1, 2019 and vacan-cies certified by the secretary no later than March 15, 2019.all terms will be for three years.

a candidate for commissioner may be nominated by peti-tion bearing the signatures of five members in good standingwith principal offices in the circuit in which the election willbe held or by the candidate’s written declaration of candidacy.Nomination forms and/or declarations of candidacy must bereceived by the secretary no later than 5:00 p.m. on the lastFriday in april (april 26, 2019).

Election of at-Large Commissionersat-large commissioners will be elected for the following

place numbers: 2, 5 and 8. Petitions for these positions,

which are elected by the board of bar commissioners, aredue by april 1, 2019.

submission of nominationsNomination forms, declaration of candidacy forms and ap-

plications for at-large commissioner positions must be sub-mitted by the appropriate deadline and addressed to:

Phillip W. Mccallumsecretaryalabama state barP.o. box 671Montgomery, al 36101-0671

These forms may also be sent by email to [email protected] by fax to (334) 261-6310.

It is the candidate’s responsibility to ensure the secretaryreceives the nomination form by the deadline.

election rules and petitions for all positions are available atwww.alabar.org.

Notice of and opportunityFor comment on amendments to the rules of the united statescourt of appeals for theeleventh circuit

Pursuant to 28 u.s.c. § 2071(b), notice and opportunity forcomment is hereby given of proposed amendments to therules of the united states court of appeals for the eleventh cir-cuit. The public comment period is from april 1 to May 1, 2019.

a copy of the proposed amendments may be obtained on and after april 1, 2019 from the court’s website athttp://www.ca11.uscourts.gov/rules/proposed-revisions. acopy may also be obtained without charge from the officeof the clerk, u.s. court of appeals for the eleventh circuit, 56Forsyth st., NW, atlanta 30303 [phone: 404-335-6100].

comments on the proposed amendments may be submit-ted in writing to the clerk at the above address, or electroni-cally at http://www.ca11.uscourts.gov/rules/proposed-revisions,by 5:00 pm eastern time on May 1, 2019. �

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to the Alabama Rules of Civil Pro-cedure effective December 21,2018. For the most part, these par-allel the changes to the FederalRules of Civil Procedure (Rules26 and 37) in December 2015. Theamendments include: (1) adding aproportionality standard in the def-inition of the scope of discovery,(2) expressly allowing courts to al-locate discovery expenses in thecontext of a protective order and(3) instituting a new and completeframework for addressing a party’sfailure to preserve electronically-stored information (“ESI”).

Discovery’s NewScope–Rule 26(b)(1)Adds ProportionalityRule 26(b)(1) sets forth the per-

missible scope of discovery in Al-abama courts. Prior to theDecember amendments, propor-tionality was not part of Rule26(b)(1). Instead, proportionalitywas only one of the considerationsthat a court could use to limit dis-covery under Rule 26(b)(2)(B).Thus, proportionality only becamean issue if a motion was made fora protective order under Rule26(c) (or if the court acted “uponits own initiative”).

Alabama Supreme Court AmendsRules 26 and 37 to Address Proportionality and ESI

By Gregory C. Cook and Sloane M. Bell

The Alabama Supreme Court recentlyadopted important amendments

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The amendment moves all pro-portionality factors to Rule26(b)(1), which is the portion ofRule 26 which defines the scopeof discovery. Rule 26(b)(1) nowprovides, in relevant part: “Partiesmay obtain discovery regardingany matter, not privileged, whichis: relevant…and proportional tothe needs of the case.”As the Committee Comments

make clear, one reason for thismove was to emphasize the impor-tance of proportionality to all par-ties and the trial court. TheCommittee noted the informationexplosion and the potentially crip-pling costs for discovery andsought to “highlight the need tosize discovery to the needs of aparticular case.” See Ala. R. Civ. P.26(b), Comm. Cmts. This changeunderscores that proportionality isrequired and not optional.The amendment specifies six

factors to consider in decidingproportionality. These factors fol-low the federal rule exactly, andthe Committee Comments indicatethat federal caselaw is expected tobe helpful in applying these fac-tors. The six factors are: (1) “theimportance of the issues at stake inthe action,” (2) “the amount incontroversy,” (3) “the parties’ rela-tive access to relevant informa-tion,” (4) “the parties’ resources,”(5) “the importance of the discov-ery in resolving the issues” and (6)“whether the burden or expense ofthe proposed discovery outweighsits likely benefits.”Four of these factors were previ-

ously part of Rule 26(b)(2)(B) (butwere slightly reworded) and twoof these factors are new. Thesetwo new factors are: (1) the par-ties’ relative access to relevant in-formation and (2) the importanceof the discovery in resolving theissues. As to the first of these new

factors, the Committee Commentsexplain that parties may not havethe same “access” to relevant in-formation and therefore one partymay need more discovery (this isreferred to as “information asym-metry”). Thus, the fact that oneparty has produced more discov-ery than another party (for in-stance, an “individual plaintiff”) isnot necessarily indicative that dis-covery is not proportional. As tothe second of these new factors,the Committee Comments explainthat the “importance of the discov-ery in resolving the issues” wasimplied in the prior wording re-garding the “needs of the case”from Rule 26(b)(3)(B)(iii).The Committee Comments (as

well as the Advisory CommitteeNotes for the federal rule) includea helpful discussion of the mean-ing of these factors. Notably, fed-eral law indicates that the weightof these factors can vary from caseto case (and request to request)and thus that the order of thesefactors in the Rule is not indicativeof their importance.The Committee Comments also

state that “[a]ll parties shouldshare the responsibility to honorthese limits,” and that the sizeof that responsibility mayshift throughout the dis-covery process. Forinstance, the partyrequesting the dis-covery may havelittle informationon the extent ofthe burden posedby particular dis-covery requestsat the time the re-quests are issued.Conversely, the re-sponding party mayhave little informationon the importance of the

discovery in resolving issues asunderstood by the requestingparty. The parties should commu-nicate during the discoveryprocess and revise their positionsaccordingly. The responding partyshould considering explaining theburden rather than standing onboilerplate objections; the request-ing party should explain why thediscovery is important to the rele-vant issues during the meet-and-confer process. Again, it is clearthat under the revised Rule, allparties now have a collective re-sponsibility to consider propor-tionality on the front end and toprovide the trial court with all ap-propriate information if they can-not reach a resolution.The impact of this rule change

should be small in routine cases.Proportionality is normally self-evident in such cases. In short,most cases will still rely on self-regulated discovery where the par-ties come to mutually-agreeableterms without court involvement.But, as noted by the Committee,the proportionality factors will beof particular importance for more

But, as noted by the Committee, the proportionality

factors will be of particular import-ance for more complex cases, including

commercial disputes, class actions, multi-party actions, product liability

actions and actions involving electronic discovery.

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complex cases, including commer-cial disputes, class actions, multi-party actions, product liabilityactions and actions involving elec-tronic discovery. It is those caseswhere this amendment will saveparties and the judicial system sig-nificant time and money. With ad-vances in technology come theincreased costs of discovery, aswell as the potential weaponiza-tion of the discovery process or toutilize the process as a stall-tactic.Given these considerations, theCommittee recognized the needfor judicial involvement in themore complex cases and providedthe trial court with a detailed stan-dard for making proportionalitydeterminations.Another change to Rule 26(b)(1)

was the removal of specific exam-ples of discoverable information,including “the existence, descrip-tion, nature, custody, condition,and location of any books, docu-ments, or other tangible things andthe identity and location of per-sons having knowledge of any dis-coverable matters.” TheCommittee justified this deletionby noting the discovery of suchmatters is so deeply entrenched inpractice that it is no longer neces-sary in an already lengthy Rule.It should be noted that the Ala-

bama amendment did not adopt thechanges in the federal rule whichnarrowed the definition of relevantdiscovery. In the Alabama versionof Rule 26(b)(1), discovery mustbe “relevant to the subject matterinvolved in the pending action.”

The federal version of Rule 26 pre-viously included the same lan-guage, but narrowed this languagein an amendment in 2000 to state“relevant to any party’s claim ordefense.” The 2015 amendment tothe federal version of Rule 26eliminated the traditional “reason-ably calculated” language in Rule26(b)(1), thus arguably narrowing

relevancy further. This change wasalso not made in the Alabamaamendments and Ala. R. Civ. P.26(b)(1) still reads: “It is notground for objection that the infor-mation sought will be inadmissibleat trial if the information soughtappears reasonably calculated tolead to the discovery of admissibleevidence.”

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Notably, discovery must be both“relevant . . . and . . . proportional.”Thus, while the difference in thewording regarding relevancy mayaffect some discovery battles, itwill not affect the independent re-quirement that discovery be pro-portional (and therefore federalcaselaw on proportionality shouldbe persuasive for Alabama courts).

Rule 26(c) Changed toExpressly AuthorizeTrial Courts to AllocateDiscovery ExpensesRule 26(c) governs the instances

for which an Alabama court canissue a protective order, which maylimit discovery in a case or even for-bid certain discovery outright. Pro-tective orders under this Ruleprotect responding parties from “an-noyance, embarrassment, oppres-sion, or undue burden or expense.”To further this purpose, the Rule in-cludes several measures a court cantake when crafting a protectiveorder. For example, a court may for-bid the discovery sought altogether,order that a deposition be sealed andonly opened on court order and limitdiscovery to a certain method.Under the amendment, Rule

26(c) remains almost unchanged.The Committee’s only substantiveaddition is providing the trial courtwith the express power to condi-tion discovery upon the allocationof expenses of that discovery be-tween the parties (allowing thecourt to order under Rule 26(c)(2)“the allocation of expenses”). Inmost cases, the amendment shouldnot change the traditional Alabamapractice that discovery expensesare borne by the responding party,because the “allocation of ex-penses” is only allowed upon the

making of a motion for protectiveorder and “good cause shown.”This change should be important

in dealing with proportionality. Forinstance, this new authority allowsthe trial court to allocate some (orall) of the costs of discovery as amethod to balance proportionalitybetween the parties. This may beespecially useful when the partiesdisagree about the true cost or thetrue importance of discovery. Theauthority would also seem to allowcreative options for the court (forinstance, dividing the costs, phas-ing the costs, taxing the costs to thelosing party, tying cost allocation tothe actual use of any discovery dur-ing trial, etc.). This change willalso be helpful with respect to allo-cating costs of restoring or replac-ing lost ESI, which is governed byRule 37(g) (see below).Though the Rule may have im-

plicitly allowed for the allocationof costs, the Committee sought toclarify the trial court’s authority toallocate costs by including expresslanguage in the Rule because ofthe large potential costs associatedwith ESI, ensuring a more equi-table process.

New (Complete)Roadmap for Loss of ESIRule 37(g) deals with sanctions

for the loss of ESI. In 2010, the Al-abama Supreme Court adoptedRule 37(g) which was consistentwith the 2006 changes to its federalcounterpart (FRCP 37(e)). How-ever, since that time, the informa-tion explosion has continued andthe courts (especially the federalcourts) have encountered an ava-lanche of motion practice regardingESI discovery and ESI sanctions.The prior version of Rule 37(g) ledto conflicting federal precedent,caused parties to incur significant

time and expense in ancillary dis-putes, threatened to confuse juriesand had the potential to cause liti-gants to spend significant time andmoney on excessive preservation.In December 2015, the federal

version of Rule 37(g) was com-pletely rewritten. The Alabamaamendment adopts almost entirelythe federal version, but provideshelpful clarity on who should makethe threshold determinations laidout in Rule 37. The Alabama Com-mittee believed that the changes“provide specificity regarding thecircumstances under which sanc-tions may be imposed when ESI islost through negligence and when itis intentionally destroyed for thepurpose of depriving the opposingparty of its use.” See Comm. Re-port, Sept. 21, 2018. These changesnow provide a clearly defined,comprehensive roadmap.The old Rule 37(g) was very nar-

row and only addressed one spe-cific safe harbor: if a loss of ESIwas a result of the “routine, goodfaith operation” of a party’s com-puter system and there were no ex-ceptional circumstances, the lossof ESI was not sanctionable. Theprior version simply didn’t speakto any other ESI situations, leavingcourts without clear guidance.Now, Rule 37(g) provides for a

far broader inquiry by the courtand a full roadmap to follow whendealing with the failure to preserveESI. It essentially provides a flowchart for the trial court in decidinghow to handle a loss of ESI.

Three-Part Test for theNonintentional Loss of ESIUnder the new Rule, the first

question is whether ESI “thatshould have been preserved in the

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anticipation or conduct of liti-gation” was lost. For in-stance, if the information isnot relevant (or not pro-portional), then this testwould not be satisfied.Second, the loss of the

ESI must be “because aparty failed to take rea-sonable steps to pre-serve it.” The focus is onwhether the steps were“reasonable” and there-fore is an objective test.Third, the ESI must be un-

able to be “restored or replacedthrough additional discovery.” Inother words, if ESI can be re-placed or restored, it should be(given proportionality in Rule 26),and there will be no need for fur-ther consideration of sanctions.If these three tests are met, the

court must next consider whetherthere is “prejudice.” If so, the trialcourt may only “order measures nogreater than necessary to cure theprejudice” (assuming that the losswas not intentional). The Rule fo-cuses upon advancing the merits ofthe litigation–attempting to cure theprejudice so that the merits of thecase can be decided. The trial court’sdiscretion under Rule 37(g)(1) in-cludes the authority under Rule 26(c)to allocate the expenses of replacingor restoring the lost information. Im-portantly, the trial court should onlyorder those measures that are propor-tional to the information lost. For ex-ample, if a small amount of relativelyunimportant information is lost, thecourt should not order the restorationof such information if doing sowould require great expense. Such ahigh cost of recovery would not beproportional to the information lost,as required by the Rule.Rule 37(g) does not assign the

burden of proof for proving preju-dice. The Committee Comments

state: “[t]he rule does not specifywhich party bears the burden ofproving prejudice… This is left tothe discretion of the trial court.”The Committee Comments alsoquote the Advisory CommitteeNotes to the federal rule observingthat the ease or difficulty of show-ing prejudice can vary betweenparticular cases.

Destruction of ESI with“Intent to Deprive Another Party of Use”However, if the party “acted

with the intent to deprive anotherparty of use of the information inthe litigation” (and those threetests are met), additional sanctionsare possible. Those options avail-able to the trial court include: (a)presuming that the lost informa-tion was unfavorable to that party,(b) instructing the jury that it mayor must presume that the informa-tion was unfavorable to that party,and (c) dismissing the action (ifthe intentional deprivation is by aplaintiff) or entering a default

judgment (if the inten-tional deprivation is bya defendant).It is important to em-

phasize the high level ofintent that must befound to apply the sanc-tions in Rule 37(g)(2).Anything short of the spe-

cific intent to deprive theother party of the use of the

ESI (“in the litigation”) is insuf-ficient for application of 37(g)(2).Notably, the Rule includes onlytwo levels of culpability for theloss of ESI–intentional and nonin-tentional. Anything short of thisspecific intent must be dealt withunder Rule 37(g)(1) which focusesupon avoiding prejudice ratherthan applying a punitive sanction.Rule 37(g) does not provide for

sanctions if the discovery is not“lost.” As the Committee Reportto the supreme court explained:

The Committee consideredwhether to diverge fromF.R.C.P. 37 and recognize thepower of the trial court to im-pose punitive sanctions if aparty intentionally destroysESI, but the information is re-stored or replaced. After dis-cussing this issue at length,the Committee voted not todo so. The Committee feltthat practitioners would bene-fit from uniformity of the Al-abama and federal rulesregarding discovery of ESIand the ability to rely on fed-eral precedent. Further, theCommittee worried aboutdistracting the jury and occu-pying the time of the partiesand the Court on non-merits

The Committee Comments also quote the Advisory Committee Notes

to the federal rule observing that the ease or difficulty of showing

prejudice can vary between particular cases.

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issues. The trial court retainsits inherent authority to allowthe jury to consider evidenceof intentional destruction if itis relevant to the merits,rather than a sanction.

Who Decides?While these changes largely fol-

low the changes to FRCP 37, theAlabama Comments include animportant clarification regardingwho decides whether the thresholdtests in Rule 37(g) have been met.Neither Fed. R. Civ. P. 37 nor itsCommittee Notes expressly statewhether the judge or the jurymakes the determinations underthe Rule. However, the AlabamaCommittee Comments are clearthat the trial court makes the deter-mination of whether the thresholdfactors in Rule 37(g) have beensatisfied and decides which sanc-tion to impose. (“The amendmentto our Rule 37(g) requires that thecourt, not the jury, determine not

only whether the lost infor-mation should have

been preserved,

whether the loss resultedfrom a failure to takereasonable steps topreserve it, andwhether it can be re-placed or restored, butalso whether anotherparty has been preju-diced... and what meas-ures should be taken tocure…”). Further, theCommittee Comments stateregarding Rule 37(g)(2) that

the “Alabama rule requires thatthe court make the findingwhether the relevant informationwas lost intentionally…”

What Rule 37(g) DoesAnd Does Not DoThe adoption of Rule 37(g) is in-

tended to provide a completeroadmap for ESI sanctions issuesand thus “forecloses reliance onthe inherent authority of the courtto determine when certain meas-ures should be used.”However, Rule 37(g) does not

change existing Alabama substan-tive law regarding spoliation ofevidence or when a duty to pre-serve evidence arises. Further, rule37(g) only addresses ESI.

ConclusionThe recent amendments to Ala.

Civ P. 26 and 37 are intended tomake discovery a more efficientand right-sized process. By enact-ing similar changes to bring theserules onto somewhat even groundwith current federal rules, practi-

tioners and courts will hopefullyfind more direction and efficiencyas we head into 2019. While theserule changes should make littleimpact on routine cases, it is veryimportant that Alabama trial courtshave these new tools to handlecomplex litigation when it in-evitably arises. s

Sloane M. Bell

Sloane Bell received herJ.D., magna cum laude,from the University of Ala-bama School of Law andwas elected to the Order ofthe Coif. She received herB.S., summa cum laude,

from Auburn University. She is anassociate in the litigation practicegroup at Balch & Bingham LLPin Birmingham. During lawschool, she served as the specialworks editor for the AlabamaLaw Review, was a member ofthe ABA National Moot CourtTeam and received the BestOral Advocate award of the2017 John A. Campbell MootCourt Competition.

Gregory C. Cook

Greg Cook received hisJ.D., magna cum laude, fromHarvard Law School wherehe was executive editor of theHarvard Journal of Law andPublic Policy. He receivedhis A.B., magna cum laude,

from Duke University. Cook is chair of thefinancial services litigation practice groupat Balch & Bingham LLP, where he haspracticed since 1991. He serves on the Ala-bama Supreme Court standing committeeon the Rules of Civil Procedure and re-cently authored the new Fifth Edition of theAlabama Rules of Civil Procedure Anno-tated, published by Thomson Reuters.

…Rule 37(g) does not change existing Alabama substantive law regarding spoliation of evidence or when a duty to preserve

evidence arises.

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Hire a PriVaTE JUdgEto hear any case assigned a CV or dr case number

by the alabama administrative Office of Courts

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Qualified, former orretired alabama

Judges registeredWith the alabamaCenter for dispute

resolution

fasT • EasYaPPEaLaBLE

al acts No. 2012-266 and 2018-384

For more information, search“Find a Private Judge” at

www.alabamaADR.org

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IntroductionThis article will explore various

methods of gifting to minors1 thatdo not involve the latest “must-have” toy–which is to say, giftingwhen the intent is to confer along-term benefit on the minor.There are two important points tobear in mind as we consider theseoptions. First, making a gift, inthis context, involves an intent totransfer and convey the asset(whether cash or another kind of

property) out of the estate of thedonor (the giver). A mere promiseto do something, no matter howwell-intentioned, is illusory andcontingent, and is not coveredhere. Second, while this articledoes, at certain points, note the in-come and gift/estate tax conse-quences of certain options, thereare tax complexities and conse-quences that we will not cover inthis article, but which should beconsidered before undertaking sig-nificant gifting to a minor.

No Batteries Required:

A Primer on Gifts to Minors

By James P. Naftel, II and Jessica S. Grover

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I. OutrightGiftsThe first option to consider is also

the simplest: a direct, outright gift tothe minor. Under Internal RevenueCode (“I.R.C.”) § 2503, gifts of upto $15,0002 per year, per person,qualify for the annual gift tax exclu-sion (and for an annual generation-skipping transfer tax exclusion,provided that the gift is directly tothe person3). Spouses can “giftsplit,” meaning that one spouse canuse the other’s annual exclusion(with his or her consent) even if theother spouse does not own an inter-est in the property being gifted; so,parents, grandparents or other rela-tives can transfer $30,000 per yearin assets to each of their children,grandchildren, nieces, nephews, etc.An outright gift to a minor can

include essentially any type ofproperty: (1) cash, (2) tangible personal property, (3) real property, (4) securities or (5) interests in aclosely-held entity (see below). Inreality, it is not the gifting to theminor that is the issue; rather, it is the consequences,intended or unintended, of making a direct gift. Consider:

• If a gift of cash or marketable securities is placedin a bank or investment account in the minor’s solename, the donor immediately loses all control.4

• If a gift of an interest in real property is made to aminor, the minor, having no capacity to contract,cannot sell or dispose of the interest until attainingthe age of majority–but what if it becomes neces-sary to do so? In that case, a conservator wouldhave to be appointed, and that conservator wouldthen have to petition for and receive specific per-mission from the probate court to sell the property.

• If a gift of valuable tangible personal property ismade to a minor (jewelry, automobile, art, etc.),can the property be insured by the minor? Howwill it be titled and how will ownership be veri-fied? How can the property be transferred duringminority if necessary?

Another consideration: significantoutright gifts to a minor may createa disincentive in the minor to workhard, go to college and become aproductive member of society. Easyaccess to money may encouragefrivolous spending habits early onin the minor’s life, from which theminor may never recover.

advantages: • Simplicity• Removes assets from estate ofdonor• Gifts of cash and cash equiva-lents are easy to quantify forpurposes of gift tax annual exclusion.

disadvantages: • Ease of access by minor if gift isof cash or asset easily convertedto cash• Difficulty of disposing of orotherwise dealing with interest(if not cash) due to minor’s in-capacity to contract–may resultin need for a conservatorship ifsale/disposition become necessary

• Loss of control by donor or other responsibleadult–minor may turn out to be irresponsible,have creditor problems, substance abuse problems, etc.• Disincentive to minor to earn and be productive

II. Outright Gifts withStrings AttachedA related option to consider is gifting LLC or other

limited interests to the minor. This strategy can beparticularly effective for non-income-producing as-sets such as a vacation property, although it can alsobe used for securities and other income-producing as-sets. The idea is that the donor forms an LLC or lim-ited partnership, creating a one percent general partner(“GP”) and 99 percent limited partnership (“LP”) in-terests. The donor initially owns all of the interests.The GP controls all aspects of the entity, including

The ABLE Act allows a

savings account to be

established for a bene-

ficiary who becomes

disabled before the age

of 26 for the purpose of

meeting the qualified

disability expenses of

the beneficiary.

distributions and management of the underlyingasset(s). Limited partners are restricted in what theycan do, particularly regarding sale or alienation oftheir interests. The donor transfers vacation property,such as a lake house or a beach house, to the entityand then obtains a qualified valuation to determinethe value of a $15,000 limited interest in the entity(i.e., the amount that can currently be transferred asan annual exclusion gift). The donor then transfersthat exact percentage of interest to the minor donee(doubling to $30,000 if the donor is married and thedonor’s spouse consents to gift-splitting). Obtaining avaluation toward the end of a calendar year allows thedonor to use the same valuation in consecutive years,for example, making a gift in December and thenagain immediately in January of the following year. Inorder to begin the clock running for the IRS to chal-lenge the valuation and the gift (even though no gifttax is due because the gift was designed to utilize thedonor’s annual exclusion amount), the donor files afederal gift tax return reporting the gift(s).While this is an outright gift, this type of interest is,

by its very nature, subject to certain limitations orhedges. While the gift itself is complete, the minor’sinterest is such that it cannot be fully utilized or ex-ploited by the minor without the concurrence of an-other party.

advantages:• Limits minor’s ability to irresponsibly accessasset• Maintains control over entity and thereforeover underlying assets• Can stop making gifts at any time• Brings minor into family wealth discussions• Over time, can transfer significant amount ofwealth down to children

disadvantages:• Initial cost of setting up LLC or other limitedliability entity• Annual expenses to maintain LLC and admin-ister entity, including distribution of K-1s, etc.,filing of federal gift tax returns to report gifts• Bi-annual cost of valuation (to determine howmuch interest in LLC = $15,000 for gifting purposes)• Cost to unwind

III. ABLE Accounts(Enable Savings PlanAlabama)ABLE accounts represent a relatively new method

for making gifts to certain minors who are disabled.In December 2014, Congress passed the Achieving aBetter Life Experience (ABLE) Act, I.R.C. § 529A,authorizing state-sponsored, tax-deferred savings ac-counts for persons with disabilities, and in June 2015,the Alabama Legislature established an ABLE pro-gram pursuant to Ala. Code § 16-33c-1 et seq. Ala-bama contracted with the Nebraska State Treasurer toadminister what is known as the Enable Savings PlanAlabama, which is intended to operate as a qualifiedABLE program under I.R.C. § 529A.The ABLE Act allows a savings account to be estab-

lished for a beneficiary who becomes disabled beforethe age of 26 for the purpose of meeting the qualifieddisability expenses of the beneficiary. I.R.C. § 529A.Anyone can create the account or make contributionsto it, but the disabled individual is considered to beboth the beneficiary and owner, with full control overthe account and its assets. I.R.C. § 529A(e)(3).5 Thefunds in an Enable account6 do not count as a resourcefor purposes of determining the beneficiary’s eligibil-ity for Supplemental Security Income (SSI) and Medi-caid. Enable Savings Plan Alabama ProgramDisclosure Statement (“Disclosure Statement”), pp.10, 34-35. Similar to a Qualified Tuition Plan (see VI,infra), an Enable account is funded with after-tax dol-lars and the assets in the account then grow tax-free.Id., pp. 2, 40.7 The earnings portion of withdrawalsfrom the account are tax-free provided that they areused for qualified disability expenses. Id.; see alsoAla. Code § 40-18-19(11) (exempting from Alabamastate income tax “all income, interest, dividends, gainsor benefits of any kind received from ABLE savingsaccounts”). Qualified disability expenses include edu-cation, employment support, personal support serv-ices, preventative health and wellness programs, andtransportation. I.R.C. § 529A(c)(1)(B).8 A minimumcontribution of $50 is required to establish an Enableaccount and the annual account maintenance fee is $45(assessed $11.25 quarterly). Id., p. 28. Only cash con-tributions are permitted. I.R.C. § 529A(b)(2)(A). Theinvestment option costs range from 0.50 percent to0.56 percent, and there are no fees for enrollment, in-vestment changes or distributions. Id., pp. 28-29.

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An Enable account is subject to several key limita-tions, as follows:

(1) The total contributions to an account for oneyear from all sources cannot exceed $15,000 (orthe amount of the gift tax annual exclusion thenin effect). I.R.C. § 529A(b)(2)(B).9

(2) For an individual who receives SSI, if the totalvalue of the account exceeds $100,000, theamount over $100,000 will count toward the SSIresource limit of $2,000, and if the resourcelimit is exceeded because of the Enable account,the beneficiary will lose eligibility for SSI untilthe resource limit falls below $2,000. (This lossof SSI eligibility does not impact the accountowner’s eligibility for Medicaid.) DisclosureStatement, pp. 34-35.

(3) The maximum account balance is $400,000.When that amount is reached, no additional con-tributions can be made, although the account as-sets may grow beyond that limit. DisclosureStatement, pp. 10, 15. (Note that the $400,000limit would be relevant for a beneficiary whodoes not receive SSI; for a beneficiary receivingSSI, the $100,000 limit explained in (2) aboveshould be observed.)

(4) Any amount remaining in the account at thedeath of the beneficiary is subject to Medicaidpayback to the extent that the beneficiary has re-ceived Medicaid benefits since the time that theEnable account was created. I.R.C. § 529A(f).

Enable accounts may be particularly attractive todonors who want to provide for a disabled minorwithout jeopardizing the minor’s entitlement to SSI,but who do not plan to gift more than $100,000 andfor whom a special needs trust may be cost-prohibi-tive. In addition, some wealthier families may chooseto establish an Enable account for a child in additionto a special needs trust, with the intent that the Enableaccount assets will be used for the beneficiary’s short-term expenses and will be completely exhausted, soas to avoid the Medicaid payback, while the specialneeds trust assets will provide for the beneficiary’slong-term special needs.

advantages:• Allows donor to make a gift to a disabled bene-ficiary without impacting his or her entitle-ment to governmental benefits• Simple and inexpensive to establish• Administrative fees are very low

• Earnings are tax-free provided that they areused for qualified disability expenses.• Contributions qualify for the annual gift taxexclusion.

disadvantages:• Limits on the amount that may be contributedto the account• Only cash contributions are permitted.• Assets are subject to Medicaid payback upondeath of beneficiary.• Beneficiary is the account owner and has con-trol over the assets.

IV. Gifts to a CustodianFBO Minor (UTMA)Alabama’s Uniform Transfers to Minors Act is codi-

fied at Alabama Code § 35-5A-1 et seq. Almost everystate has a substantially similar act (South Carolina re-tains a version of the old Uniform Gifts to Minors Act).UTMA creates a framework in which a donor canmake a gift of virtually any kind of property to a desig-nated custodian for the benefit of a minor donee. Ala.Code § 35-5A-10 provides guidelines/requirements forhow to create custodianships and title custodial assets.Generally, it is best practice to title or designate custo-dial assets exactly as prescribed by statute.The custodian acts as fiduciary, but is not a trustee

per se. The custodian can use the assets of the custodi-anship for the benefit of the minor, and is subject to aprudent person standard in investing and otherwise dis-posing of the property. Ala. Code § 35-5A-13(b). In-come in a custodial account is taxed to the minor, and,if the minor dies prior to attaining the age of majority,the custodial property is considered to be an asset ofthe minor’s estate (generally this would mean an intes-tate estate, since Ala. Code § 43-8-130 provides that 18is the age at which a will may be executed). A custo-dian has power and authority only over custodial as-sets, and may not settle or release a claim of the minoragainst the transferor or a third party (cf. conservator orguardian ad litem). Ala. Code § 35-5A-12. A custodianhas all of the powers and obligations imposed underUTMA, and only those powers and obligations–adonor cannot created a limited custodianship, or asuper-custodianship. Ala. Code § 35-5A-12(c). A cus-todian is required to keep accurate records of the custo-dial property, and is required to keep custodial property

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separate and distinct from all otherproperty so that it can be readilyidentified (no intermingling!). As-sets in a custodianship are subjectto creditor and tort claims againstthe minor, but the minor may notvoluntarily alienate the assets. Ala.Code § 35-5A-12.UTMA requires a single custo-

dian for a single minor–in otherwords, joint custodians are not per-mitted, nor can a custodial accountbe created for multiple beneficiar-ies. Ala. Code § 35-5A-11. Gener-ally speaking, a donor should notact as custodian, as this creates thepotential of the gift being disre-garded for estate and gift tax pur-poses (particularly if the donor hasan obligation to support the minor).There is not, however, an absoluteprohibition on the donor also serv-ing as custodian.There is a $10,000 limit on trans-

fers to a custodianship from an in-testate estate, or if the will of adecedent does not provide that the assets to be distrib-uted to the minor may be held in custody. Accordingly,it is good practice in will drafting always to providethat any assets or benefits that a minor may receiveunder the will, to the extent that a trust is not estab-lished for the minor’s benefit, may be held in a custo-dial account by a custodian nominated by the executor.One of the unusual features of Alabama’s version of

UTMA is that a custodial account may terminate atage 21 or at age 19, depending on how the assets inthe custodianship came to be there:

• Custodianship terminates at age 21 if assets areplaced into custodianship: (1) by irrevocable intervivos gift or (2) by a will or trust that authorizesassets to be placed into a custodianship. Ala. Code§ 35-5A-5-6;

• Custodianship terminates at age 19 if assets areplaced into custodianship: (1) pursuant to intestacy($10,000 limit), (2) through a will or trust that doesnot authorize assets to be held in custodianship($10,000 limit), (3) by an obligor of a debt or judg-ment, (4) if the minor is the surviving joint owner orPOD/TOD beneficiary of an account, (5) if theminor is the beneficiary of life insurance or a bene-fit plan payment and the beneficiary designation

does not authorize custodianship.Contributions to a custodial accountunder (3)-(5) above are limited to$50,000 if no custodian has beennominated. Ala. Code § 35-5A-7-8.

advantages:• Simplicity• Recognized statutory scheme• Can hold any type of asset• Can choose custodian• Can be used immediately forminor’s benefit• Minor has no direct accessuntil age 21 or 19.

disadvantages:• Must terminate at statutoryage of 21 or 19• Can be difficult to establishsuccessor custodians• Perception that there is lessaccountability than with atrust or conservatorship

• If minor dies prior to majority, assets can inad-vertently revert to parents if parents estab-lished the custodianship (thereby defeatingintent to remove from parents’ estate).• Custodial property is treated as owned byminor for financial aid purposes.

V. Direct Payment ofEducational and Medical ExpensesSection 2503(e) of the Internal Revenue Code (see

also 26 CFR 25.2503-6) permits direct payments oftuition and qualified medical expenses on behalf of abeneficiary without such payments counting as a tax-able gift by the donor or as taxable income to the ben-eficiary. For wealthy families, this is an underutilizedopportunity to transfer wealth from an older genera-tion to benefit a younger generation without gift orgeneration-skipping transfer tax consequences. Notethat payments by parents during minority do not (andneed not) qualify, as parents have an obligation ofsupport.

UTMA creates a

framework in which a

donor can make a gift

of virtually any kind of

property to a designated

custodian for the benefit

of a minor donee.

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Education payments that qualifyunder I.R.C. § 2503(e) must bemade directly to the educational institution or medical provider (in-surance premiums may also be paiddirectly): this point cannot be over-stressed. Qualifying education ex-penses include tuition only forprimary, secondary, preparatory,high school and college, and includereligious schools. I.R.C. § 170(b)(1)(A) and 26 CFR § 1.170A-9(c)(1).Pre-K/daycare programs are a grayarea, as are trade and vocationalschools. Books, supplies, uniforms,computers and other fees are not eli-gible for the exclusion. 26 CFR §25.2503-6(b)(2). Note, however,that boarding schools often includeroom and board as a part of tuitionand the full exclusion is generallyclaimed–at some point, the IRS maydecide to challenge this practice. (26CFR § 25.2503-6(b)(2) specificallystates: “No unlimited exclusion ispermitted for amounts paid forbooks, supplies, dormitory fees,board, or other similar expenseswhich do not constitute direct tu-ition costs.”)Medical expenses that qualify

under I.R.C. § 2503(e)(2)(B) (cross-referencing I.R.C. § 213(d)) includeexpenses “incurred for the diagnosis,cure, mitigation, treatment or prevention of disease, or forthe purpose of affecting any structure or function of thebody or for transportation primarily for and essential tomedical care. In addition, the unlimited exclusion fromthe gift tax includes amounts paid for medical insuranceon behalf of any individual. The unlimited exclusionfrom the gift tax does not apply to amounts paid for med-ical care that are reimbursed by the donee’s insurance.Thus, if payment for a medical expense is reimbursed bythe donee’s insurance company, the donor’s payment forthat expense, to the extent of the reimbursed amount, isnot eligible for the unlimited exclusion from the gift taxand the gift is treated as having been made on the date thereimbursement is received by the donee.” 26 CFR §25.2503-6(b)(3). Cosmetic surgery does not qualify, ex-cept to correct a birth defect or disfigurement due to in-jury or disease. 26 U.S.C. § 213 (d)(9)(A).

advantages:• Simple if done correctly• Unlimited amount (no phaseout by AGI or cap on amountthat can be paid); totally ex-cluded from gift tax (does notcount against $15,000 annualexclusion) and generation-skip-ping transfer tax (“GSTT”)• Can be used for multiple beneficiaries• Great strategy for One Percenters

disadvantages:• Limited in scope to tuition andqualifying medical expenses• Must be made directly to insti-tution–have to do it right orlose the exclusion

VI. QualifiedTuition Plans(Section 529Plans)Qualified Tuition Plans, or “529

Plans” as they are commonlyknown (again using the InternalRevenue Code section authorizing

them as a shorthand) are designed to encourage savingfor college by conferring certain tax advantages on par-ticipants. There are two types of 529 Plans: (1) pre-paid tuition plans and (2) educational savings accounts.Funds in a 529 Plan account are exempt from federalincome tax as long as distributions from the accountare made for qualified higher education expenses of thedesignated beneficiary. 26 U.S.C. § 529 (b)(1). An im-portant revision to I.R.C. § 529 occurred with the late2017 Trump tax plan. Under the revised section 529,“qualified higher education expenses” now includes el-ementary and secondary school tuition of up to$10,000 per year, per child, from all 529 plans.10 26U.S.C. § 529(c)(7) and 529(e)(3)(A)(iii). Note thatother expenses related to elementary and secondary ed-ucation are not currently qualified higher education ex-penses. For college and post-graduate education,

Note, however, thatAlabama is one of thefew states that taxes

gain on 529 Plan with-drawals from other

state plans, even if thedistributions are used

for qualified educationexpenses–this can

apparently be solved bycreatively rolling overout-of-state plans intoan Alabama plan, thenwithdrawing from the

Alabama plan.

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however, qualifying expenses include tuition, booksand supplies, computer and related equipment (note:video game consoles such as a PS4 or Xbox are specif-ically excluded), fees, and room and board. 26 U.S.C. §529 (e)(3). Also, it’s important to keep in mind thatsince gains are not subject to income tax, neither canlosses be deducted–a potential disadvantage.11 Distribu-tions that do not qualify are not only subject to federalincome tax, but also to a 10 percent penalty tax. I.R.S.Pub. No. 970, Cat. No. 25221V (Jan. 31, 2018).A 529 Plan account has an owner and a designated

beneficiary, but any person can make a contribution tothe account. 26 U.S.C. § 529(b)(1)(A). The accountowner can change the designated beneficiary withinthe family tree of the account owner. I.R.S. Pub. No.970, Cat. No. 25221V (Jan. 31, 2018). This is advan-tageous since the designated beneficiary may not al-ways need the funds for college. There is no age limiton the designated beneficiary (cf. Coverdell ESA andUTMA).12 Care must be given to the designation ofthe alternate beneficiary as GST tax may apply upondistribution (50 percent) if the new designated benefi-ciary is a generation younger than the original desig-nated beneficiary. 26 U.S.C. § 529 (c)(5)(B). This isto prevent “abuse” by using 529 Plans as a way tohop-scotch generations.A big advantage of 529 Plans is that there is an oppor-

tunity to quickly remove significant assets from adonor’s estate. Contributions can be front-end loaded,i.e., a donor may contribute up to five years’ worth ofannual exclusion gifts in a single year in order to get theaccount up and running ($75,000 for an individual or$150,000 for married couple gift-splitting). I.R.C. §529(c)(2)(B). This requires that the donor file a gift taxreturn reporting the gift (even though no gift tax is due),and the donor may not make additional gifts to the des-ignated beneficiary until the appropriate number of yearshave elapsed.13 If the donor does not survive the look-back period, then a portion of the transferred amountwill be brought back in the donor’s estate. I.R.C. §529(c)(4)(C).Contributions are not limited by AGI of donor (cf.

Coverdell ESA). I.R.S. Pub. No. 970, Cat. No. 25221V(Jan. 31, 2018). There is, however, a limit on total con-tributions to 529 Plan accounts for a single beneficiary;in Alabama, the limit is $400,000 (varies by state).14

Alabama grants an income tax deduction of $5,000per year ($10,000 for married filing jointly) for con-tributions to Alabama’s CollegeCounts 529 Plan.15

Funds can be rolled from another state’s 529 Plan intoan Alabama plan and the rollover will qualify for an

income tax deduction.16 Note, however, that Alabamais one of the few states that taxes gain on 529 Planwithdrawals from other state plans, even if the distri-butions are used for qualified education expenses–thiscan apparently be solved by creatively rolling overout-of-state plans into an Alabama plan, and thenwithdrawing from the Alabama plan.17

Funds in a 529 Plan account will impact financialaid determination, but not to the extent of fundsowned by the minor (UTMA).18

advantages:• Front-end load contributions for gift tax purposes• High limit on total contributions• Ability to contribute not limited by AGI of donor• Income-tax-free growth within account as longas used for qualified education expenses• Can change designated beneficiary if necessary• Account owner controls–never reverts or passesto beneficiary• Wide range of options because each state ad-ministers its own plan• Alabama also allows state income tax deductionof contributions to Alabama 529 Plan.

disadvantages:• Can only be used for qualified education expenses without being subject to income taxand penalty• Sponsor of plan may limit investment options• Could inadvertently subject plan withdrawalsto GST tax if new beneficiary is generationyounger• Can only be used for college or post-graduateexpenses

VII. Coverdell Educa-tional Savings AccountSometimes called an “education IRA,” this gifting

vehicle is authorized by I.R.C. § 530 and is namedafter the senator who sponsored the original legisla-tion creating these accounts. Contributions to aCoverdell account or “CESA” grow tax-deferred, andare not subject to income tax upon withdrawal as longas the funds are used for qualified education ex-penses. 26 U.S.C. § 530 (a). There are, however, verylow limits to annual contributions ($2,000 annually

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per child) and on the income of donors who can makecontributions to a CESA (phase out begins at $95,000AGI for an individual), making this option less usefulfor donors who desire to make significant gifts to orfor the benefit of a minor. 26 U.S.C. §§ 530(b)(1)(A)(iii)-(c)(1)(A) (2018).Unlike a 529 plan, Coverdell accounts can be used

for a broader range of elementary and secondary edu-cation expenses than merely tuition. 26 U.S.C. §530(b)(2)(A). Qualified Elementary and SecondaryEducation Expenses (“QESEE”), which are not sub-ject to income tax + 10 percent penalty tax, include:tuition, fees, tutoring, special needs services, books,supplies, computer and Internet, room and board, uni-forms, transportation, supplementary items and serv-ices (including extended care). U.S.C. § 530(b)(2)(A).Thought must be given to who owns the account. If

a parent or the child owns the account, a portion of itwill count as expected family contribution when de-termining financial aid eligibility, whereas the contri-butions will not be counted if a grandparent or otherrelative is designated as owner; however, withdrawalsfrom an account that is not owned by the child or par-ent are added back in determining the next year’sFAFSA, up to 50 percent of the value of the with-drawal, which can substantially reduce eligibility.

advantages:• Simple to set up• Wide range of investment options• Can change beneficiary (must be to a qualifiedmember of original beneficiary’s family)• Can be used for qualifying K-12 expenses, notjust college (QESEE and QHEE)• Earnings are tax-free if used for qualified expenses.

disadvantages:• Limited to $2,000 annually per child, even ifspread across multiple accounts and multiplecontributors; this is a hard number, not in-dexed for inflation• Not for One-Percenters: income limit on con-tributions (not available if AGI is $110,000 person/$220,000 joint return, starts phasingout at $95,000)• Must be withdrawn by the time beneficiary attains age 30• Must start early: contributions for child 18 orover are subject to 6 percent excise tax

VIII. Section 2503(C)Trusts and CrummeyTrustsGenerally, contributions made to a trust for the ben-

efit of a minor do not qualify for the annual gift taxexclusion under I.R.C. § 2503(b) because they are notgifts of a present interest (i.e., the beneficiary doesnot have immediate control over the property). How-ever, two specialized types of trusts, namely §2503(c) trusts and Crummey trusts, allow a donor totake advantage of the non-tax benefits of the truststructure while making contributions that qualify forthe annual gift tax exclusion. Both of these trusts are(i) inter vivos, meaning that the donor establishes thetrust during his or her lifetime, and (ii) irrevocable,meaning the donor effectively relinquishes all owner-ship and control over property transferred to the trustand cannot unilaterally terminate or modify the trust.

A. I.R.C. § 2503(c) TrustsA gift to a § 2503(c) trust for the benefit of a minor

beneficiary qualifies for the annual gift tax exclusion(and, if the gift is for the benefit of a grandchild of thedonor, it can qualify as a nontaxable direct skip forGST purposes under I.R.C. § 2642(c)(2)) if certain re-quirements are satisfied. First, the trustee must havediscretion to distribute both income and principal toor for the benefit of the minor before he or shereaches the age of 21. I.R.C. § 2503(c)(1). The trustinstrument must not place any “substantial restric-tions” on the trustee’s exercise of discretion in mak-ing distributions. Treas. Reg. § 25.2503-4(b)(1).Second, the minor must be entitled to outright distri-bution of the remaining trust assets upon the minor’sattaining the age of 21. I.R.C. § 2503(c)(2)(A). Notethat the minor may be given the power to extend thetrust, but no other party (including the donor ortrustee) may be authorized to do so.19 Third, if theminor dies before attaining the age of 21, the trust as-sets must pass to the minor’s estate or be subject to ageneral power of appointment granted to the minor.I.R.C. § 2503(c)(2)(B).A major advantage of a § 2503(c) trust over an

UTMA account is the discretion given to the trusteeover distributions of income and principal. While thetrustee must have discretion to determine the purposesfor which such distributions are made, the donor mayprovide non-binding guidance in the governing instru-

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ment with respect to the donor’sintent for distributions. On theother hand, the expense and ad-ministrative requirements associ-ated with a § 2503(c) trust aregreater than those associated withan UTMA account. The donormust hire legal counsel to preparethe trust instrument and, once thetrust is established, trustee’s feesmust be paid (unless the trusteeagrees to serve without compensa-tion) and annual tax returns mustbe filed for the trust.While the donor may serve as

trustee of a § 2503(c) trust, suchpractice should be discouraged asit may result in inclusion of thetrust property in the donor’s grossestate for estate tax purposesunder I.R.C. § 2036 or § 2038.Nor should a parent of the minorbeneficiary serve as trustee be-cause the trustee’s ability to makedistributions that could discharge aparental obligation of support mayalso result in inclusion in the par-ent’s estate under I.R.C. § 2041.Instead, a corporate trustee, friendor relative should be appointed astrustee. There are no restrictionson the type of property that maybe transferred into a § 2503(c) trust and no restric-tions on the investments that may be held by a §2503(c) trust.A § 2503(c) trust can be a useful vehicle for trans-

ferring substantial assets over time that are free of giftand estate taxes, and is a good option for a donor con-templating a series of annual gifts. However, a donormay be reluctant to transfer significant amounts to thetrust given that the minor must have the unrestrictedright to withdraw the entire trust corpus at age 21.Even if the trust may continue beyond age 21 (if thebeneficiary fails to exercise the right of withdrawal),relying upon a 21-year-old to refrain from exercisinghis or her withdrawal right is, at the very least, risky.

advantages:• Contributions to trust qualify for annual gifttax exclusion; gifts by grandparents can benontaxable direct skips for GST purposes.

• Trustee has broad discretionover distributions.• Trust may continue past age21 at beneficiary’s election.• No restrictions on assets thatmay be transferred to the trust

disadvantages:• Relatively expensive to establish• Ongoing administrative costs(trustees’ fees, preparation oftax returns)• Beneficiary may exercise rightto withdraw all of the funds atage 21, an age at which manydonors do not trust a benefici-ary to make a prudent decision.

B. Crummey TrustsAnother option that allows a

donor to make gifts to a trust for aminor that qualify for the annualgift tax exclusion is a so-called“Crummey trust.” A Crummey trustallows a donor to avoid the require-ment of a § 2503(c) trust that thebeneficiary has the right to with-draw all the trust assets at age 21,the most problematic aspect of a §2503(c) trust for many donors.

A Crummey trust, named for the Ninth Circuit’s de-cision in Crummey v. Comm’r, 397 F.2d 82 (9th Cir.1968), is a trust the contributions to which qualify forthe annual exclusion from gift tax under I.R.C. §2503(b) because the beneficiary has the unrestrictedright to withdraw all, or a portion of, the annual contri-butions to the trust. This withdrawal right is known asa “Crummey” power and typically is limited to a spec-ified period of time following a contribution to thetrust, often 30 or 60 days. The Internal Revenue Serv-ice has ruled that because the beneficiary has the rightto obtain immediate enjoyment of the contributedproperty, the beneficiary has a present interest in thetrust property to the extent it is subject to the benefi-ciary’s withdrawal power. Rev. Rul. 80-261, 1980-2C.B. 279. Based on the beneficiary’s present interest,the donor is entitled to the § 2503(b) annual exclusionwith respect to contributions that are subject to theCrummey power. Id. Note that the beneficiary does

A gift to a § 2503(c)trust for the benefit of aminor beneficiary quali-fies for the annual gifttax exclusion (and, if

the gift is for the bene-fit of a grandchild of thedonor, it can qualify as

a nontaxable direct skipfor GST purposes under

I.R.C. § 2642(c)(2)) ifcertain requirements

are satisfied.

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not actually have to exercise theCrummey power; it is simply theexistence of such power that al-lows the contribution to qualify forthe annual exclusion amount. If thebeneficiary does not exercise theCrummey power within the speci-fied time period, the power lapses,and the contributed property re-mains in the trust.No I.R.C. § 2503(b) annual ex-

clusion is available unless the ben-eficiary of a Crummey trust hasactual notice of his or her with-drawal right and a reasonable timeto exercise the right prior to itslapse. See Rev. Rul. 81-7, 1981-1C.B. 474. It is the trustee’s duty toprovide such notice (sometimesreferred to as a Crummey notice)each time a contribution is madeto the trust. If the beneficiary is aminor, notice is given to the bene-ficiary’s guardian and the guardianmay exercise the Crummey poweron behalf of the minor. Whiledonors often operate under the as-sumption that the beneficiary willnot exercise his or her Crummeypower, the power must not be illu-sory, and there cannot be a pre-arranged understanding either that the beneficiary willnot exercise the power or that the beneficiary’s doingso will lead to adverse consequences. See TAM9628004 (finding that contributions to a Crummeytrust were not gifts of a present interest when, amongother issues, the beneficiaries were given insufficienttime to exercise their right of withdrawal).As with a § 2503(c) trust, the trustee of a Crummey

trust has discretion over distributions of income andprincipal from the trust. There are no restrictions onthe type of property that may be transferred into aCrummey trust and no restrictions on the investmentsthat may be held by a Crummey trust. One drawbackthat the Crummey trust shares with the § 2503(c) trustis that a Crummey trust is relatively expensive to es-tablish and involves ongoing administrative costs,which in this case include not only the payment oftrustee’s fees and filing of tax returns, but also thesending of notices to the beneficiary each time a con-tribution is made to the trust. However, in contrast to

a § 2503(c) trust, a major advan-tage of the Crummey trust is that itmay continue for as long as thetrust instrument provides, whichallows the donor enhanced controlover when and under what circum-stances the beneficiary will ulti-mately receive the trust assets. Inaddition, the donor may continueto make gifts that are eligible forthe annual exclusion amount afterthe beneficiary has turned 21.

advantages:• Contributions to trust qualifyfor annual gift tax exclusion• Trustee has broad discretionover distributions• Trust can continue as long astrust instrument provides• No restrictions on assets thatmay be transferred to thetrust

disadvantages:• Relatively expensive to establish• Unlike § 2503(c) trusts, giftsby grandparent cannot qualifyas nontaxable direct skip forGST purposes

• Ongoing administrative costs (trustees’ fees,preparation of tax returns, sending of noticesupon contributions)• Beneficiary has the power to withdraw eachtime a contribution is made.

IX. Testamentary PlanningWhile testamentary planning is not, strictly speak-

ing, the subject of this article, it should be noted that atestator has several options available in consideringpassing property directly to or for the benefit of aminor. If a testator makes a gift to a minor but doesnot provide that the gift shall be held by a custodianor in trust, then generally a conservatorship must beestablished to hold and manage the interest until theminor attains the age of majority (note that for small

Accordingly, a well-drafted will should always provide, at aminimum, that any interest thereunder

that may be received bya minor may be held bya custodian selected bythe personal represen-

tative in a form thatcomplies with UTMA.

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gifts–$10,000 and under–a custodianship may be es-tablished instead of a conservatorship; see part IV ofthis article). Accordingly, a well-drafted will shouldalways provide, at a minimum, that any interest there-under that may be received by a minor may be heldby a custodian selected by the personal representativein a form that complies with UTMA. Alternatively, itis often far more desirable to establish a trust for thebenefit of a minor. This allows the interest to be heldin trust past the minor’s attaining the age of majority,and can provide specific/custom distribution of assets.Depending on the amount of the interest, a corporatefiduciary may be best positioned to manage and in-vest the trust assets, or, if warranted, an individualsuch as a CPA or lawyer (Practice tip: Don’t. Do. It.)may be named. s

Endnotes1. In Alabama, the age of majority is generally 19 years. Ala. Code § 26-1-1 (although there

have been recent legislative efforts to change the age of majority to 18 years). Exceptwhere otherwise noted, when this article refers to a “minor” it is referring to someoneunder the age of 19; which, keep in mind, is a full two years before that person can legallydrink “real” eggnog.

2. Note that the $15,000/$30,000 annual exclusion amount began January 1, 2018.

3. Or to a trust that meets the requirements of I.R.C. § 2503(c). See I.R.C. § 2642(c)(2).

4. Ala. Code § 5-5A-37 explicitly provides that a minor may own and have use of funds in abank account.

5. Alabama recently passed legislation allowing a beneficiary’s guardian to open, invest inand manage an Enable Account on behalf of a beneficiary. Ala. Code § 16-33C-25(e).

6. The Enable Savings Plan Alabama refers to the accounts participating in Alabama’s pro-gram as “Enable accounts.”

7. Under the Tax Cuts and Jobs Act passed at the end of 2017, funds from a 529 account maybe rolled over to an ABLE account. I.R.C. § 529(c)(3)(C)(i)(III).

8. Withdrawals may also be made to pay for housing-related expenses, including mortgage,rent and utilities, as long as the funds are spent within the month of withdrawal; if ahousing expense is paid after the month of withdrawal, it counts as a resource for pur-poses of SSI. Disclosure Statement, pp. 34-35.

9. Note that once the annual contribution limit is reached, a beneficiary may be able tomake additional contributions pursuant to the ABLE to Work Act if the beneficiary hasearned income. I.R.C. § 529A(b)(2)(B)(ii).

10. Although this change was made to I.R.C. § 529, it is still incumbent upon the states whosponsor 529 plans to adopt the new change. As of the date of submission of this article,Alabama’s CollegeCounts 529 plan was somewhat ambiguous about whether distribu-tions from the Alabama-sponsored 529 plan to pay for tuition at an elementary or sec-ondary school would qualify. See Program Disclosure Statement and Account Agreementdated June 28, 2018.

11. IRS, 529 Plans Questions and Answers, https://www.irs.gov/newsroom/529-plans-questions-and-answers.

12. CollegeCounts Alabama’s 529 Fund, FAQs, https://www.collegecounts529.com/faqs/.

13. COLLEGECOUNTS 529 FUND PROGRAM DISCLOSURE STATEMENT 30 (2018),https://www.collegecounts529.com/ pdf/pds.pdf.

14. Id. at 5.

15. Id. at 3.

16. ALA. DEPARTMENT OF REV., ALABAMA 529 SAVINGS PLAN FAQ,https://revenue.alabama.gov/individual-corporate/alabama-529-savings-plan-faq/.

17. CollegeCounts Alabama’s 529 Fund, Frequently Asked Q&A’s,https://www.collegecounts529.com/pdf/taxQA.pdf.

18. SAVING FOR COLLEGE.COM, Does a 529 Plan Affect Financial Aid, (Dec. 15, 2017),https://www.savingforcollege.com/intro-to-529s/does-a-529-plan-affect-financial-aid.

19. Accordingly, the trust instrument may be drafted to provide that the minor, upon attain-ing the age of 21, either (i) has a continuing right to compel distribution of the trust as-sets or (ii) has a right during a limited period of time (such as 60 days) to compeldistribution of the trust assets by written notice to the trustee, failing which the trust willcontinue on its own terms. Rev. Rul. 74-73.

James P. Naftel, II

Jim Naftel is a shareholder in Maynard Cooper& Gale’s estate, trust and business planning, fiduci-ary advisory services and fiduciary, trust and estatelitigation practice groups. He received his J.D.magna cum laude from the University of AlabamaSchool of Law, and graduated summa cum laude

from the University of Mississippi.

Jessica S. Grover

Jessica Grover is a shareholder in MaynardCooper & Gale’s estate, trust and business plan-ning, fiduciary advisory services and fiduciary,trust and estate litigation practice groups. In addi-tion, she advises private foundations and sponsorsof donor-advised funds on compliance issues and

assists nonprofit organizations with charitable giving matters.She earned her J.D. summa cum laude from the University of Al-abama School of Law and her B.A. cum laude from DavidsonCollege.

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and typically the terms of theirwills and other estate planningdocuments are the last thing theywant to think about. However, theterms of their estate plan are im-portant not only while the divorceis pending but also after the di-vorce is finalized. Moreover, thereality of the high divorce rate inthe United States should be con-sidered prior to entering into themarriage. This article will discussimportant issues that all couples

should consider with regard totheir estate plan prior to enteringinto marriage and also if a mar-riage may be ending in the nearfuture.

Estate PlanningBefore MarriageA premarital agreement addresses

the basic concept of what is yours isyours and what is mine is mine un-less and until I give any of my assetsor rights thereunder to you. How-ever, this document can becomecomplicated when addressing con-cepts such as (1) the right to elect to

A divorce is certainly a tryingtime on the parties involved

NavigatingEstate Planning

Before, During and After a MarriageBy Nancy Williams Ball

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utilize the deceased spouse’s unusedestate tax exemption (otherwiseknown as portability), (2) the rightof the surviving spouse to serve asthe personal representative of thedeceased spouse’s estate, (3) theright to serve as guardian or conser-vator for the other spouse, (4) thewaiver of rights under ERISA,specifically §§ 401(a)(11) and 417of the Internal Revenue Code of1986, and (5) the right to claim anelective share (ALA. CODE § 43-8-70), intestate share (ALA. CODE §43-8-41), omitted spouse’s share(ALA. CODE § 43-8-90), homesteadallowance (ALA. CODE § 43-8-110),exempt property allowance (§ 43-8-111) and family allowances (ALA.CODE §§ 43-8-112 & -113).1

It is desirable that these spousalrights be addressed in the premaritalagreement.2 For example, upon thepassage of the Tax Relief, Unem-ployment Insurance Reauthoriza-tion, and Job Creation Act of 2010,the concept of portability wasbrought about with regard to trans-fer of a person’s unused estate taxexemption from one spouse to an-other, and it was made permanentwith the passage of the AmericanTaxpayer Relief Act of 2012. Thistransfer is made by filing a simpli-fied reporting of an estate tax returnfor the deceased spouse.3 The con-cept is straightforward in principal,but can become complicated whenconsideration is given to whether aspouse has children from a priormarriage named as personal repre-sentative, who will file and pay forthe preparation of the return andwhether the spouse and the personalrepresentative will get along.4 Pro-viding the terms of whether thiselection will be made and the pro-cedure for such should be addressedin the premarital agreement.As part of the premarital agree-

ment process, the client should be

advised of maintaining separate ac-counts and not titling assets in thenames of both spouses unless theclient specifically intends to convertthe asset to a marital asset. It mighteven be desirable to place theclient’s assets in a revocable trust tobetter segregate the parties’ assets.Another matter a premarital

agreement should address is theability to leave assets to the surviv-ing spouse. Without such a provi-sion, a contestant in a will challengemay allege that the premaritalagreement is violated if the agree-ment does not contemplate that thespouse may be designated as a ben-eficiary under the spouse’s estateplanning documents if that spousechooses to do so. An interesting dis-pute can arise among the familymembers of the deceased spouseand the surviving spouse as towhether the premarital agreementwas violated by the decedent in pro-viding gifts for his or her spouse.Occasionally, a client will be a

beneficiary of a trust or trusts andboth spouses essentially live off thetrust. This can be a disaster for the“monied” spouse in terms of a di-vorce proceeding unless the partieshave a premarital agreement inplace. The applicable Code sectionis 30-2-51(a), which states in perti-nent part: “If either spouse has noseparate estate or if it is insufficientfor the maintenance of a spouse, thejudge, upon granting a divorce, athis or her discretion, may order to aspouse an allowance out of the es-tate of the other spouse, taking intoconsideration the value thereof andthe condition of the spouse’s family.Notwithstanding the foregoing, thejudge may not take into considera-tion any property acquired prior tothe marriage of the parties or by in-heritance or gift unless the judgefinds from the evidence that theproperty, or income produced by

Another matter

a premarital

agreement

should address

is the ability to

leave assets to

the surviving

spouse.

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the property, has been used regu-larly for the common benefit of theparties during their marriage.”(emphasis added). The rights of thenonmonied spouse to access thesetrust assets can be limited through apremarital agreement.

Update EstatePlanning Documents inThe Middle of a DivorceThe Alabama Legislature passed

Alabama Code § 30-4-17 with aneffective date of September 1,2015. This code section was de-signed to make clear that if a partydoes not update their estate plan-ning documents or “will substi-tutes” (which are defined toinclude revocable inter-vivostrusts, life-insurance and retire-ment-plan beneficiary designa-tions, transfer-on-death accountsand other revocable dispositions tothe former spouse that the divorcedindividual established before thedivorce), then the designation of orgift to the former spouse is re-voked. Prior to the adoption of thisprovision, reliance was placed onAlabama Code § 43-8-137 to arguethat such revocation had occurred.However, many practitioners wereunsure as to whether this was fullyincorporated into trusts by Ala-bama Uniform Trust Code § 19-3B-112 as § 137 may notnecessarily be included as “a ruleof construction” or “a miscella-neous provision” as stated in § 19-3B-112. Presumably, this issue wasresolved with the adoption of Ala-bama Code § 30-4-17.

The terms of a client’s other es-tate planning documents need tobe updated during the process of adivorce. The relatively new Ala-bama Uniform Power of AttorneyAct provides that upon the filingof a divorce or annulment actionor legal separation, the agent’s au-thority under a power of attorneyends with regard to acting on theprincipal’s behalf unless the docu-ment provides otherwise. ALA.CODE § 26-1A-110(b)(3). How-ever, the Act only applies to pow-ers of attorney executed on or afterJanuary 1, 2012. Therefore, a newpower of attorney needs to be exe-cuted during a divorce and theprior power of attorney revoked.Additionally, the spouse may wishto give notice to the divorcingspouse and perhaps others of therevocation so there is no questionthat the agent no longer has au-thority to act under the power ofattorney. Many attorneys are notfamiliar with the terms of ALA.CODE § 26-1A-110(b)(3); there-fore, the agent might not otherwisebe informed that the filing for di-vorce resulted in a revocation. It isalso interesting to note that ALA.CODE § 26-1A-110(b)(3) does notrevoke a designation of a memberof the divorcing spouse’s familyfrom serving as agent for the prin-cipal. The removal of the familymember is, however, addressed inALA. CODE § 30-4-17(b)(1)(c)which takes effect after the di-vorce is finalized.The removal of the ability of a

divorcing spouse to serve as a con-servator or guardian of the otherspouse is not provided by statuteas Alabama’s Power of AttorneyAct provides. In other words, thecourt may appoint a divorcingspouse to serve in such capacity,as a spouse is ranked high on thelist of priority, if that appointment

The removal ofthe ability of adivorcing spouseto serve as aconservator orguardian of theother spouse isnot provided by

statute as Alabama’sPower of

Attorney Act provides.

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is deemed to be “in the best inter-est of the incapacitated person.”5

Additionally, if the incapacitatedspouse designated the other spouseto serve in these capacities by aninstrument, the court will need toconsider if there has been a changein circumstances to override thedesignation. The main point is thatthere is no clear guidance on theissue because the appointment ismade by a court based upon a mo-tion. New documents should bedrafted to make clear the client’sintent. Once the divorce is final-ized, the designation of a divorcedspouse is revoked by in ALA.CODE § 30-4-17(b)(1)(c).The Alabama Health Care Direc-

tive Act grants a person the abilityto name a health care proxy “tomake decisions regarding the pro-viding, withholding or withdrawalof life-sustaining treatment and ar-tificially provided nutrition andhydration.”6 The designation of aspouse is not automatically termi-nated upon the filing for divorce.Rather, the order for divorce mustbe entered in order to revoke thedesignation.7 Therefore, a client inpoor health or undergoing medicaltreatment would be wise to updatetheir health care proxy designationduring a pending divorce.

Death of aSpouse duringDivorceA spouse can die during the mid-

dle of a divorce. This can result inthe spouse still being a beneficiaryunder the terms of the deceased’sspouse’s estate plan. If the surviv-ing spouse is omitted, then the sur-viving spouse can elect against theestate if assets are included in the

surviving spouse’s estate. An elec-tive share provided to the surviv-ing spouse is the lesser of all ofthe deceased spouse’s separate es-tate assets reduced by the value ofthe surviving spouse’s separate es-tate or one-third of the deceasedspouse’s estate.8

Alabama uses a non-augmentedestate for spousal election pur-poses. This means that a probatecourt considering a spousal elec-tion should not consider assetsheld outside of the estate, i.e., as-sets in trust and other transfersmade.9 Therefore, a practitionermay want to consider placing theclient’s segregated assets in a trustor making gifts long before a di-vorce is contemplated. Of course,if the divorce is already contem-plated, this may open up the estateto fraudulent conveyance argu-ments by the other spouse.10

If a client is in the middle of adivorce, it is also a good idea tomake sure the client’s will ad-dresses the waiver of the home-stead allowance (ALA. CODE §43-8-110), exempt property al-lowance (§ 43-8-111) and familyallowances (ALA. CODE §§ 43-8-112 &-113). Election of theseitems can be precluded by the de-ceased spouse’s will.

Update of EstatePlan after DivorceOnce the parties are divorced, an

update of the client’s estate planlikely is necessary. It is desirable toremove all references to the priorspouse because even if the spousewould not be a beneficiary or serveas a fiduciary (as provided underALA. CODE § 30-4-1711), this mayresult in litigation, especially if theestate-planning documents weresigned prior to the effectiveness of

It is a goodidea to discussall potential issues that aclient or

clients mayencounterprior to thatpoint.

this code provision. If it is intendedto leave the former spouse as abeneficiary, it is desirable to redes-ignate that individual after the dateof the divorce agreement and prop-erty distribution. The client shouldalso make sure that there are suffi-cient backup fiduciaries under hisor her will, trust and power of attor-ney. Often, spouses do not contem-plate a backup fiduciary actuallyserving or they do not even desig-nate a backup fiduciary, such as anagent under the power of attorney,which could leave a divorcedspouse without a desired fiduciaryor a fiduciary at all.After the divorce, spousal con-

sent is no longer required to up-date the beneficiary of a 401(k)plan or other ERISA-qualified as-sets. The beneficiaries of these as-sets should be promptly updated.A divorce agreement often re-

quires a spouse to maintain certainterms in the spouse’s estate plan-ning documents or to maintain acertain level of life insurance cov-erage. The attorney advising thespouse should have as part of hisor her standard estate-planningquestionnaire questions pertainingto any divorces of the client andthe underlying obligations. Insteadof solely relying on what the clientstates, the attorney should also ob-tain a copy of the divorce agree-ment and any modificationsthereto from the client. This willhelp to ensure that the terms of theagreement will be adhered to inthe estate planning documents.The purchase of a life insurance

policy insuring the life of the otherspouse or the parties’ children is acommon provision in divorceagreements. The specific require-ments of holding the coverageshould be specifically spelled out inthe divorce agreement and prefer-ably a trust agreement executed in

conjunction with the divorce orderbeing entered. Otherwise, the ambi-guity of a vague requirement ofholding a life insurance policy “intrust” as stated in the divorce agree-ment may open up the parties andtheir estates to litigation in the fu-ture. It may put the parties in theposition of filing a claim against theestate and objecting to such claim ifthe terms of the divorce agreementare not adhered to.Finally, consideration should be

made throughout the course ofrepresentation whether the attor-ney can still represent both of thespouses if he or she has previouslydone so in their estate planning. Itis common to engage in “joint”representation of spouses, how-ever, divorcing spouses are in aninherent conflict that typically pre-vents continued representation ofboth parties.The stress of a failing marriage

can be quite overwhelming to aperson. It is a good idea to discussall potential issues that a client orclients may encounter prior to thatpoint. If it is desirable to put aprenuptial agreement in place, adiscussion with the client aboutthat should occur well in advanceof the marriage. If it is desirable tolimit the ability of a spouse toserve as executor, trustee, agent,conservator or guardian, then adiscussion on those issues shouldbe had with the client. The clientwill be well-served if their attor-ney thinks through as many ofthese issues as possible to give theclient peace of mind when theyneed it the most. s

Endnotes1. See ALA. CODE § 43-8-72.

2. ALA. CODE § 43-8-70(c).

3. See C.F.R. § 20.2010-2(a)(7)(ii) for simplified reportingrequirements.

4. For a picture of parties that do not get along with

regard to the filing of an estate tax return, see the InThe Matter of The Estate of Vose, 390 P.3d 238 (Okla.2017). Even if the parties do not have a premaritalagreement in place which addresses the ability of thesurviving spouse to file a portability election, it may bedesirable to address the topic in the parties’ wills sohopefully the issues addressed by the Vose court can beavoided.

5. See ALA. CODE § 26-2A-104 (regarding guardians) andALA. CODE § 26-2A-138 (regarding conservators).

6. ALA. CODE § 22-8A-4(b).

7. Id. at (b)(3).

8. ALA. CODE § 43-8-70.

9. See Russell v. Russell, 758 So.2d 533, 538 (Ala. Civ. App.1999), overruled on other grounds: “Under the UPC atthe time Alabama adopted its current Probate Code, thesurviving spouse’s elective share was a portion of thedecedent’s ‘augmented estate,’ which included thevalue of certain assets that the decedent had trans-ferred during his lifetime. See UPC § 2–202. However,in enacting its Probate Code in 1982, Alabama rejectedthe UPC’s augmented-estate concept. See § 43-8-70.Thus, we have no statutory authority for the proposi-tion that a surviving spouse is entitled to a share of as-sets that were validly transferred by the decedentduring his lifetime.”

10. See e.g., Prestwood v. Prestwood, 523 So.2d 1071 (Ala.Civ. App. 1988).

11. Care should be taken in relying on this statute as it only ap-plies to divorces occurring on or after September 1, 2015.

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Nancy Williams Ball

Nancy Williams Ball is apartner with Cabaniss, John-ston Gardner, Dumas &O’Neal LLP in the Birming-ham office, where she prac-tices in the areas of estatesand trusts, including estate

planning and estate administration, taxa-tion, real estate and corporate law. She re-ceived her LL.M. in taxation (magna cumlaude) from the University of AlabamaSchool of Law in 2014, her Juris Doctor(summa cum laude) from the University ofMississippi School of Law in 2007 and herbachelor of science degree (cum laude)from Birmingham-Southern College in2004. During law school, she served as theexecutive articles editor of the MississippiLaw Journal and received the Robert C.Khayat Scholarship Award for Outstand-ing Service and Contribution to the LawJournal. Ball is a member of the EstatePlanning Council of Birmingham, Inc. andthe Alabama Planned Giving Council.

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I’m here to tell you it’s played out, and there are bet-ter ways to attract new clients and retain existingones than to wine-’em-and-dine-’em. There are affir-mative things you can do to communicate to yourclients that you understand their needs and want towork with them to resolve their problems. You canprovide lasting value to potential clients to beginbuilding a trust-based relationship. First, though, weneed to bust some marketing myths and open our-selves up to unconventional possibilities.

Law Firm Marketing

For decades law firms approached clientmarketing with the same approach.

By Jeremy W. Richter

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Myth 1:Marketing Means Telling People HowGreat You AreYour potential clients don’t need to know how great

you are. They couldn’t care less about where you wentto law school or how high falutin’ you are. Amongother things, this emphasis on ourselves is whatlawyers get so wrong with their websites and market-ing efforts.If you go to most law firm websites, they spend the

majority of space telling you how great the firm is,how accomplished their lawyers are and how extraor-dinary their results have been. They will tell youwhere they went to law school and all the importantthings they did while attending. There is a commonmisconception that by telling our clients and prospec-tive clients how truly awesome we believe ourselvesto be, they will be more inclined to work with us.Here’s the truth–clients and potential clients don’t

care what you did in law school five or 25 years ago.By and large, your pedigree is of little consequence tothem. Clients are not convinced towork with you because of thesethings, because your pedigree doesnot address clients’ concerns.Most firms are making their web-

sites and their communication aboutthemselves, but what clients need toknow is what you can do for them.They need to know they can trustyou to efficiently and effectivelyhandle their business. They needyou to be a good steward of yourtime and their money.When potential clients are consid-

ering doing business with you, there

are certain things you need to address to put them atease, and earn their trust and their business. Here arethree questions potential clients need you to answer:

1. is your proposal interesting to them?Potential clients often answer the question of

whether your proposal is interesting to them beforeever making contact with you. If the answer is “no,”then you will probably not ever hear from them. Yourpotential clients are often deciding whether your pro-posal is interesting based on your firm’s marketingmaterials they first encounter. Maybe that’s yourfirm’s website, a billboard or an industry publication.If you fail to identify the problem they’re experienc-ing, and how you can guide them to the solution,you’ve already lost.To guide potential clients to an understanding that

your services are interesting to them, you have toknow who your target client is. If you’ve misidenti-fied the people or businesses who are interested inyour services or the services they’re in need of, youwill be unable to correctly identify for them the prob-lem they are experiencing. You will not be communi-cating that you understand what they are experiencingand have the knowledge and skills to guide them to aresolution.In the context of a firm website, here is how you

can communicate to your client that you are offering aservice that is of interest to them. Make the websiteabout your client. Your potential client has a problem,or else they would not be seeking out your services.They have invented a new widget and need a patent.They had an employee injured on the job while theirworkers’ compensation insurance was lapsed. Theyhave a business partner who has stolen money fromthem. Or they may have a problem they’re not even

sure how to verbalize. If all yourfirm’s website does is tell yourclient how great you are, it doesn’taddress their problem.Your client needs you to help

them identify their problem, butthat’s not all. They also need toknow that you can help them re-solve their problem. According toDonald Miller in his book, Buildinga StoryBrand, one of the most com-mon mistakes businesses make isfailing to focus on what they canoffer that will help their customers

Here’s the truth–

clients and potential

clients don’t care

what you did in law

school five or 25

years ago.

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both survive and thrive. “The key,” writes Miller, “isto make your company’s message about somethingthat helps the customer survive.” (Donald Miller,Building a StoryBrand, HarperCollins Publishing,2017, Kindle Loc. 352).Miller contends that potential clients may hear about

your firm “through word of mouth or social media, butthey definitely go to our website to learn more. Whenthey get to our website, their ‘hopes need to be con-firmed,’ and they need to be convinced we have a solu-tion to their problem.” (Miller, Kindle Loc. 2024). Youcan’t convince potential clients you have the solutionto their problems if all your law firm website tells themis that you participated in a moot court competition 15years ago and were the editor of the law review. Millersummarizes the crux of the issue: “The customer sim-ply needs to know that you have something they wantand you can be trusted to deliver whatever that is.”(Miller, Kindle Loc. 2032).Once you have your potential client’s attention, you

need to distinguish yourself from others who areseeking their business. You can accomplish this inpart by establishing that your proposal is the one thatbest meets their needs.

2. is your proposal right for them?Have you ever been in a meeting where the sales-

person is not listening to his audience’s questions orhas misdiagnosed the problem they need help with? Itcan be a cringe-inducing thing to witness. The sales-person keeps coming back to the talking points thatare important to him. He insists on communicatingwhat he came to say, even when the potential clientasks questions about the things that more directly af-fect them. The offending salesman is oblivious,though. He hasn’t given the client the opportunity toanswer the question of whether the proposal is rightfor them. And, in so doing, he will lose the sale.For you to answer a potential client’s question as to

whether your proposal is right for their needs, youmust actively listen to discern their needs. This mayrequire you to disregard any presuppositions youbrought with you to the meeting. Otherwise, you willbe answering the wrong question.

3. Can they trust you?Trust is hard won but easily lost. You are likely fa-

miliar with the maxim, “People do business with peo-ple they know, like and trust.” A trust relationship takestime to build, but you can certainly signal right awaythat you cannot be trusted. Some of the most effective

ways to sow seeds of distrust from the outset are tooversell yourself, to be unduly critical of your competi-tion and to fudge on facts.To the contrary, you can establish a firm foundation

of trust when you carry yourself with integrity anddeal with everyone in an upright manner. There is ashortage of people who are genuine and honest. Beingsomeone known for these characteristics will opendoors for you that would otherwise have been closedand will give people the confidence to take their inter-actions with you at face value. We operate in a fairlysmall legal community. The people we work with on adaily basis, whether claims adjusters or opposingcounsel, move from one company or firm to another.If you develop the reputation of a person who is nottrustworthy, that reputation is going to be hard to shed.Anthony Iannarino writes in The Lost Art of Closing

that establishing new relationships can be effectivelydone by being others-minded and engaging your em-pathy. The way to develop a relationship from merelya contact to a client is by building “relationships ontrust, creating value, collaborating, and delivering ex-ceptional results.”1 Even more specifically, he pro-poses the key to these relationships is to “create valuefor your clients as someone who provides ideas andadvice–and who also ensures that the outcomes theysell are delivered.”2

Myth 2:Marketing Is for ExtrovertsIn times gone by, marketing was done by wining

and dining potential and existing clients. Wining anddining is the preference of extroverts, those personali-ties who thrive on engagement with others. It was the

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way of the world. And there is stilla place for that, but there are alsoplenty of other marketing methodsavailable to us now. And by us, Imean introverts.

What is an introvert, and am ione of them?There is a bit of a stigma attached

to the word introvert. Upon hearingit, people sometimes envisionhomely hermits who would just assoon never see or interact with an-other human. That’s rather a mis-conception. As with most things,there are degrees of introversionand extroversion. In fact you maybe wondering now where you fit.Here’s a question that may help

shed some light on the matter: Whenyou’ve been at a party or around alarge group of people for an evening,how do you feel afterward? If yourbatteries are fully charged and you’dlike nothing more than to talk withsomeone and share your experience,you are likely an extrovert. If toward the end of theevening, all you can think about is curling into your fa-vorite chair and reading a book because you are feelinga bit drained with all the interaction and stimulation,you are likely an introvert.Susan Cain writes in Quiet: The Power of Introverts

in a World That Can’t Stop Talking that introverts“may have strong social skills and enjoy parties andbusiness meetings, but after a while wish they werehome in their pajamas. They prefer to devote their so-cial energies to close friends, colleagues, and family.They listen more than they talk, think before theyspeak, and often feel as if they express themselvesbetter in writing than in conversation. They tend todislike conflict. Many have a horror of small talk, butenjoy deep discussions.”3

I am squarely in the introvert camp. I’m not particu-larly shy, and I don’t mind group events (although Iwouldn’t go so far as to say I look forward to them),but afterward I am wiped out. When I am looking atan upcoming conference, speaking engagement orclient dinner, I have to mentally prepare myself. Mostimportantly, though, I try to make sure that the day ortwo after the event requires little socialization. Mybatteries need recharging. The best way for me to do

that is to disengage from group so-cial interaction.

Law firm marketing is for introverts too.If you are an introvert hoping I will

tell you there is a way to marketyourself to potential clients that does-n’t require you to get out of yourquiet comfort zone, you are going tobe disappointed. If people are goingto trust you enough to send you workto handle for them, you are going tohave to get in front of them and buildup some trust equity.However, there are some things

you can do to make things easier onyourself. If you aren’t very good atsmall talk, read tips for having goodconversations before going to a net-working event. For example, peoplereally enjoy talking about them-selves. You can have a conversationwith a stranger in which you startby asking him what he does for aliving and stay engaged in the con-

versation by asking natural, follow-up questions.When you two part ways, he’s going to think you justhad the greatest interaction, and you are going to real-ize you only had to speak a couple dozen words andhe did all the work.Susan Cain writes: “Figure out what you are meant

to contribute to the world and make sure you con-tribute it. If this requires public speaking or network-ing or other activities that make you uncomfortable,do them anyway. But accept that they’re difficult, getthe training you need to make them easier, and rewardyourself when you’re done. Here’s a rule of thumb fornetworking events: one new honest-to-goodness rela-tionship is worth ten fistfuls of business cards. Rushhome afterward and kick back on your sofa. Carveout restorative niches.”4

There are plenty of other things you can do to im-prove your marketing without increasing your interac-tion. This was part of my motivation for starting mylaw blog in June 2016. The blog enabled me to pro-vide information and valuable content to clients andpotential new clients in a way that would developtrust equity. They would learn about me and what Icould do to help them without my having to sell themon it first.

If you are an

introvert hoping I

will tell you there is

a way to market

yourself to potential

clients that doesn’t

require you to get

out of your quiet

comfort zone, you

are going to be

disappointed.

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There are other things I do to provide value toclients and people with whom I have relationships butwho may not be clients (yet). If I write something ona substantive legal issue that may affect a client, I’llsend it over. This has a two-fold effect: (1) it providesa service to my client by making them aware of a de-velopment in their field that could affect them andtheir business, and (2) it keeps me fresh in their mindin case a problem arises.Think about the things you can do to add value and

build up trust equity with clients and potential clients.There is so much more to effective marketing thanwining, dining, and entertaining. The value in provid-ing real substance and developing trusting, mutuallybeneficial relationships cannot be overstated.

Myth 3:“Just Do Great Work”How many times have you heard something to this

effect: “The key to getting clients is to just do greatwork.” That statement is a partial truth, at best.

Clients expect you to do great workClients expect great work. That’s what happens

when you pay thousands of dollars for someone’sservices. There are built-in expectations. So, forsomeone to tell you that if you just do great work,you’ll get more clients, is mostly inaccurate, becausethe reality is, if you just do great work you’ll be ...meeting expectations. And, nobody refers theirfriends, family and coworkers to businesses who justmeet their expectations.It is important that you be a good lawyer and do

great work for your clients, but you cannot rely on

doing great as a means of bringing in more business. Iwas talking with another lawyer about this topic re-cently, and this was his experience at a firm that al-lowed “just do great work” to serve as their coremarketing strategy:“I was at a midsized insurance defense firm at one

point. They basically had this theory: 80 percent ofwork from one carrier. They did very well. Then thecarrier did some internal shifts and they really had adecline in work and ended up scrambling to start mar-keting. While great work does help bring in clients, Idon’t think it’s at an appreciable rate. It’s just luck atthat point. You have to make sure you are on potentialclients’ radars, and doing that at a low/moderate ratesteadily is better than not at all and then if somethinggoes south, trying to play catch-up.“That firm imploded down from about 25 attorneys

to 10, and I think they are back around 15 now over afive-ish-year period. And now their strategy includesregular marketing efforts. My current firm is verymuch doing great work and other work will come in,but they also encourage marketing, even if it’s smallamounts. And they, from what I understand in mytime here and the history, have not had the size/busi-ness fluctuation.”

Combine great work with other marketing effortsAll of the lawyers above have expressed what is the

whole truth about doing great work for your clients–ifyou combine that with other marketing efforts, youcan leverage yourself into a better situation. For mostcorporate and insurance defense lawyers, clientsaren’t going to come find you.When I look at the work I’ve brought into my firm,

none of it has been because some insurance companycame calling: “Hey, Jeremy, we heard you’re a goodlawyer and you really make a priority of client com-munication and collaboration. And we’ve just got toadd you as our panel counsel.” Nope. It might happento you once in a while, but it’s not something you cancount on.You must to find ways to meet people who could

send you business. You have to begin to build up trustwith those people and add value for them. Then, per-haps when they have a need, they will think of youand send you work. And, when you do great work forthem, it may result in their continuing to send youmore work and being your client.So here’s the truth about the axiom, “Just do great

work.” Doing great work will help you maintain your

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existing clients, and it may result inthose clients recommending you toothers, but it is not to be relied uponas the core marketing strategy foryour firm.

Challenge conventional approaches to marketingWhen I was in 10th grade, our bas-

ketball team was playing a school(who I’ll refer to as “Metro”)against whom we were prettyevenly matched. We did not haveone particularly good player, but had several moder-ately good players. Metro, on the other hand, had onegood player, while the rest of the team was made upof non-difference makers. My coach understood thatif we played a conventional game, the odds of victorywere in doubt, so he devised a plan.I was not a good offensive player, but I loved defense

and was good at it. I relished the opportunity to hasslethe opposing point guard. Getting a five-second call onhim at the top of the key was a rush. I envisioned my-self as a white, suburban, 135-pound Joe Dumars.What I lacked in talent (and mind you, there was verylittle talent), I tried to compensate for with tenacity.In the pre-game meeting, the coach instructed me:

“Jeremy, I want you to play defense on #25 the wholegame. When we’re on offense. When we’re on defense.I want you to tell me what kind of gum he’s chewing,what kind of deodorant he wears. You stick on him thewhole game. You’ll get in his head.” I’ve rarely smiledso broadly. This was to be my finest hour.I did as instructed. When we were in man defense, I

was on him. When we went to a box-and-one, I de-fended #25. When we were on offense and #25 wasguarding our best player, I was glued to his hip. Itdidn’t take long for him to realize things were not oc-curring in the traditional way. He started trash talkingand getting frustrated. His foul total started to accu-mulate and his productivity decreased. The score wasbecoming lopsided in our favor. In the third quarter,#25 drew his fifth and final foul when, out of frustra-tion, he shoved me and said some ... not nice things. Ijust beamed back at him. The game was not much ofa contest after that.By challenging conventions, my coach had put our

opponent on their heels and attacked them with astrategy for which they were unprepared. He gave usthe advantage by electing to put his offense at astrategic disadvantage.

There are lawyers who are moreestablished and have more ties tothe people with whom you want todo business, but don’t let that deteryou from going after clients. Youjust can’t do it the traditional way.You have to approach marketingwith innovation and play to yourstrengths. Do not comply with con-ventional approaches as a matter ofcourse. Take a broad view and con-sider all of the possible strategiesavailable to you. Get an outside

perspective that may shed light on a tactic you hadnot considered. Do not concede to marketing in themanner that your competition is accustomed. Devise astrategy that is most effective for reaching your goalsand your potential client, and execute your plan.

Endnotes1. Anthony Iannarino, The Lost Art of Closing, Portfolio, 2017, p. 7.

2. Iannarino, p. 21.

3. Susan Cain, Quiet: The Power of Introverts in a World That Can’t Stop Talking, Crown/Arche-type, 2012, p. 11.

4. Cain, p. 264.

Jeremy W. Richter

Jeremy Richter, of Webster, Henry, Bradwell,Cohan, Speagle & DeShazo PC, practices civil de-fense litigation with a focus on personal and com-mercial transportation, general business liabilityand premises liability. He is the author of Buildinga Better Law Practice, Stop Putting Out Fires and

an ABA-acclaimed law blog at www.jeremywrichter.com, wherehe writes on litigation and law practice management topics.

While great work

does help bring in

clients, I don’t

think it’s at an

appreciable rate.

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whenever you can. Point out tothem how the nominal winner isoften a real loser–in fees, expensesand waste of time.” The quotationsounds like the words of a modernday trial judge. However, thesewords of wisdom actually comefrom lawyer turned president,Abraham Lincoln, in his “Notesfrom a Law Lecture.” Although thewords are more than 150 years old,the advice offered by PresidentLincoln still rings true for us today.

The idea of “compromise” islikely as old as our judicial systemin Alabama. Settlement negotia-tions and settlement conferenceshave long been a part of our judi-cial process. However, in the earlyto mid-1990s, a new term was in-troduced to many of us as Alabamalawyers and judges: “mediation.”While mediation came late to theYellowhammer State, the conceptof alternative dispute resolution isnow clearly an integral part of ourcourt system. Though perhaps notas fully embraced in Alabama asthe “Big Three” (faith, family andfootball), mediation has becomewidely utilized across the state.Indeed, the 2017 Annual Report

for the Alabama Center for Dispute

“Discourage litigation. Persuadeyour neighbors to compromise

Mediation Best Practices in Alabama

By H. Harold Stephens

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Resolution provides a compilationfrom 1997 through 2017, showingthat over this 20-year span in Ala-bama, 100,435 cases were mediatedwith 79,701 of those cases settledfor a settlement rate of 79.4 percent.The success of mediation in Ala-bama is clearly shown in the cen-ter’s report for 2017 alone, with2,558 non-divorce civil cases medi-ated with 1,973 of those cases set-tled, for a settlement rate of 77percent. In 2017, 891 divorce casesin Alabama were mediated, with662 of those settled, for a successrate of 74 percent. Over the last 20years, mediation truly has come ofage in Alabama.In fact, on July 17, 2003, the Al-

abama Supreme Court adoptedRule 55 of the Alabama Rules of

Appellate Procedure, which pro-vides for appellate mediation. Sub-sequently, on November 17, 2003,the supreme court adopted the Ala-bama Appellate Mediation Rules.Our state’s appellate mediation pro-gram is definitely a model for appel-late courts across the country. It isadministered through the outstand-ing efforts of Michelle Ohme, as ex-ecutive director and supreme courtadministrator, and Lynn DeVaughn,as court of civil appeals administra-tor. Almost since its inception, theAlabama appellate mediation pro-gram has consistently achieved res-olution of approximately 50 percentof all appellate cases sent to media-tion, a truly remarkable result!With the widely successful use of

mediation in the Alabama court sys-

tem, how do we continue this suc-cessful track record? How do webest utilize mediation as an alterna-tive dispute resolution tool? Howare members of the public, the Ala-bama State Bar and the Alabama ju-diciary best served in the use ofmediation? It is with these goals andthoughts in mind that the author of-fers the following best practices formediation in Alabama.

I. Be Familiar withMediation RulesAnd StatutesThe history of mediation in

Alabama is not exactly a

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time-consuming review. Followinga study by a task force of the Ala-bama State Bar, the AlabamaSupreme Court in 1992 adopted anamendment to Rule 16 of the Ala-bama Rules of Civil Procedure. Inits current form, Rule 16(c) of theAlabama Rules of Civil Procedureprovides that the parties at a pre-trial conference may consider andtake action with regard to a varietyof subjects, including “(7) the possi-bility of settlement or the voluntaryuse by all parties of extra judicialprocedures to resolve the dispute,including mediation conducted pur-suant to the Alabama Civil CourtMediation Rules”. ALA. R. CIV.PROC. 16(c)(7). The 1992 amend-ment of Rule 16 was to encouragethe parties to consider resolution ofdisputes through alternative disputeresolution. Also, in 1992, the Ala-bama Supreme Court adopted theAlabama Civil Court MediationRules (“the Rules”). The startingpoint for mediation best practices inAlabama clearly begins with a re-view of and familiarization with theRules. Subsequent to their imple-mentation in 1992, the Rules havebeen amended in 1998 and later in2002. The Rules are straightforwardand concise. There are only 15Rules at present and, in print edi-tion, they cover less than 10 pages.A clear understanding of the Rulesis vital to laying the groundwork fora successful mediation.A couple of other major mile-

stones in the development of medi-ation in Alabama occurred in 1994.In that year, the Alabama SupremeCourt created the AlabamaSupreme Court Commission onDispute Resolution. The commis-sion is made up of a variety ofmembers appointed by the courtsand various other organizations.The commission promotes alterna-

tive dispute resolution, provides ed-ucation and training to the membersof the state bar, the judiciary and thepublic about ADR, maintains statis-tical data related to the effectivenessof ADR in Alabama and helps topromote community-based ADRprograms, such as the Parents AreForever Family Mediation Pro-gram. This program assists low-in-come families who are goingthrough an initial divorce or separa-tion by providing a mediator at nocost to them. In 2017, the programhelped more than 125 families andbenefited 191 children with a settle-ment rate of 73 percent. Mediatorsin the program are compensated at areduced rate and are expected toprovide some pro bono service as aparticipant in the program. Forthose who may be interested in pro-viding such community service as amediator or if you want to includeyour local courts in the Parents AreForever Family Mediation Pro-gram, contact Eileen Harris, execu-tive director of the Alabama Centerfor Dispute Resolution.Also, in 1994, the Alabama State

Bar established a standing commit-tee on alternative methods of dis-pute resolution. That committeehas evolved and is now the DisputeResolution Section of the AlabamaState Bar. Again, for those inter-ested in professional service oppor-tunities and ADR issues, the ASBDispute Resolution Section is agreat opportunity for involvement.The success of mediation at the

trial court level was quickly recog-nized in Alabama. Consequently,as noted earlier, the AlabamaSupreme Court in July 2003adopted Rule 55 of the AlabamaRules of Appellate Procedure.Rule 55 of the appellate rules gen-erally authorizes an appellate courtto direct the attorneys and parties

to appear before a mediator and toengage in privileged and confiden-tial negotiations in an effort to re-solve the litigation. ALA. R. APP.PROC. 55. Subsequently, on No-vember 17, 2003, the AlabamaSupreme Court adopted the Ala-bama Appellate Mediation Rules.Like their trial court counterpart,the Alabama Appellate MediationRules are quite brief and straight-forward. At present, there are ninerules which address an overviewof the Appellate Mediation Pro-gram, screening, referral, the me-diator, mediation procedures andcompletion of the mediationprocess. A best-practices approachto appellate mediation in Alabamaclearly begins with familiaritywith Rule 55 of the AlabamaRules of Appellate Procedure anda review and understanding of theAppellate Mediation Rules.Additionally, those engaged in

alternative dispute resolution inAlabama should be familiar withthe provisions of Sections 6-6-20and 6-6-25 of the Code of Ala-bama. Although the statutory en-actments in Alabama related toalternative dispute resolution/me-diation are small in number, theprovisions are very important tothe overall process.On May 17, 1996, the Alabama

Legislature enacted a statute whichprovides for mandatory mediationprior to trial. The provisions ofSection 6-6-20(b) of the Code ofAlabama currently provide:

Mediation is mandatory for allparties in the following instances:

1. At any time where allparties agree.

2. Upon motion by anyparty. The party askingfor mediation shall paythe costs of mediation,

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except attorney’s fees, un-less otherwise agreed.

3. In the event no party re-quests mediation, the trialcourt may on its own mo-tion order mediation. Thetrial court may allocatethe costs of mediation,except attorney’s fees,among the parties.

ALA. CODE § 6-6-20(b).

While all of us as attorneys arecertainly familiar with the use ofmediation in Alabama courts, noteveryone may be aware of the pro-vision of Section 6-6-20(b)(2)which provides that mediation ismandatory “upon motion by anyparty.” The only qualifying limita-tion is that the party who moves tocompel mediation will be respon-sible for payment of the cost ofmediation but not attorney’s fees.A significant portion of the

Mandatory Mediation Act alsodeals expressly with domestic me-diations. For example, the statuteprohibits a court from orderingparties into mediation for resolu-tion of issues in a petition for anorder for protection or in any peti-tion where domestic violence is al-leged. ALA. CODE § 6-6-20(d) and(e). Furthermore, the statute re-quires that a mediator who re-ceives an order to conductmediation or a referral from acourt for mediation shall screenfor the occurrence of domestic orfamily violence between the par-ties and outlines procedures re-lated to addressing the issue ofdomestic or family violence. ALA.CODE § 6-6-20(f). Moreover, theMandatory Mediation Act pro-vides that where a claim of immu-nity is asserted as a defense, thatthe trial court shall dispose of thatissue prior to mediation. ALA.

CODE § 6-6-20(g). Lastly, thestatute provides that a court shouldnot order parties into mediation ifthe action is one involving childsupport, adult protective servicesor child protective services wherethe Department of Human Re-sources is a party. ALA. CODE § 6-6-20(h).A second Alabama statute ad-

dresses the issue of mediator con-fidentiality. In May 2008, theAlabama Legislature enacted astatute which generally providesthat a mediator may not be com-pelled to divulge the contents ofdocuments received or viewedduring mediation or to otherwisetestify regarding any statementsmade, actions taken or positionsstated by a party during a media-tion. ALA. CODE § 6-6-225.Notably, if the litigation is in

federal court, best practices cer-tainly require review and familiar-ity with local ADR rules. Each ofAlabama’s federal district courtshave their own specific provisionsrelated to mediation and ADR(e.g., Local Rule 16.2 and the Al-ternative Dispute Resolution Planfor the Middle District of Ala-bama, Local Rule 16.1 and the Al-ternative Dispute Resolution Planfor the Northern District of Ala-bama and Local Rule 16 and theAlternative Dispute ResolutionPlan for the Southern District ofAlabama).Finally, attorneys in Alabama,

and especially those who serve asmediators, clearly should be awareof and familiar with the provisionsof the Alabama Code of Ethics forMediators. This code of ethics wasoriginally adopted by order of theAlabama Supreme Court on De-cember 14, 1995. This code out-lines standards to be a guide formediators and their practices.

In summary, a best-practices ap-proach to mediation in Alabamacertainly begins with reviewingand understanding the AlabamaMediation Rules and statutory pro-visions governing mediation.

II. Select the Optimum TimeTo MediateThe provisions of Rule 2 of the

Alabama Civil Court MediationRules declare that parties to a civilaction “may engage in mediationby mutual consent at any time.”ALA. CIV. MED. R. 2. So when isthe optimum time to mediate acase? Clearly, there are no hardand fast rules as to when a caseshould go to mediation. Each casemust be considered on its ownmerits based upon the issues in-volved, the parties and other rele-vant circumstances.Undoubtedly, some matters can

and should be mediated even be-fore a lawsuit is filed. The advan-tage of confidentiality to protectone or both parties’ privacy, theability to continue or amicably enda business relationship or theavoidance of a lengthy and pro-tracted litigation battle are all im-portant reasons to considerpre-suit mediation.The complaint has been filed,

the defendant served and an an-swer provided. Is now the time tomediate? In some such instances,mediation will succeed. However,where no discovery has been un-dertaken, no documents ex-changed and no depositions taken,the parties and their counsel oftenarrive at mediation with each partyfully aware of his or her side of

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the case and virtually oblivious asto the opposing party’s views, evi-dence, credibility, strengths orweaknesses. Thus, once litigationhas commenced, the author’s gen-eral experience has been that me-diation is more likely to succeed ifsome limited discovery has beencompleted. Interrogatory answers,document production and perhapsthe depositions of the parties cer-tainly allow a better understandingof the opposing side’s case andevaluation of the credibility andappeal of the opposing party as awitness.Some would suggest that an

ideal time for mediation is with apending motion for summaryjudgment. With a dispositive mo-tion pending but not yet ruledupon, it certainly allows the medi-ator a clear opportunity to encour-age both parties to heavily weighthe potential for two significantlydifferent outcomes of the case ifmediation does not succeed. Thedownside of waiting until thisstage of the litigation to mediate isoften voluminous documents havebeen produced and numerous dep-ositions taken, including those ofexperts. When the parties arrive atmediation, each side has incurredsignificant time, fees and expensesand may have become deeply entrenched in their respective positions.Neither side wanted to mediate

or the early case mediation wasunsuccessful. Discovery has beencompleted and dispositive motionsfiled. Summary judgment has beendenied. A trial has taken place andthe jury has announced its verdict.Is it too late to mediate? It clearlyis not with the previously notedsuccessful record of appellate me-diation in Alabama. While media-tion of a case on appeal presents

its own difficulties, particularlywhere summary judgment hasbeen granted or a successful juryverdict has been obtained, therestill remains a window of opportu-nity for resolution even at thisstage of the litigation.Best practices for mediation

require that both plaintiff’s anddefendant’s counsel consider as apart of their preliminary case evaluation the optimum time formediation.

III. Choose theRight MediatorRule 3 of the Alabama Civil

Court of Mediation Rules providesthat in ordering mediation the trialcourt should appoint “a qualifiedmediator.” ALA. CIV. MED. R. 3.Rule 4 specifically addresses theissue of qualifications of a media-tor. In general, this rule requiresthat in court-ordered mediations, amediator shall meet those qualifi-cations required by statute or bythe Alabama Supreme Court Me-diator Registration Standards orshall have those qualificationswhich the court “may deem appro-priate given the subject matter ofthe mediation.” Id. 4. As a currentmember of the Alabama SupremeCourt Commission on DisputeResolution, the author certainlyencourages litigators to select indi-viduals who are registered withthe Alabama Center for DisputeResolution.Do you need a specialized medi-

ator for your case? Certain typesof cases may warrant use of a me-diator with specialized knowledge,training or experience, especiallywith regard to cases such as taxdisputes, patent or intellectual

property litigation, domestic rela-tion matters, environmental and/orregulatory claims and/or employ-ment cases.In addition to the type of litiga-

tion involved and the possibleneed for specialized knowledge,training or experience, a secondconsideration relates primarily tothe style of the mediator. Depend-ing upon the parties involved, thenature of the case or other circum-stances, counsel may prefer amore facilitative or a more evalua-tive mediator.While different states impose

different rules upon mediators,Rule 9 of the Alabama Civil CourtMediation Rules states that the au-thority of a mediator includes “atthe request of the parties, to makeoral and written recommendationsfor settlement.” ALA. CIV. MED. R.9. Furthermore, the comment toRule 9 emphasizes, “Nothing inthis section would prohibit theparties from mutually requesting amediator to propose a solution tothe dispute or an amount to settle adispute. Indeed, the revision is notintended to reduce a mediator’srole in helping parties in joint orprivate sessions to create solu-tions.” ALA. CIV. MED. R. 9, Com-ment. Mediation best practices inAlabama include selection of thebest person to serve as mediatordetermined on a case by casebasis.

IV. Prepare Your Client forMediationFor insurance defense counsel

this may be a simple or perhapseven an unnecessary step. The in-

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surance claim representative at-tending the mediation may haveparticipated in more mediationsthan the lawyers and mediatorcombined. Nevertheless, even forthe sophisticated client or clientrepresentative, a pre-mediationdiscussion and/or meeting is gen-erally helpful.For the party, whether plaintiff

or defendant, who has never at-tended a mediation, preparation isessential. Counsel should explainthe mediation process to the clientand answer any questions or con-cerns the client may raise with re-gard to the mediation procedure.Furthermore, even for the sophisti-cated business client, it shouldnever be assumed that the client isfamiliar with the mediationprocess or understands what to ex-pect on the day of mediation.Mediation best practices in Ala-

bama certainly include preparingthe client for mediation.

V. Prepare YourMediator for MediationWhen the author serves as a me-

diator, the letter generally pro-vided to counsel requests that theyforward a position statement out-lining the significant factual andlegal issues in the case, as well ascopies of any pleadings, motionsor other materials which would bebeneficial prior to the mediation.In response to this request, I havereceived (without in any way vio-lating any confidences and refer-ring to no attorney or mediation inparticular) the following: (1) noth-ing; (2) a short email on the morn-ing of the mediation; (3) a short

email the evening before the medi-ation; (4) a lengthy email; (5) atelephone call; (6) a one- to three-page position statement with noattachments; (7) a three- to five-page position statement with acopy of the complaint attached;(8) a five- to seven-page positionstatement with a copy of relevantpleadings attached; (9) a seven- to20-page position statement with acopy of the motion for summaryjudgment and all documents sub-mitted in support of and in opposi-tion to such motion; (10) a four- to10-page position statement with acopy of all depositions taken in thecase; and (11) no position state-ment and three or four boxes ofdocuments.And which of these is the better

practice? The answer is: all of theabove. At times as a litigator, ifforced to provide a position state-ment, the author would simplyprovide the mediator with a sheetof paper and the word “oops” or“sorry.” Sometimes, there is noth-ing more to say. The mediator re-ally does not always need aposition statement.However, generally, as a media-

tor, the author has been eternallygrateful for a short email or a tele-phone call with counsel that givesa heads-up as to some particularlysensitive issue, some difficultlegal question or some importantrelationship about which the medi-ator needs to know. Consequently,from a mediator’s perspective,please do not view a request for aposition statement as a burden orimposition. To the contrary, it issimply an invitation–an invitationto communicate any significantfactual matters or legal issueswhich the mediator should beaware of prior to the mediationsession. Sometimes it is useful to

know that the parties should bekept on separate floors. In somecases, it is extremely helpful tohave copies of summary judgmentmotions and briefs, depositionsand, yes, even boxes of docu-ments. On other occasions, a pre-mediation telephone call is simplyall that needs to be done. The au-thor encourages litigators to putthemselves in the position of themediator. If you were the media-tor, what would you want to knowabout your client and your client’sposition in advance of the mediation?Best mediation practices in Ala-

bama include using the opportu-nity for a pre-mediation telephoneconference or a mediation positionstatement to prepare your mediatorfor the mediation session.

VI. Have theRight Person orPersons PresentFor MediationWhile perhaps surprising to

some, the provisions of Rule 6 ofthe Alabama Civil Court Media-tion Rules do not require that aperson with authority be physi-cally present for the mediation. In-deed, Rule 6 of the Rules simplyprovides that “someone with au-thority to settle those issues mustbe present at the mediation sessionor reasonably available to author-ize settlement during the media-tion session.” ALA. CIV. CT. MED.R. 6. The concern of having thecorrect person physically presentfor a mediation is expressly ad-dressed in the comment to Rule 6,in part, as follows:

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The Rule attempts to strikethe proper balance betweenhaving a person with full set-tlement authority physicallypresent at the mediation ses-sion and allowing such per-son to be within reasonablecontact, such as by telephone.Mediation of disputes withsmall amounts in controversyor where the person with set-tlement authority would incursubstantial cost to travel tothe site of the mediationmight best be accommodatedby using a telephone confer-ence or similar long-distancecommunication. On the otherhand, one value of mediationis having the decision-maker,such as a corporation’s chieffinancial officer or chief ex-ecutive officer, present tohear the discussions duringmediation to personally as-sess the pros and cons of pur-suing litigation versussettlement of the controversyfor a particular amount.Ala. Civ. Ct. Med. R. 6,Comment.As noted in the comment, where

the amount in dispute is quitesmall or travel is cost prohibitiveor unduly expensive in relation tothe amount in dispute, it may beentirely appropriate to have an in-surance claims representativeavailable by telephone. However,absent such factors, certainly thedefault preference should be tohave a decision-maker personallypresent “to hear the discussionsduring mediation.”Mediation best practices in Ala-

bama certainly dictate that the issueof “present at the mediation session”or “reasonably available to authorizesettlement during the mediation session” should be considered,

discussed and resolved in advanceof the mediation session itself.Some trial judges do specifically re-quire personal physical presence intheir standing mediation order.One should be particularly

aware if in federal court of theprovisions of any local alternativedispute resolution plan. For exam-ple, in the United States DistrictCourt for the Northern District ofAlabama, under its ADR plan, theprovisions of Rule IV(6), state, inpart, as follows:The attorney primarily re-sponsible for each party’scase must personally attendthe mediation conference andmust be prepared and author-ized to discuss all relevant is-sues, including settlement.The parties must also be pres-ent in person unless other-wise ordered by the Court orexcused by the mediator.However, when a party isother than an individual orwhen a party’s interests arebeing represented by an in-surance company, an author-ized representative of suchparty or insurance company,with full authority to settle,must attend in person unlessotherwise ordered by theCourt or excused by the me-diator with notice to the op-posing party. The mediatorwill report a party’s willfulfailure to attend the media-tion conference to the Court,including the failure to attendof an authorized representa-tive with full authority to set-tle, which may imposeappropriate sanctions. Failureto attend a mediation is notconsidered to be confidentialfor the purposes of Paragraph9 below.

United States District Court forthe Northern District of Alabama,Alternative Dispute ResolutionPlan, Rule IV(6).It has certainly been the author’s

experience that mediation is morelikely to be successful where thosewith settlement authority are inpersonal attendance at the media-tion. If personal attendance by aparty or insurance representative isimportant to counsel, then consid-eration should be given to includ-ing required attendance as a partof the court’s mediation order. Onthe other hand, if personal atten-dance at the mediation is not feasi-ble or practical, this should also beaddressed prior to mediation withthe court and the mediator. Bestpractices in mediation are gener-ally to have those with decision-making authority personallypresent for the mediation session.

VII. Give Appropriate Consideration To the Most Important NumbersAfter more than 20 years’ expe-

rience as a mediator, the authorhas concluded that the two mostimportant numbers at a mediationare (1) plaintiff’s first offer and (2)defendant’s last offer.Although not always the case,

the success or failure of some me-diations is directly linked to theplaintiff’s first offer. An offer fromplaintiff’s counsel that is seen as

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completely unrealistic and ex-tremely high may precipitate aknee-jerk response, low-ball coun-teroffer from the defendant ensur-ing an early stalemate in themediation process. At times, theparties come to mediation havingalready engaged in settlement ne-gotiations. This is certainly a wel-come development from themediator’s perspective and en-ables both sides to begin the medi-ation process with a clearunderstanding of the opposingparty’s opening position.However, at other times, when

there has been no settlement dis-cussion at all between the partiesprior to mediation, an openingoffer is sometimes made withseemingly little, if any, priorthought or consideration of the im-pact. The author would encourageplaintiff’s counsel to give signifi-cant thought in advance of the me-diation to the plaintiff’s first offer,a number which will set the stagefor the negotiations to come. Cer-tainly, it must be recognized thatfrom the plaintiff’s starting offer itis extremely difficult, though notimpossible, to go backwards.Thus, the thought of allowing“room to move” is an entirely log-ical part of the analysis. However,this should not be the entire analy-sis. How will this first offer beperceived in the other room? It is aquestion which is not consistentlyasked, but should always be con-sidered. One of the two most im-portant numbers at mediation isthe plaintiff’s first offer.A second critically important

number at mediation is the defen-dant’s last offer. As with plaintiff’sfirst offer, counsel should giveconsiderable thought and analysisbefore declaring a number to bethe “best and final offer.” Indeed,

while an unrealistically high firstoffer can make for a difficult me-diation, an unrealistically low lastnumber can certainly assure themediation’s unsuccessful conclu-sion. Hopefully, the endpoint of amediation is viewed by both par-ties as a target or goal as opposedto an arbitrarily selected numberwith a line drawn in the sand. Witha healthy exchange of information,litigants on both sides may learninformation about their case forthe first time at mediation. Docu-ments or witnesses may be dis-closed or identified at mediationwhich were previously unknown.Views regarding a witness’s testi-mony or a party’s credibility maybe changed as a result of informa-tion learned at the mediation. In-deed, one of the very advantagesof mediation is to afford an oppor-tunity for introspection and re-newed self-critical analysis. Is thatyour final offer?Best practices in mediation in

Alabama require careful thoughtand objective insight into the mostimportant numbers at mediation:the plaintiff’s first offer and thedefendant’s last offer.

VIII. Not EveryoneLies to the MediatorA well-known lawyer, talented

magician and exceptional media-tor, Don Spurrier (who practicedlaw for many years in Huntsvillebut sadly is no longer with us),was sometimes heard to say in hislater days as a mediator, “Every-one lies to the mediator.” For Don,this was simply a whimsicalrecognition that a certain amount

of gamesmanship takes place inevery mediation session. DonSpurrier, the magician, understoodthat at times a delicate sleight ofhand may be in order to try toreach one’s goal. And, certainly,Don Spurrier, the seasoned litiga-tor, well understood the reluctanceof counsel to fully disclose every-thing about one’s case to a media-tor who ultimately is not thedecision maker for the other room.Thus, according to Don, “Every-one lies to the mediator.”Certainly, in many mediations,

there simply are no “juicy se-crets.” The issue of disclosingsome significant document, wit-ness or fact, perhaps not known bythe opposing party, does not arisein every case. However, there areinstances when one side or some-times even both come to a media-tion with highly relevantinformation which is unknown tothe opposing party. As an experi-enced litigator, the author fullyand completely understands the re-luctance to disclose such informa-tion. As a mediator, the authorcertainly understands an approachby counsel who discloses informa-tion for my ears only, but thenstates, “If we get close, I may letyou tell this to the other side.” Inthe adversarial world of litigation,this is an entirely reasonable andappropriate approach.However, if the ultimate objec-

tive is to reach a resolution of thedispute at mediation, the full dis-closure of known information def-initely enhances such anopportunity. Under certain limitedcircumstances, the author wouldacknowledge that some “juicy se-crets” simply cannot and shouldnot be disclosed. Don, you wereprobably right, “Everyone lies tothe mediator.” Nonetheless, the

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author urges participants in themediation process to consider howthe strategic use and timely disclo-sure of damaging information canbe employed as a tactical advan-tage to achieve dispute resolution.Indeed, if one party evaluates acase based upon secret informa-tion known only to their side, itshould come as no surprise thatopposing counsel, lacking such in-formation, will likely reach a verydifferent evaluation of the case.Best practices at mediation in

Alabama require that not everyonelies to the mediator.

IX. The UltimateObjective MustBe ResolutionIn one theoretical sense, cases

should never settle at mediation.After all, mediation becomes aprocess where two parties arebrought together with entirely con-flicting and, in fact, diametricallyopposed objectives: (1) the plain-tiff wants to get as much money aspossible at mediation, and (2) thedefendant wants to pay as littlemoney as possible at mediation.With these two conflicting ideas,one would think that mediationmost often is a failed process.However, as the numbers reportedearlier from the Alabama Centerfor Dispute Resolution indicate,the exact opposite is true. Mostcases in Alabama are settled atmediation.How can this be possible? The

answer is fairly simple but of up-most importance: both partiesmust want resolution. Settlementoccurs at mediation when a defen-dant offers a dollar amount which

the plaintiff feels that he or shecannot walk away from and/orwhen the plaintiff expresses awillingness to settle a case for anamount which is better than therisk of a trial. The parties come tomediation with differing objec-tives (one wanting more and onewanting less). Resolution occurswhen it is the most important ob-jective for both sides. Mediationultimately is not about winning orlosing. To resolve a case at media-tion requires two parties who arewilling to negotiate and compro-mise and who believe that resolu-tion is more important than atime-consuming and destructivelitigation battle.Best practices in mediation in

Alabama require both parties toapproach mediation with the will-ingness to negotiate and a true de-sire to obtain a final resolution oftheir dispute.

X. Be CreativeIf you want a fight, the court-

room is the place for you. If yourclient wants a protracted and ex-pensive battle to be decided by ar-bitrarily selected strangers, thenlitigation is where they need to be.Remember, though, that a jurytrial only has three possible out-comes: (1) a verdict for the plain-tiff, (2) a verdict for the defendantor (3) a hung jury.The possibilities for creative so-

lutions to disputes at mediation areendless. The author has seen medi-ation prove to be effective in re-solving disputes ranging from theInternational Space Station toneighbors quarreling. Solutions atmediation range from millions ofdollars to “I’m sorry.” Lawyers, asa group, are not just socially fun

people; they are, on the whole, acreative bunch! When you go tomediation, put the swords andspears in the corner, put on yourthinking caps and be willing tothink outside the box to reach anacceptable resolution of the case.Be willing to work toward a cre-ative solution no matter how diffi-cult the circumstances.Best practices in mediation in

Alabama require that counsel forthe parties and the mediator bewilling to consider and identifycreative methods to settle cases.Remember: “Blessed are thepeacemakers.” s

H. Harold Stephens

Harold Stephens is a part-ner with Bradley ArantBoult Cummings LLP. Heserves as chair of the Ala-bama Supreme Court Com-mission on AlternativeDispute Resolution.

Stephens is a charter member of the Ala-bama Academy of Attorney Mediators, amember of the National Association ofDistinguished Neutrals and a member ofthe Panel of Neutrals for the UnitedStates District Court for the NorthernDistrict of Alabama. In addition to hismediation practice, he also handles a va-riety of litigation, including health carelitigation, medical malpractice cases,products liability and personal injurymatters, as well as business and commer-cial disputes. He serves as a member ofthe Alabama Pattern Jury InstructionCommittee, is past chair of the LitigationSection of the Alabama State Bar and is aformer member of the Board of BarCommissioners.

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The Alabama State Bar Bench and Bar Task Force held its ini-tial meeting in October. This joint task force, comprised of mem-bers of the bench and the bar, was created with the goal ofenhancing and improving the communication, collaboration andoverall relationship between the members of the bar and the ju-diciary. The goals of this task force are:

To examine issues of professionalism and civility betweenlawyers as well as between lawyers and judges with thegoal of recommending and, if possible, implementingpro-grams, guidelines or seminars to improve the level of pro-fessionalism and civility in the practice of law;

To examine, recommend and, if possible, implement col-laborative educational programson issues of interest toboth the bench and the bar;

To examine and recommend ways in which the bar can as-sist the members of the judiciary in matters crucial to theadministration of justice in Alabama including, withoutlimitation, education of members of the judiciary and of thebar on issues related to judicial funding and court costs;

To examine and recommend other avenues of engagementto assist both the bench and the bar in ways to better serveone another and the general public; and

To examine, recommend and implement collaborative edu-cational programs on issues of interest to both the benchand the bar.

At its October meeting, the task force implemented strategiesto accomplish these goals. The task force will hold an educa-tional seminar at the Mid-Year Judges’ conference and will alsooffer an education seminar at Alabama State Bar Annual Meet-ing in July 2019.The task force resolved that it would create an open communica-

tion forum for suggestions from both members of the bench andbar. In doing so, co-chairs Judge J. David Jordan ([email protected]) and Michael E. Upchurch ([email protected])wish to hear from judges and attorneys from across the state on howthe task force can facilitate better relations between the bench andbar. As this task force holds regular meetings, please copy both co-chairs with any suggestions via email and your suggestions will be

shared at the next meeting. The Bench and Bar Task Force is excitedto share its mission and goals with all of you and looks forward toproviding regular updates as the committee progresses and evolves.The task force chairs, liaisons and members are:

Co-ChairsJames D. Jordan and Michael E. Upchurch

Supreme Court LiaisonJustice Michael F. Bolin

Executive Council MemberJana Russell Garner

MembersSamuel N. Crosby; Elisabeth Ann French; Joseph R. Fuller; Tan-ganyika D. Gholston; Andrew J. Hairston; Douglas B. Hargett;Hon. R. Bernard Harwood, Jr.; Ralph E. Holt; J. Lister Hubbard,Sr.; Suzanne D. Huffaker; Anthony A. Joseph; Frederick T. Kuyk-endall, III; Marshall C. Martin; Barry D. Matson; Robert G.Methvin, Jr.; Thomas D. Moore; J. Flynn Mozingo; Gerald R.Paulk; John M. Peek; T. Thomas Perry, Jr.; J. Cole Portis; ThomasA. Radney; Katrina Ross; Curtis H. Seal; Roger W. Varner, Jr.;and Clinton L. Wilson s

A Progress ReportBy J. Flynn Mozingo and Clinton L. Wilson

J. Flynn Mozingo

Flynn Mozingo practices with Melton, Espy &Williams PC in Montgomery, where he is engagedin a diverse civil, administrative-law and appellatepractice including health care regulation, public em-ployment and advising various associations. He is amember of the Alabama State Bar Board of Bar

Commissioners, a former state bar Disciplinary Hearing officerand serves on numerous bar committees.

Clinton L. Wilson

Clint Wilson practices in Auburn, where he is special-izes in plaintiffs’ law, business litigation and criminaldefense with an emphasis on Auburn University stu-dents. He is the current secretary of the Lee CountyBar and is involved with numerous charitable organi-zations in the Auburn/Lee County area.

2018-2019 BENCH AND BAR TASK FORCE:

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Transfers to inactive status• selma attorney Carolyn gaines-Varner was transferred to inactive status, effective

october 22, 2018, by order of the supreme court of alabama. The supreme courtentered its order based upon the october 22, 2018 order of Panel iii of the discipli-nary board of the alabama state bar in response to gaines-Varner’s petition submit-ted to the office of general counsel requesting she be transferred to inactive status.

• Fairhope attorney michael stephen mcglothren was transferred to inactive sta-tus, effective July 25, 2018, by order of the supreme court of alabama. Thesupreme court entered its order based upon the July 25, 2018 order of Panel i ofthe disciplinary board of the alabama state bar in response to the office of generalcounsel’s petition requesting he be transferred to inactive status.

• birmingham attorney Thomas Lawson selden was transferred to inactive status,effective January 9, 2018, by order of the supreme court of alabama. The supremecourt entered its order based upon the January 9, 2018 order of Panel iii of the dis-ciplinary board of the alabama state bar in response to selden’s petition submittedto the office of general counsel requesting he be transferred to inactive status.

• Morris attorney Keith William Veigas, Jr. was transferred to inactive status, effec-tive November 8, 2018, by order of the supreme court of alabama. The supremecourt entered its order based upon the November 8, 2018 order of Panel ii of thedisciplinary board of the alabama state bar in response to Veigas’s petition submit-ted to the office of general counsel requesting he be transferred to inactive status.

disbarments• daphne attorney russell foster Bozeman was disbarred from the practice of law

in alabama by order of the supreme court of alabama, effective september 26,2018. The supreme court entered its order based upon the september 26, 2018order of Panel iii of the disciplinary board of the alabama state bar. The supremecourt entered its order based on the disciplinary board’s acceptance of bozeman’s

d i s c i P l i N a r Y N o T i c e s

� Transfers to inactive status

� disbarments

� suspensions

� Public reprimands

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consent to disbarment, wherein bozeman admitted to fail-ing to properly handle and account for client funds. [rule23(a), Pet. No. 2018-1101; asb Nos. 2017-371, 2017-463,2017-1229, 2018-41, 2018-254 and 2018-565; rule 20(a),Pet. No. 2018-159]

• homewood attorney Chevene neel Hill was disbarredfrom the practice of law in alabama, effective November 16,2018. The supreme court entered its order based upon thefinding of fact and final order entered November 2, 2017 byPanel i of the disciplinary board of the alabama state bar,disbarring hill after he was found guilty of violating rules1.2(a) [scope of representation], 1.3 [diligence], 1.4(a) and1.4(b) [communication], 1.5(a) and 1.5(b) [Fees], 1.15(a),1.15(b), 1.15(d), 1.15(e), 1.15(f ) and 1.15(g) [safekeeping],and 8.4(a), 8.4(c) and 8.4(g) [Misconduct], ala. r. Prof. c. anelderly client retained hill’s services for a criminal matterand corresponding civil suit. The client instructed hill tocommunicate with her niece, who was her power of attor-ney, on all matters. after the criminal matter was dismissed,a contingency contract for the civil matter was executed.The contract did not require payment of fees and costs inaddition to the contingency fee. however, hill requestedadditional funds which she paid. a few months later, theclient received a letter with an itemization of time from hilland he again requested the client pay additional funds. Theclient and her niece attempted to contact hill multiple

times and set up a meeting due to concerns over themounting bills. hill failed or refused to communicate. a yearand a half later, hill contacted the client regarding a settle-ment offer. The client requested hill call her niece, but hefailed or refused to do so. hill accepted the settlement offerwithout his client’s consent. over the next three months,hill provided inconsistent itemizations to the client, eachtime claiming she owed a different amount to him and fail-ing to acknowledge the amounts she previously paid. hillprovided the bar a copy of the front of the settlement checkpayable to the client which the client contended she neverreceived. a copy of the cleared check obtained by sub-poena confirmed hill endorsed and deposited the checkinto his personal account. [asb No. 2015-1640]

• Florence attorney mollie Hunter mcCutchen was dis-barred from the practice of law in alabama, effective octo-ber 23, 2018, by order of the supreme court of alabama.Mccutchen’s disbarment was based upon her guilty pleaentered in the circuit court of lauderdale county to onecount of theft of property, first degree and the correspon-ding sentence entered april 18, 2018 ordering Mccutchento serve 60 months in the custody of the alabama depart-ment of corrections. [rule 22(a), Pet. No. 2018-1136]

• birmingham attorney richard glynn Poff, Jr. was dis-barred from the practice of law in alabama by order of thesupreme court of alabama, effective october 30, 2018.

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The supreme court entered its order affirming the discipli-nary board’s order of disbarment, finding Poff guilty of theunauthorized practice of law. [asb No. 2013-1811]

suspensions• Montgomery attorney Joseph Lee fitzpatrick, Jr. was

suspended from the practice of law in alabama for 91 daysby order of the supreme court of alabama, effective sep-tember 27, 2018. The suspension was based upon the dis-ciplinary commission’s acceptance of Fitzpatrick’sconditional guilty plea, wherein he pled guilty to violatingrules 1.4 [communication], 1.15(b) [safekeeping Prop-erty], 1.16(d) [declining or Terminating representation]and 8.4(g) [Misconduct], ala. r. Prof. c. [asb Nos. 2017-241and 2017-934]

• clanton attorney angie avery mayfield was suspendedfrom the practice of law in alabama for 91 days with thesuspension to be held in abeyance. Mayfield was placedon a two-year probationary period, effective october 30,2018. The suspension was based upon the disciplinarycommission’s acceptance of Mayfield’s conditional guiltyplea, wherein she pled guilty to violating rules 1.4 [com-munication], 1.15(a) and (e) [safekeeping Property] and1.16(d) [declining or Terminating representation], ala. r.Prof. c. [asb No. 2017-780]

• Montgomery attorney William allen mcgeachy was sus-pended from the practice of law in alabama by thesupreme court of alabama, effective september 26, 2018.The supreme court entered its order based upon the disci-plinary commission’s order that Wilson be suspended forfailing to comply with the 2017 Mandatory continuinglegal education requirements of the alabama state bar.[cle No. 2018-503]

• lafayette attorney roland Lewis sledge was interimlysuspended from the practice of law in alabama pursuantto rules 8(c) and 20(a), ala. r. disc. P., by order of the disci-plinary commission of the alabama state bar, effectiveJanuary 11, 2018. The disciplinary commission’s order wasbased on a petition filed by the office of general counselevidencing sledge’s arrest for one count of arson in thesecond degree. sledge was previously arrested and re-leased on bond in an unrelated matter involving sledge’sactions in a conservatorship proceeding. because sledgewas arrested and charged with an additional offense, hisbond was revoked. [rule 20(a), Pet. No. 2018-38]

• Mobile attorney steven Lamar Terry was suspended fromthe practice of law in alabama for two years by the supremecourt of alabama, effective November 13, 2018. Thesupreme court entered its order based upon the disciplinarycommission of the alabama state bar’s order reflectingTerry’s guilty plea to violations of rules 1.1, 1.2(a), 1.2(c), 1.3,1.4, 1.5(b), 3.2, 8.1(b), 8.4(a), 8.4(d) and 8.4(g), ala. r. Prof. c. inasb No. 2017-1287. Terry admitted he failed to timely notifyhis client of the final order issued in her matter and, as a re-sult, the client lost approximately 18 days to prepare eitherher appeal or motion to alter, amend or vacate. Terry furtheradmitted his client requested he file a motion to correct er-rors in the judge’s order and he requested additional fees inorder to complete this task and continue representing theclient. Terry also failed to attend a hearing and failed to file amotion to withdraw. Terry admitted he violated rules 1.1,1.3, 1.4, 3.2, 8.1(d), 8.4(a), 8.4(d) and 8.4(g), ala. r. Prof. c. inasb No. 2017-1316. Terry admitted he was hired to representa client in accessing her mother’s bank account, the onlyasset of the estate. Terry opened the estate and arranged fora bond for the client to serve as administrator. The client ex-perienced difficulty communicating with Terry over thecourse of two and a half years. Terry also failed to file variouspleadings by the deadlines established by the court forcinghis client to file them on her own. as a result, the court re-voked the client’s appointment as administratrix and joinedthe surety into the proceedings. The surety filed a petition ofremoval of estate from probate court due to Terry’s failure toproperly administer the estate and the surety received ajudgment against the client for fees and expenses. Terry ad-mitted he violated rules 1.1, 1.3, 3.2, 8.4(a), 8.4(d) and 8.4(g),ala. r. Prof. c. in asb No. 2017-1018. Terry was hired to repre-sent a client in an employment discrimination matter. Terryfailed to file a response to the employer’s motion to dismissand the case was dismissed. Terry filed a second lawsuit andthe employer again filed a motion to dismiss or alternativelyfor a more definite statement and the court ordered Terry torespond. Terry’s complaint was dismissed for failure to prop-erly state discrimination claims in the complaint. [asb Nos.2017-1018, 2017-1287 and 2017-1316]

• huntsville attorney Wendell Wesley Wilson was sus-pended from the practice of law in alabama by thesupreme court of alabama, effective september 26, 2018.The supreme court entered its order based upon the disci-plinary commission’s order that Wilson be suspended forfailing to comply with the 2017 Mandatory continuinglegal education requirements of the alabama state bar.[cle No. 2018-520]


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Public reprimands• on april 11, 2018, the disciplinary commission deter-

mined dothan attorney Tracie Tawana melvin should re-ceive a public reprimand with general publication forviolating rules 1.6, 3.4(c), 4.1(a), 4.4, 8.2(a), 8.4(a), 8.4(c),8.4(d) and 8.4(g), ala. r. Prof. c. Melvin appeared in districtcourt and was using her cellular telephone during thedocket call. When her case was called she approached thebench while continuing her call. The judge ordered her toend her telephone call; however she failed to follow theorder. When her case was called, she continued the calland advised the court her client would proceed withoutMelvin. The judge informed her that was unacceptableand ordered her to leave the courtroom. after the clientwas unsuccessful in negotiating a settlement on her ownbehalf, Melvin completed her phone call, re-entered thecourtroom and notified the court she would represent herclient. Melvin called her client as the witness, asked a fewquestions and rested. she did not cross-examine wit-nesses or call additional witnesses. her client’s case wasdismissed for failure of proof. after the hearing, the judgespoke with her regarding her conduct in the courtroomand she accused him of dismissing her client’s case in re-taliation. later that evening, Melvin posted derogatory

and untruthful statements about the judge and the inci-dent in his courtroom on social media. Melvin is also re-quired to pay any costs taxed against her pursuant to rule33, ala. r. disc. P., including but not limited to a $1,000 ad-ministrative fee. [asb No. 2017-740]

• haleyville attorney Jerry dean roberson received a pub-lic reprimand with general publication on october 26,2018 for violating rules 1.15(a) [safekeeping Property],8.4(a) and 8.4(g) [Misconduct], alabama rules of Profes-sional conduct. roberson admitted he paid his occupa-tional license and client security Fund assessment with acheck drawn from his trust account. he also admitted hewrote several checks out of the trust account for both per-sonal and business expenses. With this conduct, robersonviolated rules 1.15(a), 8.4(a) and 8.4(g), alabama rules ofProfessional conduct, for failing to keep client propertyseparate from his own property and engaging in conductthat adversely reflects on his fitness to practice law. rober-son is also required pay any costs taxed against him pur-suant to rule 33, alabama rules of Professional conduct,including but not limited to a $1,000 administrative fee.[asb No. 2015-1539]

• on July 24, 2018, the disciplinary commission determinedbessemer attorney Jon Batton Terry should receive a pub-lic reprimand with general publication for violating rules

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1.15(a), 1.15(c), 5.3(a), 5.3(b), 5.3(c)(2), 8.4(a) and 8.4(g), ala-bama rules of Professional conduct. Terry admitted he heldproperty of a client in his trust account which was not inconnection with his representation of the client, he failed tohold property in his possession in which he and a third-party claimed an interest until severance of that interest, hefailed to supervise and institute reasonable measures to en-sure a non-lawyer employee’s conduct complied with thealabama rules of Professional conduct in handling hisfirm’s trust account and he failed to take reasonable reme-dial action to correct said conduct. With Terry’s conduct inthis matter, he violated the alabama rules of Professionalconduct and engaged in conduct that adversely reflects onhis fitness to practice law. Terry is also required pay anycosts taxed against him pursuant to rule 33, alabama rulesof Professional conduct, including but not limited to a$1,000 administrative fee. [asb No. 2016-1378]

• hamilton attorney Oliver frederick Wood received apublic reprimand with general publication for violatingrules 1.8(a) [conflict of interest: Prohibited Transaction],8.4(a) and 8.4(g) [Misconduct], ala. r. Prof. c. The pertinentfacts are Wood represented his second cousin in a divorceand a related lawsuit. in addition to the attorney’s fees, theclient made loans to Wood and executed promissorynotes in his client’s favor. Wood never advised his client heshould seek independent counsel prior to making theloans or that entering into the loans could be a conflict ofinterest. With this conduct, Wood violated rules 1.8(a),8.4(a) and 8.4(g), ala. r. Prof. c., by failing to advise hisclient to seek independent counsel prior to entering into abusiness transaction with Wood. Wood is also required payany costs taxed against him pursuant to rule 33, ala. r.disc. P., including but not limited to a $1,000 administra-tive fee. [asb No. 2017-663] s


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about Members

Bennett L. Pugh announces theopening of The Law Office of BennettL. Pugh at 300 N. Montgomery ave.,sheffield 35660.

W. david ryan announces the open-ing of ryan Law LLC at 1629 McFarlandblvd. N., ste. 402, Tuscaloosa 35406.Phone (205) 469-2800.

among Firmsadams & reese announces that neal

Townsend is now a partner in the Mobileoffice.

argent Trust Company announcesthat sidney O. roebuck, Jr. joined assenior vice president/trust officer in thebirmingham office.

Balch & Bingham announces thatasher L. Kitchings joined the birming-ham office and that Joe Leavens andCorbitt Tate are now partners.

Beasley, allen, Crow, methvin, Por-tis & miles PC announces that f. Beau

darley, iii, J. ryan Kral, Leslie L. Pescia,robert s. register, William r. sutton,Joseph g. VanZandt and sharon J.Zinns are now principals, and that ryanBeattie, Paul Evans, Leon Hampton,aigner Kolom, Lauren miles, Jeff Priceand soo seok Yang are now associates.

Cartledge W. Blackwell, Jr., VirginiaL. Blackwell and randall K. Bozemanannounce the formation of Bozeman &Blackwell LLC with offices in selma,hayneville and camden. The Honorablea. Ted Bozeman is of counsel.

Burgess roberts LLC announces thatHaas Byrd joined as an associate.

Cabaniss Johnston announces thatmatthew m. Couch is now a partner.

Capell & Howard PC announces thatJerusha T. adams joined as a shareholder.

The Catholic diocese of Birming-ham announces that John f. Whitakeris now in-house general counsel.

Chason & Chason PC announces thatJoseph d. Thetford, Jr. is now a partner.

gaines gault Hendrix PC announcesthat Lynn Pulido and sheena Johnsonjoined as associates, in the birminghamand huntsville offices, respectively.

a b o u T M e M b e r s , a M o N g F i r M s

Please email announcements [email protected].

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The Kullman firm announces thatKelly reese is now a shareholder.

Lightfoot, franklin & White LLCannounces that reid C. Carpenterand Jeffrey P. doss are now partners.

maynard Cooper announces thatallen B. Bennett, Christie Keifer Bor-ton, Emily J. Chancey, H. finn Cox,Jr., starr Turner drum, Jessicashaver Everest, Evan P. moltz,Bradley g. siegal, ryan d. Thomp-son and ashley T. Wright are nowshareholders.

starnes davis florie announcesthat Jay Ezelle is now the managingpartner and that Weathers Bolt is apartner in the Mobile office.

stockham, Cooper & Potts PC an-nounces that John K. Pocus is a share-holder and Hannah m. Thrasher is ofcounsel.

stone Crosby PC announces thatErin B. fleming is now a shareholder.

Wallace, Jordan, ratliff & BrandtLLC announces that april danielsonand roderick Evans are now partners.

Webster, Henry, Bradwell, Cohan,speagle & deshazo PC announcesthat Tamera K. Erskine and JeremyW. richter are now shareholders inthe birmingham office.

Wilmer & Lee Pa, Clint L. maze andTracy L. green announce they havemerged their practices, with offices inhuntsville, athens, decatur and arab. s

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QUEsTiOn:“The purpose of this letter is to re-

quest a formal opinion from your officeregarding whether my law firm shouldbe disqualified from representing thePlaintiff corporation a in litigation.

“i believe that all of the relevant factsare set out in the following documentswhich are enclosed:

“1. complaint filed by corporation aagainst corporation b and Mr. Jones fordamages arising from an alleged breachof equipment lease and on a personalguaranty.

“2. answer and counterclaims of corporation b and Jones.

“3. amendment to answer and counterclaims.

o P i N i o N s o F T h e g e N e r a l c o u N s e l

Roman A. [email protected]

lawyer Who has Formerly representeda client May Not represent another Person in the same or a substantiallyrelated Matter Where the Presentclient’s interests are Materially adverse to the Former client

“4. corporation a’s answer to counterclaims.

“5. appearance of lawyer a as counsel for corporation a.

“6. defendant’s objection to appearance of attorney, withattached exhibits a, b, and c.

“7. letter from lawyer x to Judge rite, with referenced attachments.

“8. response of lawyer a’s firm in opposition to defen-dants’ objection to appearance of attorney’ with attachedexhibits 1 through 6.

“Judge rite has asked that i request this opinion from youroffice. enclosed is a copy of the order which i am submittingto Judge rite which i expect will be signed shortly.”

ansWEr:The documents submitted with your request for opinion

show that your firm is presently representing corporation aagainst corporation b and Mr. Jones. corporation b is in thebusiness of designing and providing printed business forms.Jones is the president and sole stockholder. This lawsuit wasfiled on and deals with an alleged breach of an equipmentlease/purchase agreement by corporation b and Jones.There is a counterclaim and a third-party complaint as well.The lease agreement was entered into on July 29, 1988. cor-poration a is claiming damages in the amount of $9,320 as aresult of the breach.

during 1991, lawyer a’s partner (“Partner”) representedJones when he was considering the formation of another cor-poration which would offer consulting services to the sameclientele that corporation b serviced. Partner met with Joneson one occasion and with his accountant on another. Prior tothis, Partner had never had any dealings with either man. Part-ner met with the accountant, Mr. smith, and sent a letter thenext day confirming “the key points we examined.” in august,Partner met with Jones about forming the new company. Thenext day, he sent Jones a four-page letter setting out “the es-sential facts you imparted to me together with my recommen-dations for further consideration.” after that, there was nofurther contact between Partner and Jones or the accountant.at the end of august, Partner sent a bill for his services. Partnerhas submitted an affidavit of his association with Jones and alldocuments from his file are attached as exhibits. There is noquestion that Jones was a client of Partner’s for a brief periodof time and that he obtained information in the course of therepresentation which would be confidential under rule 1.6(a).

since Jones is a former client of lawyer a’s firm, rule 1.9 mustbe addressed when another member of the firm represents

another party in a lawsuit against Jones. any member of thefirm is disqualified under rule 1.10 if Partner himself would bedisqualified by any type of conflict of interest. rule 1.9(a) pro-vides that a lawyer who has formerly represented a client maynot represent another person in “the same or a substantiallyrelated matter where the present client’s interests are materi-ally adverse to the former client.” in determining whether twomatters are “substantially related,” the scope and subject ofthe two matters must be examined. The issues involved mustbe very closely connected. Partner’s representation of Jonesappears to have been brief and limited in scope as opposed toan ongoing representation of Jones’s business. if the trialcourt finds from the facts before it that corporation a’s suit issubstantially related to the issues of Partner’s prior consulta-tion, then the firm is precluded from representing corporationa against Jones in the instant case. if the finding is otherwise,then rule 1.9(b) must be addressed.

rule 1.9(b) is directed to the protection of client confi-dences gained by a lawyer during the former representation.Public information or information generally known is not en-compassed in the rule. There is a presumption that a lawyerhas gained confidential information in the prior representa-tion of a client. That can be rebutted by the lawyer. There isalso the presumption that if a lawyer possesses confidentialinformation, he will potentially use it in a way adverse to theformer client. in that sense, if the confidential information isin any possible way disadvantageous to the former client,the lawyer is disqualified.

if it is found that Partner could use the information he gath-ered during his short representation of Jones, in any adverseway, or that he would have an advantage because of his ac-quired knowledge, then he and the firm are disqualified fromrepresenting corporation a. if an analysis of the informationreveals that it could not be used by Partner, in any way, in thecorporation a case, then the firm is not disqualified.

The disciplinary commission is not going to make any fac-tual or other finding determinative of this question. There is amotion to disqualify pending in the trial court and those mat-ters are for the court to decide. The commission would pointout that the “appearance of impropriety” is not the standardat this time and, that, in and of itself, does not require a dis-qualification. That term is not used in the rules of Professionalconduct. The application of such a standard tends to result inblanket disqualification because it does not take the actualrelationship, if any, between the subject matter of the tworepresentations into account. [ro 1994-13] s

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M e M o r i a l s

� richard s. manley

� darryl Lee Webb

richard s. Manley“Do not go where the path may lead, go instead where there is no

path and leave a trail.” –ralph Waldo emerson

richard s. Manley, admitted to the alabama state bar in 1958, leftthat trail behind with his passing on January 5, 2019. his outstand-ing leadership in so many capacities has been well documented inhis passing, recognition from so many of his service to our bar, to our state and to hiscommunity. as his daughter, i can attest to his heart for service and desire to help oth-ers to the best of his ability. even as the awful alzheimer’s disease that eventually tookhis life began to impact his brilliant mind, he was still “lawyer Manley,” reaching out tofellow patients to ask if he could help them in any way. our family smiles deeply think-ing about the reports from his caregivers that when they would take field trips, manythought dad was a staff member, not a patient, because he was helping the other pa-tients, showing them where to go or giving them his hand to lead their way.

it is that aspect of rick Manley i wish to memorialize for our bar members–the manwho mentored me and so many others, who loved helping the client who could only payhim in snap beans and cucumbers, but who equally relished the opportunity to advocatefor our state with leaders from across our county and world, the man who loved being a

Burney, Hon. Billy Carpenterdecatur

admitted: 1966died: November 3, 2018

Carlson, William Tunstall, Jr.birmingham

admitted: 1986died: November 18, 2018Cheshire, James Patrick

selmaadmitted: 1983

died: February 10, 2018Coleman, John James, Jr.

birminghamadmitted: 1950

died: November 29, 2018fry, Hon. James Harold

gulf shoresadmitted: 1979

died: November 12, 2018

gullage, Hon. James Truettopelika

admitted: 1960died: January 31, 2018

inge, Zebulon montgomery Pike, Jr.Mobile

admitted: 1974died: July 13, 2018

monfroe, robert Wayne, Jr.Tuscaloosa


Perkins, giles gilpinbirmingham

admitted: 1992died: december 2, 2018

Quattlebaum, Harold g.anniston

admitted: 1970died: January 6, 2018

rutland, Wilmer T. goodloebirmingham


Ward, William Josephbirmingham

admitted: 1953died: october 20, 2018

White, Hon. James mordecaibrent

admitted: 1962died: July 31, 2018

Williams, John sterlingbirmingham

admitted: 1978died: october 19, 2018

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“small-town lawyer” in his beloved demopolis in his belovedwest alabama, but who never, ever thought that was anythingbut the highest honor.

he worked so hard to be the best he could be in everythinghe did, whether serving as speaker Pro Tem of the house ofrepresentatives or as my brother’s baseball coach. he read, hestudied and he always worked to understand the issues andthen would collaborate with others to try to solve the problemor reach the goal at hand. he was a loving father and grandfa-ther, always there with a hug and word of encouragement, butalso with a swift kick to our posterior if that was needed instead.our family has been moved by the number of stories from oth-ers regarding dad’s kindness to them as a young attorney oryoung legislator regarding his efforts to reach out and put themat ease, and to help where he could to set them on a path tosuccess in whatever the endeavor might be. he was always thementor–always the teacher–always the leader who wanted tohelp you be your best and then inspire you to be better, no mat-ter what you were doing.

dad’s path could have led him in so many directions, but hechose the path of family and of service. i watched him choosestatesmanship over personal political gain many times overand, in my early years, i would ask why, and later never had to;his answer was always, “because i am here to do what is bestfor the whole, not for just myself.” Many times he would let mego with him to court or meetings to observe and learn. he wasalways willing to discuss matters afterwards, patiently explain-ing how or why he chose a certain advocacy path or course ofdiscussion. dad taught us all leadership that was infused withservice, integrity and preparation, a lesson worth sharing withothers no matter what the occasion.

rick Manley’s legacy, like so many others who we have allbeen privileged to know within our bar community, is one tobe honored for its accomplishments and for its record of serv-ice. his choices–his path–his willingness to blaze trails whereothers were not willing or brave enough to go, especially inthe face of certain adversity and almost guaranteed failure, isa legacy that inspires us all. The best memorials to my dadare those of you, like me, who had the chance to know him,love him and learn from him. May we all honor him by payinghis legacy forward with our time and our investment in oth-ers, especially our fellow bar members and new lawyers, sothey can find and follow their path as well.

-Alyce Manley Spruell, Tuscaloosa

darryl lee WebbMy father, darryl lee Webb, passed away

on November 11 in Tuscaloosa. he was 76years old. dad was born “in the Valley” inlangdale, chambers county, alabama. heloved the law, and introduced his family,and thousands of students at the universityof alabama, to the law. Two of his children,my sister, alyson, and i, became lawyers be-cause of dad’s influence.

dad graduated from samford university in 1963 and thenenrolled in the cumberland school of law, graduating in 1967.Following graduation, he formed a law partnership in birming-ham with classmates, corley, church & Webb. in 1971, dadtook a position at the university of alabama’s college of com-merce and business administration as an assistant legal studiesprofessor. This position would define his career until his retire-ment from the university in 2005. during those years, he alsoserved as the assistant dean of student affairs and chair of thelegal studies section in the college of commerce and businessadministration. and, he taught in the executive Mba program.For many years, he served enthusiastically as one of the facultyrecruiters for the crimson Tide football team.

in the course of his long career, dad taught thousands ofstudents, and always wanted to know where they were fromand where they had gone to high school. he would remem-ber these facts about each student. he always infused hisclasses with law stories, and taught with a witty sense ofhumor and good-natured jokes. during his tenure at the uni-versity, dad received many awards and recognitions and wasinducted into many campus organizations, including Jason’sMen’s honor society and odK. he served in the Faculty sen-ate and was also a faculty advisor for alpha delta Pi sororityand his own fraternity Pi Kappa Phi. dad wrote many text-books, all related to legal studies and business law whichwere used on college campuses across the country. he was a50-year member of the alabama state bar.

dad was known by many names–dr. Webb, dean Webb,Professor Webb, doc and Pop. he was a member of calvarybaptist church, across the street from bryant-denny sta-dium, where he was a lifetime deacon, taught sunday schoolin the college department and was a member of the guytonFellowship class. he was a past member of the Tuscaloosa Ki-wanis club, and a longtime member of the university club,where his favorite dessert was their famous almond ball.

his kind, congenial warmth and happiness were conta-gious to all who knew and loved him. dad never met astranger and loved nothing more than to engage in light-hearted conversations with everyone he encountered,whether a lifelong friend or a new acquaintance. he enjoyedplaying golf at his beloved Woodland Forrest country club,now known as Tall Pines golf club at Woodland Forrest, andsmoking cigars. he always followed his much-loved crimsonTide. dad was fun to be around and loved life immensely. heencouraged many students to pursue the study of law, andhelped them get into law schools across our country.

dad was a devoted husband, father, grandfather, brotherand uncle who deeply loved his family, god and his saviorJesus christ. he is survived by his wife of 56 years, connieself Webb; three children, Jeffrey and wife rhonda; lee; andalyson and husband Tim Mathews; and granddaughter ram-sey lee Webb. unfortunately, he lost his only grandson, ToddWebb, in 2015.

dad was well known and blessed to have numerous lovingfriends, many of them former students, now practicing attor-neys. he will be missed by all who knew him, especially me. s

—Jeffrey Todd Webb, Montgomery

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rECEnT CiViL dECisiOns

From the alabama supreme courtspoliationHartung Commercial Properties, Inc. v. Buffi’s Automotive Equipment and SupplyCompany, Inc., no. 1170482 (ala. dec. 7, 2018)

spoliation of evidence determinations are made by weighing five factors: (1) theimportance of the evidence destroyed; (2) the culpability of the offending party; (3)fundamental fairness; (4) alternative sources of the information [that would havebeen available] from the evidence destroyed; and (5) the possible effectiveness ofother sanctions less severe than dismissal. The supreme court reversed the dismissalof claims based on spoliation, concluding that factors 1, 2 and 4 were not supportedby evidence, particularly because there appeared to be alternative sources of infor-mation available from which expert examinations could be made.

discovery; medical LiabilityEx parte Mobile Infirmary Assn., no. 1170567 (ala. dec. 14, 2018)

in medical liability action, trial court’s protective order allowed plaintiff’s counsel touse documents produced in the present action in another pending case against Mo-bile infirmary. Mobile infirmary objected to that language under ala. code § 6-5-551,which provides that “[a]ny party shall be prohibited from conducting discovery withregard to any other act or omission or from introducing at trial evidence of any otheract or omission.” Mobile infirmary sought mandamus relief. in a 6-3 decision, thecourt granted mandamus relief, holding that the provision in the protective ordercontravened section 6-5-551.

PreemptionState of Alabama v. Volkswagen AG, no. 1170528 (ala. dec. 14, 2018)

state’s claims against VW for “tampering” and seeking penalties against VW andother defendants pursuant to the alabama environmental Management act (“theaeMa”), § 22-22a-1 et seq., ala. code 1975, and the alabama air Pollution control actof 1971 (“the aaPca”), § 22-28-1 et seq., ala. code 1975, were preempted by section209 of the clean air act, 42 u.s.c. § 7543. The case is very fact-specific and is con-trolled largely by a ruling in the VW emissions Mdl litigation.

rule 59Ex parte Chmielewski, no. 1171089 (ala. dec. 21, 2018)

Trial court lacked jurisdiction to rule on a rule 59 motion filed 31 days followingentry of judgment of dismissal.

T h e a P P e l l a T e c o r N e r

Wilson F. Green

Wilson F. Green is a partner in Fleenor &Green LLP in Tuscaloosa. He is a summacum laude graduate of the University ofAlabama School of Law and a former lawclerk to the Hon. Robert B. Propst, UnitedStates District Court for the Northern Dis-trict of Alabama. From 2000-09, Greenserved as adjunct professor at the lawschool, where he taught courses in classactions and complex litigation. He repre-sents consumers and businesses in con-sumer and commercial litigation.

Marc A. Starrett

Marc A. Starrett is an assistant attorneygeneral for the State of Alabama and repre-sents the state in criminal appeals andhabeas corpus in all state and federalcourts. He is a graduate of the University ofAlabama School of Law. Starrett served asstaff attorney to Justice Kenneth Ingram andJustice Mark Kennedy on the AlabamaSupreme Court, and was engaged in civiland criminal practice in Montgomery beforeappointment to the Office of the AttorneyGeneral. Among other cases for the office,Starrett successfully prosecuted BobbyFrank Cherry on appeal from his murderconvictions for the 1963 bombing of Birm-ingham’s Sixteenth Street Baptist Church.

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immunity; Public school TeachersEx parte Wilcox Co. Bd. of Educ., no. 1170621 (ala. dec.21, 2018)

in an action arising from a failure to renew contract of pro-bationary teacher upon a vote of the board, where a boardposition was vacant and unfilled and where the teacher con-tended that the board vote was invalid, the court held: (1)claims against the board and against board members in theirofficial capacities for money damages were barred by ala.const. sec. 14; (2) official-capacity claims against superintend-ent for declaratory and injunctive relief regarding reinstate-ment were barred by immunity, because superintendent hadonly the authority to make a personnel recommendation tothe board, and thus superintendent had not failed to performa legal duty for immunity exception; (3) official-capacityclaims against board members for declaratory and injunctiverelief regarding the legality of the board vote under ala. code§ 16-8-4 were not barred by immunity; (4) on individual-ca-pacity claims, because personnel decisions fall within Cran-man immunity, the burden shifted, even at the motion todismiss stage, to the plaintiff to allege facts demonstratingthat defendants acted maliciously, willfully, beyond authorityor under mistaken interpretation of the law; (5) although ala.code § 16-8-4 states that no action or resolution of a board isvalid unless concurred by a majority of the “whole board,” ala.code § 16-24c-5(c), within the students First act, provides fora written termination of a probationary teacher by “a majorityvote of the governing board.”

Venue; forum non ConveniensEx parte Maynard, Cooper & Gale, P.C., no. 1171102 (ala.dec. 21, 2018)

although venue was proper in action by former clientagainst law firm in Jefferson county (where defendant hadits principal office), interests of justice demanded transfer ofaction to Madison county, where the acts and omissions al-legedly occurred out of defendant’s office there.

involuntary dismissalAce American Insurance Company v. Rouse’s Enterprises,LLC, no. 1170818 (ala. dec. 21, 2018)

dismissal for want of prosecution requires a finding thatplaintiff committed “willful default or contumacious conduct.”

insurance; failure to ProcureSomnus Mattress Corporation v. Hilton, no. 1170250 (ala.dec. 21, 2018)

Trial court properly entered summary judgment for in-surer and agent against insured on claims of failure to pro-cure proper coverage for business income coverages.insured failed to present substantial evidence as to what ad-vice the agent actually provided to the insured concerningthe appropriateness or extent of coverage. additionally,

agent and insurer had no affirmative duty to provide adviceconcerning the need for or extent of coverages: “jurisdic-tions throughout the country have overwhelmingly con-cluded that insurers have no such duty to advise clients.”

Venue; CorporationsEx parte Mercedes-Benz U.S. International, Inc., no.1170623 (ala. Jan. 4, 2019)

The court overruled Ex parte Scott Bridge Co., 834 so. 2d 79(ala. 2002), under which a corporation could be deemed tobe “doing business by agent” in a county by purchasing inthat county significant materials or components for use inthe subject corporation’s operations. “The regular purchas-ing of parts or materials from a supplier located in a certaincounty, by itself, does not constitute “[doing] business byagent” in that county under § 6-3-7(a)(3).”

Venue; surface miningEx parte Alabama Surface Mining Commission, no.1170222 (ala. Jan. 11, 2019)

answering a narrow issue of first impression, the courtconcluded that venue for appeals from the commission’s is-suance of permits is required to be sited in Walker county

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under ala. code § 9-16-79(4)b., because the commission isrequired by ala. code § 9-16-73(h) to maintain its principaloffice in that county.

From the court ofcivil appealsLambert advance; survivalGEICO General Insurance Company v. Curtis, no. 2170907(ala. Civ. app. dec. 21, 2018)

before suit was filed, defendant curtis’s carrier allstate of-fered its $25,000 limits; geico (plaintiff’s uM carrier) refusedto consent to settlement and advanced the funds under Lam-bert. Plaintiff then died. geico sued curtis for recovery of theLambert advance. curtis moved to dismiss based on lack ofsurvival of plaintiff’s underlying claim; geico argued that theclaim was actually in contract and not tort. The trial courtgranted summary judgment. The cca affirmed, holding thatthe claim did not survive because “a uiM insurer’s right to re-cover its Lambert advance, which is an amount within thetortfeasor’s liability limits, is not a subrogation right.”

Workers’ Compensation; mandate ComplianceCity of Gadsden v. Billingsley, no. 2170873 (ala. Civ. app.dec. 21, 2018)

in prior appeal, the cca held that claimed psychologicalproblems were not caused by the 2008 accident in issue, andthe court’s mandate was to “remand the cause for [the circuit]court to determine the extent, if any, to which the employee’sleft-shoulder injury has affected her ability to earn incomeand to award the employee benefits in accordance with thatdetermination.” on remand, the trial court held that “the em-ployee, because of injuries to “her left shoulder, neck, [and]lower back” and her “psychological problems caused by theaugust 11, 2008,” collision, “lost 100% of her ability to earn aliving.”“ held: trial court’s determination exceeded and contra-vened the cca’s mandate from the first appeal.

Workers’ Compensation; Cumulative stressinjuriesEnterprise Leasing Company-South Central, LLC v. Drake,no. 2170870 (ala. Civ. app. Jan. 4, 2019)

under § 25-5-81(c), the burden of proof for an accidental in-jury differs from that of an injury due to cumulative physical

stress. at the trial-court level, to establish medical causation[for an accidental injury], the employee must show, through apreponderance of the evidence, that the accident arising outof and in the course of the employment was, in fact, a con-tributing cause of the claimed injury. To prove that an injuryarose from work-related cumulative trauma, an employeemust present clear and convincing evidence of legal andmedical causation. in this case, the trial court erred by apply-ing a less-than-clear and convincing standard to the issues ofmedical and legal causation for the injury.

HOasGreat Bend Yacht Club, Inc. v. MacLeod, no. 2170815 (ala.Civ. app. Jan. 11, 2019)

Provisions in hoa by-laws afforded discretion to the boardto set assessments and charges against owners, and that dis-cretion extended to an interpretation of the by-law provid-ing that lot owners would be charged a “proportionate”share of expenses.

Unlawful detainer; serviceMays v. Trinity Property Consultants, LLC, no. 2170867(ala. Civ. app. Jan. 11, 2019)

landlord obtained service on tenant in unlawful detaineraction. landlord’s process server averred in his affidavit thathe had “knocked on the door, [and that,] after [he] did notreceive a response, [he] posted a copy of the summons andcomplaint on the door, then placed a stamped copy in thefirst-class mail to the same address.” The act of knocking onthe door and receiving no response satisfied the statutoryrequirement of “reasonable effort” to obtain personal serv-ice, and thus service was proper pursuant to § 6-6-332(b)and § 35-9a-461(c).

rule 54(b)Williams v. Fann, no. 2170988 (ala. Civ. app. Jan. 11,2019)

Trial court’s partial summary judgment for defendant on awantonness claim, and associated rulings concerning evi-dence, were improperly certified as a final judgment underrule 54(b) and the intertwining doctrine. Pending claims re-mained and were intertwined with the wantonness claim.

attorneys’ fees; LiensHarris v. Capell & Howard, P.C., no. 2170973 (ala. Civ.app. Jan. 11, 2019)

after settlement of a will contest which was approved inand reduced to judgment, a dispute arose between will


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contestant and counsel concerning fees owed. attorney fileda motion to set the fee styled under rule 60(b)(6), arguingthat the settlement agreement gave the trial court continu-ing jurisdiction to effectuate the agreement. The trial courtgranted the motion and set a fee of just over $54,000 on a$170,000 settlement. contestant appealed. The cca af-firmed, holding: (1) the motion was not cognizable underrule 60(b)(6) because the attorney was a non-party (amongother reasons); (2) attorney’s lien arose under ala. code § 34-3-61(b) because the amount of settlement was reduced tojudgment, and under ala. code § 34-3-62, attorney properlyfiled a motion in the circuit court to enforce that lien, whichprocedure conferred jurisdiction on the trial court–”[b]asedon the language used in § 34-4-62, an attorney holdingmoney from which his or her attorney fee may be deductedmay file a motion in the circuit court of the county of his orher residence seeking to settle a dispute over the amount ofcompensation to which the attorney is entitled”; (3) attorneywas not required to intervene or file a lien, because the lienarose by operation of law; and (4) amount of fees was reasonable.

finality; Boundary Line disputesDonald v. Kimberley, no. 2170991 (ala. Civ. app. Jan. 11,2019)

Trial court’s order setting a boundary line, but “severing” is-sues of damages raised in complaint and counterclaim andreserving those for later proceeding (without setting up anew cV number), was not a final judgment for appeal.

From the unitedstates supremecourtarbitrationHenry Schein, Inc. v. Archer & White Sales, Inc., no. 17-1272 (U.s. Jan. 8, 2019)

arbitration agreement provided carve-out for injunctiverelief, but provided the arbitrator with authority to adjudi-cate arbitrability questions. in response to archer’s com-plaint which sought injunctive relief and other relief, hs

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moved for arbitration, arguing that arbitrator should deter-mine arbitrability of dispute. The district court and the Fifthcircuit determined arbitrability without referring the matterto arbitration, holding that hs’s claim to entitlement to arbi-tration was “wholly groundless.” The supreme court re-versed, holding that the “wholly groundless” exception to“First Options” arbitrability (under which the arbitrator candecide the scope of authority when the arbitration agree-ment provides the arbitrator with that authority) was un-sound and inconsistent with Faa law.

social security; attorneys’ feesCulbertson v. Berryhill, no. 17-773 (U.s. Jan. 8, 2019)

The social security act regulates the fees that attorneysmay charge claimants seeking Title ii benefits for representa-tion both before the social security administration and infederal court. For representation in administrative proceed-ings, the act provides two ways to determine fees. if a feeagreement exists, fees are capped at the lesser of 25 percentof past-due benefits or a set dollar amount–currently $6,000.42 u. s. c. §406(a (2)(a). absent an agreement, the agencymay set any “reasonable” fee. §406(a)(1). in either case, theagency is required to withhold up to 25 percent of past-duebenefits for direct payment of any fee. §406(a)(4). For repre-sentation in court proceedings, fees are capped at 25 per-cent of past-due benefits, and the agency has authority towithhold such benefits to pay these fees. §406(b)(1)(a). held:section 406(b)(1)(a)’s 25 percent cap applies only to fees forcourt representation and not to the aggregate fees awardedunder §§406(a) and (b).

arbitrationNew Prime, Inc. v. Olivera, no. 17-340 (U.s. Jan. 15, 2019)

section 1 of the Faa excludes from coverage of the Faadisputes involving the “contracts of employment” of certaintransportation workers. 9 u. s. c. §1. That qualification hassparked these questions: When a contract delegates ques-tions of arbitrability to an arbitrator, must a court leave dis-putes over the application of §1’s exception for the arbitratorto resolve? and does the term “contracts of employment”refer only to contracts between employers and employees,or does it also reach contracts with independent contrac-tors? held: (1) district courts, not arbitrators, must considerand resolve whether a contract falls within section 1 of theFaa before considering whether to compel arbitration undersections 3 and 4, and in this regard the sequencing of thestatute is strong supporting authority that congress in-

tended this result; and (2) the Faa’s term “contract of em-ployment” refers to any agreement to perform work, includ-ing independent contractor relationships–and in this regard,the court looked to how the phrase “contracts of employ-ment” would have been understood at the time of enact-ment of the Faa.

From the eleventhcircuit court of appealsBankruptcyIn re Dukes, no. 16-16513 (11th Cir. dec. 6, 2018)

For a debt to be “provided for” by a plan under § 1328(a),the plan must make a provision for or stipulate to the debt inthe plan. because debtor’s chapter 13 plan did nothingmore than state that the credit union’s mortgage would bepaid outside the plan, it was not “provided for” and was notdischarged. even if it was provided for, moreover, dischargeof the credit union’s debt would violate § 1322(b)(2) by mod-ifying the credit union’s right under the original loan docu-ments to obtain a deficiency judgment against debtor.Failure to file a proof of claim did not discharge the creditunion’s mortgage because, again, discharge would violate § 1322(b)(2).

fda Preemption; Lanham actHi-Tech Pharmaceuticals, Inc. v. HBS International Corp.,no. 17-13884 (11th Cir. dec. 4, 2018)

hi-Tech sued hbs under the lanham act and georgia law,claiming that the label of a protein-powder supplement dis-tributed by hbs misleads customers about the quantity andquality of protein in each serving. The district court dis-missed the complaint on the grounds that the state-lawclaim was preempted by the Food, drug and cosmetic act(“Fdca”) and that the complaint failed to state a claim underthe lanham act because it is not plausible that the label ismisleading. held: the Fdca preempts the state law claim be-cause it would impose liability for labeling that does not vio-late the Fdca or the regulations that carry it into effect. afederal regulation expressly allows “[p]rotein content [to] becalculated on the basis of the factor 6.25 times the nitrogen


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content of the food,” 21 c.F.r. § 101.9(c)(7), and hi-Tech doesnot dispute that hexaPro’s labeling complies with this regu-lation. any representations about the quality or sourcing ofprotein are not covered by the regulations and thereforecannot serve as the basis for a state-law claim. however, thelabel was plausibly misleading, and therefore the complaintstated a viable lanham act claim–and the Fdca did not barthe claim under the lanham act.

Eleventh amendmentFreyre v. Chronister, no. 17-11231 (11th Cir. dec. 14, 2018)

hillsborough county sheriff’s office, in conducting child-protective investigations under a grant agreement with theFlorida department of children and Families, was not an armof the state and therefore not entitled to eleventh amend-ment immunity.

Erie doctrineCarbone v. Cable News Network, Inc., no. 17-10812 (11th

Cir. dec. 13, 2018)The motion-to-strike procedure imposed under the geor-

gia anti-slaPP (strategic lawsuits against Public Participa-tion) statute, o.c.g.a. § 9-11-11.1, does not apply in federalcourt, and thus the district court erred in dismissing thecomplaint for non-compliance.

admiraltyCaron v. NCL Bahamas Ltd., no. 17-15008 (11th Cir. dec.13, 2018)

in a “case aris[ing] from a drunken tumble down an escapehatch on a cruise ship[,]” the court held: (1) 28 u.s.c. §1332(a)(2) does not grant “alienage diversity” jurisdictionover a suit between a corporation incorporated solely in aforeign state and another alien, regardless of the corpora-tion’s principal place of business; (2) admiralty jurisdictionwas present, however, under section 1333(1) because a) theincident occurred on navigable water, or the injury wascaused by a vessel on navigable water, and b) the incident isconnected with maritime activity; (3) passenger waiver ofsuit after one year, printed on ticket, prevented relation backof over-service claim brought as amendment to complaintafter the one-year bar, especially since the original com-plaint made no mention of alcohol and focused mostly onthe physical condition of various areas of the ship, allegingvarious failures to maintain its “manholes, floors, walkways,or thresholds” in a safe condition; (4) there was no substan-tial evidence to support the general premises liability claim.

Iqbal/Twombly standard for PleadingColburn v. Odom, no. 17-11404 (11th Cir. dec. 21, 2018)

Plaintiffs brought an action against magistrate judges andcircuit clerk for failures to set timely preliminary hearings forpurposes of setting bail after initial arrests. The district court

granted a dismissal of the claims against the magistratesbased on judicial immunity, but denied judicial immunity tothe circuit clerk, and the circuit clerk appealed. The eleventhcircuit vacated the district court’s denial of the dismissal ofthe circuit clerk (there was no cross-appeal of the dismissalof the magistrates), reasoning that the complaint did notmeet the Iqbal/Twombly standard of pleading because it didnot identify when each plaintiff was arrested, before whichmagistrate each plaintiff was brought, when if at all each ar-restee was given a bail hearing, etc.

fourth amendment; Public EmploymentFriedenburg v. School Bd. of Palm Beach County, no. 17-12935 (11th Cir. dec. 20, 2018)

issue of first impression: whether a county school boardmay require all applicants for substitute teacher positions tosubmit to and pass a drug test as a condition of employ-ment, or whether the board may, without any suspicion ofwrongdoing, collect and search–by testing–the urine of allprospective substitute teachers. held: Yes; the board has asufficiently compelling interest in screening its prospectiveteachers to justify this invasion of the privacy rights of jobapplicants.

standingAaron Private Clinic Mgmt. LLC v. Berry, no. 17-15144 (11th

Cir. Jan. 4, 2019)Putative methadone clinic operator’s challenge to a statu-

tory moratorium for new narcotic treatment facilities wasmoot because the moratorium had expired, (2) operatorlacked standing to assert its claims for injunctive and de-claratory relief, because the fact that it might open a clinic inthe future, without any specific concrete plans, fails to rise tothe level of actual or imminent injury or an immediate threatof future injury necessary for article iii standing. on that lat-ter point, “[the operator] has failed to allege that it has takenany concrete steps–such as selecting a clinic location, secur-ing a lease option, consulting with relevant government offi-cials, applying for the necessary permits or certifications, orassociating with potential clients–that suggest such an im-mediate intention or plan.”

Bankruptcy; CoalIn re Walter Energy, Inc., no. 16-13483 (11th Cir. dec. 27,2018)

The legal issue involves the interplay between the coal in-dustry retiree health benefit act of 1992 (“coal act”), Pub. l.No. 102-486, 106 stat. 2776, 3036-56 (1992), and the retireebenefits bankruptcy Protection act of 1988 (“rbbPa”), Pub. l.No. 100-334, 102 stat. 610 (1988). held: the rbbPa author-izes a bankruptcy court to terminate a debtor’s statutory ob-ligation under the coal act to pay premiums to the fundswhen the bankruptcy court finds that such termination is

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necessary for the coal company to sell its assets as a goingconcern and avoid a piecemeal liquidation.

Qualified immunity; first amendmentEchols v. Lawton, no. 17-13843 (11th Cir. Jan. 24, 2019)

Former prisoner who sued district attorney for Firstamendment retaliation for prisoner’s seeking legislativecompensation for his wrongful convictions stated a claim forretaliation for exercise of First amendment rights. as thecourt explained, “[i]f a district attorney defamed a formerprisoner for seeking legislative compensation for his wrong-ful convictions and derailed that legislative effort, a personof ordinary firmness would likely be deterred from speakingagain on that matter lest the prosecutor continue to tarnishhis reputation or, worse, initiate a wrongful prosecution. soechols’s complaint states a claim of retaliation under theFirst amendment.” however, because that right was notclearly established at the time of the conduct, district attor-ney enjoyed qualified immunity for any claims for damagesbecause “our sister circuits are divided over whether an offi-cial’s defamatory speech is actionable as retaliation underthe First amendment[,]” and there was no case on pointwithin the circuit.

rECEnT CriminaL dECisiOns

From the FederalcourtsaCCaStokeling v. USA, no. 17-1554 (U.s. Jan. 15, 2019)

a sentence enhancement is mandated by the armed careercriminal act (acca) “for a violent felony,” 18 u.s.c. §924(e),which acca defines, in relevant part, as “any crime punishableby imprisonment for a term exceeding one year” that “has asan element the use, at-tempted use, or threatened use ofphysical force against the person of another,” §924(e)(2)(b)(i).affirming the eleventh circuit, the court held that acca’s ele-ments clause encompasses a robbery offense that requires thedefendant to overcome the victim’s resistance.

ineffective assistance of CounselBrewster v. Hetzel, no. 16-16350 (11th Cir. Jan. 22, 2019)

Trial counsel rendered ineffective assistance of counsel byfailing to object or move for mistrial when jury returned five

or more messages to the trial judge about being dead-locked, and the trial judge gave multiple Allen charges, dur-ing the last of which the trial judge, when told that the onejuror who wouldn’t vote to convict was doing crosswordpuzzles, ordered all the reading materials taken out of thejury room.

From the alabamasupreme courtstand Your groundEx parte Smith, no. 1171025 (ala. Jan. 11, 2019)

The court denied mandamus relief from the trial court’srefusal to grant “stand Your ground” immunity to the defen-dant arising from his fatal altercation with the victim whileon police patrol. however, it directed the trial court to re-cuse itself from the case due to its statements made at theimmunity hearing, in light of its previous widely publicizedstatements in social media regarding law enforcement. Thecourt also granted mandamus relief on the defendant’sclaim that he was entitled to a change of venue due to pre-trial publicity, departing from prior caselaw that this issue isreviewable only on appeal in criminal cases.

rule 32; ineffective assistanceEx parte Gissendanner, no. 1160762 (ala. Jan. 4, 2019)

defendant was entitled to relief under rule 32 on his inef-fective assistance claims, finding that trial counsel’s failure toadequately investigate his charges of capital murder andpossession of a forged instrument prejudiced his defenseunder Strickland v. Washington, 466 u.s. 668 (1984).

From the court ofcriminal appealsTheft of Lost Property; LimitationsThomas v. State, Cr-17-0873 (ala. Crim. app. Jan. 11,2019)

because theft of lost property under ala. code § 13a-8-6 isa continuing offense, the statute of limitations for the defen-dant’s offense began to run when the final erroneous payrollpayment was made to her for work not performed.


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Capital murder; ProvocationPetersen v. State, Cr-16-0652 (ala. Crim. app. Jan. 11,2019)

defendant was correctly denied a jury instruction onprovocation manslaughter. The evidence showed that hewas not assaulted while being escorted out of a nightclubby its employees, and he did not act in the heat of passionwhen he returned inside the nightclub and fatally shot sev-eral people.

Juvenile delinquencyD.A.H. v. State, Cr-17-1049 (ala. Crim. app. Jan. 11, 2019)

The court remanded for the juvenile court to enter a newrestitution order pursuant to ala. r. crim. P. 26.11 (a) reflect-ing that it considered the juvenile’s financial resources andhis ability to reasonably meet his restitution obligation inthe delinquency proceeding.

Child EndangermentState v. Martin, Cr-17-0745 (ala. Crim. app. Jan. 11, 2019)

Trial court erred in suppressing evidence of the defen-dant’s urine and meconium test results following the birth ofher baby in this child endangerment case. The “disclaimers”on the face of the test results did not bar their admission,and the trial court’s premature ruling prevented their propo-nent from attempting to lay a proper predicate.

split sentence actWilson v. State, Cr-17-0814 (ala. Crim. app. Jan. 11,2019)

Trial court had discretion to determine whether to suspendthe minimum sentence required under ala. code § 15-18-8 (a),including the three-year “minimum period of confinement”required for sentences greater than 15 years but not morethan 20 years, but it was not required to do so. s

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March 5th marked the first day of the2019 regular session of the alabamalegislature, the start of real business forthis new quadrennium. over the nextfew months, we will be getting a front-row seat to how the personality of thisnew legislature develops and how theywill tackle some of the most pressing is-sues facing our state. This column isbeing written as we are closing pre-ses-sion budget hearings and all indicationsare that this is a group who will step upand do their best over the next fouryears.

Normally this is the time when thelegislature is most likely to attempt totackle some of the more difficult work ofthe cycle and this year is no exception.governor ivey and legislative leadershiphave been making it clear for some timethat the first priority for this group

would be to address the current prob-lems facing our infrastructure in thestate and the need to invest more in it.

The key funding component for ourstate’s construction and maintenance ofroads and bridges is the gasoline andmotor fuel taxes. For purposes of spacethis article will focus on the gasolineside of that equation. The rate at whichthese taxes are levied was last increasedin 1992. like most taxes levied in thestate, the gasoline tax is collected anddistributed pursuant to a collection ofconstitutional and statutory provisions.in past columns i have tried to explainsome of the resources our office pre-pares for the benefit of public officialsand citizens to understand our fiscalpolicies and thought this subject wouldbe a good time to publish an excerptfrom one of them: A Legislator’s Guide to

l e g i s l a T i V e W r a P - u P

Othni J. LathramDirector, Legislative Services Agency

[email protected]

For more information, visit www.lsa.alabama.gov.

aNd We’re oFF!The gasoline Tax

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THE NEUTRALS O L U T I O NA mediation and arbitration community

™

Alabama’s Taxes. This is the portion of that publication that isdevoted to the gasoline tax, but the publication brings thesame information to bear on all state tax streams.

i hope this information is useful not only to your under-standing of this important issue as it is being discussed, butalso to alerting you to the kind of information that is avail-able on this front. The complete version of this publication isavailable on the legislative services agency website.

gasoline Tax (and gasoline Portion of themotor Carrier fuel Tax)

n Constitutional Provisionsamendment No. 93 to the Constitution of Alabama of 1901, by

amendment No. 354, now appearing as section 111.06 of theofficial recompilation of the Constitution of Alabama of 1901

amendment No. 93 (proclaimed ratified November 19,1952) provided that no monies derived from any fee, ex-cise or license tax, levied by the state, relating to (1) regis-tration, operation or use of vehicles or (2) fuels used forpropelling vehicles except pump taxes shall be ex-pended for any purpose other than costs of construction,reconstruction, maintenance and repair of public high-ways and bridges, costs of highway rights of way, pay-ment of highway obligations, the cost of traffic

regulation and the expense of enforcing state trafficand motor vehicle laws. amendment No. 354 (pro-claimed ratified November 10, 1976) expanded uponamendment No. 93 to allow for the distribution of pro-ceeds from charges for personalized license plates ortags in any manner prescribed by the legislature.

note: The above restriction does not apply to fees andtaxes levied by counties and municipalities pursuant toauthority granted by the state.

n statutory authoritysections 40-17-140 through 40-17-155 (Motor carrier Fuel

Tax) and sections 40-17-320 through 40-17-363 (gasolineTax), Code of Alabama 1975

n Tax Baseexcise tax on the removal, import, sale/transfer in the bulk

transfer/terminal system and blending of motor fuel (gaso-line Tax). excise tax upon motor carriers who operate orcause to be operated any motor vehicles on any highway inalabama (Motor carrier Fuel Tax)

n Tax rateThe state of alabama collects three levies, of $.07, $.05 and

$.06, for a total of $.18 per gallon. Pursuant to act 2015-54,

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effective october 1, 2016, the $.02 gasoline inspection feewas added to the $.04 excise tax, for a total of $.06 (see alsoPetroleum commodities inspection). excise tax on motorcarrier fuel is at the same rate as in effect for gasoline.

note regarding Local rates:Counties may levy a county gasoline tax if the legislature

has passed a local act authorizing the county commission todo so. The local act usually sets the parameters of the taxand specifies use of the funds. The local act may provide fora credit of municipal gas taxes paid within that countyagainst the county tax owed or may exempt payment of aportion of the county tax in municipalities which levy agasoline tax.

municipalities may levy a municipal gasoline tax by cityordinance. one-half of the amount levied in the municipalitymay be levied in the police jurisdiction. The ability of munici-palities to levy a city gasoline tax may be limited by a legisla-tive act which levies a county gasoline tax–i.e., cities withinthe county may be prohibited from levying a municipalgasoline tax, but be given a share of the county tax.

n Collectionsby the department of revenue due each month (gasolinetax), and before the last day of april, July, october and Janu-ary (motor carrier fuel tax)Fiscal %Year $.07 $.06[1] $.05 Total[2] Change2018 205,328,499 117,327,885 146,659,857 469,316,241 9.022017 188,325,897 107,614,798 134,518,498 430,459,192 10.482016 170,461,830 97,406,760 121,758,450 389,627,040 (5.87)2015 181,093,551 103,482,030 129,352,537 413,928,118 3.742014 174,570,962 99,754,836 124,693,545 399,019,343 0.46

Source: State of Alabama, Department of Revenue, Motor Fuels Section

n distribution(1) a total of 1.23% of the $.07 and $.05 per gallon ($.12 total)

levied is distributed and allocated as follows:

(a) 35% of 1% is credited to the Water safety Fund and theseafood Fund.

(b)70% of 1% is credited to the game and Fish Fund.[3]

(c) 18% of 1% is credited to the Water safety Fund and theseafood Fund.

(2) 60% of the $.05 supplemental tax goes to the state roadand bridge Fund. of that amount, $500,000 each fiscal yearis used for the construction, maintenance and repair ofpublic roads in the state parks system. The remaining 40%is distributed according to the 45%/55% pattern below.

(3) The balance of the $.07 and $.05 levy after the 1.23% dis-tribution, and 2/3 of the $.06 gasoline levy are distributedas follows:

(a) 45% to the state road and bridge Fund. The distributionsto the game and Fish Fund (70%) and the distributions tothe Water safety Fund and the seafood Fund (18%) arededucted from the state road and bridge Fund.

(b)55% to be shared by the counties and their municipali-ties as follows:

1) 25% of the net tax proceeds are distributed equallyto the 67 counties;

2) 30% of the net tax proceeds are allocated to the 67counties based on population.

a. 10% of the counties’ share received shall be allo-cated to each municipality therein, based on apopulation ratio.

b. remaining portion to the county

(4) The remaining 1/3 of the $.06 gasoline levy is distributedas described in “Petroleum commodities Fees.”

n major Exemptions1. Motor fuel exported from the state for which proof of ex-

port is available in the form of a terminal issued destina-tion state shipping document that is:

a. exported by a supplier who is licensed in the destinationstate or

b. sold by a supplier to a licensed exporter for immediateexport to a state for which the applicable destinationstate motor fuel excise tax has been collected by the sup-plier who is licensed to remit the tax to the destinationstate.

2. K-1 kerosene or aviation jet fuel that is produced at a refineryin alabama and is either exported directly by the operator ofthe refinery or sold for immediate export by the operator toa licensed exporter with proper documentation.

3. sales of dyed diesel fuel

4. gasoline blendstocks when sold to:

a. licensed supplier or

b. Person who will not be using blendstocks in the manu-facture of gasoline or as a motor fuel (with exemptioncertificate)

5. Motor fuel sold by licensed supplier or licensed permis-sive supplier to an exempt agency under section 40-17-332 (united states government or agency thereof, anycounty governing body of state, any incorporated municipal


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governing body of state, city and county boards of edu-cation of state, alabama institute for the deaf and blindand alabama department of Youth services school dis-trict, and private and church schools as defined in section16-28-1, Code of Alabama 1975

6. Motor fuel delivered by a licensed supplier from one ter-minal to another terminal when ownership in the motorfuel has not changed or by a licensed supplier from a ter-minal to a refinery operated by the licensed supplier.

7. From the Motor carrier Fuel Tax:

a. any department, board, bureau, commission or taxingarea or other agency of the federal government, stateof alabama or any political subdivision thereof

b. any school bus operated by the state of alabama, anypolitical subdivision thereof or any private or privately-operated school or schools

refund Eligibility(1) licensed distributor–on monthly basis on taxes paid on

gallons sold by that distributor to licensed exempt agen-cies (as defined above)

(2) exporter–on monthly basis on taxes paid to the state ongallons exported by exporter (with proof )

(3) exempt entities (as defined above)–on quarterly basis forany purchases of motor fuel (or issuer of card if chargedto credit card issued to the exempt entity)

(4) end users who first pay tax on gallons of gasoline blend-stocks not used in manufacture of gasoline or as motorfuel–on quarterly basis

(5) Tax paid on motor fuel that is lost or destroyed as directresult of sudden and unexpected casualty or becomesunsalable or unusable as highway fuel due to such thingsas contamination by dye or mixture of gasoline anddiesel.

(6) Tax paid on transmix not used as motor fuel or that is de-livered to refinery for further processing–on quarterlybasis

(7) Tax paid on motor fuel within the bulk transfer systemwith sufficient proof that a second tax had been paid pur-suant to section 40-17-325 or the fuel was exported toanother state or country–on monthly basis.

n Legislative Historyacts 1923, no. 62, p. 36

established the excise tax on gasoline at $.02 per gallon

acts 1927, no. 340, p. 326increased tax to $.04 per gallon



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acts 1955, 1st Ex. sess., no. 44, p. 73increased tax to $.07 per gallon

acts 1961, no. 674, p. 925Provided further for the taxation of gasoline and/or motorfuel sold to or withdrawn from storage or used in the stateby motor carriers by establishing a separate excise tax onmotor carrier fuel

acts 1980, no. 427, p. 590levied an additional excise tax of $.04 per gallon on gaso-line, motor fuel and lubricating oil

acts 1987, no. 675, p. 1205authorized municipalities to use proceeds from the $.04tax on gasoline, motor fuel and lubricating oil for newroad construction

acts 1992, no. 203, p. 486levied an additional excise tax of $.05 per gallon on gaso-line and provided for its distribution. Proportionately in-creased refund on gasoline for agricultural use and statictesting of engines

acts 2000, no. 736, p. 1608Provided additional allocations from the gross $.07 and$.05 receipts of 70% of 1% to the game and Fish Fund and18% of 1% (60% to state Water safety Fund and 40% toseafood Fund). These allocations are deducted from theportion of gasoline tax revenues otherwise credited to thePublic road and bridge Fund.

acts 2011, no. 565, p. 1084effective october 1, 2012, amended, repealed and reestab-lished the state gasoline and motor fuel taxes at the samerates as the taxes were previously levied. changed thepoint of collection of the taxes from the distributor to thesupplier. expanded the administrative discounts allowed todistributors and suppliers for the collection of fuel taxes.appropriated $150,000 from the revenues collected to thedepartment of revenue for the fiscal year ending septem-ber 30, 2012. each fiscal year thereafter, an amount of rev-enue will be appropriated to the department to offset itscost of administering the act.

acts 2013, no. 402, p. 1541allowed the proceeds of the $.04 excise tax on gasolineand oil distributed to the counties to be used for vegeta-tion management

acts 2014, no. 105, p. 169amended current law relating to bonds and notes of thealabama Federal aid highway Finance authority to pro-vide that so much of the state’s share of net gasoline tax

proceeds as shall be necessary shall be pledged and ap-propriated for the purpose of providing funds to enablethe authority to pay principal and interest of obligations.

acts 2015, no. 54, p. 198Transfers the collection of gasoline inspection fees fromthe alabama department of agriculture and industries tothe alabama department of revenue (ador); and in-cluded a change in the distribution of collected fees toallow an appropriation to ador for costs of administra-tion and collection of fees.

n Comparison with neighboring statesflorida

excise tax on gasoline of $.04 per gallon. an additional fuelsales tax is levied at a rate adjusted annually based on thechange in the consumer Price index. For 2017, the totalrate is $.309 per gallon (does not include all local taxes). inaddition, gasoline is subject to the 6% sales tax. The motorcarrier tax is at a rate that includes the motor and specialfuel tax rates, the state comprehensive enhanced trans-portation system tax rate, the sales tax rate and the mini-mum local special fuels rates.

georgiaexcise tax on gasoline of $.263 per gallon. local taxes mayalso apply. The motor carrier fuel rate is equivalent to thetaxes imposed by the motor fuels tax.

mississippiexcise tax on gasoline of $.18 per gallon and an additional$.004 for environmental protection. The motor carrierprivilege tax is imposed at the prevailing excise tax ratesfor motor fuels.

Tennesseeas of July 2017, the tax on gasoline is $.24 per gallon, anadditional $.004 environmental assurance fee, plus a $.01per gallon special tax. Motor carriers are subject to a high-way user fuel tax. The tax on gasoline will increase to $.25on July 1, 2018 and to $.26 on July 1, 2019. s

Endnotes1. The figures are net (after deduction of motor fuels and IFTA tax refunds). Figures

shown are prior to deduction of Department of Revenue administrative expenses. Includes motor fuel excise taxes, IFTA taxes and truck decals.

2. Fiscal Year 2018 includes 13 months of distribution because September 2017 was distributed in October 2017.

3. Due to the early fiscal year closeout date, the Motor Fuel Distribution for September2016 was not processed until October 3, 2016. The September 2016 distribution is included in FY 2017 instead of FY 2016.


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