Alabama governor kills bill on tax appeals
Written by PHILLIP RAWLS, Associated Press
May 29, 2012
MONTGOMERY — A bill passed by the Legislature with only one negative vote has been vetoed by Gov. Robert Bentley even though he agreed with its goal of setting up an independent streamlined system for hearing appeals of state and local tax disputes.
Bentley's press secretary, Jennifer Ardis, said Tuesday the governor refused to sign the so-called Taxpayers Bill of Rights II because it passed with mistakes in it on the last night of the Legislature's regular session May 16. Ardis said there was no time for him to send it back to the Legislature with recommended changes to fix it.
She said the governor is supportive of creating an independent tax appeals commission. "The governor is committed to working with the business community to continue to streamline the tax administration and the appeals process, and will push for an enhanced bill of rights in the next legislative session," Ardis said.
The governor had to decide during the Memorial Day holiday weekend whether to sign or not sign all bills passed on the Legislature's final day. She said he refused to sign two other bills.
One bill, sponsored by Democratic Rep. Joe Hubbard of Montgomery, provided for the state to offer financial incentives to Alabama restaurants to buy products from Alabama farmers and seafood businesses during the next three years. Ardis said the governor was concerned about the constitutionality of the bill.
Hubbard said the bill was designed to open new markets for Alabama farmers. He said he will work with agricultural interests to offer a revised version of the bill during the next legislative session.
The other vetoed bill, sponsored by Republican Rep. Randy Wood of Anniston, would have had the state cover more of counties' election expenses. Ardis said the bill could have cost the state $1.8 million per election and taken money away from other government functions.
Several businesses groups worked with tax lawyers from the Alabama State Bar and others to try to revise the way state handles tax disputes. Currently, they are handled by an administrative law judge at the state Revenue Department. They said that creates a perception that the process may not be fair.
The legislation, sponsored by Republican Sen. Ben Brooks of Mobile and Republican Rep. Paul DeMarco of Homewood, would have switched the appeals to a new independent agency called the Alabama Tax Appeals Commission.
Legislators and lawyers who worked on the legislation said a compromise was worked out on the final day of the legislative session. But they said that in the rush of the last day, not all of the agreed-upon language got put into the bill that was presented to the Legislature for a 95-1 vote in the House and a 33-0 vote in the Senate.
"''There were a couple of things omitted — all unintentional," Montgomery tax attorney Will Sellers said.
Another Montgomery tax attorney, Hank Hutchinson, said the bill was supposed to set up an advisory committee to make recommendations to the governor for appointments as administrative law judges to hear the disputes. The governor was not supposed to be required to pick one of the recommendations. Instead, the bill required the governor to pick one of the three names recommended by the commission.
The bill also called for the chief administrative law judge to have different qualifications than legislators had agreed to in their compromise, he said.
Nancy Dennis, spokeswoman for the Alabama Retail Association, said business groups will work with the governor to have a bill ready for the next session of the Legislature, whether it's a special session later this year or the next regular session in February 2013.
"I'm confident we will get this bill passed this year or at the first of the regular session," DeMarco said.
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Winston and Crandall: The Law Firm Business Model Is Dying
By CLIFFORD WINSTON AND ROBERT W. CRANDALL, The Wall Street Journal
May 29, 2012
On Monday night the century-old law firm of Dewey & LeBoeuf filed for bankruptcy—following in the footsteps of other venerable firms such as Howrey & Simon, Heller Ehrman, Coudert Brothers, and Brobeck, Phelger and Harrison. It is easy to think that greedy lawyers are getting their just desserts. But this should not blind us from seeing that there is a better way for America's law firms to do business.
The problems these firms face today are twofold: Large clients are increasingly using in-house counsel to reduce costs, and the public is increasingly taking the do-it-yourself route given the growing access to a variety of legal services and documents on the Internet. The rational response would be for new, low-cost legal firms to start up, and for incumbents to reduce costs and attract new clients by providing innovative services.
But that is happening only to a limited extent because of state licensing requirements and American Bar Association (ABA) rules. Deregulation could open the market and transform the legal industry for the better.
Regulatory barriers have hamstrung other sectors of the economy in the past until the arrival of deregulation. For example, Interstate Commerce Commission (ICC) regulations raised railroad rates for decades after its inception in 1887. But with the proliferation of motor vehicles, trucks began to capture a large share of rail freight traffic.
Then trucks were included under the ICC's regulatory umbrella in 1935, to prevent railroads' freight market share from continuing to erode. But by raising trucking rates, the ICC induced some shippers to buy and operate their own trucks, exacerbating rail's woes. Similarly, Civil Aeronautics Board regulations elevated airline fares, and by the late 1950s—when interstate highway travel was possible—the high fares limited the percentage of seats filled with paying passengers.
The deregulation of transportation that began during the late 1970s enabled motor, air and rail carriers to reduce costs and, particularly in the case of railroads and airlines, to regain market share by offering consumers lower prices and better service.
How have regulations caused the demise of long-established "white-shoe" law firms? Much legal work is performed by associates, who in most states must graduate from a law school accredited by the ABA and pass a state bar examination. This form of licensing significantly limits the flow of new legal practitioners. It also means would-be lawyers must make a substantial upfront educational investment in money and time that must be recouped in high salaries later.
Such salaries can be and are paid because licensing limits competition in the legal profession, and because partners derive much of their own inflated earnings from associates' work.
But when law firms are under pressure to reduce costs, it is difficult for the partners to significantly reduce their reliance on associates without severely affecting their ability to serve clients. Efforts to outsource some tasks have met with only limited success.
While law firms can and do get bank loans, ABA regulations prohibit banks, private-equity firms or other corporations from owning or having an ownership stake in a law firm. This limits a law firm's financing options and raises its capital costs. Dewey's collapse has been attributed to the firm being highly leveraged and unable to attract investment from businesses outside the legal profession.
Law firms are aware of the value that professional business managers can add to their operations. But regulations that prohibit the ownership of law firms by nonlawyers prevent those firms from fully realizing the value of managerial skills and oversight that professional management could bring.
Finally, because regulations prevent corporations from providing legal services other than their own legal counsel, a law firm today cannot realize efficiencies or make more money by merging with a firm outside the legal profession to provide financial and accounting services, for example, along with legal services.
Eliminating regulations on who may provide legal services and who may own and operate a law firm could result in substantial efficiencies. Deregulated firms and new legal entities could reduce costs by hiring a variety of people to provide legal services—some who have completed three years of law school and some who have not.
Such firms would be better positioned to explore the substitution of capital for labor—for example, by accelerating the use of sophisticated Web searches as a substitute for manual document searches, and by using other information technology to ensure that corporate clients comply with government regulations.
New firms not necessarily owned by lawyers would bring new ideas, new technologies, new talents, and new operating procedures into the practice of law. This process has certainly happened elsewhere, the way Freddie Laker and Southwest Airlines brought new operating efficiencies to the airline industry, or the way satellite and cable brought a multitude of new programming to a once-stagnant television industry controlled by three broadcast networks.
As legal fees fell and services improved and expanded, many corporate clients would begin to downsize their internal legal departments. They would go back to relying principally on outside legal help, much as shippers have returned to deregulated for-hire trucking companies and less-regulated railroads. American businesses would reap the economies of specialization and technical progress that a rejuvenated legal-services industry could provide.
Mr. Winston is a senior fellow and Mr. Crandall is a nonresident senior fellow at the Brookings Institution. They are co-authors, with Vikram Mahesri, of "First Thing We Do, Let's Deregulate All The Lawyers" (Brookings, 2011).
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Community News
Mobile Press-Register
May 19, 2012
Congratulations to Billy Bedsole, who has practiced law in Mobile since 1963 and was awarded the Howell T. Heflin Award at the Mobile and Baldwin County Bar associations’ Bench and Bar Conference.
This award goes to an attorney or judge selected for having brought honor and integrity to the legal profession during his or her practice and service in Mobile and Baldwin counties. Bedsole has been active in the Mobile Bar Association, serving on numerous committees. For two years, he was the Chair of the Grievance Committee. He has been a member of the Alabama State Bar Executive Council on three separate occasions and as vice president in 2010.
Bedsole has also served as a bar commissioner from the 13th Judicial Circuit almost continuously since 1993 and as a member of the Disciplinary Committee since 1995.In addition, he is a member of the Judicial Inquiry Commission. He and his wife, Merrie, have been married for 45 years.
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Alabama rights bill forms agency for state tax payers
By Roy L. Williams, The Birmingham News
May 19, 2012
BIRMINGHAM, Alabama -- Alabama businesses should realize cost savings and find it easier to settle tax disputes, thanks to a new state agency being created to speed up tax appeals, according to experts familiar with a bill approved in the final hours of the regular session.
The Alabama Taxpayers' Bill of Rights II, or Senate Bill 549, creates the Alabama Tax Appeals Commission in Montgomery and will allow businesses to appeal tax issues through one state agency. The bill, approved 33-0 by the Senate and 95-1 by the House, must be signed by Gov. Robert Bentley within 10 days of its passage to become law.
"It's a huge step forward for Alabama businesses," said Jimmy Long, an associate with Bradley Arant Boult Cummings LLC, who co-wrote the bill with Bruce Ely, a partner at the Birmingham firm. "Right now if audited, companies that do business in multiple cities and counties would have to file in some cases 30 to 40 different appeals. Now they will be able to file in one place."
J. Wray Pearce, a certified public accountant with the Birmingham firm of Pearce, Bevill, Leesburg, Moore, said the changes put Alabama more in line with federal law and "will make tax filing simpler for everyone, more effective and less expensive."
"The independent tax tribunal should make needed appeals easier, and reduce the time required to get resolution," Pearce said. "Simplifying the tax process is in everyone's interest and should not be a partisan issue. If the governor signs this will be a good day."
Long said Alabama is one of a few states that lacks an independent tax appeals tribunal -- both Georgia and Mississippi have recently created independent tax courts.
The Senate version was sponsored by Sen. Ben Brooks of Mobile, while the House version was sponsored by State Rep. Paul DeMarco, R-Homewood. In an interview Thursday, Demarco said the entire state will benefit from the new Alabama Tax Appeals Commission.
"The significance of the legislation is that it provides for a streamlined tax appeals process, and a tax system that will be fair all the way from the municipalities to the state level," Demarco said.
The legislation creating the independent Alabama Tax Appeals Commission abolishes the current Administrative Law Division of the Alabama Department of Revenue, transferring both the personnel and equipment to a newly-formed state agency under the executive branch, Long and Ely said.
As the law stands now, appeals are heard by a judge appointed by the Alabama Department of Revenue. Critics have said there is a potential conflict of interest when judges are paid by the agency that has a stake in the outcome of tax cases.
One key feature of the tax commission is the ability for taxpayers to appeal assessments of sales, use, rental or lodging taxes from cities and counties to the appeals commission. Cities and counties have the right to opt out and continue handling their current tax appeals.
Long said the agency will create savings for counties and cities that use personnel to handle tax appeals, because those cases will now go to the new state agency. The annual appropriation set aside for the Administrative Law Division will go to the appeals commission, so there is no extra cost for the state.
The bill also includes several changes to Alabama's existing procedural provisions, such as extending the appeal periods for preliminary and final assessments from 30 to 60 days for most taxpayers, allowing taxpayers with disputed adjustments the option to appeal to Alabama Tax Appeals Commission. Also at the request of the Department of Revenue, the bill amends reporting requirements and modernizes certain penalties to be consistent with federal law.
Several prominent trade and business associations supported SB 549, including the 28-member Business Associations' Tax Coalition, the Business Council of Alabama; the Alabama State Bar, the Alabama Society of CPAs; the Alabama Retail Association, Birmingham Business Alliance, Manufacture Alabama; the Alabama Bankers Association and the Alabama Farmers Federation.
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Hall of fame honors civil rights lawyer
Alvin Benn, The Montgomery Advertiser
May 6, 2012
It was 1963, and Alabama was under a national microscope as a new governor vowed “segregation forever,” and violence swept the state after he made that pledge.
Watching as police dogs and high-pressure fire hoses scattered black demonstrators at a downtown park in Birmingham was a 33-year-old liberal lawyer who didn’t mind being the underdog in most courtrooms he entered.
His name was Charles Morgan Jr., but those who liked him called him Chuck. Those who despised him used other names.
Morgan was one of only a handful of white lawyers in Alabama willing to take civil rights cases, and he could sense that violent spring that he had his work cut out for him.
Then, on Sept. 15, it happened. A bomb ripped through the 16th Street Baptist Church, killing four black girls preparing for Sunday services. The state’s biggest city appeared ready to implode.
Morgan had had enough, but he didn’t vent his anger to a small group of friends. He chose a meeting of future leaders, and it would be a turning point in his life.
One day after the bombing, Morgan addressed the Young Men’s Business Club at the Redmont Hotel. What he had to say that day rocked the state’s legal community along with those who chronicled Alabama history.
Morgan didn’t mince words. He didn’t name names. He just laid it out for all to hear and judge later. He figuratively blamed the bombing — set by Ku Klux Klansmen — on those he said sat back and did nothing as racist actions slowly consumed Birmingham.
“Every person in this community who has in any way contributed during the past several years to this popularity of hatred is at least as guilty, or more so, than the demented fool who threw that bomb,” he said.
Then, for good measure, he added nine words that tore through the heart of the city, a verbal coup de grace: “Birmingham is not a dying city,” he said. “It is dead.”
Camille Morgan said her husband never told her what he was going to say that eventful day, “but I knew something big had just happened because reporters wanted copies of his speech.”
She said there weren’t any because her husband delivered his remarks extemporaneously, something he often did when the mood hit him — just like what happened at the business meeting.
Morgan quickly became a pariah for hanging Birmingham’s dirty laundry out for everyone in the country to see, especially when The New York Times picked up his speech.
Rebukes from city leaders came quickly. He expected that. The death threats against him and his family, however, were something else.
“It was an incredible speech, but it ran him out of town,” civil rights icon Julian Bond said Friday. “Within a week, Chuck and his family had to leave Birmingham. In fact, they left so quickly that they had to leave their dog behind.”
Bond called Morgan “bigger than life,” and noted that he “defended me when I was thrown out of the Georgia Legislature and made sure I got back in.”
“He and (federal Judge Frank Johnson) almost single-handedly integrated the state of Alabama,” Bond said of Morgan, who died two years ago of Alzheimer’s disease.
Bond made sure he was on hand Friday to honor Morgan at the annual Alabama Lawyers Hall of Fame induction ceremony at the Heflin-Torbert Judicial Building.
The fact that Morgan was almost run out of town on a rail in 1963 instead of being enshrined in a hall of fame reserved for the best and the brightest in Alabama’s legal community illustrated the state’s “new look.”
“It’s amazing how times have changed,” Charles Morgan III said of his father. “Back then, ‘Law and Order’ was a code word coming out of Montgomery. Well, my dad used the law to change the order and I believe that’s one reason he’s being honored today.”
Ed Bridges, director of the state Department of Archives and History, described Morgan as an “outspoken advocate of justice” and said he was a “relatively unappreciated figure given the enormous role and impact he had in Alabama and American law.”
When Morgan and his family arrived in Atlanta, it wasn’t long before he established the southern office of the American Civil Liberties Union.
Among many controversial cases he accepted at the ACLU was Muhammad Ali’s appeal of his draft evasion conviction. In 1972, Morgan moved to Washington where, among other cases, he led the ACLU’s bid to impeach President Richard Nixon.
Former Reuters writer Tony Heffernan got to know Morgan in Atlanta where he described him as a man “of considerable principles,” someone who enjoyed adult beverages, especially after winning a civil rights case.
“He courted the press because he knew the ‘other side’ hated him,” said Heffernan. “That’s why he opened his office across the street from The Atlanta Journal-Constitution. It kept him close to the editors and reporters who covered him.”
Others inducted into the Alabama Lawyers Hall of Fame on Friday were:
• Roderick Beddow Sr. (1889-1978): Considered one of the best criminal defense lawyers of his time, Beddow mentored many future stars of legal defense and was known for his high ethical standards. During his illustrious career, he was president of the Birmingham Bar Association and the Alabama State Bar.
• John McKinley (1780-1852): McKinley became the first Alabamian appointed to the U.S. Supreme Court in 1838. He also served in the Legislature and represented Alabama in the U.S. Senate and U.S. House of Representatives.
• Nina Miglionico (1913-2009): A scholar, activist, politician and a crusader for women’s issues who worked for positive change in race relations. Miglionico served on the Birmingham City Council and practiced law for 73 years. She was inducted in the Alabama Women’s Hall of Fame earlier this year at Judson College.
• William D. Scruggs Jr. (1943-2001): A small town lawyer whose legal abilities were known throughout the country, he once served as president of the Alabama State Bar and worked tirelessly to improve the self-regulation of the legal profession.
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Former state Supreme Court Justice Almon dies
The Associated Press
May 2, 2012
Former Alabama Supreme Court Justice Reneau Almon of Montgomery has died after a long legal career that saw him serve at every level of Alabama’s court system, including 24 years on the state’s highest court.
Longtime friend Bob Martin said Almon died Monday night at Brookwood Hospital in Birmingham from complications from Alzheimer’s disease and other health problems. He was 74.
After earning a bachelor’s degree from the University of Alabama and a law degree from Cumberland School of Law at Samford University, Almon practiced law in Moulton. Gov. George Wallace appointed him to a circuit judgeship in 1966 in Moulton. Gov. Albert Brewer appointed him to the Alabama Court of Appeals in 1969. He was elected to a full-term in 1970.
When the court split into separate courts for criminal and civil appeals in 1971, he went to the Court of Criminal Appeals. Voters elected him to the Supreme Court in 1974 and he served from 1975 through 1999. Then he opened a law office in Montgomery.
Alabama State Bar President Jim Pratt of Birmingham said “Justice Almon was one of the brightest individuals who has served on the court in the years I’ve been an attorney.”
Former State Bar President Bobby Segall of Montgomery called him “a solid rock” on the court, known for his scholarship and fairness and admired by other judges and lawyers.
Another former State Bar president, Mark White of Birmingham, said, “My friend was not just a Justice, he was in everything and every way justice.”
Martin said visitation will be from 2 to 3 p.m. Thursday at Elliott’s Funeral Home in Moulton, with a graveside service at 3:30 p.m. A memorial service will be scheduled later in Montgomery, he said.
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First Alabamian on Supreme Court to be inducted into hall
By Bernie Delinski, Decatur Times-Daily
May 1, 2012
John A. McKinley, a former Florence resident who became the first Alabamian to serve on the U.S. Supreme Court, will be inducted this week into the Alabama Lawyer's Hall of Fame.
McKinley lived in Florence from 1821 to 1842 and was a member of the Cypress Land Co. He was among seven founders of Florence in 1818.
The Culpepper County, Va., native was a Supreme Court justice from 1838 until his death in 1852. He was a state legislator and member of the U.S. House and U.S. Senate. Many consider McKinley to be the "Spiritual Father of TVA" because of his work in Congress on the first Florence Canal.
The John McKinley Federal Building on Seminary Street in Florence was named in his honor 11 years ago today. McKinley was born on this date 232 years ago.
The annual hall of fame induction posthumously honors Alabama lawyers who have made significant contributions to the legal profession, according to a release from the Alabama State Bar.
This year's ceremony will be Friday in Montgomery. Others to be inducted Friday, and information on them provided by the state bar:
Roderick Beddow Sr. (1889–1978). Beddow was considered one of the best criminal defense attorneys of his time and went on to become president of Lions Club International.
Nina Miglionico (1913–2009). Miglionico practiced law for 73 years and was a crusader for legal reforms, particularly concerning women's issues, and was president of the National Association of Women Lawyers from 1958-59.
Charles Morgan Jr. (1930-2009). Morgan developed a reputation during the Civil Rights Era as a courageous social reformer. He persuaded federal courts to dismantle segregation, changing the social and political landscape of the South.
William D. Scruggs Jr. (1943–2001). Described as a "quintessential small-town lawyer," he is the namesake of the state bar's "William D. Scruggs, Jr. Service to the Bar Award."
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Al Benn's Alabama: Tiny artist meets chief justice
The Montgomery Advertiser
May 2, 2012
Sasha Foreman may not have had a clue about who the chief justice of the Alabama Supreme Court was, but she’ll really have a story to tell her older sister in the next few weeks.
That’s because Sasha is only 9 years old and more interested in art than legal matters, while Violeta Foreman is 23 and a student at Washington University’s School of Law in St. Louis.
“It’s ironic that, here is her little sister who draws a picture and meets the chief justice,” said a smiling Ray Foreman after Tuesday’s annual Law Day program at the Heflin-Torbert Judicial Building.
Chief Justice Chuck Malone spoke eloquently not only about the importance of Alabama’s court system, but also his concern over grave economic conditions confronting every state agency.
Sasha, a third-grader at Advent Episcopal School in Birmingham, admitted she didn’t know much about the law but was happy to accept $300 for her first-place finish in posters as part of the Law Day program.
“I’m going to give half of my money to her,” Sasha said, referring to her older sister. “She’s in law school, and I’m just 9. I know she can use it.”
When Sasha’s name was announced, she stood and walked from her first-row seat to the center of the big room where important legal matters are debated. She didn’t seem a bit nervous, either.
“My poster showed two people shaking hands with the world behind them,” Sasha said. “I thought people should stick together and that’s why I made my poster the way I did.”
The theme of this year’s competition was “No Courts, No Justice, No Freedom,” and students from across the state had an opportunity to write essays about it or illustrate what it meant to them.
Two other members of Sasha’s school also excelled. Lily Geisen took second place while Simms Berdy finished third in the same K-3 division.
Malone, who was appointed by Gov. Robert Bentley to fill the chief justice vacancy following the resignation of incumbent Sue Bell Cobb, failed to win the Republican Party nomination for a six-year-term in last year’s election.
He didn’t stay very long Tuesday, but used what time he had to drive home a point to the winners that money is almost as important as judicial decisions because without it, the wheels of justice can come to a grinding halt.
“I was up late last night working on our budget,” he said. “This is a critical time for the state of Alabama, but this is not unique to our state. This is a national problem.”
Malone said he is faced with a difficult decision as Alabama’s top judge because revenues aren’t what they should be in order to meet existing expenditures.
“I’m looking at having to lay off 500 employees out of 1,800,” he said. “Out of the 1,800, about 600 of them are protected for those whose jobs are supported by statutes.”
Without the funds needed to pay employees in judicial positions throughout the state, Malone said it will mean offices in each of Alabama’s 67 counties will be operating far below normal levels.
Before he left to meet with legislators and Bentley to discuss issues of judicial importance, Malone gave a collective pat on the back for each of the award-winning youngsters who sat a few feet away.
“Your involvement helps, believe it or not,” said the chief justice, alluding to their entries. “If you care, then maybe I can use your caring to let the Legislature know that, guess what, we’ve got people out there at schools who are talking about our court system.”
Malone also commended the Alabama State Bar for its annual Law Day competition, saying it helps to focus attention on the importance of the judicial system.
Taking part in Tuesday’s program were Keith Norman, executive director of the Alabama State Bar, Chad Stewart and Marcia Daniel.
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A New Lawyer’s Duty – [Editorial]
The New York Times
May 2, 2012
New York State’s chief judge, Jonathan Lippman, announced on Tuesday a change in the state’s bar admission process that is both simple and potentially revolutionary. Beginning next year, the 10,000 or so prospective lawyers who pass the New York State Bar exam every year will be required to perform 50 hours of pro bono legal services before they are approved to practice law.
The requirement, which has been approved by the state’s four appellate divisions, will ensure that all lawyers starting out have some degree of real-world experience. It is also a practical way to foster a stronger culture of public service in the legal profession, while providing more assistance for the many hundreds of thousands of people without lawyers in the state’s civil court system. Like many states, New York allows law students to perform legal work under the supervision of faculty members or legal services groups.
In these hard financial times, the need for legal help among low-income New Yorkers has become a crisis. According to court data, 99 percent of tenants are unrepresented in eviction cases in New York City, 97 percent of parents are unrepresented in child support matters and more than 60 percent of homeowners in foreclosure cases attend the state’s mandated settlement conferences without the benefit of legal counsel. Requiring would-be lawyers to do 50 hours of pro bono service is a modest requirement. While many law schools have courtroom-based clinical programs, the new rule would add a few hundred thousand more hours of legal help for those in need. If other states follow New York’s lead, the impact nationally could be substantial.
This initiative, however, is no substitute for more federal and state support of legal aid for the poor, or for other moves, like expanding law school loan-forgiveness programs to help graduates who work in legal services offices. Still, requiring new lawyers to demonstrate their commitment to the profession’s ideals of service is a worthy step in the right direction.
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