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It’s Time To Change The Law Firm Business Model

It’s Time To Change The Law Firm Business Model

Every year, statistics on women and minorities in the legal profession are reported. And, every year, these statistics reveal very little change in the number of women and minorities in the ranks of partnership. In response, some firms have adopted policies seemingly designed to encourage diversity and equality. Yet, despite this response, the makeup of law firm leadership largely remains unchanged. In fact, Catalyst estimates “that it will take more than a woman lawyer’s lifetime to achieve equality” with their male counterparts.[1]

So how do law firms change this painfully slow rate of progress? It takes more than adding a diversity policy or a women’s leadership program to the current law firm business model. For law firms to effectively address these sobering statistics and address the needs of current and future lawyers, the typical law firm business model needs to transform. And law firm leadership needs to embrace the transformation and support policies and programs that invest in their attorneys and staff.

Some may ask — why? Why change the way we’ve been doing business for decades? We’ve been successful thus far … The answer to this question is really quite simple — we’re living in a time unlike any other and maintaining the status quo in today’s rapidly changing global economy is not an option for future success. Law firms need to reflect the global marketplace to attract clients and future business. In a world of “do-it-yourself online” legal services, law firms need to distinguish themselves and add value to their legal services. They need to retain talented lawyers for stability in times of change and to reduce the costs incurred by high turnover. Thus, while adapting to change is typically not the nature of a lawyer, change is critical to the future success of law firms.

Inadequacies of the Current Law Firm Business Model

However, the glacially slow rate of change in the number of women and minorities achieving success and recognition in all levels of the legal profession demonstrates that these policies are merely a Band-Aid on a wound that needs surgery.

The typical current law firm business model is based on a lifestyle that has not existed in several decades. The successful lawyer bills as many hours as he can and spends the rest of his time rainmaking, with his wife at home taking care of everything else — the house, the kids, parents, etc. This is the path to equity partner status — prioritizing high billable hours and rainmaking. The lack of diversity in equity partnerships and the data on the number of accomplished women lawyers leaving the profession[2] demonstrate that this model does not address the current reality of life for talented lawyers. And the current model is also not consistent with the future pool of professionals, known to some as “millennials,” who seek work-life balance.

And yes, over the past few decades some firms have instituted policies, such as flex-time and paid parental leave, in response to the lack of work-life balance of the typical law firm business model. However, the glacially slow rate of change in the number of women and minorities achieving success and recognition in all levels of the legal profession demonstrates that these policies are merely a Band-Aid on a wound that needs surgery. Moreover, the data suggest that policies geared solely for women are short-sighted and miss the point of truly addressing work-life balance.

Why aren’t these “work-life balance” policies effective? Because, for the most part, these policies are not consistent with the law firm business model. The result is that these policies often become window dressing and lawyers are discouraged from using them. Take paid parental leave as an example. In 2015, Above the Law reported the results of its survey on paid parental leave: women lawyers receive an average of 14.33 weeks of paid maternity leave and male lawyers receive an average of 6.33 weeks of paid paternity leave.[3] These numbers are not terrible. What is disappointing is the reaction when male and female lawyers attempted to take paid parental leave in accordance with their firm’s policy. Lawyers reported that they were admonished for low billable hours during the months they took parental leave. Female lawyers who returned after paid parental leave were given less interesting matters and less work. Similar treatment was reported by lawyers trying to use their firm’s other family friendly policies such as flex-time or telecommuting.[4]

The data also suggest that women’s leadership programs within law firms are also not effective in advancing the legal careers of women. In December 2016, the New York Times reported that women make up the majority of law students.[5] However, Catalyst reported that in a survey of the 50 best law firms for women, only 19 percent of the equity partners were women.[6] Women’s leadership programs need to focus on the law firm as a whole by addressing unconscious bias and exclusionary informal practices.

This information shows that trying to integrate these policies into the typical law firm business model just doesn’t work. Successful policies require a new model and a different approach to managing a law firm.

The New Law Firm Business Model

So, how does one transform a business model that has persisted for decades? Law firms can look outside of the typical law firm to find a successful business model that reflects diversity and equality and achieves results. One potential source of successful business models is another type of yearly statistic — the “best places to work” data. Fortune publishes its “100 Best Companies to Work For,”[7] where two-thirds of a company’s score is based on the results of an employee survey.

A review of Fortune’s report reveals some commonalities among companies where 95 percent or more employees express a sense of pride and a belief that management is competent at running the business:

  •  Open communication and transparency, including data on salaries
    •    Programs to support professional development of under-represented groups
    •    Workshops on inclusion and reversing biases
    •    Family care programs such as backup childcare; elder care resources; parental leave where employees do not have to use all of their personal time
    •    Flexible schedules, compressed work weeks and telecommuting options
    •    Teamwork awards
    •    Perks such as free beverages, subsidized public transportation, fitness and nutrition classes, social outings/gatherings
    •    Generous health care benefits

The results of Fortune’s employee surveys also revealed that employees were willing to “go the extra mile” to get work done or serve a client. Employees are willing to work hard to achieve results for employers who invest in their success. Makes perfect sense.

What does this tell us? Successful business models include a broad focus. In addition to prioritizing profits (billable hours, rainmaking), law firms need to also concentrate on their resources — lawyers. This transformation will lead to law firms where lawyers are committed to the firm, their clients, and their practice. This transformation is critical. The market for legal services has significantly changed and only law firms that adapt will realize future success.

 

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

 

[1] Catalyst Quick Take: Women in Law in Canada and the U.S.. New York: Catalyst, 2015.

[2] Id.

[3] Which Biglaw Firm Has The Best Parental Leave Policy? By Staci Zaretsky, May 11, 2015, http://abovethelaw.com/2015/05/which-biglaw-firm-has-the-best-parental-leave-policy/

[4] Id.

[5] Elizabeth Olson, Women Make Up Majority of U.S. Law Students for First Time, NY Times, December 16, 2016, http://www.nytimes.com/2016/12/16/business/dealbook/women-majority-of-us-law-students-first-time.html?_r=0

[6] Catalyst Quick Take: Women in Law in Canada and the U.S.. New York: Catalyst, 2015.

[7] 100 Best Companies To Work For – Fortune: http://fortune.com/best-companies/

 

 

How local energy aggregation works

Energy Bill Savings through Community Choice Aggregation (CCA)

Whether it’s tickets for a sporting event, or a health care plan, the concept is a familiar one: discounted entrance fee or membership for groups of individuals. The same concept applies to Community Choice Aggregation (“CCA”), a program where municipalities can use the influence of aggregation, or groups of customers, to negotiate discounted rates with private energy suppliers. In a CCA program, a municipality or group of municipalities act as an aggregator and broker for the sale of energy (gas and/or electric service) to residents. In addition to reducing energy costs for residents and small non-residential entities, the CCA empowers communities and individuals to select and promote clean energy.

On April 21, 2016, the Public Service Commission (PSC) issued an order authorizing the establishment of CCA programs by municipalities statewide. (See PSC Case 14-M-0224). In this Order, the PSC declared that the goals of CCA programs are aligned with the goals of Governor Cuomo’s Reforming the Energy Vision (known as REV), which include “increasing the ability of individuals and communities to manage their energy usage and bills, facilitating wider market-based deployment of clean energy including energy efficiency, large-scale renewable and distributed energy resources and increasing the benefits of retail competition for residential and small non-residential customers.” The PSC based this Order partly on the success of a CCA Pilot Program implemented by Sustainable Westchester known as the Westchester Power CCA Program. This pilot program includes 20 participating municipalities in Westchester County.

So, what kind of savings do CCAs deliver? The Westchester Power program promises that rates will be lower than the 12-month average for 2015 for Con Edison and NYSEG and the rate is fixed for 24-36 months.

Neil J. Alexander of Cuddy & Feder LLP provided pro bono counsel to Sustainable Westchester on several facets of that Pilot CCA program, including discussions with the NYS Attorney General’s Office as to the legality of the program, and the negotiation of the salient documents such as a Memorandum of Understanding between Sustainable Westchester and each of its member municipalities, an Electric Service Agreement among Sustainable Westchester, its member municipalities and the responsible ESCO (Energy Service Company), and a Data Access and Mutual Non-Disclosure Agreement with the Investor Owned Utilities (IOUs).

Recognizing that CCA programs are a new and different approach to energy supply and a new and very different role for municipalities, the PSC tapped the New York State Energy Research and Development Authority (NYSERDA) to provide technical assistance including a CCA Toolkit which includes templates for the various required documents and community outreach materials. In addition to the NYSERDA guidance documents, the CCA Rules authorize a CCA Administrator, who can be a non-profit or consultant, or the municipality acting on its own behalf.

In a significant departure from other policies and programs, the PSC established that CCA Programs must be “opt-out” programs, where qualifying residents and small non-residential customers must affirmatively opt-out of the CCA, rather than sign up, or affirmatively opt-in. Based on CCA programs in other states, the PSC determined that a successful CCA program requires an opt-out set up. Given this opt-out requirement, community outreach and engagement are critical components of an effective and meaningful program, not to mention data protection for customers’ data. CCA Programs also require that municipalities invoke their home rule authority and enact a local law to establish the CCA. As such, the ESCO is chosen by the municipality (or group of municipalities acting pursuant to a MOU) through a competitive procurement process. In addition, the PSC CCA Rules require the submission of an Implementation Plan, a Data Protection Plan and certification of local authorization (enactment of a local law) to the PSC for approval. The complete CCA Rules can be found in Appendix D of the Order.

So, what kind of saving do CCAs deliver? The Westchester Power program promises that rates will be lower priced than the 12-month average for 2015 for Con Edison and NYSEG and the rate is fixed for 24-36 months. And, every eligible customer of the Westchester Power program has the choice to buy 100% renewable supply for all of their electric needs.

Although CCA 1.0 is just getting started statewide, the projection is that CCA 2.0 will entail the development of energy efficiency and DER (Distributed Energy Resources) programs as well as otherwise engaging in a full range of energy planning and management activities. We all have to face the fact that energy sources are finite: yet energy demand is growing. CCA programs are one of the innovative ways that we can balance the supply and demand of energy to ensure a sustainable energy future.

Anthony Morando Wireless Approval Timeframes

Wireless Approval Timeframes – Time’s Up, Now What?

This piece is “Part II” of a two part blog on Section 6409 of the Spectrum Act – a portion of the Federal Middle Class Tax Relief and Job Creation Act of 2012, or “Section 6409” for short.1 “Part 1” is available for a quick review of some basics of Section 6409.

Section 6409 requires municipalities to approve applications to add, replace or modify wireless transmission equipment currently on existing towers, buildings and other structures that contain transmission equipment (e.g., smokestacks or water towers with antennas). The goal of Section 6409 is to promote the deployment of wireless infrastructure by eliminating unnecessary reviews, costs and delays. The tools to achieve Section 6409’s goal are set forth in the FCC’s implementing regulations (47 C.F.R. § 1.40001).

The FCC regulations specifically contain a “failure to act” provision which appears to be the “hammer” in the 6409 toolbox.2 The failure to act provision states that: “In the event the reviewing State or local government fails to approve or deny a request seeking approval under [Section 6409] within the timeframe for review (accounting for any tolling), the request shall be deemed granted.” (Emphasis added.) This generally means that if a municipality fails to approve a complete application filed under Section 6409 within 60 days from its filing date, then the application is approved by default. The question that has many applicants wondering is what do they do next after their application is “deemed granted” by a municipality’s lack of action?

Under the FCC’s regulations relating to Section 6409 applications to add, replace or modify wireless infrastructure, the “failure to act” provision is the “hammer” in the 6409 toolbox. Applicants should consult counsel in advance of their 6409 filings to establish a strategy at the start of the process to ensure that their rights under federal law are protected, and to minimize the risk of experiencing protracted delays and unnecessary expenses.

Let’s walk through a typical fact pattern, like that described in Part I of this blog, and some potential issues for an applicant to consider.

An applicant files a complete building permit application for a 6409 eligible modification meeting all applicable building code requirements and establishing compliance with the 6409 parameters. The 60-day period is about to expire without the Town granting the application, and without the Town providing the applicant with any written notice within the first 30 days (identifying items the Town would have wanted the applicant to submit as part of its review).

First, the applicant should consider sending a pre-60 day expiration communication notifying the municipality in writing of the impending approval deadline. This helps to keep the municipality informed and encourages the municipality’s compliance before the 6409 deadline expires.

Second, once the 60-day period expires the FCC regulations require an applicant to send notice. Indeed, the regulations actually state: “The deemed grant does not become effective until the applicant notifies the applicable reviewing authority in writing after the review period has expired (accounting for any tolling) that the application has been deemed granted.” (Emphasis added). This is the only “deemed granted” procedural requirement stated in the FCC regulations.

It is worth noting that one Circuit Court opined that the “failure to act” provision and “deemed granted” language does not actually require the municipality to take any action. Specifically, the Fourth Circuit held in Montgomery County, Md. v. F.C.C. that the “deemed granted” procedure comports with the Tenth Amendment because it does not require the states or municipalities to take action, but rather allows the applications to be granted by default rather than an affirmative approval.3 The Court interpreted this key provision to preempt state and local regulations that prevent an applicant’s Section 6409 request from being timely approved.

The applicant’s third, and possibly final step is very much dependant on the specific facts of the application, the applicant’s goals for the application and the applicant’s past experiences with the municipality. A strict reading of Section 6409 supports the applicant proceeding with work. However, a particular applicant may be willing to allow the municipality a few extra days to issue the requested permit, or to at least acknowledge that the request has been deemed granted if perhaps the applicant previously had a favorable 6409 experience with the same municipality.

Applicants should speak with experienced practitioners in advance of their 6409 filings to establish a strategy at the start of the process to ensure that their rights under federal law are protected, and to minimize the risk of experiencing protracted delays and unnecessary expenses.

Conor Walline Successor Liability | New York Oil Spill Act

Successor Liability Under New York’s Oil Spill Act

Article 12 of New York’s Navigation Law, known as the Oil Spill Act, imposes strict liability, regardless of fault, on any discharger of petroleum for all costs associated with its clean up and remediation. The statute defines discharge in terms of intentional or unintentional action or omission, which results in a release (broadly construed) of petroleum, and even imposes liability on landowners who did not actually cause such a release. While this may appear inequitable or unduly punitive, such an aggrieved landowner is not without redress and may have the ability to seek contribution for the cost of cleanup and remediation against a prior owner or other party who actually caused or contributed to a discharge.

Significantly, however, a party bringing a claim pursuant to the Act’s private right of action to recover from another party has the initial burden of establishing that the third party actually caused or contributed to the discharge. At least one court has expressly rejected the contention that a current property owner should be able to shift liability to the party or entity who owned the property at the time of the discharge, citing the imposition of liability on the current owner as a statutorily-defined discharger (regardless of causation or, more appropriately, lack thereof).1 Instead, the court noted that the current owner’s remedy is in its direct claim against the prior owner based on that individual’s liability as a discharger since the Act also imposes liability for conduct and not simply status. Importantly, however, if it is established that the current owner caused or contributed to a spill, that owner can be precluded from seeking contribution from a third party.

New York’s Oil Spill Act imposes strict liability, regardless of fault, on any discharger of petroleum for all costs associated with its clean up and remediation. While this may appear inequitable or unduly punitive, such an aggrieved landowner is not without redress and may have the ability to seek contribution for the cost of cleanup and remediation against a prior owner or other party who actually caused or contributed to a discharge.

Illustrative of this is the case of State v. C.J. Burth Servs., Inc.,2 where the Appellate Division, Third Department held the present owner of property strictly liable under the Act even where the owner concededly had no knowledge of the existence of storage tanks or contamination on the property when it was purchased. In C.J. Burth, when the defendant owners purchased the property at issue it was being used as an automobile repair business; there were no gas tanks, pumps, or other indications on the property that petroleum had been stored there. Years later, the defendants learned of the presence of several underground storage tanks (“USTs”), which were removed and found to be corroded and riddled with holes. The defendants refused to pay for or take remedial action, thereby forcing the State to commence an action under the Navigation Law to recover its expenses for remediation efforts.

Although the Court acknowledged that the defendants “did not cause the contamination, did not control the site when the contamination occurred, and had no knowledge of the existence” of the USTs when they purchased the property, the Court held that liability does not rest on “fault or knowledge,” but instead on the “owner’s capacity to take action to prevent an oil spill or to clean up contamination resulting from an oil spill.”3 The Court confirmed that it was the defendants’ status as owners of the property where a discharge occurred, and not any causal connection to the discharge, that resulted in the Court imposing liability on them.

Given the breadth of liability imposed by the Act, it is not uncommon for purchasers and owners of property to bargain for contractual limitations of liability for discharges occurring prior to the vesting of their fee interest. One approach has been to include a general “as is” clause in the contract of sale, by which the seller purports to limit liability for any discharges occurring during the seller’s ownership of the property. Several cases4 have found such clauses to be ineffective as a shield to liability, though only because the clauses as drafted were insufficiently explicit in their exculpation of the parties seeking their enforcement. Indeed, the lesson from those cases seems to be that the intent to relieve a party of responsibility for a discharge must be clear and unequivocal or a court will not give it effect.

Other means of attempting to prevent liability also exist. Statutory mechanisms available under the Act to shield a party from liability include indemnification and contribution, which allow an aggrieved landowner to seek from a prior owner or actual discharger any amounts ultimately paid out in a judgment. For indemnification or contribution to be available to an aggrieved landowner, she must be entirely faultless, that is, not at all responsible for the discharge or discharges alleged.5 Thus, if a party has in any manner or to any degree contributed to a discharge, she is precluded from seeking indemnification or contribution from an actual discharger. Nevertheless, another provision of the Act does provide a substantive right to seek contribution from a responsible party, regardless of fault of the aggrieved landowner, so long as there is proof that the other party is a discharger. In the case of a tenant’s discharge, a landlord may be found to be a responsible party – and therefore subject to liability for expenses incurred in remediation of a discharge – where he had control over the activities on the property and reason to believe that petroleum products were being used.6

Ultimately, limiting liability under the Act when a party has at all contributed to the discharge or spill of petroleum on property, despite the nature or degree of that contribution, presents significant challenges. Reliance on the provided statutory mechanisms comes with its own risks, particularly in the context of a landlord-tenant relationship. In light of these considerations, clearly and unequivocally contracting away liability at the time of purchase/sale or leasing appears to be the strongest means of protection available to a party who is concerned that a discharge may have occurred.

 

Eva David Leasing 101 Office Relocation Issues and Considerations

Leasing 101: Office Relocation – Issues and Considerations

The prospect of relocating an office can be daunting enough without having to worry about the contingencies and unanticipated difficulties that often arise in the course of relocation. Structuring a lease in order to provide necessary leeway in the event the move doesn’t go exactly as planned is always good practice. This post highlights some of the issues that often come up in the course of negotiating a new lease and how – from both the tenant’s and the new landlord’s perspective – to fairly and reasonably navigate them.

First and foremost, as a tenant, it is imperative to start the process of reviewing your options well in advance of the expiration of your current lease. This will give you plenty of time to test the market to determine if moving makes the most sense (if staying in your current space is indeed an option). As part of this process, it is important to review your current lease to determine your obligations in the event you do not stay in your current office space (e.g., removal and restoration obligations, liability in the event of a holdover, etc.). These terms may end up having a significant bearing on your ultimate decision of whether to stay or leave.

An enticing feature of moving to a new location is that typically you will be getting an updated/renovated space paid for in large part by the landlord (however, the dollar amount per square foot for such renovations is market-dependent).

If it is determined that you will be relocating, the questions of “who” will be preparing the space for your occupancy (and who will be paying for such preparation) and “when” the space will be available to you must be an integral part of the discussions with your new landlord. An enticing feature of moving to a new location is that typically you will be getting an updated/renovated space paid for in large part by the landlord (however, the dollar amount per square foot for such renovations is market-dependent). Often, the landlord will also perform the renovations and provide a “turnkey” delivery of the space with all renovations complete (although it is worth keeping in mind that this relinquishes the majority of control of the budgeting and final product of the renovations to the landlord). In any case, the question of “when” becomes extremely important because it will be up to your new Landlord to either deliver the space to you prior to the date your current lease expires or with enough time for you to complete your renovations before such time. It will be important that you have recourse if your new space is not ready by then and you are forced into holdover status in your current location. A reasonable solution to this issue is to negotiate some financial remedy that becomes effective on the date your current lease expires. The best-case scenario is that the remedy is directly tied to the amount of your liability in the event you hold over. Another reasonable solution is a day for day rent credit for each day delivery is delayed.

From the landlord’s perspective, it is in your best interest to deliver the space timely so that you can begin collecting rent, so it is likely not an issue to build in some protection for your incoming tenant. However, you will likely want to make any such protections subject to delays caused by the tenant or other third parties over whom you have no control (e.g., the building department). The matter of which party bears the risk of other unforeseeable events (e.g., force majeure events or the holding over of any existing tenant/occupant of the new space) delaying the delivery of the space is typically negotiated as well.

These and other contingencies should be discussed in detail with your attorney (and broker, if applicable) at the earliest possible juncture so that they are not overlooked.

Mortgage recording tax New York - special additional mortgage recording tax

New York Home Buyers Beware – Who Pays the Mortgage Recording Tax?

You’re getting ready to buy your first home. It’s exciting. It’s nerve-wracking. It’s expensive. Nevertheless, you feel you have a good idea of what costs to expect on closing day: purchase price – check, legal fees – check, title costs – wait, why is this title bill so high?! Chances are, the mortgage recording tax is the most expensive item on your title bill.

What is mortgage recording tax? Mortgage recording tax is a tax imposed by New York State on the privilege of recording a mortgage. The term “mortgage recording tax” is the colloquial term for a group of taxes imposed by Section 253 of the New York State tax law, which includes the basic tax (0.50 percent), the additional tax (0.25 percent) and the special additional tax (0.25 percent). The tax amount is calculated based on the loan amount. There may be additional mortgage recording taxes depending on the location of the residence (e.g., New York City). The home-buyer/borrower is, as a general matter, always responsible for paying the basic tax and the additional tax. At the closing, the home-buyer/borrower pays the basic tax and the additional tax by delivering a check to the title company. The title company then submits payment of the mortgage recording tax together with the mortgage when the mortgage is submitted to the county clerk for recording.

Section 253 1-a. (b) of the New York State tax law provides that if the lender (1) operates on a nonprofit basis; and (2) is exempt from federal income taxation under Section 501(a) of the Internal Revenue Code, then the lender is exempt from paying the special additional tax.

Who is responsible for paying the special additional tax? The special additional tax, is commonly known as the “quarter point”. As a general matter, Section 253 1-a of the New York State tax law imposes the obligation on the lender to pay the special additional tax due on a mortgage secured by one or more structures containing, in the aggregate, not more than six residential dwelling units, each dwelling unit having its own separate cooking facility (for example, any single family residence). However, if the lender is a not-for-profit organization, as set forth below, then the lender is exempt from paying the special additional tax.

Section 253 1-a. (b) of the New York State tax law provides that if the lender (1) operates on a nonprofit basis; and (2) is exempt from federal income taxation under Section 501(a) of the Internal Revenue Code, then the lender is exempt from paying the special additional tax. A lender claiming an exemption under Section 253 1-a. (b) of the New York State tax law should deliver to the closing a signed and notarized original affidavit attesting that the lender meets the requirements entitling it to the exemption. This affidavit will be presented to the county clerk together with the mortgage for recording.

How does this exemption impact the home-buyer/borrower? Under Section 253 1-a of the New York State tax law, if the lender is exempt, then the home-buyer/borrower must pay the special additional tax. If you are aware that your lender is a not-for-profit organization, and, generally speaking, most institutional lenders do not fall into this category, then be prepared to pay the entire mortgage recording tax.

Jordan Brooks Breach of Commercial Lease

The Incurable Breach of the Commercial Lease

Are you a commercial landlord looking for a reason to evict a problematic tenant? Are you a commercial tenant seeking to avoid an incurable breach of your lease? If you fall into either category, a word of caution: resist the urge to glaze over the provisions in your lease governing insurance coverage. A tenant’s failure to comply with the lease’s insurance requirements could result in an incurable breach, lease termination, and eviction.

Although details vary from lease to lease, a typical commercial lease will obligate a tenant to obtain and maintain insurance for the premises at all times during the lease term above some set amount and according to specific terms for the benefit of both the landlord and the tenant. This is because the tenant is in control of the premises and is in the best position to keep the premises in a safe and orderly condition, and the landlord justifiably wants to avoid any liability in the event of a trip-and-fall injury or some other similar occurrence at the premises.

A commercial tenant’s failure to insure the premises as required by the lease – even for a gap period of one day – is incurable as a matter of law and may entitle the landlord to terminate the lease and evict the tenant despite any after-the-fact remedial efforts by the tenant.

Unlike many other breaches of a commercial lease that can usually be cured by a tenant within some fixed time period as set by the lease, a commercial tenant’s failure to insure the premises as required by the lease – even for a gap period of one day – is incurable as a matter of law and may entitle the landlord to terminate the lease and evict the tenant despite any after-the-fact remedial efforts by the tenant.

Generally, if a tenant breaches its lease, the landlord will serve a notice of default providing the tenant with time to cure the breach. If the tenant disagrees with the landlord over the alleged breach, it will at least possess the opportunity to go to court to preserve the status quo and avoid lease termination until the parties’ dispute is resolved. Such an application to the court by a tenant to preserve the status quo following the landlord’s service of a notice of default is commonly referred to as a Yellowstone injunction.

But New York courts have confirmed that a commercial tenant cannot obtain a Yellowstone injunction and cannot forestall or avoid lease termination where the tenant has failed to comply with lease requirements to obtain and maintain insurance coverage for the premises. As the Appellate Division has noted, a commercial tenant’s failure to previously and continuously maintain insurance coverage as required by the lease is a material and incurable breach of the lease, and a tenant’s “attempt to demonstrate their ability and readiness to cure the alleged violation by procuring, during the cure period, insurance coverage prospectively for the remaining 10 months of their lease term is unavailing, as such policy does not protect [the landlord] against the unknown universe of any claims arising during the period of no insurance coverage.” Kyung Sik Kim v. Idylwood, N.Y., LLC, 66 A.D.3d 528, 529, 886 N.Y.S.2d 337, 337 (1st Dep’t 2009).

So pay close attention to the insurance provisions in your commercial lease. A tenant’s failure to comply with its lease requirements regarding insurance coverage could spell the end of the lease and cause significant liability on the part of the tenant.

Solar Easements New York

Here Comes the Sun – Solar Easements in New York

The United States has witnessed exponential growth in solar power installations including on residential properties, at commercial locations and as part of installations serving public utilities. Decreasing installation costs, increased competition, tax breaks and technological advancement continue to energize this growth. While commercial applications of solar power date back over 100 years, the oil embargo of the 1970s fostered a burgeoning interest in solar power in the United States which translated to action at the federal level including the Solar Heating and Cooling Demonstration Act and the Solar Energy Research, Development and Demonstration Act also of 1974. In 1979 New York State passed legislation establishing the right to maintain voluntary easements over property for the purpose of assuring sufficient sunlight for solar facility operation. New York Real Property Law Section 335-b specifically allows for the recording of solar easements as follows:

Setbacks or other zoning regulations may prohibit the location of a solar power installation proximate to adjacent property lines in such a way that moots the effectiveness of any solar easement. An easement for light across neighboring property is of little value if solar panels cannot be legally installed where that light can be effectively collected.
  1. Any easement obtained for the purpose of exposure of a solar energy device shall be created in writing and shall be subject to the same conveyancing and instrument recording requirements as other easements.
  2. Any instrument creating a solar energy easement shall include, but the contents shall not be limited to:
  • The vertical and horizontal angles, expressed in degrees, at which the solar energy easement extends over the real property subject to the solar energy easement.
  • Any terms or conditions or both under which the solar energy easement is granted or will be terminated.
  • Any provisions for compensation of the owner of the property benefiting from the solar energy easement in the event of interference with the enjoyment of the solar energy easement or compensation of the owner of the property subject to the solar energy easement for maintaining the solar energy easement.

Many local municipalities have sought to address the various types of solar power installations in their communities through comprehensive plan and zoning amendments. The key aspects of concern regarding these installations are size, location and appearance. It is important to understand how local zoning codes regulate these and other aspects of solar power installation.

Before negotiating a solar easement agreement it is therefore important to conduct due diligence on where a solar power installation is permitted. Setbacks or other zoning regulations may prohibit the location of a solar power installation proximate to adjacent property lines in such a way that moots the effectiveness of any solar easement. In other words, an easement for light across neighboring property is of little value if zoning precludes installation of the solar panels in the location where the panels will collect the light passing through the solar easement.

When negotiating an easement in circumstances where there is some uncertainty regarding how local regulations will apply, either because amendments to the zoning are forthcoming or variances are required, then it is best to seek a termination clause if local regulations do not allow for effective use of the light that the easement seeks to protect. Keep in mind that solar power installations are no different from other real estate development projects that require careful pairing of private property rights and an understanding of local regulations. Be sure to perform zoning due diligence before executing a solar easement.

Adult Daycare Facilities | Zoning & Planning | Cuddy & Feder

Adult Daycare: In Step with Walkable Localities

For the past several decades, an active topic of discussion amongst planners has been the impending effects on communities as the United States’ aging population (largely comprised of the Baby Boomers) sharply increases.1 By 2050, the population aged 65 and over is projected to be 83.7 million, almost double its estimated population of 43.1 million in 2012).2

Access to adult daycare integrates seamlessly into today’s vision of where people want to live and work; in denser, walkable neighborhoods, connected to transit, with a rich variety of integrated residential, retail, and office uses. Imagine living in a community where you can walk your elderly parent, who lives at home with you and your family, to an adult daycare facility on your way to work in the morning.

One side effect of the exponential growth in the aged population is an increased need for elder care, including the “adult daycare” facility. Sometimes stand-alone, and other times incorporated into existing adult care facilities (such as nursing homes), these facilities provide a safe space for older adults to receive supervised care while simultaneously enjoying the companionship of other seniors. The general goals of these facilities are to delay or prevent institutionalization and encourage socialization.3 Facilities can offer either “social” or “health” daycare; “social” daycare provides social activities, meals, recreation, and some limited health care services, while “health” daycare offers a more in-depth range of medical and social services for seniors with more serious health conditions.4 The programs are ideal for elderly persons who require some supervision but not full-time care, and allow family member caretakers to still go to work during the day.

Adult daycares integrate seamlessly into today’s vision of where people want to live and work; in denser, walkable neighborhoods, connected to transit, with a rich variety of integrated residential, retail, and office uses. Imagine living in a community where you can walk your elderly parent, who lives at home with you and your family, to an adult daycare facility on your way to work in the morning. Because of the daycare center’s close proximity to both your home and office, you are relieved of the stress and costs associated with facing the difficult choice between staying home with your parent, having to hire expensive home care, or placing your parent in a faraway full-time care facility. At the same time, because of the daycare’s central location to transit and a variety of shops and restaurants, your parent can still enjoy a high quality of life and engage in a variety of enriching social activities with other seniors.

Currently, as is often the case when a novel land use begins to enjoy increased popularity, local zoning codes are not uniformly prepared to regulate these new facilities. As local governments update their comprehensive plans, they should consider the important place such facilities have in creating diverse, integrated communities. Likewise, municipalities should also ensure their zoning codes are amended to reflect this commitment toward inclusivity. This is the first step toward providing a clear path for developers, business owners, and non-profit organizations to bring these much-needed facilities to a wider range of localities across New York.

Yelp Reviews Consumer Experience | Cuddy & Feder

Yelp Review Lands Consumer In Hot Water

Small businesses heavily rely on consumer review websites such as Yelp, Angie’s List and even Google to promote and generate new business. These sites also provide a forum for consumers to “vent” about recent interactions with businesses, business owners and the like. Many consumers, however, fail to recognize that reviews left on these websites are not immune from claims of defamation, specifically libel. Reviews which cross the line from offering an opinion relating to a specific business interaction (which is a form of protected speech) to implying facts which may be untrue about a business or business owner (such as the commission of a fraud or that a consumer was taken advantage of by a certain business) can lead to legal repercussions in the form of a defamation lawsuit.

Consumer-based websites are great resources for consumers to learn of the reputations of specific businesses before dealing with them. There is, however, a fine line between expressing opinion — even over the Internet — concerning a particular business interaction, and on the other hand implying outright criminality to a person or business because of a negative consumer experience.

In one such lawsuit, a consumer had retained a flooring contractor in Staten Island to refinish her living room and dining room wood floors. Unfortunately, the consumer was less than pleased with the work and left the business and its owner negative reviews on Yelp.com. In the review, the consumer referred to the business owner as a “con artist,” “scam”, “liar” and also stated that the owner “robs customers.” Based on the content of these Yelp reviews, the business owner sued the consumer for libel per se. The court ultimately found that these Yelp reviews were defamatory against the business owner because words such as “scam,” “con artist,” and “robs,” “imply actions approaching criminal wrongdoing rather than someone who failed to live up to the terms of a contract.” The consumer was ordered to pay damages to the business owner in the amount of $1,000.

Consumer-based websites are great resources for consumers to learn of the reputations of specific businesses before dealing with them. They are also powerful tools in helping resolve disputes between consumers and businesses. There is, however, a fine line between expressing opinion – even over the Internet – concerning a particular business interaction, and on the other hand implying outright criminality to a person or business because of a negative consumer experience.