VBA Electronic Journal

Our plans for the VBA News Journal include more articles by VBA members, more practice-oriented articles, and more "news you can use." Our newsmagazine-style format will not permit us to publish lengthy articles, but we plan to print as much information as our 16 pages per issue will allow. And we hope to present different types of articles in each issue, just to keep things interesting for our readers.

For more information about writing and submitting articles for the VBA News Journal, please call the editor at (804) 644-0041, or look for a copy of our writers' guidelines on the Internet at http://www.vba.org.

And while we're on the subject of the Internet, the VBA website at the aforementioned address has been updated, expanded and enhanced. The new site went online in late June, and was demonstrated for VBA Summer Meeting attendees in July.

We've geared information to lawyers and non-lawyers alike, in response to the comments of those who have visited our website in the past year.

Not only can you find a great deal of information about the VBA and its activities, but there are links to many other Virginia, national and international sites that can make research more convenient than ever before.

For the first time, each VBA substantive law section has its own home page, and the sections are in the process of loading those pages with information.

Need to contact a VBA leader? A section council member? A staffer? A committee chair? Directory information is available.

If you're planning your schedule for the year, you can check the calendar for dates of upcoming VBA events.

An online application makes joining the VBA easier than it's ever been.

If someone you know might benefit from the assistance of the Lawyers Helping Lawyers Program, it now has a home page on the VBA website, with facts and contact information.
And there's even an online version of the VBA News Journal.

This is only a sampling of the information available to you through the VBA's website. Please visit and explore its many offerings. And feel free to share your comments with us. After all, the site was designed with you in mind!

The VBA News Journal and the enhanced website have been created to complement each other as communication media for the Association as it prepares to enter the 21st century. Certainly, some readers may miss the old publications, and others may be computer-phobic, but we hope you'll be willing to give these new vehicles a try and contribute your thoughts as we develop them further in the coming months.

Keep us posted. Return to Top

Can an Attorney Serve Two Masters? The Relationship Among Insurer, Insured and Defense Counsel

by J. Jonathan Schraub

The VBA Civil Litigation Section has formed an Insurance Work Group to monitor and promote legislative issues, focus CLE initiatives and enhance practice skills. The group is created to appeal to both plaintiff and defense attorneys. Areas identified for focus are insurance coverage; health, disability and life insurance; fire and marine insurance; property and title insurance; professional liability insurance, fidelity insurance; automobile insurance; worker's compensation insurance; subrogation; reinsurance; employment practices liability insurance; and evidence, civil procedure and trial issues. Interested lawyers may contact Section Chair Ann K. Sullivan at (757) 623-3000 or Group Leader J. Jonathan Schraub at (703) 671-0200 for more information about the group.

Perhaps no issue in the American liability insurance community is being as hotly debated today as the relationship and duties among an insurer and insured and counsel retained by the insurer to represent the insured. The issue is of much more than passing academic interest. Substantial questions of ethics, legal liability and contractual duty all converge in the "tripartite relationship" to form a Gordian knot. Efforts at untying the knot have resulted in a dizzying array of at best less than helpful and at worst utterly unworkable judicial approaches. Defense counsel and insurers are left scratching their heads and asking some very basic questions.*

Who Is My Client?

The problem is as easy to state as it is difficult to resolve. To whom does counsel retained by an insurer to represent an insured owe his or her primary or perhaps exclusive duty? If the attorney has dual allegiances, what are the limits and bounds of each? Who is entitled to sue the retained counsel in the event of malpractice in defense of the insured? Who has an attorney-client privilege with the insured counsel so as to make communications confidential and protected from mandatory disclosure?

Under the traditional notion of a tripartite relationship, the insured and the insurer share a certain commonality of interest in defeating or settling third-party claims. In pursuit of that common goal, an attorney is hired by the insurer to represent the insured. The basis of the relationship between the insurer and the insured is the insurance contract. That contract gives certain rights and duties to the insurer and the insured. Typically, among the rights preserved to the insurer is the right to select counsel and control the defense.

Immediately after stating—or certainly strongly implying—that the attorney has two clients, the theory of the tripartite relationship goes on to state unequivocally that the relation between the insured and the counsel is a traditional attorney-client relationship. In other words, the attorney owes the insured as his client an undivided and unqualified duty of loyalty as if he were the only client. (ABA Opinion 282 (1950) recognizing the "community of interest between insurer and insured but stating unequivocally that an attorney represents the insured with undivided fidelity.) This duty does not arise out of any contract, but rather out of the fiduciary relationship between an attorney and client.

Virginia, like many other states, presents its insurance defense lawyers with a checkered history of positions on the duty of the insurance defense counsel. See, e.g., State Farm v. Floyd, 366 S.E.2d 93 (Va. 1988) (relationship between insurer and insured was not fiduciary and insurer permitted to look after its own interests along with that of insured); Aetna Casualty v. Price, 146 S.E.2d 220 (Va. 1966) (A relationship of trust and confidence exists between an insured and his insurer and places special duties and responsibilities of candor and fairness on insurer in protecting insured's interests); Gardner v. Aetna Casualty, 841 F.2d 82 (4th Cir. 1985) (Special duties and responsibilities between outside counsel and insurer arising out of insurer's contractual obligation with insured); Norman v. INA, 239 S.E.2d (1978) (attorney retained by insurer to represent insured owes individual loyalty to the interests of the insured as if the attorney had been privately retained by the insured); and In Re A.H. Robins Co., Inc., 880 F.2d 709, 751 (4th Cir. 1989) ("it is universally declared that such counsel [i.e., retained insurance defense counsel] represents the insured and not the insurer").

In sum, although in Virginia, A.H. Robins and Norman would seem to provide strong comfort that a defense counsel owes his undivided and sole loyalty to the insured, it is impossible to ignore the shadow cast over this conclusion to by the later decided Floyd case, and the fundamental issue of who your client is, even in Virginia, remains, for the defense attorney, disquietingly unresolved.

If the issue of one client or two clients is unresolved, the obvious problem, of course, is how these two concepts—a shared notion of client between insurer and insured and a duty of exclusive loyalty to one, the insured—can coexist. For most of the more difficult real-life applications of this murky relationship, the insurance defense lawyer has been left to make his or her own way using only good common sense and prayer for divine intervention leading to a quick and noncontroversial resolution of litigation before problems arise. Unfortunately, however, problems often do arise.

In Mississippi, for instance, a federal court refused to allow an attorney appointed by the insurer to withdraw after the carrier rejected coverage and this notwithstanding the fact that both the insurer and insured disclaimed responsibility for paying the attorney's fees. See, Smith v. Anderson-Tully Co., 608 F.Supp. 1143 (S.D. Miss. 1985). Again, this decision arose out of the premise that the relationship between the insured and counsel is not based in the insurance contract but rather in the fiduciary and ethical obligations of the attorney-client relationship.

Perhaps the logical extreme of this position was adopted in Michigan where the Michigan Supreme Court concluded that an attorney appointed by an insurer to defend an insured only has an attorney-client relationship with the insured. Atlanta Int'l Insurance Co. v. Bell, 475 N.W.2d 294 (Mich. 1991). According to the Michigan Supreme Court in Bell, no duty of care is owed to the insurer. (Although after saying so, the court proceeded to allow the insurer to pursue a malpractice claim against counsel under the doctrine of equitable subrogation.) However, in reaching the conclusion that no attorney-client relationship existed between insurer and retained counsel, the court carefully avoided giving any guidance as to how the insurer—who may be the only one at any economic risk in the case—can protect its economic interest; or how the insurer could protect as privileged any information regarding the case that it might request or that the insured or counsel might provide. In sum, the very fundamental question of who the defense lawyer's client is remains largely unresolved.

I Know I Owe a Duty of Confidentiality to Someone — But to Whom?

The situation only becomes murkier when we throw into the tripartite mix questions of duty of confidentiality. Insurance defense counsel are not exempt from the mandate of confidentiality and the insured's disclosures to counsel are protected by an attorney's fiduciary and ethical obligations. The question is what types of communications fall within the privilege. Again there is no hard and fast rule but only the common sense distinction between the types of information that defense counsel receives that advance the cause of both the insurer and insured and the type of information—usually related to coverage issues—which defense counsel might learn of from the insured but which are or might be detrimental to the insured's interests vis-à-vis the insurer. Defense counsel has no role in protecting or advancing the interests of the insurer in coverage-related matters and the insurer must be sensitive to this constraint on the part of retained counsel.

The matter of preserving client confidences is a serious one. Decisions in Arizona and elsewhere have found that an insurer will be estopped from denying coverage and will forfeit coverage defenses if the information relied upon by the insurer was procured through the appointed defense counsel.

What Situations Create True Conflicts in the Tripartite Relationship?

There are four basic scenarios involving conflicts of interest that routinely arise and which defense counsel, the insured and the insurer must face in dealing with the tripartite relationship.

1. Defense Under a Reservation of Rights

Not every reservation of rights creates conflict between insured and insurer. The general rule is that to require the appointment of an independent counsel, the conflict has to relate to a question, the outcome of which can be influenced by a chosen defense strategy. For example, consider a suit that contains different claims for different conduct: some covered, some not. Here, although a reservation of rights would certainly be issued, there is no conflict because for each count, the only issue is whether the insured is guilty or not.

2. Alternate Covered and Non-Covered Claims

Contrast the above with cases where there are inconsistent theories of relief pleaded, such as alternative claims of intentional and negligent shooting. Here, the very existence of coverage may be determined by the choice of defense strategy. It would be in the insured's interest, if he could not prevail to be found liable for negligent—and thus covered-action, and it would be in the interest of the insurer—again if it could not prevail—to shape the defense toward a finding of intentional—and thus uncovered—conduct. Accordingly, a conflict exists requiring the appointment of independent counsel.

3. Defense of Claims in Excess of Policy Limits

Claims that present real and substantial exposure for the insured in excess of policy limits, coupled with the opportunity to settle within policy limits, also present real conflicts of interest between the insured and insurer. In this situation, the defense counsel can and should advise the insured regarding the reasonableness of any proposed settlement but the insured should retain his own counsel to advocate on behalf of the insured to the insurer as regards settlement. Obviously, if the insurer puts up its policy limits toward settlement, there is no conflict.

4. Defense of Multiple Insureds

Multiple insureds can be defended by one counsel if there is no conflict of interests between or among the insured. In this regard, courts draw a distinction between conflicting positions—evidenced for instance by cross-claim exposure for indemnification—and interests which are merely different or divergent—such as different exposure levels based upon agreed facts or different policy limits where the defense strategy for both are identical. In the latter situation, multiple representation is possible provided there is informed consent.

Conclusion

The tripartite relationship remains a mysterious and unresolved series of questions and potential dangers. Navigating through it requires the understanding and good common sense from all three participants—insured, insurer and defense counsel—and, most importantly, a respect by each for the duties and responsibilities of the other.

*Attorneys confront many of these same practical and ethical issues outside of the insurance defense context in situations involving representation of a corporate and partnership entity and one or more individuals associated with that entity. Conflicting issues involving duties of loyalty, confidentiality and the avoidance of conflicts of interest arise constantly in this area. Fortunately, the law has developed in a clearer manner in dealing with the corporate or partnership "tripartite" problem. It can be stated with a good degree of confidence that, as most lawyers know, an attorney's duty when he/she is hired to represent an entity is to that entity and not to any particular individual member of that entity. See, e.g., ABA Formal Ethics Opinion 91-361 (July 12, 1991); Virginia LEO No. 1458 (May 11, 1992); Virginia LEO No. 1505 (December 14, 1992). While this rule by no means answers all ethical problems that the corporate attorney can face, it does provide a solid conceptual foundation for determining an appropriate course of action in a given situation. Even that degree of comfort has yet to be afforded the insurance defense counsel.

ABOUT THE AUTHOR: J. Jonathan Schraub is the founder of Schraub & Company, Chtd., A Professional Law Corporation with offices in McLean, Virginia, Washington, D.C., and Maryland. The firm concentrates in handling professional liability defense, coverage and supervisory counsel assignments throughout the United States. Mr. Schraub is a member of the VBA Civil Litigation Section Council and leader of the Section's Insurance Work Group. Return to Top

Fixing Broken Retirement Plans Under New IRS Correction Programs

by Jeffrey R. Capwell

Introduction

Tax-qualified retirement plans such as pension, profit sharing, and Section 401(k) plans, provide a number of tax benefits. Such benefits include the deductibility of employer contributions, deferral of income taxes on plan benefits and, under certain circumstances, favorable income tax treatment of plan benefits when such benefits are distributed to employees. However, these tax benefits are only available to the extent that the plan maintains its qualified status.

In order to maintain the qualified status of a retirement plan, the plan must comply both in form and in operation with an intricate set of rules under the Internal Revenue Code (the "Code"). The Internal Revenue Service ("IRS") takes the position that a defect in a plan's adherence to the qualification requirements of the Code, however minor in character or minimal in amount, can be a basis for disqualifying the plan and thus cause the tax benefits associated with the plan to be lost.

The IRS has developed over the years an uneven patchwork of correction programs designed to permit plan sponsors and plan administrators to avoid the severe sanction of plan disqualification. The disjointed nature of the programs and inconsistencies in how the IRS applied the programs has generated a great deal of criticism of the IRS in this area. In response to this criticism, the IRS has introduced a new and comprehensive system of correction programs for qualified retirement plans called the Employee Plans Compliance Resolution System ("EPCRS").

Overview of EPCRS

EPCRS consolidates in one place five separate programs for correcting qualification failures. These programs are the Administrative Policy Regarding Self-Correction ("APRSC"), the Voluntary Compliance Resolution Program ("VCR"), the Standardized VCR Procedure, the Walk-In Closing Agreement Program ("Walk-In CAP"), and the Audit Closing Agreement Program ("Audit CAP").
The availability and usefulness of each program depends on the type of defect involved. EPCRS groups plan defects into three general categories: (1) plan document failures (the plan's terms do not comply with applicable qualification requirements); (2) operational failures (failure to operate a plan in accordance with the plan's terms); and (3) demographic failures (a plan's failure to meet one or more of the objective nondiscrimination tests that apply to qualified plans).

The APRSC and VCR programs are available to correct operational failures. Corrections made under APRSC do not receive formal approval from the IRS. Instead, the plan sponsor self-corrects the defect and documents the correction so that the sponsor can justify how the defect did not disqualify the plan if the plan is later examined in an IRS audit. Corrections made under VCR and Standardized VCR programs are submitted to the IRS for formal approval.

The Walk-In CAP program is available to correct plan document failures, operational failures, and demographic failures. Walk-In CAP requires formal IRS approval of proposed corrections. The Audit CAP program is available for all types of qualification defects that are discovered by the IRS while a plan is under examination.

EPCRS generally reduces the monetary penalties that applied under prior IRS correction programs, liberalizes to some extent the correction requirements of those programs, and attempts to minimize prior uncertainty regarding the comfort that an employer could take from self-correction. If certain eligibility requirements are met and the plan sponsor corrects defects in accordance with the applicable requirements of the specific compliance program under which the plan sponsor is proceeding, the IRS will not treat the plan as disqualified. EPCRS is generally effective September 1, 1998.

Principles Applicable to All EPCRS Programs

Eligibility Requirements. There are a number of eligibility requirements that must be met for a plan sponsor to use one or more of the programs available under the EPCRS. First, the fact that an IRS examination of the plan is pending will prevent use of most of programs. For example, the VCR and Walk-In CAP programs cease to be available once an IRS examination of the plan has begun. However, certain types of defects may be corrected under the APRSC program even if the plan is currently under examination. Second, a plan generally must have a favorable determination or opinion letter from the IRS to be eligible to correct an operational defect under the VCR program or to correct "significant" operational defects under the APRSC (this requirement does not apply if the sponsor wants to correct an "insignificant" defect under the APRSC). Because Walk-In CAP often involves defects in a plan document, the IRS may require that a plan be considered for a favorable determination letter as a condition to correcting any plan defects.

The APRSC has an important condition that is unique to that program. In order to self-correct defects under the APRSC, the plan sponsor or plan administrator must have established practices and procedures in place that are designed to promote and facilitate overall compliance with applicable tax-qualification requirements. A plan document alone is insufficient to establish the presence of administrative practices and procedures. The plan sponsor must be able to show that the operational defects are the result of a failure to follow the procedures, or resulted from an inadequacy in the procedures.

Except in limited circumstances, APRSC and VCR cannot be used if correcting the defect requires a plan amendment (such as to conform the plan document to the plan's operation). However, operational defects may be corrected through plan amendments under the Walk-In CAP program. Finally, neither APRSC nor VCR can be used to correct egregious operational defects (e.g., where plan has consistently and improperly covered only highly compensated employees). In such cases, Walk-In CAP would need to be used. No program is available for situations that involve the diversion or misuse of plan assets.

Correction Principles. There are a number of general correction principles that apply to all programs. First, the defect or defects must generally be corrected in full (i.e., correction must be made with respect to all participants and beneficiaries, and for all taxable years, whether open or closed). Second, the correction must restore the plan to the position it would have been in had the defect not occurred. This typically requires making corrections for both current and former participants who were affected by the defect.

The method of correction must be "reasonable and appropriate." A facts and circumstances test generally applies for determining whether the correction is sufficient. Under this test, the correction method should, to the extent possible, resemble one that is already provided for under the Code or IRS regulations or other guidance. In addition, the correction method for a nondiscrimination testing defect should provide additional benefits to nonhighly compensated employees, as opposed to merely limiting the benefits of highly compensated employees. For example, the EPCRS states that a failure to pass the test for pre-tax employee contributions to a Section 401(k) plan typically should not be corrected by returning excess contributions to highly compensated employees. Instead, making additional contributions to lower-paid employees until the test can be met is the preferred method of correction. Finally, the correction method should keep plan assets in the plan, unless the Code or other IRS guidance requires otherwise, and should not violate another Code requirement.

There is a limited exception to full correction for situations where it is unreasonable or not feasible to fully correct. For example, a plan sponsor need not provide precise calculations if the probable difference between the approximate and precise restoration of a participant's benefits is insignificant and the administrative cost of determining precise restoration would exceed the probable difference.
Many practitioners have found that the IRS is generally receptive to creative, "less than complete" correction methods that are specifically tailored to address particular facts and circumstances, are fair to participants and beneficiaries, and which show good faith on the part of the plan sponsor. The IRS will often provide informal opinions in advance as to whether a proposed correction method is acceptable.

Summary of EPCRS Program

APRSC. As mentioned above, the APRSC is a voluntary, employer-initiated correction method. An employer generally must weigh the relative ease and lower expense of self-correcting an operational defect under APRSC, against the comfort that the VCR program provides.

In order to use the APRSC program, the plan sponsor must first establish that the defect is an operational defect that is eligible for correction under APRSC (as discussed above). The plan sponsor generally should document the identified defects and the correction method that it used to correct the defects. Because the APRSC does not involve prior review by the IRS, an IRS agent in an examination could challenge the availability of, or the appropriateness of the correction method used under, the APRSC program. Plan sponsors should understand this risk before proceeding under the APRSC program.

If a plan sponsor determines that a defect is "insignificant," it may correct the defect at any time, even if the plan or plan sponsor is under an IRS examination. A plan sponsor may use APRSC even if a plan has several operational defects if such defects, in the aggregate, are "insignificant." The factors taken into account in determining whether an operational factor is "insignificant" are (1) whether other failures occurred during the period being examined (simply because several participants are affected by one failure does not mean that several failures occurred); (2) the percentage of plan assets and contributions involved in the failure; (3) the number of years the failure occurred; (4) the number of participants affected by the defect relative to the total number of participants in the plan; (5) the number of participants affected as a result of the failure relative to the number of participants who could have been affected by the failure; (6) whether correction was made within a reasonable time after discovery of the failure; and (7) the reason for the failure. As a result, the determination of whether a defect is "insignificant" is very case-specific.

If a plan sponsor determines that a defect is not "insignificant," the defect must be corrected by the last day of the second plan year following the plan year for which the failure occurred. However, in the case of a defect involving the nondiscrimination tests specific to Section 401(k) plans, the two-year correction period runs from the plan year following the plan year in which the tests were not met. In any case, the correction period ends on the first date the plan is under an IRS examination. The plan sponsor may want to informally discuss the nature of a defect with the IRS before proceeding under this program. Each IRS district office has one or more contact persons who are responsible for responding to anonymous inquiries concerning proposed APRSC corrections..

VCR. As mentioned above, the VCR program permits a plan sponsor to voluntarily bring an operational defect to the attention of the IRS and request approval of a proposed or completed correction method. The plan sponsor must submit a written application to the IRS that identifies the defects and correction methods that it would like the IRS to review. The IRS will not make any further investigation beyond the issues raised in the plan sponsor's application, and will issue a compliance statement that covers only those matters identified in the plan sponsor's application. The IRS may, in a subsequent examination, inquire into matters that were not raised in the VCR submission.

The fee for requesting a compliance letter under the VCR program depends generally on the number of plan participants (determined from the most recently filed Form 5500). The applicable fee ranges from $500 for small plans to $10,000 for plans with 10,000 or more participants.

The VCR program requires submission of a written application to the IRS National Office in Washington, D.C. The IRS will review the application, and then consult with the plan sponsor or the plan sponsor's representative regarding the proposed corrections and the plan's administrative procedures. The IRS may require the plan sponsor to supplement information provided in the original application. If an agreement is reached, the IRS will issue a compliance statement. The compliance statement will address the failures identified, terms of correction, and any needed revisions to administrative procedures. The case is closed only after the agreed upon corrections are implemented and the plan sponsor signs an acknowledgment letter attesting to completion of the corrections. In the situation where a mutually agreeable solution cannot be reached, the IRS will return the compliance fee. The case may then be referred for examination.

Standardized VCR Procedure. The Standardized VCR Procedure ("SVP") is a part of the VCR program. Most of the provisions relating to VCR also apply in the SVP. Under SVP, specific and discrete types of operational failures may be corrected on an expedited basis. The employer pays a flat fee of $350 for all defects that are eligible for correction in the SVP program. If a plan sponsor is proceeding under SVP, certain specific correction methods must be used. If a plan sponsor chooses to use any other correction method, SVP is not available and the VCR program or another program must be used. In addition, SVP is only available to correct up to two different types of SVP-eligible defects. Moreover, if a plan has a combination of a SVP-eligible defect and a defect that cannot be corrected under SVP, SVP is not available. The IRS reserves the right to shift a SVP request into the VCR program.

Walk-In Cap. The Walk-In CAP program was originally established in 1994. The program was designed to provide plan sponsors with a means of correcting defects that were not eligible for the VCR program. The program required employers to pay a monetary sanction in exchange for the IRS's approval of the proposed correction.

The new Walk-In CAP program serves essentially the same purpose as the old program; it permits correction of defects that the IRS considers too significant for correction under APRSC or VCR. For example, if an employer failed to timely amend its plan to reflect certain changes in applicable law, that defect could only be corrected by filing under Walk-In CAP.

The Walk-In CAP program is administered at the key district office level. Before the IRS agrees to close a Walk-In CAP case, the plan sponsor must generally obtain a favorable determination letter for its plan. The agent working on the case typically will be responsible for reviewing the determination letter application.

The fees for Walk-In CAP are based on a graduated schedule. There is a minimum amount (which is the applicable VCR program fee), a maximum amount, and a presumptive amount (between the maximum and minimum amount), all of which are keyed to the number of participants in the plan. EPCRS states that "it is expected that in most instances the compliance correction fee imposed will be at or near the presumptive amount." However, the agent handling the case has the discretion to impose a higher or lower fee based on the individual facts and circumstances. Unlike the VCR program where the IRS will only examine the defects that it is asked to review, the agent handling a Walk-In CAP case may raise other issues. These other defects can be added to, and corrected in connection with, the initial Walk-In CAP request. However, the agent has the discretion to determine that an additional defect is outside the scope of the initial request because it was not voluntarily identified by the employer, and may refer the matter to Audit CAP.

Audit CAP. Audit CAP is the oldest of the EPCRS programs. It was established in 1990 as a means for employers to avoid disqualification when plan defects were discovered by the IRS in an audit or other plan examination. The original program required payment of a monetary penalty and entering into a closing agreement.

The new Audit CAP program is essentially unchanged from the prior program. If the IRS identifies a defect in connection with an audit of a plan, the plan sponsor may avoid disqualification by paying a monetary sanction and entering into a closing agreement. The monetary sanction is a negotiated percentage of the plan's "maximum payment amount." The maximum payment amount is the total tax that the IRS could collect if the plan were disqualified for all open tax years. This consists of (1) tax on the trust's income; (2) tax on additional income to the employer from the loss of its deductions for contributions to the plan (plus interest and penalties); and (3) income taxes payable by participants as a result of having to include their benefits in income.

Conclusion

EPCRS offers plan sponsors, plan administrators and their advisors an expanded array of options for avoiding disqualification of qualified retirement plans. The new choices offered under the EPCRS require careful analysis of the defects associated with a plan. In addition, consideration must be given to the most efficient and effective way in which to correct the defect, and the level of comfort that the plan sponsor or plan administrator wishes to obtain.

ABOUT THE AUTHOR: Jeffrey R. Capwell is a partner in the law firm of McGuire, Woods, Battle & Boothe LLP in Richmond, practicing in the areas of executive compensation, employee benefits and federal taxation. A member of the VBA Taxation Section, he is also a member of the Employee Benefits Committee of the American Bar Association Section on Taxation, the National Association of Stock Plan Professionals, and the Central Virginia Employee Benefits Council. Return to Top

The Summer Meeting Report: VBA members gather at The Homestead for CLE, speakers & fun

Hot mineral springs, elegant and sumptuous meals, challenging golf courses, mountain vistas and front-porch rockers—The Homestead, "America's Premier Mountain Resort," has long been known for these.

When The Virginia Bar Association's 108th Summer Meeting was added to that blend of traditions, the overall mix, while as timeless as afternoon tea, became as up-to-the-minute as the latest developments in computer technology, several of which were featured in CLE programs.

The Summer Meeting, held July 16-19, balanced an array of continuing legal education programs with social gatherings and recreational activities for "our extended VBA family," as Association President Frank Flippin described the group.

His Excellency Kunihiko Saito, Japan's ambassador to the United States, addressed the Friday evening banquet. With the resignation of Japanese Prime Minister Ryutaro Hashimoto occurring earlier in that week, the ambassador's appearance was anticipated with great interest. Ambassador Saito began his speech with a personal recollection of his boyhood impressions of America, including his fondness for Hershey bars. He proceeded to discuss Japanese-American relations, similarities and differences with insight and humor. At one point, he drew laughter when relating one proposal for boosting Japanese economic consumption: "Import more Americans."

A number of VBA members rose early on Saturday morning to hear former Tennessee Supreme Court Justice and law professor Penny White speak at the second VBA Women's Breakfast Roundtable. White's description of her experiences as a justice who was voted off the bench after a campaign of criticism proved thought-provoking in the wake of the VBA's recent resolution regarding criticism of the judiciary, and sparked much discussion.

Four general sessions dominated the CLE lineup on Friday and Saturday. The Corporate Counsel Section's Friday morning "Year 2000 and You: Debacle or Distraction?" was moderated by former Governor George Allen and included Lieutenant Governor John Hager, Corporate Counsel Section Chair Amy Holt, attorneys Allan Heyward and Dana McDaniel, and Ann Coffou of Giga Information Group.

That afternoon, the Judicial Section's Bench-Bar Program featured moderator Glenn Lewis and Circuit Court Judges William Alexander, Lang Keith, Dennis Smith and Diane Strickland fielding "Questions You Always Wanted to Ask But Didn't Have the Nerve!"

It was followed by "Making the Internet Work for You: Useful Sites, Useful Tools and Ethical Considerations," presented by the Business Law Section. Executive Committee member and W&M law professor Mechele Dickerson moderated the program, with Section Council member Jim Wheaton and Richard Klau of TrialNet, Inc., as panelists.

On Saturday morning, Professionalism Task Group Chair Tom Spahn led an interactive workshop on "Reporting Misconduct by Non-Clients and Other Lawyers."

Nine other CLE programs were offered by VBA sections and the Substance Abuse Committee during the weekend.

While it had previously been announced that the Lawyers Helping Lawyers Program's Stephen Chapple Memorial Fund would receive a $20,000 gift from the American National Lawyers Insurance Reciprocal (ANLIR), the official presentation was made during the banquet. Jill Wells of ANLIR presented the "check" to VBA Executive Committee member and Substance Abuse Committee liaison Vic Millner, who accepted the gift on behalf of the program.

The Honorable Johanna Fitzpatrick, chief judge of the Virginia Court of Appeals, was the guest of honor at the Saturday evening reception hosted by Lexis Law Publishing.

The Civil Litigation Section's breakfast was enlivened by the presence of magician-cum-motivational speaker Michael Sears. During the Thursday evening reception, Sears entertained a group of onlookers with magic tricks; at the Friday morning breakfast, he persuaded normally dignified litigators to don disguises and perform onstage as part of his message on stress management.

When not in CLE seminars or business meetings, VBA members and guests savored their leisure time. The singles tennis tournaments were washed out by a Friday afternoon storm, but all other recreational tournaments proceeded as scheduled.

For armchair athletes, the rockers on The Homestead's front porch provided an enjoyable diversion. And with the Tower Shops, Cottage Row and other emporia close at hand,various VBA members and guests bore the unmistakable "stop me before I shop again" look.

The post-banquet cigar smoker, now in its third year, attracted a crowd to The Homestead's porch on Friday evening. While a number enjoyed postprandial puffs, many others stopped by merely for a good time with old and new friends—a reminder that fostering a collegial spirit among lawyers and judges is one of the VBA's missions.

The Association's next major gathering will be the VBA's 109th Annual Meeting, to be held in Williamsburg January 14-17, 1999. Mark your calendars now... Return to Top

Partners on and off the playing fields win big in tourneys

While there may not be a proven relationship between marriage and athletic ability, three couples participating in The Virginia Bar Association's Summer Meeting recreational tournaments collected first-place trophies as individuals and, in one case, as a team.

Golfers Ted and Laura Lee Chandler of Richmond took top honors in men's 36 holes (low gross) and ladies' 18 holes (low gross).

Elizabeth McClanahan and Byrum Geisler of Abingdon raced to their respective championships in the Race Mobiles 5K run.

The longtime team—on and off the greens—of Urchie and Joyce Ellis of Richmond won the croquet tournament.

In other competition, the rainout of the singles tennis tournaments dampened players' hopes of taking home prizes, but mixed doubles play continued on schedule. VBA sharpshooters tested their skills at The Homestead Gun Club.

Athletic results, in addition to those listed above, were as follows:

Golf
Men's 36 Holes (Low Net): Rick Adams
Men's 18 Holes (Low Gross): Bill Shelton
Men's 18 Holes (Low Net): Jim Walsh
Ladies' 18 Holes (Low Net): Susan Armstrong

Tennis
Mixed Doubles 1st: Beth Johnson & Paul Gerhardt
Mixed Doubles 2nd: Matt Davis & Betty Shannon

Shooting
Skeet/Men's: Court Traver
Skeet/Ladies': Nancy Emerson
Clay/Men's: Lynnie Brugh
Clay/Ladies': E.B. Stutts
Trap/Men's: Dexter Rumsey
Trap/Ladies': E.B. Stutts Return to Top

1998 Summer Meeting Sponsors

1998 Summer Meeting Sponsors
American National Lawyers Insurance Reciprocal, Richmond
Flippin, Densmore, Morse & Jessee, Roanoke
The Homestead, Hot Springs
Hunton & Williams, Richmond
Lexis Law Publishing, A Division of Reed-Elsevier, Inc., Charlottesville
LEXIS-NEXIS, A Division of Reed-Elsevier, Inc., Dayton, Ohio
Norfolk Southern Corporation & CSX Corporation
Patrick & Associates, Williamsburg
Philip Morris, USA, Richmond
The Reciprocal Insurance Agency, Ltd., Richmond
Trigon Administrators, Inc., Richmond Return to Top

Tysons Corner is site of 28th annual VBA labor law conference
October 2-3

The Virginia Bar Association has announced that the 28th Annual Labor Relations and Employment Law Conference, presented by the VBA Labor Relations and Employment Law Section, will be held October 2-3 at the Ritz-Carlton in Tysons Corner.

Although the conference schedule was still being finalized at press time, programs will focus on current issues and recent developments in the fields of labor relations and employment law. Continuing legal education credits will be available to conference participants.

VBA Labor Relations and Employment Law Section members have received preliminary mailings about the conference. Registration materials will be mailed to section members following final confirmation of program speakers' assignments. Non-section members interested in attending the conference should contact the VBA office for registration information.

The Section's Council will meet in Tysons Corner on October 1, prior to the conference. Section members are asked to contact Section Chair Michael F. Marino of McLean, a partner in the firm of Reed, Smith, Shaw & McClay, at (703) 734-4653 regarding proposed legislative matters or future section activities, before the council meeting.

Hotel reservations should be made directly with the Ritz-Carlton, 1-800-241-3333 or locally at (703) 506-4300.

For more information, please call The Virginia Bar Association at (804) 644-0041. Return to Top

Capital Defense Workshop will be held November 9-10 in Charlottesville

The Sixth Annual Capital Defense Workshop, sponsored by the VBA Criminal Law Section and financially assisted by the Virginia Law Foundation, will be held November 9-10, 1998, at the Doubletree Hotel in Charlottesville.

The workshop is designed to satisfy the "current training" requirements for capital case certification in accordance with Virginia Code Section 19.2-163.8. At least six hours of specialized training is required every two years for lead counsel certification. Forms for participants to submit to the Virginia Public Defender Commission for capital case certification will be available at the workshop.

The program will feature such topics as "Why We Do What We Do," emphasizing the value of a life and the actually innocent defendant; a session for neophytes on the capital murder statute and basic capital procedure issues, and one for returnees on mitigation in the guilt phase and specialized mitigation issues; recent capital case developments; team building; specific pretrial strategies; special pretrial issues including other decision-makers and the Vienna Convention; using pretrial strategies at trial; race/ethnicity issues in capital cases; and the closing argument for life.

A total of 10 hours of CLE credit will be available to workshop attendees.

The Capital Defense Workshop is provided essentially without cost to participants who certify that they will accept appointment in a capital case pursuant to Virginia Code Section 19.2-163.7 et seq.

A nominal charge of $25 per person is required to cover the cost of lunch.

Pre-registration is required to ensure admission. Walk-in registrants cannot be guaranteed admission.
Hotel reservations may be made directly with the Doubletree Hotel by calling (804) 973-2121.
James H. Walsh of McGuire, Woods, Battle & Boothe in Richmond is chair of the VBA Criminal Law Section. Overton P. Pollard of Richmond, executive director of the Virginia Public Defender Commission, and Professor Roger D. Groot of the Washington & Lee University School of Law in Lexington co-chair the workshop planning committee.

For more details, please contact the VBA office, (804) 644-0041. Return to Top

Legislative dates to remember for the 1999 Assembly

The 1999 Virginia General Assembly session won't start until January 13, but the legislative clock is already running. Bill prefiling began July 17, and while the next major deadline (for consideration of carryover bills) isn't until December 20, the message is clear: Get your legislative proposals in order now.

Current: Bill prefiling (began July 17).
October 16-17: VBA Executive Committee review of 1999 legislative proposals.
December 20: Deadline to consider carryover bills.
January 13: Session begins.
January 18: Bill drafting deadline.
January 25: Bill introduction deadline.
February 27: Last day of session.

Election Day—November 3—is still several weeks away, but the voter registration deadline is coming up quickly on October 5. Return to Top

Tax practitioners will gather for annual roundtable Oct. 30

The Taxation Section of The Virginia Bar Association will present the Ninth Annual Virginia Tax Practitioners' Roundtable on Friday, October 30, 1998, from 9 a.m. to 1 p.m. at Farmington in Charlottesville.

Presentations and discussions will focus on "hot" current issues in taxation law. Continuing legal education credit is pending.

Space is limited and is available on a first-come, first-served basis. The nominal registration fee includes the cost of a buffet lunch.

James S. McNider III of Hampton chairs the VBA Taxation Section. D. French Slaughter III of McGuire, Woods, Battle & Boothe in Charlottesville, section vice chair, is the roundtable coordinator.

For additional details, please contact The Virginia Bar Association at (804) 644-0041. Return to Top

One-day conference planned for Lawyers Helping Lawyers

The Fourth Annual Lawyers Helping Lawyers Conference will be held on Friday, October 9, at the Embassy Suites Hotel in Richmond.

As in past years, the conference is designed for legal professionals, health care professionals, family members and friends. Participants can meet and network with others who are supportive of a program committed to the betterment of the legal profession.

General session speakers will include Michael A. Babbitt, regional services manager of the Caron Foundation in Philadelphia, on "The Best Intentions: Overcoming Co-Dependency and Enabling in the Firm and the Family"; Prof. Christopher C. Wagner of Virginia Commonwealth University on "Motivating Behavior Change: An Approach to Increase Volunteer Success at Engaging a Person with Addiction"; and Lawyers Helping Lawyers Program Director Susan D. Pauley on "The New and Improved Guidelines for Lawyers Helping Lawyers Volunteers: An Orientation to the New Local Committee and Volunteer Handbook."

Discussion facilitators for "Sharing Knowledge and Experience in Working Through the Denial and Co-Dependency of Colleagues, Staff and Families of an Impaired Attorney" will be Edwina Carr, northeast regional director of marketing for the Hazelden Foundation, and Dianne T. Mann, director of the intensive outpatient program at Williamsburg Place.

Other components of the conference are a continental breakfast in the morning, a luncheon, and open meetings of AA and Al-Anon in the afternoon. Continuing legal education credit is pending.

Joseph W. Gorrell of Fredericksburg chairs the VBA Substance Abuse Committee, which oversees the LHL Program. Palmer S. Rutherford Jr. of Norfolk, a partner in the firm of Willcox & Savage, chairs the conference committee.

A limited number of hotel rooms are available to participants at a special rate. For reservations, participants should call the Embassy Suites in Richmond at (804) 672-8585 and identify themselves as Lawyers Helping Lawyers conference attendees.

For more details, please call the VBA office at (804) 644-0041. Return to Top

Cable & Wireless, USA, joins VBA member service providers

Cable & Wireless, USA, the leading U.S. long-distance company specializing in the business market and the third largest international carrier of telecommunications traffic, becomes the preferred provider of long-distance telephone services to VBA members as of September 8, 1998.

Cable & Wireless will develop customized plans that match calling needs of VBA members, who will be eligible for a flat-rated long-distance program for outbound, 800, international, travel card and conferencing calls services. In addition, Cable & Wireless specializes in the legal industry's need for call accounting, tracking calls by client/attorney, and developing "client-ready" statements to improve receivables management. For more details, call Ed Burns of Cable & Wireless at 1-800-899-1983. Return to Top

News in Brief

The Virginia Bar Association got some "northern exposure" during the recent American Bar Association Annual Meeting in Toronto. VBA member Robert J. Grey Jr. of Richmond was elected chair of the ABA House of Delegates, which puts him in line to serve as ABA president. William R. Rakes of Roanoke, also a VBA member, was elected to the ABA Board of Governors. The VBA/YLD collected honors in the ABA/YLD Awards of Achievement Competition. As a panelist for an ABA seminar on criticism of the judiciary, VBA Judiciary Committee Chair John B. Donohue Jr. shared details of the VBA's resolution regarding criticism of judges. Past VBA President R. Terrence Ney ended his service on the board of the National Conference of Bar Presidents and began a term as the VBA's delegate to the ABA House of Delegates, succeeding fellow Past President F. Claiborne Johnston Jr.

Barbara L. Hulburt of Richmond, chair of the VBA/VSB Joint Committee on Alternative Dispute Resolution, has received the Award for Outstanding Achievement in Education and Training from the American College of Civil Trial Mediators. Hulburt is president of Access Family Mediation, a division of the McCammon Mediation Group, and was the first director of the Virginia Supreme Court's Department of Dispute Resolution.

Peter Clark Manson of Earlysville, former secretary-treasurer of the VBA and the retired initial director of Virginia CLE, received the first Gardener G. DeMallie Jr. Continuing Legal Education Award, presented by Virginia CLE, in June. Manson was the first person to serve as both a University of Virginia law school professor and director of the Joint Committee on Continuing Legal Education of The Virginia Bar Association and the Virginia State Bar. He developed Virginia's CLE structure, curricula and handbooks during his 23 years of service, ending with his resignation in 1983. The DeMallie Award is named for the late Gardener G. DeMallie Jr. of Charlottesville, a VBA member who was assistant director of Virginia CLE at the time of his death in 1996.

Many thanks to VBA member Robert M. Tuck of Richmond, who graciously donated his copies of Association "red books" in response to the call in the July News & Views. Thanks to his gift, the VBA office now has a complete chronicle of Association activities from 1888 to the present.

VBA Financial Coordinator Amy Cathey and her husband Mike welcomed a daughter, Amanda Nicole, on July 9 in Richmond. Parents, baby and big brother Alex are all doing well, and Amy will return to full-time VBA duties later this month.

While the hit film "Saving Private Ryan" has focused moviegoers' attention on America's veterans, many real-life U.S. veterans are in need of legal services. The Veterans Consortium Pro Bono Program seeks volunteer attorneys who will receive free training, a veterans' law manual, pre-screened cases and access to veterans' law experts as mentors. An all-day veterans' law training will be held at the D.C. Bar on October 30. CLE credits are available and malpractice coverage is provided. Call (202) 265-8305, ext. 126, to register, or ext. 109 for more information. Return to Top

VBA/YLD gathers honors from ABA in Toronto

The Virginia Bar Association Young Lawyers Division has received second place for Comprehensive programs in Division 1C of the American Bar Association Awards of Achievement Competition, which includes all statewide bar associations' young lawyers' organizations with up to 3,000 members. The VBA/YLD garnered two additional awards for projects of service to the public and the bar.

The awards were announced during the recent ABA Annual Meeting in Toronto.

The VBA/YLD received second place in the Comprehensive area for the quality of its overall slate of activities and projects. David N. Anthony of Norfolk, an associate with the law firm of Kaufman & Canoles, chairs the ABA Awards of Achievement Committee for the VBA/YLD and prepared entries for the ABA awards competition.

In addition, the VBA/YLD received a second place award in the Single Project—Service to the Public category for its Legal Services for the Mentally Ill model project, in which volunteer lawyers work with the Virginia Alliance for the Mentally Ill to provide legal services to mentally ill persons and their families. Patrick R. Hanes of Richmond, an associate with the law firm of Williams, Mullen, Christian & Dobbins, chairs the model project committee.

The VBA/YLD also received a certificate of performance in the Single Project—Service to the Bar category for The Virginia Lawyer, the basic practice handbook for Virginia lawyers which the VBA/YLD has regularly revised and updated since 1966. Sharon Lorah Burr of Richmond, an associate with the law firm of Hirschler, Fleischer, Weinberg, Cox & Allen, chairs The Virginia Lawyer committee.

"We should all be very proud of these national awards that have been bestowed upon us," stated VBA/YLD Chair Harry M. "Pete" Johnson III of Richmond, a partner in the law firm of Hunton & Williams, in a memorandum announcing the awards to VBA/YLD leaders.

"It is a testament to your combined efforts that we are consistently recognized as one of the top young lawyers' groups in the country."

The ABA Awards of Achievement are designed to encourage program development by recognizing young lawyers' organizations that contribute time, effort and skills to creating and maintaining superior projects that serve the public and the bar in their communities. Return to Top

"Stop the Violence" will offer training in Fairfax Oct. 22

The VBA/YLD's award-winning Domestic Violence Project will offer "Stop the Violence: A Training Program for Legal Advocates of Victims of Domestic Violence" on Thursday, October 22, at the Fairfax County Judicial Center Cafeteria, 4110 Chain Bridge Road in Fairfax.

The training is co-sponsored by the VBA/YLD and Legal Services of Northern Virginia (LSNV). Program topics include obtaining a civil protective order, assisting victims in family law matters related to domestic violence, and a moot court demonstrating a civil protective order hearing.

Speakers will be Judge Joanne F. Alper of the Arlington County Circuit Court and Chief Judge David S. Schell of the Fairfax County Juvenile & Domestic Relations Court.

Registration will begin at 4:30 p.m., with the training program from 5 to 8 p.m. and the moot court from 8 to 9 p.m. A light supper will be served.

Volunteers will receive 4.0 CLE credits for representing three domestic violence victims in a civil protective order hearing within the next 12 months.

The program and supper are free, but there is a materials fee of $10 for pre-registrants and $15 for walk-ins.

Lawyers may pre-register by October 10 by contacting John Lopez at LSNV, (703) 534-4343 or fax (703) 532-3990. Lawyers can also volunteer as mentors to help other attorneys obtain civil protective orders for domestic violence victims by calling LSNV.

Erica S. Beardsley of Watt, Tieder, Hoffar & Fitzgerald in McLean and Katherine Harman-Stokes of Hogan & Hartson in Washington, D.C., co-chair the Domestic Violence Project, which received a second-place award for Service to the Public in the 1997 ABA Awards of Achievement Competition. Return to Top

September 1998 Volume I, Number 1

September 1998
Volume I, Number 1