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Minimum Competence
Legal News for Tues 2/13 - Trump Asks SCOTUS For Help Again, Hogan Lovells Profits, Judge Newman's Lawsuit Struggles and the Death of Chevron Doctrine Effect on Tax Law

Legal News for Tues 2/13 - Trump Asks SCOTUS For Help Again, Hogan Lovells Profits, Judge Newman's Lawsuit Struggles and the Death of Chevron Doctrine Effect on Tax Law

Trump's Supreme Court plea, Hogan Lovells' profit surge, Judge Newman's lawsuit struggles, and Column Tuesday on the potential overturning of Chevron and tax law.

Laws being codified.

This Day in Legal History: David Dudley Field is Born 

On this day in legal history, we commemorate the birth of David Dudley Field, a pivotal figure in the codification of American law, born in Haddam, Connecticut, on February 13, 1805. Field's contributions to the legal landscape of the United States are monumental, as he tirelessly worked towards the simplification and organization of legal statutes and procedures. A graduate of Williams College, Field embarked on a legal career that would see him become one of the most influential legal reformers of the 19th century.

Field believed that the law should be accessible and understandable to every American, not just those formally trained in the legal profession. This belief drove him to advocate for the codification of both civil and criminal law, leading to the drafting of the Field Code in 1848. The Field Code revolutionized the practice of law by systematizing civil procedure into a coherent body of statutes, making it a model that would eventually be adopted, in whole or in part, by many states across the country.

Moreover, Field's efforts extended beyond civil law into the realms of criminal law, political, and commercial codes, striving for a comprehensive codification that would standardize legal practice across the United States. His work laid the groundwork for future legal codification and reform, influencing not only American law but also legal systems in other countries.

Field's legacy is a testament to his vision of a more rational and efficient legal system. Through his pioneering efforts in legal codification, David Dudley Field helped shape the foundation of modern American jurisprudence. On the anniversary of his birth, we recognize Field not just as a champion of legal codification, but as a visionary who sought to democratize the law and enhance its clarity and fairness for all. His contributions continue to resonate within the legal community, marking him as one of the most significant legal figures in American history.

Donald Trump has requested the U.S. Supreme Court to maintain a hold on his criminal trial related to efforts to overturn the 2020 election outcome while he appeals against a lower court's decision that denied him immunity from prosecution. This move introduces a second significant case involving Trump to the Supreme Court amidst his campaign for re-election, with the court already evaluating his eligibility for the presidential ballot due to his involvement in the Jan. 6 Capitol riot. Trump aims to pause a federal appeals court ruling that permits his prosecution for allegedly seeking to illegally remain in power, challenging the notion that a president could have the 'unbounded authority' to commit crimes undermining election results.

Trump, currently leading the Republican nomination race, faces the prospect of being the first major party candidate to undergo a criminal trial during a presidential campaign. This is one of four criminal cases against him, including another election-related prosecution in Georgia and a case concerning hush money payments. Trump has sought to delay these trials until after the November 2024 election, suggesting that a victory would allow him to direct the Justice Department to dismiss the cases.

A Supreme Court denial of Trump's request could lead to the scheduling of a new trial date by U.S. District Judge Tanya Chutkan. Trump's legal team has argued that proceeding with the trial would infringe upon his First Amendment rights and that of his supporters, potentially sidelining him during the campaign season. They contend that Trump's actions leading up to the Capitol riot were within his official presidential duties, citing a 1982 Supreme Court ruling on presidential immunity in civil suits. The special counsel has emphasized the urgency of resolving Trump's immunity claims, suggesting the Supreme Court's role in addressing these critical legal questions.

Trump Asks Supreme Court to Keep DC Election Trial on Hold (2)

Trump asks US Supreme Court to intervene in his immunity bid | Reuters

In 2023, global law firm Hogan Lovells reported record-breaking revenues and partner profits, indicating a significant rebound in the legal industry's profitability. The firm's average profit per equity partner surged by approximately 20% to $2.74 million, with global revenue climbing to $2.68 billion, recovering from a dip to about $2.43 billion in 2022. This growth comes in the context of a broader legal sector recovery, with many U.S. and global law firms experiencing a turnaround after a relatively slower 2022, marked by decreased demand for M&A and other legal services.

Legal industry analyses, including those from Wells Fargo's Legal Specialty Group and the Thomson Reuters Law Firm Financial Index, highlighted 2023 as a year of increased revenue and profitability for law firms on average. However, the success was not uniform across the board, with a Citigroup survey revealing that while the average profits per equity partner grew by 6.6%, 39% of firms saw a decline in partner profits.

Hogan Lovells' CEO Miguel Zaldivar attributed the firm's successful growth to its diversified geographic presence, practice areas, and industry sectors, avoiding overreliance on any single market. Under Zaldivar's leadership, who was reappointed for a second term until June 2028, the firm aims to continue its growth, especially in life sciences, technology, energy, financial services, and mobility sectors, focusing on expansion in New York, California, and Texas.

The firm, which emerged from a 2010 merger and now boasts over 2,600 lawyers globally, has also been active in strategic hiring. In November, it added nearly 70 lawyers from the dissolved New York firm Stroock & Stroock & Lavan, alongside other recent hires in Italy and the U.S., bolstering its capabilities in finance, M&A, capital markets, and tax law. These moves are part of Hogan Lovells' strategy to achieve its 2024 goals and further solidify its position in the legal market.

Law firm Hogan Lovells reports revenue, profit highs in 2023 | Reuters

Judge Pauline Newman's lawsuit against her suspension from the Federal Circuit faces significant challenges after a federal judge, Christopher R. Cooper, denied her preliminary relief and dismissed several claims. Newman, 96, was suspended in September 2023 for refusing medical testing related to an investigation into her fitness to serve. Cooper's ruling found that the US District Court for the District of Columbia lacks jurisdiction over many of Newman's claims or that they failed to state a claim, significantly reducing her lawsuit's scope.

Despite Newman's challenges to the suspension, Cooper ruled she isn't entitled to immediate reinstatement, citing a lack of likelihood in prevailing on her remaining claims. The suspension was part of the judiciary's self-regulatory measures under the Judicial Conduct and Disability Act, a framework upheld by Supreme Court precedent, which Newman contests as unconstitutional.

Parts of Newman’s legal battle focus on the Act's application and the constitutional challenges it presents, particularly regarding the judiciary's authority to enforce disciplinary actions and define mental disabilities. Cooper did allow some parts of Newman's lawsuit to proceed, mainly those challenging the Act's underlying provisions and her claim that the law fails to clearly define what constitutes a mental disability.

However, even with some aspects of Newman's lawsuit moving forward, Cooper emphasized the high standards Newman must meet to succeed on the merits. He dismissed two of her constitutional challenges outright and reserved judgment on others, indicating a tough path ahead for Newman. The ruling also suggests that Newman's attorney is prepared to appeal any unfavorable decision, potentially taking the case as far as the US Supreme Court.

This case highlights the judiciary's self-regulatory mechanisms and the challenges judges face when contesting disciplinary actions, setting a precedent for how similar future disputes might be adjudicated.

Judge Newman’s Reinstatement Odds Wane as Judge Limits Suit (1)

In my column on the potential demise of the Chevron doctrine and its implications for tax law, I discuss the critical role Chevron plays in allowing federal agencies to interpret ambiguous laws, a principle at risk in the Loper Bright Enterprises v. Raimondo case before the US Supreme Court. I explain that without Chevron's deferential standard, IRS regulations on ambiguous statutes might not automatically be upheld, leading to a significant upheaval in tax law and practice, notably in areas like transfer pricing. Transfer pricing, crucial for how multinational corporations allocate income and expenses across jurisdictions, relies heavily on IRS interpretations of tax legislation, which could be thrown into uncertainty without Chevron.

I also highlight the extensive regulatory framework developed under Internal Revenue Code Section 482, which is essential for maintaining compliance and preventing tax evasion through price manipulations. The potential for judicial review of these standards, if Chevron is overturned, introduces a significant risk of uncertainty in international tax practices, affecting multinational corporations' tax planning strategies.

Moreover, I touch on the immediate increase in litigation that could follow Chevron's overturn, using the specific case of Microsoft's alleged $28.9 billion tax bill as an example of the financial implications. The removal of Chevron deference could lead to reevaluation of major IRS victories and pose a nearly immediate financial impact, potentially costing taxpayers $30 billion.

I argue that the judiciary's increased role in tax regulation would result in greater variability in tax law interpretation, complicating tax planning and compliance. However, I suggest that clear statutes and robust regulatory guidance could mitigate some of these challenges, even if political realities make such clarity difficult to achieve. 

Finally, I emphasize the importance of preparedness for the tax law community, as the end of Chevron could mark a significant shift in how tax regulations are interpreted and enforced, urging stakeholders to consider the implications of a post-Chevron landscape for regulatory and compliance strategies.

Chevron Doctrine’s Demise Would Mean Big Changes for Tax Law

Minimum Competence - Daily Legal News Podcast
Minimum Competence
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