The Time Value of Money (Regarding Case Expenses)

 

Here is another great video from Khan Academy that explains the Time Value of Money in an easy-to-understand way.

 

 

This is a very relevant topic for contingent-fee law firms who have traditionally used the after-tax cash of the partners of the firm to fund ongoing case expenses.  In effect, these funds represent an interest-free loan that the partners have made to their firm (see Internal Revenue Service Private Letter Ruling 8246013).  And since these funds can be tied up for many, many years at zero percent return, the present value of those dollars is much lower than the nominal amount of capital that is tied up.

 

There is a better way, though.  Give us a call or watch this video.

 

Michael J. Swanson

President and Chief Executive Officer

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Entrepreneur Online – Good Source of Business Info

 

I have found the online edition of Entrepreneur Magazine to be a great resource for a variety of business management tools.  I think the Money tab is especially useful and I recommend that every trial law firm partner take a look at the Accounting Basics section for some excellent nuts-and-bolts content for running an even better law firm.

 

On the Accounting Basics page you’ll find links to useful articles such as “When To Hire A Bookkeeper”, “A Year-End Tax Checklist”, “11 Expectations to Set for Your Bookkeeper” and many more.  It’s important to work on the business side of running a law firm and sites like Entrepreneur can make it easier!

 

Michael J. Swanson

President and Chief Executive Officer

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Five Big Companies That Started Small

 

I found this great info graphic last week on www.lendio.com.  It shows how 5 companies that are now big (Apple, Whole Foods Market, Mattel, Amazon and Starbucks) all started with humble beginnings.  Blogger Dan Bischoff then gives 7 steps to starting your very own Fortune 500 company!  Very interesting and informative.  Here is a link to the blog. Good job, Dan!

 

Michael J. Swanson

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Overview of Tax Law Changes for 2011

 

As the end of the year is quickly approaching, many people reluctantly begin thinking about their tax position.  A well-thought out tax strategy can save thousands of dollars in unnecessary federal and state taxes.  According to TurboTax, here are a few highlights for the 2011 tax year:

 

  1. Lower Tax Rates Extended – The 2010 Tax Relief Act extends through the end of 2012 the tax rates in effect in 2010. They had been scheduled to increase to the higher tax rates that were in effect prior to 2001.
  2. Lower Capital Gains and Dividend Tax Rates Extended Through 2012 – The tax rate reductions for long-term capital gains remain in effect for 2011 and 2012.
  3. Payroll Tax Credit – Starting in 2011, the partial credit for payroll taxes paid by employers is no longer available.
  4. Section 179 Expense Deduction – The $500,000 maximum amount of equipment placed in service that businesses can expense and the annual investment limit of $2,000,000 remain in effect for 2011.

 

For a more complete listing, please click here.  This post is intended for informational purposes only and is not to be considered as tax advice.  Please speak with your Certified Public Accountant to determine how this information affects you and your law firm.

 

Kelly A. O’Leary, CPA, MBA, CITP

Director of Finance and Administration

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ACI Schedule Notes for Week of Thanksgiving

 

For scheduling and planning purposes, please be advised that offices of Advocate Capital, Inc. will be closed on Thursday & Friday, November 24 & 25 for the Thanksgiving holidays.   Any payments and/or fundings received in our offices on those days will be processed first thing on Monday, November 28.

 

Everyone at Advocate Capital, Inc. wishes a safe and happy holiday to all of our wonderful law firm clients, their staffs, and families.

 

Donna A. Jones

Vice President, Operations

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Hot Coffee Holiday Gift Drive

 

Watch this brief video by Michael Swanson, learn how to send your elected officials the important message shared in this must see documentary, Hot Coffee.

 

 

Tina Burns

Marketing Manager

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Lack of Oversight in Texas Nursing Homes?

 

A dangerous lack of regulatory oversight coupled with tort reform has made “safety” inspections and regulation of nursing homes in Texas largely ineffective, according to a recent article published in the Houston Chronicle.  Due to budget cuts, legislative changes and inspectors being discouraged from citing bad conditions, Texas has largely reduced its enforcement of rules that govern the state’s nursing homes.

 

According to the article, the state has all but stopped imposing the most severe penalties.  In Texas presently, revoking a nursing home’s license or its government contracts, not to mention seeking a court-appointed overseer to examine nursing home infractions of the rules, is almost unthinkable.  Inspectors are discouraged from carrying out their duties to the letter of the law because there isn’t a budget for it.  Per the article, “State budget cuts have reduced staff by about one-fourth since 2001, even as the number of nursing homes in Texas is virtually unchanged, at about 1,200.”

 

During its research, the paper found four employees who performed inspections for the state in recent months who said their superiors often resist letting them cite homes for possible life-threatening abuse and neglect.  One experienced inspector, who still works for the state and asked not to be identified out of fear of retaliation, said, “They’ll say, ‘You just don’t have it.’  You feel it’s to the point of immediate jeopardy, and to be told ‘no’ is quite mind-boggling.”

 

Of course, the state disagrees, as does the for-profit nursing home industry (surprise, huh?).  The Commissioner for the Texas Department of Aging and Disability Services, Chris Traylor, says that agency is not impeding tough enforcement of nursing home regulations, and the Texas Health Care Association representative, Tim Graves, says he believes the system works.

 

Their protests notwithstanding, if you couple the likely shortcomings in government oversight with the limits imposed on lawsuit damages, you have a very dangerous situation.  As we all know, the trial bar often serves as a default regulator, but the 2003 tort reform law has “virtually eliminated trial lawyers as de facto watchdogs of nursing homes.”  All of this raises the question – Who is left to stand up to the large nursing home companies?

Paul B. Myers

Chief Credit Officer

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Jackson & McGee Celebrate $4 Million Verdict in “MyGallons” Defamation Case

 

Advocate Capital extends hearty congratulations to clients Sam McGee and Gary Jackson, Partners of Jackson McGee, LLP, in Charlotte, North Carolina for their recent $4 Million verdict as reported in the November 4, 2011 edition of North Carolina Lawyers Weekly (subscription required).

 

In 2008, MyGallons announced a pre-paid gas program which allowed consumers to lock in gas prices at a going rate.  Company founder Steven Verona launched the venture to much fanfare but just as quickly had to pull back.  The day after the launch, its payment processing network, U.S. Bank Voyager Fleet Systems Inc. disavowed any relationship with MyGallons prompting the Better Business Bureau to give the company an “F” rating.  The news story went viral with internet, television and print reports questioning the company’s ethics and depicting Mr. Verona as a shyster.

 

Unable to land another processing network, MyGallons was forced to refund money to the estimated 6,000 members who had already enlisted in the program and also lost thousands of potential new members.

 

Mr. McGee commented in part, “Steve Verona personally, and MyGallons as a company, went in 24 hours from being sort of a media darling to being a media target.”   Also adding, “. . . the defamation verdict really holds the potential for MyGallons to do business on a large scale, now that he’s able to point to this verdict and say ‘My Name has been cleared.’”

 

The case was tried for two weeks in a NC Federal Court with the jury finding against Verona and MyGallons on the breach of contract claim but in their favor on the defamation claim and adding $4 million in damages.   Following the verdict, Gary Jackson summed it up well in his comment, “The reputational damage here was very deep . . . the verdict was an opportunity to get rid of all that baggage.”

 

Awesome job on this victory for consumers everywhere!

 

Donna A. Jones

Vice President, Operations

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Business Travel – Baggage Fee Billions

 

Ever wonder where that $25 or $50 baggage fee went that you paid to check your large bag?  In a recent article the Nashville Business Journal reported the top collectors of baggage fees for Q1 of 2010 as published by the U.S. Department of Transportation and the numbers are staggering.

 

Delta Air Lines led the way with $198 million followed by American Airlines at $137 million and US Airways with $121 million.   See the statistics here.

 

Should this make us all scratch our heads and wonder how Southwest Airlines “breezed” to a $459 million profit in 2010 without all the baggage fees?

 

Donna A. Jones

Vice President, Operations

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Jury Awards $9 Million Verdict in Business Fraud and Breach of Contract Case

 

Congratulations to long-time friend Gary Gwilliam and his team of experts at Gwilliam, Ivary, Chiosso, Cavalli & Brewer, A Professional Corporation on their recent victory for client Peter Allen, owner of Allmed Systems, Inc. d/b/a LISA Laser USA.  Gwilliam and colleague Jayme L. Burns have been pursuing justice for business owner Peter Allen for more than three years and on Friday, November 4th, justice was finally served when the jury returned a verdict of $9,263,345.00 plus attorney fees and costs in favor of their client.

 

According to the PRNewswire report published on Wednesday, November 9th the case, Allmed Systems, Inc. v. Healthronics, Inc. filed in Alameda County, CA came to fruition when Healthtronics, Inc., failed to adhere to their contractual obligation to Allen by not only failing to use their best effort to market Allmed Systems, Inc.’s  product, the RevoLix laser, but also by using Allmed’s RevoLix laser as a tool to entice exclusive partnerships with urologists and therefore interfering with Allmed’s market position and product sales.   Click here for the complete PRNewswire article.

 

Healthtronics is a multinational corporation.    Lawyers like Gary Gwilliam and his colleagues at Gwilliam, Ivary, Chiosso, Cavalli & Brewer work tirelessly to ensure justice for people who are injured by the negligence and wrong doing of even the largest corporations.

 

Congratulations to the entire team on behalf of your friends at Advocate Capital, Inc.

 

Lisa Wagner

Vice President, Client Services

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Case Expense Financing at a Net Cost of Less Than 1%*

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