Tuesday, July 07, 2009
"Sotomayor & Associates" ... meh, who cares?
Nothing has happened since May 26 to make me change my initial take on Pres. Obama's nomination of U.S. Circuit Judge Sonia Sotomayor to fill Justice Souter's seat on the Supreme Court. (That take, in short, was this: Obama would never nominate anyone of whom I approved, and Judge Sotomayor, if confirmed, will vote the same way as Souter has, but be no more effective than Souter was (and perhaps less so) at swaying the Court's swing vote, Kennedy, in close cases. Republicans should use every opportunity to demonstrate how disastrous it is for the country and the Constitution to have liberal Democrats like Obama in a position to pick politically liberal and judicially activist SCOTUS Justices. But expecting to defeat Sotomayor's nomination is unrealistic unless something big and new comes up from her past, and I'm very grateful Obama didn't nominate someone who'd be much more effective.)
Now it appears from a NYT story that between 1983 and 1986, on behalf of some friends or friends of friends, Sotomayor wrote a few wills, incorporated a few businesses, or helped skim the closing documents for a few condo sales under the exaggerated firm name of "Sotomayor & Associates" while she was really a full-time employee of the Manhattan D.A.'s office or another law firm.
I agree with my blogospheric friend and fellow lawyer Andrew McCarthy that it doesn't take a sophisticated legal analysis for anyone, lawyer or layman, to recognize that claiming to be "Sotomayor & Associates" — when you really don't have any associates — is stupid and misleading. It ought not be done. (On this topic more generally, see also Eric Turkewitz, Jim Lindgren, Glenn Reynolds, John Steele, and the Washington Times,)
I very, very seriously doubt, however, that lawyer Sotomayor's transgression in exaggerating the size of her firm ever actually misled anyone. As small potatoes go, this one is pea-sized or smaller. And as misrepresentations with disastrous public consequences go, this one is utterly microscopic in comparison with, for example, almost any one of Obama's presidential campaign promises, or his own claims to have had significant experience to prepare him for that office.
(Personal disclosure: My own solo law firm — likewise an unincorporated sole proprietorship whose name is only a d/b/a (albeit one duly registered with Harris County) — is carefully designated "Law Office of William J. Dyer" on my letterhead, pleadings, website, and elsewhere to avoid implying more than one regular place of business, more than one lawyer, or any incorporated status that would potentially limit or complicate my personal liability for debts of the law practice. It's a traditional name, but terribly stuffy and boring. I'd rather simply use "Dyer Legal" to correspond with my business internet URL, but the State Bar of Texas — for reasons that are entirely opaque and directly contrary to the square holding (at footnote 12 & accompanying text) of at least one federal district court opinion adopted by the Fifth Circuit — considers that to be an impermissible "trade name" which might mislead the public into thinking that I'm making some representation about the quality of my legal services as compared to other lawyers, which Texas lawyers are forbidden to do. I think state bars in general, including my own, have historically done pathetically bad jobs of preventing genuinely misleading information about lawyers and their services from being spread in the marketplace. I also think that they've almost completely defaulted in their obligations to instead ensure that meaningful and accurate information — information which would help promote informed consumer decisions, and which would tend to drive out misinformation — is constantly available to the public in usable forms. There ought to be no commercial market for an advertising-sponsored legal information-gathering and -distributing service like Avvo.com, for example, because state bars, individually or (better) collectively, ought to have already done all that and more, and have done it much better, via the internet. Which is to say, on this set of legal ethics/public interest issues, I'm a self-interested, grumpy curmudgeon, but not entirely a traditionalist. I do care about these issues, in other words, but I don't think they matter much in the context of the Sotomayor nomination.)
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In Illinois, even judges are allowed to do transactions on the side, and possibly litigation for family members. And, yes, the lady was just starting out as a lawyer and did not really know what to call her business. "Meh"? I think so.
(2) ech made the following comment | Jul 8, 2009 12:26:23 PM | Permalink
Note: IANAL, IANA Accountant! I have however, done the taxes for my wife's unincorporated medical practice for many years.
The only potential problem is whether she properly disclosed and limited the work she was doing to avoid breaking any rules or conflicts-of-interest with her employers.
As for the claim it may have been a "tax dodge", it may well have been a way for her to deduct expenses that might not otherwise have been deductable, or subject to limitations on 1040, schedule A. For example, if she paid bar registration fees, bought books, went to continuing legal education seminars, etc. and they were not reimbursed by her employer, those might be deductable on schedule C of her income tax for her side practice. While she was an employee, those expenses are not, IIRC, deductable on schedule A (as unreimbursed employee expenses) until they meet a certain percentage of income. If she had a study in her residence dedicated to her side law practice, it might have allowed her to deduct part of her rent/mortgage. It might run you afoul of your lease, deed restrictions, or zoning laws and deducting part of a residence you own has downstream tax implications at the sale of the home.
So, unless she was representing criminals while she was a ADA, or doing work that she should have referred to the firm where she was an associate, "Move along, nothing to see."
(3) John made the following comment | Jul 8, 2009 2:03:34 PM | Permalink
Right now the main problem with her side law practice is how little information has been put out about it. Minesota HAS apparently ruled that a single practioner using a firm name that includes Ascociates or & Ascociates is misleading and does disallow it (effetive in 2010) http://www.courts.state.mn.us/lprb/opinions.html#o20
But other questions remain, like who were her clients (she apparently can remember none she worked for during the time period in question), how much did she make, and did she inform her employers and how did she handle screening clients for potential conflicts of interests (both with other side clients and with her employers).
Its probably not a huge deal, but the lack of actual information precludes concluding that it isn't.
(4) Gregory Koster made the following comment | Jul 8, 2009 11:59:05 PM | Permalink
Dear Mr. Dyer: Glad to see you back, and hope you are up and coming. I can't tell you how many times in the last month with all the stuff that's been popping that I thought, I wonder what Beldar thinks about this?
Everyone is going "Meh," on this one, and I would normally go along. But given the history of tax cheats that The One has put up, I think this angle needs more investigation. Given SS's "on the make" focus, why would she start her own shop? Glenn Reynolds cites one of his professors as saying when you see a business decision that doesn't seem to make sense, nine times out of ten there's a tax reason driving it. I think SS needs to cough up her tax returns for this period---and later.
If I'm out of line here, delete this, but let me make a Sarah Palin service announcement: everyone who wants to do something for SP needs to look at the Alaska Fund Trust. This is a legal defense fund set up to help SP defray the cost of fighting the phony ethics complaints the Left is bombarding her with. Briefly, the Fund accepts donations of up to $150, only from American citizens, no PACs, corporations or other entities, the money goes ONLY to paying for the ethics defense, NONE of the donations can go to SP personally, nor to any campaign fund, and once the investigations are completed, anything left over will be donated to a 501c(3) charity by the Fund trustee.
These investigations aren't going to stop once SP resigns. They will drag on. Here's a chance to put your money where your spirits might lie.
(5) Michael J. Myers made the following comment | Jul 9, 2009 11:17:31 AM | Permalink
Thank you Mr. Koster for bringing the Alaska Trust Fund to our attention.
And I think that you are spot on in bringing up the tax question on Sotomayor & Associates. My first thought was that she wanted something that would allow her to take a "home office deduction" for her "on the side" civil law practice.
It may well be that this "tax dodge" involves truly small potatoes tax wise, and may simply merit a "meh".
I am in agreement with Mr. Dyer's larger point--that Ms. Sotomayor may represent the best choice from a barrel of bad apples. And his "best choice" rationale is that she's not likely to change many minds among her fellow Justices on the Supreme Court.
It's really hearkening back to Senator Roman Hruska's spirited defense of the J. Clement Haynworth nomination: "Mediocre people deserve a seat on the Supreme Court as well." If you're going to have a liberal, why not an ineffective liberal?
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