News

2410, 2018

Ownership and Control of Service-Disabled Veteran-Owned Small Business Concerns

October 24th, 2018|

Written by:  Jon M. DeVore

 

In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act of 2005 (38 U.S.C. 501,513), this in part created the Vets First Contracting Program within the Department of Veterans Affairs (VA). This program enabled approved firms to participate in Veteran-Owned Small Business (VOSB) and Service Disabled Veteran-Owned Small Business (SDVOSB) set asides issued by the VA.  On October 1, 2018, both the VA and the U.S. Small Business Administration (SBA)  made changes in their regulations that change the manner in which Veteran Owned Businesses will be certified and determined eligible to participate in Federal Procurement Programs.

In 2017, Congress passed the National Defense Authorization Act of 2017 (NDAA) which directed standardized definitions for VOSBs, and SDVOSBs between the VA and SBA. The NDAA further clarified how veteran-owned firms were certified and directed how the U.S. Small Business Administration (SBA) and VA would administer the veteran contracting program.  The NDAA instructed the VA to use SBA regulations to determine ownership and control of both VOSB and SDVOSBs. The VA would determine whether the individuals were veterans or service disabled veterans and would verify applicant firms. Any challenges as to control and size issues would be determined by the SBA and ultimately heard by SBA Office of Hearings and Appeals (OHA).

The VA removed references related to ownership and control to clarify the terms and references part of the verification process. This clarified that surviving spouse or employee stock ownership plan (ESOP) could also be qualified for the program under specific circumstances.

The SBA published final regulations that were effective October 1, 2018.  This rule amends the rules of practice of SBA’s OHA to implement protests of eligibility for inclusion in the VA center for Verification and Evaluation database eligibility, and it also includes procedures for appeals and denials of cancellations of inclusions in the database.  SBA amended its regulations and issued definitions of ownership and control for small business concerns (SBC) which applies to the VA in its verification and “Vets First Contracting Program” and all other government acquisitions requiring self-certification.

The Rule:

The rule defines a Service Disabled Veteran as one who possesses either a valid disability rating letter issued by the VA establishing a rating between 0-100% or a valid disability determination from the DOD, or is registered in the beneficiary identification and records locator subsystem maintained by the VA.  Reserve and National Guard disabled from disease or injury incurred or aggravated in line of duty also qualifies. These veterans with a permanent and severe disability are those with a service-connected disability that was determined by the VA to have permanent and total service connected disability for purposes of receiving disability compensation or pension.

The new rule and regulations define a VOSB concern as one where not less than 51 percent of which is owned by one or more veterans or, for publicly owned business, not less than 51% of the stock of which is owned by one or more veterans, and the management and daily business operations are controlled by one or more veterans or, if permanently and totally disabled, no less than 51% is owned by one or more veterans for both small business concerns and publicly owned businesses. Daily business operations are defined as the marketing, production, sales, and administrative functions of the firm, as well as supervision of the executive team.

An owner of an SDVO SBC and Conditions of Ownership are:

The SBA regulations essentially remain the same with some important changes for unique circumstances providing a concern must be at least 51% unconditionally and directly owned by one or more service-disabled veterans. For partnerships at least 51% of aggregate voting interest must be unconditionally owned by one or more service-disabled veterans. For publicly owned businesses, no less than 51% of stock must be unconditionally owned by one or more veterans.  One or more service-disabled veterans must be entitled to receive at least 51% of the annual distribution of profits paid to owners of corporation, partnership etc.  Ownership is determined regardless of whether the ownership and business concern is located in a community property state.

A SDVOSB upon the death of the service-disabled veteran will continue to qualify as a small business concern if the surviving spouse acquires the veterans ownership interest, veteran was rated 100% disabled under VA or the veteran owner with majority ownership died as a result of the service related disability.  The SBA limits the ability to continue to be a qualified business from the time of the death of the veteran and the ending of the earliest of the following three events:

  • The veteran’s spouse remarries;
  • The spouse divest ownership interest in the business; or
  • Ten (10 years) after the death of the veteran.

Control of a SDVOSB or VOSB:

The SBA has clarified the requirement for veteran control of the business concern under a variety of circumstances essentially providing eligibility integrity while providing that the veteran can still get the benefits in unique situations.  In the case of a permanent or severely disabled veteran the spouse or designated caregiver may act on behalf of that veteran.  A Permanent Caregiver for the veteran may control the affairs of the business on behalf of the veteran when it has been legally demonstrated that the person has the responsibility for managing the wellbeing of the veteran with a severe or permanent disability as determined by the VA.  There may be only one permanent caregiver.

Control over a corporation for one or more service-disabled veterans (or spouse or caregiver of a permanent and severe disabled veteran, will be deemed to be service disabled to control the board of directors when a single service-disabled veteran owns 100% of all voting stock of an applicant or concern, or owns at least 51% of all voting stock of an applicant or concern, is on the board of directors, and no super majority voting requirements exist for shareholders to approve actions.

If supermajority exists in the articles of incorporation the veteran must be able to overcome super majority voting requirements. If more than one seeks to qualify the concern each individual on the board together should own at least 51%. All voting stock, there is no requirement for supermajority, and the shareholders can demonstrate that they have made enforceable arrangements to permit one of them to vote the stock as a block without a shareholder meeting. If supermajority exists shareholders must provide for a sufficient percent of voting stock to overcome requirements. Weighted voting is required when an applicant does not meet these above requirements.

The SBA will NOT make a determination that the veteran lacks control in “extraordinary circumstances.”  The limited extraordinary circumstances are defined as:

  • Adding a new equity stakeholder
  • Dissolution of the company
  • Sale of the company
  • Merger of the company
  • Company declaring bankruptcy, and
  • Negative control.

There is a rebuttable presumption that service-disabled veterans do not control the firm when they are unable to work for the firm during normal working hours that businesses in the industry usually work (not limited to other full or part time employment, student, other activities etc.). There is also a presumption that these veterans do not control the firm if they are not within a reasonable commute to the firm’s HQ or job-site. Ability to respond to phone calls or emails is not by itself a presumption.

If the service-disabled veteran has been called to active duty, they may elect to designate in writing one or more individuals to control the concern on behalf of the service-disabled veteran during the period of active duty. This will not remove the eligibility based on absence during active duty. Written records must be kept.

This short report on the new regulations is not intended to be comprehensive and does not cover all of the details of the two sets of regulations.  This short report is not intended as legal advice.  We recommend people interested in this issue complete due diligence and independent research into the new regulations.

1709, 2018

Supreme Court Issues Opinions in Three BHBC Appellate Cases

September 17th, 2018|

Written by Anmei Goldsmith

Last Friday, September 24, 2018, the Alaska Supreme Court issued opinions in three cases briefed and argued by the BHBC municipal team – with favorable decisions in two of the three. In each case, the municipal team, led by the practice group’s lead attorney Holly Wells, vigorously defended its client city’s interests. These three cases highlight the municipal team’s depth of experience in appellate work, particularly for its municipal clients.

In City of Kodiak v. Kodiak Public Broadcasting Corporation, Slip Op. No. 7291, Holly Wells and Katie Davies successfully defended the City of Kodiak from an award of full attorney’s fees in a case involving production of public records under the Public Records Act. A radio station in Kodiak, KMXT, filed suit against the City to compel production of certain public records after the City objected. After brief litigation lasting less than two months, the City agreed to turn over all the records KMXT requested. KMXT then demanded its full attorney’s fees – almost $25,000, arguing that because access to public records is a fundamental right, it was entitled to full fees under AS 09.60.010, which allows full fees to the prevailing party in a constitutional claim. The trial court awarded KMXT its full attorney’s fees. The Supreme Court overturned this award, agreeing with the City that KMXT asserted a statutory right rather than a constitutional right, and was therefore not entitled to its full attorney’s fees. The case was remanded back to the Superior Court for a decision on Rule 82 attorney’s fees.

In Griswold v. Homer City Council, et al., Slip Op. No. 7297, BHBC defended the City of Homer in another case involving disclosure of public records under the Public Records Act. Holly Wells and Katie Davies defended the City’s assertion of the attorney-client privilege and the deliberative process privilege as exceptions to the general rule that the public has full access to inspect and copy public records generated by municipal governments. The Supreme Court took this opportunity to reaffirm the existence of the deliberative process privilege and the balancing test that trial courts must apply when this privilege is litigated. The Supreme Court also addressed for the first time how the attorney-client and work-product privileges interact with the Public Records Act. The Supreme Court held that these two privileges are exceptions to the general disclosure rule of the Public Records Act and provided guidance for future cases. This case was remanded to the trial court to re-examine the requested records in light of the Supreme Court’s holdings and to decide issues not addressed in the appeal.

In Griswold v. Homer Board of Adjustment, et al., Slip Op. No. 7295, the trial court issued an order “sua sponte” dismissing Griswold’s appeal of a conditional use permit granted by the City of Homer’s Board of Adjustment. Though neither side had raised the standing issue in the trial court, the trial court nevertheless decided the issue on its own. This placed Homer in the unusual legal position of defending an order it did not request. The Supreme Court overturned the trial court’s dismissal order and reaffirmed the principle that notice of an adverse argument that affects a party’s participation in a case, such as standing, is an essential part of due process. The case was remanded to Superior Court for further proceedings on the substantive issues of the case. Holly Wells and Tom Klinkner briefed and argued this case.

1309, 2018

Birch Horton Supports Wellness in the Workplace

September 13th, 2018|

Written by Kristy Garrett

Birch Horton Bittner & Cherot recently held its biennial retreat as an opportunity for attorneys and paralegals to get out of the office together, in order to focus on the direction and future of the firm. One of the events on the agenda was an early morning yoga class, demonstrating the firm’s commitment to the health and wellness of its people. The complex practice of law can be demanding and stressful at times, and studies have shown the practice of yoga has several benefits for corporate professionals. Some of the many benefits of yoga include the following:

  • Alleviates certain physical pain and prevents injury. Any physical pain will impact work productivity and absenteeism. Yoga has been shown to be beneficial to reduce low back pain, shoulder stiffness and immobility, neck strain, carpal tunnel and arthritis symptoms, and reduce headaches in some instances. The increased range of motion and flexibility also helps to prevent common injuries. Of course all individuals with any physical limitations or ailments should consult their physician before beginning a physical yoga practice.
  • Relieves Stress. Aside from the many physical benefits, one of the best benefits of yoga is how it helps a person manage and reduce stress, which is known to have devastating effects on the body and mind. A regular yoga practice creates mental calmness and relieves chronic stress patterns by relaxing the mind. By practicing mindful breathing and the other relaxation techniques emphasized in yoga, individuals experience tremendous stress relief.
  • Improves Concentration & Focus.  Yoga’s practice of slowing down, mindful and intentional movement and controlled breathing centers attention and sharpens concentration, contributing to more focus and creativity.
  • Increases Positivity and Productivity. By moving the body, its muscles, joints, ligaments and bones in all of the way that the body needs to move; by removing certain toxins through deep breathing; and by clearing the clutter of the mind by practicing one point of focus, individuals find they have more energy and just feel better, physically and emotionally. And an employee that feels better, will perform better in all aspects of their professional life.

Healthy, relaxed, energized and focused employees are more productive, efficient and cost effective.  By promoting and encouraging the practice of yoga, Birch Horton Bittner & Cherot values wellness and is committed to the happiness and health of its employees.

1408, 2018

Team BHBC raises $2,900 for the American Diabetes Association

August 14th, 2018|

Written by:  Katie Davies

For the second year in a row, members of Birch Horton Bittner & Cherot competed in the Tour de Cure bike race in Anchorage to raise money for the American Diabetes Association.

Jack McKenna, Anmei Goldsmith, Katie Davies, Peggy Crowe, Rachel Crowe (l to r)

Team BHBC proudly raised $2,900 through their fundraising efforts!

Jack McKenna, Anmei Goldsmith, Katie Davies, Peggy Crowe, and Rachel Crowe braved the rain and wind to compete in the 100KM race, and Adam Cook took on the elements in the 50KM race. On behalf of Team BHBC, thank you to everyone who supported our team and the American Diabetes Association!

You can donate until September 14, 2018 by clicking here.

1407, 2018

The Importance of Play and Engaging Your Children in Sports: A Parent’s Journey

July 14th, 2018|

Written By: Aaron D. Sperbeck

Child’s play is not just all fun and games; rather the act of play is a crucial component in the growth and development of the adolescent brain, body, and intellect. Numerous studies conducted over the years consistently demonstrate how young people learn and prove that, especially in children, they acquire knowledge through play, experimentation, exploration, and discovery. Research shows that many of the fundamental tasks children must achieve, such as exploring, risk-taking, fine and gross motor development, and the absorption of vast amounts of basic knowledge can be most effectively learned through outdoor play activities.

In this regard, youth sports, both individual and team, offer a host of emotional and physical benefits that range from helping kids stay active, build self-esteem, and learn to work with others to accomplish a goal. More importantly, youth sports teach children that hard work and dedication can translate into achievements both on and off the field of play. As a parent, knowing which sport is best for your child often depends on your child’s personality, as well as the time and money you are willing to invest.

Here’s a tip … aim for fun! Many parents naturally gravitate toward introducing their child to a sport they enjoyed or experienced success at when they were children. While this is a good place to start, your child may not share your enthusiasm for baseball, soccer, or swimming. You may cycle through several sports and then back again, before you find one that is the right fit for your child and their unique personality.

Today’s parents face a challenge to find the right mix of fun, social interaction, and physical education within organized sports. Parents really need to look at what your kids do to have fun. If they are having fun, then chances are they will stay in the sport longer and will not burn out. They are also more likely to achieve goals that elevate them to their highest potential.

Within a team sport setting, children have to work together toward a common goal and take instruction from a coach who is not necessarily a parent. This skill is not only important but critical in a child’s social development toward peers and learning how to interact with future teachers, bosses and leaders.

Parents need to know and understand that boys and girls approach team sports differently and with vastly different metrics for gauging the success or failure of an experience.  In some instances, success in a team sport may mean being motivated to improve by playing alongside more talented teammates. In other instances, the social interaction of team play is rewarding in and of itself, regardless of the final score. Every child progresses at his or her own speed. Encourage your young athletes toward their personal goals with positive, calm support, and celebrate personal accomplishments along the way.

Not every child will compete in the Olympics someday, so watching for individual progress in your child may offer a better measure of performance than direct comparison to those 12-year olds who are naturally gifted. Your child may seem behind or ahead of others, but like Alaskan weather, this can change over the course of a season. It takes at least one or two seasons to really judge improvement and success rather than one or two competitions.

Certain categories of team sports — like hockey and soccer — have become more year-round in nature. Although this approach can help the team and individual players grow stronger and more skilled over time, families may find that the sport is more of a time and money commitment than they had bargained for. Make sure your child is ready and willing to fully commit to this opportunity, otherwise walking away from the team could be interpreted as a failure and thus counterproductive.

Much of the success that children experience during individual sports like tennis, dance, swimming, and gymnastics, depend on the motivation of the particular athlete. Athletes who excel at individual sports find satisfaction pushing themselves to achieve a personal goal rather than relying on the team to help them get there.

This is especially true for my daughter who swims. Swimming is a good fit for her because the race is always between her and the clock. She does not want to have the win or lose dependent on her teammates. While your child may prefer an individual sport, that does not mean they have to sacrifice the support of a team. Many individual sports have the camaraderie or partnership of a team as they travel together and learn to become partners and accomplish individual goals, all while supporting each other as a team.

The down side to individual sports is that not all children feel drawn to the spotlight during a performance or sporting event. Some children may put undue pressure on themselves to reach personal goals, causing the negatives to outweigh the positives if they do not achieve their self-set measure of success. Some parents also find it difficult watching their youngsters navigate the pressures of a sport on their own. As a parent, it is tough to watch your 9-year-old perform her first gymnastics floor routine where she is responsible for remembering how the individual skills all fit together to a choreographed song. This can be a terrifying experience for your child, and completely unnerving for a parent. It can also be an incredibly empowering experience for everyone involved.

As a parent, I am glad my daughters engaged in both team and individual type sports, including soccer, football, softball, volleyball, swimming, and gymnastics. It is impossible to say that one type is better than the other. I think it all depends on the kids, the coaches, and the sport. I do think that exposure to both types is crucial and ultimately leads children to discover what success means to them under their own terms.

IMPORTANCE OF PARENT SUPPORT

It is important to not view your child’s participation in sports as a “child-care” opportunity. It is not enough to just drop them off for practice or games, especially at younger ages. While it may be tempting to view sports as a temporary reprieve from parenting, both coaches and parents can help competitors deal with the aftermath of winning and losing. Valuable life lessons are taught and learned on the field of play and every parent should strive to be a part of that journey as often as possible.

Neither coaches nor other influential role models can serve as a substitute for parents. The presence of parents as onlookers and supporters of their child’s academic and athletic endeavors sends a clear message of love, pride, and affirmation to their child. In order to achieve genuine self-esteem, children must achieve goals they have set for themselves. They have a much better chance of doing so with active parental support.

Attend your child’s sporting events, and be their biggest fan! If you have the time and resources, be a coach, an organizer, a team Mom or Dad, or the parent willing to give your neighbors’ kids a ride to practice. Join the many dedicated parent and coach volunteers willing to participate to make our kids’ experience in sports as fun, healthy, and safe as possible.

See you at the swimming pool and ball park soon!

For additional information and reading:
The National Association for the Education of Young Children
Pellegrini, A. D., & Bohn-Gettler, C. M. (2013). The Benefits of Recess in Primary School
Forstadt, L.A., Graham, J. (2011). Children and brain development: what we know about how children learn. The University of Maine.
UMKC-School of Education’s Edgar L. and Rheta A. Berkley, newsletter (2015)
Goldstein, Jeffrey, (2012), Play in Children’s Development Health and Well-Being
Early Headstart National Resource Center, 2013, Supporting Outdoor Play and Exploration for Infant and Toddler.
Gabbard,C. and Rodrigues, L. Windows of Opportunity for Early Brain and Motor Development. Journal of Physical Education, Recreation & Dance, 69(8),54-56
Tandon, P., Zhou, C., Christakis, D. (2012). Jama Pediatrics: Frequency of Parent-Supervised Outdoor Play of US Preschool-Aged Children. Arch Pediatr Adolesc Med. 2012;166(8):707-712.

207, 2018

Countering the Trend of Women Leaving the Practice of Law at the Height of their Careers

July 2nd, 2018|

Written by Lisa Ross

According to American Bar Association (“ABA”) research,[1] many women are leaving the legal profession in record numbers at what should be the height of their careers.  Although women enter the legal profession in numbers equivalent to men, and outnumber men in law school,[2] a process of attrition occurs over the years.  Women comprise only 23% of partners and 19% of equity partners in law firms.[3]  Women are leaving law at the time in their careers when they should be at the peak of their experience, value, and success to their employer.[4]  The ABA finds this phenomenon so troubling that it has undertaken an initiative to understand why women are leaving the legal profession, and reverse that trend.[5]

Preliminary ABA research shows that women tend to leave the profession for several major reasons:

  • Work/life balance
  • Unconscious bias; and
  • Pay gap.[6]

Other research sources cite law firms’ toxic environment and a lack of training and mentoring.[7] Women also leave firms when they see longer partnership tracks and requirements for larger books of business to protect the profits of partners at the firms’ top.[8]

I read about the ABA initiative several months ago and have been pondering writing about this trend. When my managing partner asked me to write a blog for publication July 2, 2018, I knew this piece was “meant to be.”  July 2, 2018 is my thirty-sixth anniversary with the Firm.

It takes a lot to stay with a law firm for thirty-six years.  I used to tell my friends that I just didn’t like change.  It really was a lot more.

Birch Horton was my second job out of law school.  I served as an Assistant Attorney General representing the Alaska Public Utilities Commission in Anchorage Alaska for four years.  I joined Birch Horton in 1982 to develop a public utility practice.  I am a native Washingtonian, and was able to move home, as well as maintain my beloved Alaska ties, by joining the firm’s Washington, DC office.  Here, I represent a wide range of clients, both national and Alaska-based, in the areas of energy and telecommunications. My clients range from a tiny Alaska Native Village Corporation for St. Paul Island in the Bering Sea that owns four rural Alaska electric utilities to a private equity firm based in New York City that is investigating investments in Alaska energy infrastructure.

In Birch Horton, I have found a firm with a culture consistent with my personal values.  Attorneys don’t fight over taking credit for clients.  Attorneys share credits and client responsibility with younger partners to help them develop their practices.  We work together to promote one another with clients and support each individual attorney’s client relationships.  The quality of work is the firm’s number one priority, not “face time” in the office on weekends or inflated billable hours.

Working younger attorneys to the bone, just to test their mettle, is not standard fare.  In fact, the Firm encourages a healthy work-life balance.  Addressing client work in a timely manner is always essential; however, the Firm recognizes that attorneys who can meet their own personal needs, by taking the time they need to tend to their families, exercise, or pursue other interests, are more satisfied.  They are more loyal to the Firm and naturally want to work harder for clients.  Of course, there are periods where attorneys work very hard because their cases demand that level of effort.  Long days are not required, where not needed, simply as a rite of passage. Additionally, the Firm has recently made it a priority to support the ability to work remotely, making it simple to be responsive to clients while attorneys are required to be away from the office.

The Firm is a good place for women to grow, influence policies and practices, and find personal support.  Unlike other firms, women have served for long periods as managing partners and board members and proliferate among partner ranks.  There is no bias against women advancing.  To the contrary, senior partners transitioning to more modest work schedules have trained women to take over their practices.  Salaries are based on objective criteria, and younger attorneys’ salaries are not set artificially lower to prop up older partners who are no longer as productive. The Firm also offers good family-oriented benefits as part of its salary package, including paid maternity and paternity leave.

These are values that appeal particularly to women, and certainly have sustained my loyalty for thirty-six years.  I have seen the Firm evolve from its early period, where the founders dominated share ownership and control, to present, where we have successfully transitioned to a younger management team. Women have major sway in this group and advocate strongly for policies and practices consistent with fair values.

I admit, I do dislike change.  But, like other women at the Firm, I have found Birch Horton to have the values that fit my needs, in addition to very high quality legal work standards.  That appears to be rare in the law business, and I feel lucky to celebrate my thirty-sixth anniversary here.

[1] Why Women Leave the Profession, Your ABA (December 2017).

[2] Staci Zaretsky, There Are Now More Women In Law School Than Ever Before, Above the Law (Mar 7, 2018, 12:27 PM).

[3] Why Women Leave the Profession, Your ABA (December 2017).

[4] Meghan Dougherty, Why Do Women Leave the Legal Profession?, The American Bar Association (Aug 28, 2017).

[5] Id.

[6] Why Women Leave the Profession, Your ABA (December 2017).

[7] Susan Smith Blakely, Why Women Lawyers Leave Firms: Astonishing New Statistics, Ms. JD (Apr. 12, 2017).

[8] Id.