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The Court system has a budget problem arising from an increase in case filings with no corresponding budget increase to handle the additional caseload. The current financial crisis does not appear to have decreased Family Court filings: over 40,000 new petitions were filed in 2008. Many people going through divorce or custody disputes may not be aware that there are alternate ways to resolve their disputes without going to court. The alternate approaches include private arbitration, mediation, or a new Delaware program, Parenting Coordination.

If both parties agree, rather than waiting for a hearing date from the Court, they can stipulate to have their property division and alimony issues heard by a mutually selected attorney at an arbitration hearing. An arbitrator would render a decision regarding any issues submitted by the parties to the arbitrator. Arbitration is generally a less formal process than a full hearing before a Judge.

Mediators can assist parties in resolving property division, alimony, custody, visitation, and support issues. Unlike arbitrators, mediators cannot make decisions, but rather assist the parties in coming to an agreement.

Parenting Coordinators are trained lawyers and mental health professionals who assist high-conflict parents in resolving a variety of issues and work to help keep these parents from returning to Court repeatedly. This approach can save money and time by decreasing the filings, and hopefully can reduce the hostility between the parents.

If you are interested in pursuing an alternate route to divorce or custody matters, MacElree Harvey has attorneys able to serve as arbitrators, mediators, and Parent Coordinators.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.

Caregiver agreements are formal contracts under which relatives are hired to care for elderly family members. Although these types of contracts are not new, families may be open to entering into a family care agreement given our current economic downturn. Because it can impact the size of an estate, the caregiver agreement has been used as an estate planning tool.

In today’s economy, a caregiver agreement can provide the opportunity to save resources and keep resources within a family. A written caregiver agreement is a good idea for family members wanting to preserve harmony among family members and at the same time stay informed about the care delivery and cost of care to an elder.

Here is a common family situation: Jenny and Ken are siblings who want to make sure that their mother is receiving appropriate care and attention at home. Ken lives close to his mother’s home and can budget time to provide regular care. Jenny lives in another state and is busy with a career that prevents her from visiting her mother regularly. A written caregiver agreement providing compensation to Ken for the hours he provides care will recognize the work that Ken is doing and prevent misunderstandings over the extent of Ken’s responsibilities.

For an aging parent who does not want to leave their home, the opportunity to be cared for by a trusted family member is an attractive solution. It can also be a money-saving strategy for an aging parent who is unable to sell property or other assets to fund entry into a continuing care retirement community. For an adult child who has the time and ability, caring for an aging parent may provide a modest income at a time when many families are struggling with finances. The caregiver agreement between the elder and the caregiver should cover the following:

• Caregiver’s tasks and duties including meal preparation, housekeeping, personal care needs, transportation, companionship.
• Times and days the caregiver performs the service.
• Caregiver’s responsibilities for the supervision of other caregivers.
• Reimbursement for expenses paid for by the caregiver.
• Elder’s role as an employer who pays wages.
• Wages paid to the caregiver, comparable to local home care

The caregiver agreement allows you to track and forecast a senior loved one’s finances. Without an agreement, the finances of the loved one and those of the caregiver can be comingled and it may become difficult to determine who paid for what. The agreement allows money matters to be transparent. When a caregiver agreement is properly established, transfers of money are not considered gifts, but rather are treated as compensation since they are payments made in return for a service. However, the caregiver is required to pay income taxes on the compensation received.

A caregiver agreement can help your family to:

• Recognize and reward time and effort of family members caring for an aging loved one or parent.
• Provide an organized and structured schedule of care.
• Prevent arguments or misunderstandings among family members.

MacElree Harvey’s Family Law practice can provide you with samples of caregiver agreements to meet the needs of your particular family situations. Our Family Law practice has lawyers located in all three of the MacElree Harvey offices.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.

The final installment in a three-part series on local counsel. Click here for second installment.

The previous two installments (which appeared in our December and January newsletters) outlined the responsibilities of and the protection afforded by local counsel. This final installment will focus on the consequences for not following the rules for engagement of an out-of-state attorney. As in the previous two installments, I will use examples from Delaware to bring the regulations to life.

Valerie Glover Tonwe was a Pennsylvania lawyer. In a case of first impression, the Delaware Supreme Court disbarred her, even though she was never admitted to practice law in Delaware. She was disbarred for her unauthorized practice of law in Delaware, where she was not admitted and not associated with local counsel.

As an additional consequence, the Supreme Court of Pennsylvania disbarred her.

Disbarment anywhere generally results in disbarment, or denial of admission to practice, everywhere.

Lesson 1: The Delaware Supreme Court can discipline attorneys practicing in Delaware, even if they are not admitted to practice in Delaware.

The Delaware Supreme Court held:

The Office of Disciplinary Counsel (ODC) had authority to institute a disciplinary proceeding against a lawyer who engages in professional misconduct, whether admitted or not.

ODC could proceed under Rule 8.5, which states in relevant part:

(a) Disciplinary Authority. A lawyer not admitted in this jurisdiction is also subject to the disciplinary authority of this jurisdiction if the lawyer provides or offers to provide any legal services in this jurisdiction.

(b) Choice of Law…. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:

” . . . for any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred, or if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.”

Lesson 2: Representing Delawareans in Delaware matters on a systematic and continuous basis will require an out-of-state attorney to seek admission or associate with local counsel.

Disciplinary Rule 5.5(b)(1) prohibits a lawyer who is not admitted in Delaware from establishing a “systematic and continuous presence in this jurisdiction for the practice of law.”

The Court held that physical presence is not required to establish that a person is providing, or offering to provide, legal services in this state, citing Birbrower, Montalbano, Condon & Frank v. Superior Court, 949 P.2d 1, 5 (Cal. 1998) and In re Coale, 775 N.E.2d 1079, 1081 (Ind. 2002).

The Court found that the following regular pattern of representation of Delaware clients constituted the practice of law “in Delaware” for purposes of Rule 8.5. Specifically, Ms. Tonwe accepted new clients who were Delaware residents involved in car accidents and who were seeking recovery under Delaware insurance policies. Ms. Tonwe did everything short of appearing in Delaware courts, and engaged Delaware attorneys as co-counsel, only if she could not resolve the matter without litigation. Otherwise, she worked out of a Pennsylvania office.

The “Safe Harbor” of Rule 8.5(b), allowing consideration of the attorney’s “reasonable belief” that the “predominant effect” of her representation of Delaware clients was in Pennsylvania did not apply, because of this pattern of conduct.

Delaware follows the ABA Standards for Imposing Lawyer Sanctions:

“This framework requires the Court to determine first: (i) the ethical duty violated; (ii) the lawyer’s state of mind; and (iii) the actual or potential injury caused by the lawyer’s misconduct. Based on these considerations, the Court will make a preliminary determination of the appropriate sanction. The Court then will review the particular aggravating and mitigating circumstances in the case to determine if an increase or decrease in the sanction is justified.”

Ms. Tonwe was disbarred because she “knowingly violated the Cease and Desist Order, thereby violating her ethical duties to the legal profession. Although her conduct may not have injured her clients, Tonwe’s disregard for the law seriously undermines the legal system.”

After law school, Ms.Tonwe was admitted to practice in Ohio, Pennsylvania, and Washington D.C. She took, but did not pass, the Delaware Bar Examination (reputed to be among the toughest in the nation). She opened a law office in her home in Milford, Delaware.

In 1991, Ms. Tonwe was convicted of bribing a federal immigration official and served 37 months in prison. Following her conviction, she was disbarred in Pennsylvania, Ohio, and Washington D.C. She was reinstated in Pennsylvania in 2002.

In 1991, the Delaware ODC discovered that Ms. Tonwe was representing Delaware residents in personal injury claims from her Delaware office. She entered into a Statement and Order of Voluntary Compliance.

Shortly after she was reinstated, she contacted the Pennsylvania Ethics Hotline to find out whether she could conduct “pre-litigation” meetings with Delaware clients who had personal injury claims arising from Delaware accidents. Pennsylvania authorities explained that she would have to contact the appropriate Delaware authorities, and that pre-litigation meetings with Delaware clients would not violate the Pennsylvania Rules of Professional Conduct as long as the Pennsylvania lawyer was not appearing in Delaware tribunals.

She never contacted anyone in Delaware to determine whether she could provide any legal services to Delaware clients.

Over the next few years, she developed a sizeable Delaware clientele. She never solicited business from Delaware residents, but her Delaware practice grew because she was involved in church groups and other civic activities.

In 2005, on inquiries from the ODC, she admitted that from 2003-2006 she represented more than 100 Delaware residents in Delaware matters.

After a hearing, the disciplinary board issued a “cease and desist” order and recommended the Delaware Supreme Court declare her permanently unfit for admission to the Delaware bar, and “request and recommend disbarment by the Supreme Court of Pennsylvania.”

Lesson 3: Associate with Delaware counsel for Delaware matters

MacElree Harvey has attorneys admitted to practice in both Pennsylvania and Delaware and is available to help you should you need local counsel representation in either state.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.

The second installment in a three-part series on local counsel using examples from Delaware. Click here for last installment.

Last month I posed the question: What happens if you live outside of the state of Delaware, but have a legal matter that has to be decided in Delaware Courts? My first installment addressed the need for local counsel, the value local counsel can provide to the client, and the responsibilities of local counsel. This month I will outline the protection afforded by local counsel, the division of labor between local counsel and the individual’s attorney, and ways of defining the scope of their work to best manage fees.

To recap the circumstances requiring local counsel…

You may find yourself, or your business, in one of these situations:

• You must sue a Delaware company for breach of contract.
• A company that owes you money has declared bankruptcy in Delaware.

Can your own, familiar attorney represent you? In Delaware, as in most states, the answer is yes.

Attorneys from outside the state of Delaware are permitted to represent their clients in the courts of the state of Delaware if they follow certain rules and guidelines. Of course, the out-of-state attorney must agree to be bound by the Rules of Ethics, the Principles of Professionalism of the State of Delaware, and is subject to the jurisdiction of the Supreme Court for disciplinary purposes. Another important requirement is that an out-of-state attorney must associate with a “local” Delaware attorney. Most jurisdictions have similar requirements permitting an out-of-state attorney to appear on a temporary basis, one case at a time, by applying to the court for admission pro hac vice, or “for one matter.”

Protection for Clients

The purpose of these rules is to protect the public against errors by unqualified professionals and against the unauthorized practice of law. When out-of-state counsel applies for permission to practice pro hac vice, it is for a single case. In State court, out-of-state attorneys must identify how many times they have been admitted in Delaware courts in the prior year. This assists the court in monitoring whether an attorney not licensed to practice law in Delaware is, for all practical purposes, maintaining an office in Delaware by frequently representing clients in court.

Local Counsel Assists

Local counsel is responsible for a basic investigation of the matter and the out-of-state attorney for the single matter. The local attorney checks to see that there are no conflicts of interest between the incoming client and the current clients of his firm. Local counsel will discuss the scope of local counsel’s duties envisioned by the out-of-state attorney, which can range from completely taking over the litigation to merely reviewing documents and making appearances as required by the rules. The out-of-state attorney must certify that he is in good standing in his own jurisdiction and has no disciplinary actions prohibiting or limiting his practice in his own jurisdiction. Local counsel usually must make some independent verification of these certifications.

Defining the Scope of Local Counsel’s Duties Can Save Money

The local counsel’s arrangement usually begins with a telephone call, proceeds through an investigation of the matter, conflict of interest checks, and verification of the good standing of the out-of-state attorney. It leads to a written agreement setting forth the scope of the duties and responsibilities of the local attorney. The client’s signature is usually required to approve limitations of the local attorney’s involvement.

The value of an agreement is that it allows the client to avoid unnecessary duplication of effort and focus on meaningful contribution by the local counsel. When a balance is found, courts and clients recognize and appreciate the role of local counsel. In cases which allow attorneys’ fees to be shifted from one side to the other, courts have held “time spent by local counsel reviewing correspondence and pleadings, as well as time in court, [is] eminently reasonable in light of local counsel’s responsibilities under the local rules.” Ballen v. Martin Chevrolet – Buick of Delaware, D. Del. 1998 W.L. 101 3874 (September 17, 1998).

The attorneys in MacElree Harvey’s Delaware office have appeared in every court system within the state of Delaware and have served as local counsel for small and large matters, class actions, bankruptcies, personal injury cases, and have worked with attorneys from across the United States.

Next month, we’ll highlight a situation where an out-of-state attorney was disbarred for ignoring Delaware’s rules on representation.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.

“Nesting” provides another alternative for divorced parents with children.

A factor in many divorces today is the custody of the children. When parties divorce, one intact family unit becomes two family units. The Courts strive to determine a custody schedule in each case which serves the best interests of the children. Traditionally, this has meant that one parent is the primary residential custodian of the children and the other parent has specific days and times to see the children. Today, the Courts strongly favor a shared custody arrangement with each parent having equal time and responsibility for the children. The determining factor in all cases is the best interests of the child(ren) involved. The Courts are not required to become involved in a custody schedule if parents are able to reach an agreement and can follow the agreement with built-in flexibility.

There is a small growing trend of a post-divorce child custody arrangement called “nesting.” With nesting, the divorced parents, rather than the children, move in and out of the marital residence. The children live at home and the separated or divorced parents take turns living with the children, but never at the same time. A core element of this arrangement is that each parent maintains a separate residence where they live on their “off” weeks. Specific access for the noncustodial time may be made during the week such as a dinner visit outside of the “nest.”

One may ask, how can divorcing parents successfully manage this arrangement when they could not keep their family unit intact? This is a fair question and the nesting arrangement only works in limited situations. However, for the best interests of the children, it is worth considering. Certainly one consideration is cost. The arrangement can be expensive, as it generally requires three separate residences be maintained: the “nest” plus a separate residence for each parent. Nesting is not meant to be a long-term solution, but rather serve as a transitional time for the family. For example, with the real estate market today, it may make good economic sense to wait to sell the marital home. In the interim, the parents may have an opportunity to try nesting. It may be a healthier environment for the children rather than a tense family home where parents cannot live together.

The concept is progressive. Nesting has its origin in a Virginia case, Lamonte v. Lamonte, 2000 Va. App Lexis 434 (Court of Appeals of Virginia). In Lamonte, the court made a nesting custody arrangement in which the children (ages 3 and 5) remained in the home, with the mother staying in the home during the week and the father on the weekends. The court concluded, “We think that the benefits of a nesting arrangement are best achieved where the children are able to stay in the matrimonial home, particularly if it has been the only residence that they have known. Time and time again, we have seen cases where the children are being treated as Frisbees. Parents do not seem to appreciate the gross disruption to which children are subjected where one of the parents has frequent access.” In Lamonte, the court concluded by stating: “At the risk of falling prey to simplistic generalities, we are of the view, that given a choice, we do not see why anyone would select a living arrangement which involved so much movement from house to house.”

Nesting has disadvantages other than economics and should only be considered in certain circumstances where the parents are willing to focus solely on the children outside the divorce process. Joint custody can be sufficient in promoting positive developmental adjustments in children. There is also recent social science research which shows that children are not as negatively affected by divorce as once thought. 1

I suggest that nesting at least be considered as an option in all custody matters. Parents may then focus on minimizing the disruption a separation may have on their children and nesting may achieve a better result than the traditional shared custody arrangement.

1″Is Bird Nesting in the Best Interests of the Children?” Michael Flannery, paper presented October 2008 at the Annual Meeting of The Law and Society, Las Vegas, NV.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.

In two landmark decisions earlier this year, the Delaware Supreme Court set forth standards and guidelines regarding the interplay between pensions and social security. In Forrester v. Forrester, the husband appealed a Family Court Order which divided his City of Wilmington police pension and accumulated compensatory time. Husband argued that his pension was a “substitute” for social security and therefore not subject to equitable division, as social security is not subject to property division.

There were conflicting Family Court trial decisions regarding the treatment of pensions that were “in lieu of” social security benefits. Under Federal Law, social security benefits are not subject to property division. The Family Court determined that the police pension was not subject to the Federal Law exempting social security from property division and that the equities of the case, including the parties’ respective economic positions, warranted dividing the pension. The trial court gave wife a fifty (50%) percent share of the portion of the pension earned during the marriage.

The Delaware Supreme Court confirmed that social security benefits are not subject to division as social security is pre-empted by Federal Law, and Federal Law prohibits their division. The Delaware Supreme Court, after reviewing decisions from other states which go both ways, determined that pensions that operate as a “substitute” for social security are marital property, and, as such, are subject to equitable division upon dissolution of the beneficiary’s marriage. The Court reviewed the statutes governing the Wilmington Police Department pensions and determined that the legislative intent was to make the police department pensions assignable.

In a decision the following month, in Stanley v. Stanley, the Delaware Supreme Court concluded that the Family Court erred in ordering husband to pay wife a portion of his social security disability benefits. In the Stanley case, husband worked for General Motors throughout the marriage, but after suffering from several serious medical conditions, retired shortly before the divorce. The husband’s pension was divided pursuant to an Agreement and Order dividing the marital assets. At the time, since husband was already retired, both parties were aware that husband was receiving in excess of $2,000 per month and based their negotiations on that amount.

A couple of years later, husband applied for social security disability benefits. Husband received these benefits retroactive to a date which was one year before the Agreement and Order dividing the martial assets. When husband began receiving the disability benefits, his GM pension payments were reduced to almost half the prior amount and both of the parties were required to repay General Motors due to the retroactive social security disability payments. Husband received the full social security plus the reduced GM pension, while wife received only the reduced GM pension. In order to correct the inequity, Family Court ordered that husband’s entire GM pension be paid to wife and that husband reimburse wife the lump sum that she owes to General Motors by paying wife half the amount of the social security disability lump sum that he received.

The Supreme Court determined that due to the Federal Prohibition against the direct division of social security benefits, the Court could not order husband to pay wife half the retroactive social security disability amount. However, the Court also determined that it was fair that husband repay wife for the debt that she owes to General Motors, but ordered the Family Court to require it to be paid from another source.

The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.