Monthly Archives: January 2013

Short Term Coverage for Business Income Loss

By Dennis Smith, Esq.

In the wake of hurricane Sandy, many professional service businesses were totally shut down for two or three days, losing substantial amounts of income.  A typical business owner’s policy will “pay for the actual loss of business income [the insured] sustain[s] due to the necessary suspension of your ‘operations’ during the ‘period of restoration’.”  “Operations” is generally defined to mean your business activities occurring at your place of business.  The majority of courts have interpreted the undefined phrase “necessary suspension” to mean a total cessation of business operations.  Put differently, in order to trigger coverage for business income loss, the professionals’ business, at least initially, has to be completely shut down such that no professionals are able to work at the office.   The more troubling definition, as it relates to the recovery of short term business income loss, is the definition of “period of restoration.”  In many policies, “period of restoration” is defined to mean the period of time that begins “seventy-two hours after the time of direct physical loss or damage for business income coverage. . .”  In the world of the professional service business, a seventy-two hour waiting period before the policy allows for the recovery of business income could be quite damaging and may result in hundreds of thousands of dollars of unreimbursed losses. 

The bottom line is that professional services companies should review their business owners’ policies carefully to determine whether a short term business income loss would be covered.  Even in the worst scenarios, businesses typically experience one to three days of losses before being up and running at full capacity.  Under such circumstances, depending upon your policy provision, coverage for the business income loss may not be recoverable.

Lawyer/Client Confidentiality?

By Louis Pashman, Esq.

You may think it’s a pretty simple thing if you come to your lawyer and tell him that you and your wife want wills.

It’s not.

There are several rules our Supreme Court has established, called Rules of Professional Conduct, that circumscribe how we must do that.

You probably know about lawyer/client confidentiality.  Anything we learn from you relating a legal matter we are handling is confidential and we cannot disclose it.  How then are we to deal with that confidentiality if we are representing both you and your spouse and receiving information from both of you?  We must ask both of you to waive that confidentiality.  The same is true in a parent/child or sibling situation.

It can get more complex if we are representing your business and, individually, multiple owners of the business.  We may know different things from each of the owners about the business.  One owner may tell us he does not want his partner to know something we are told.

Let me give you an example of each.  You and your spouse have two children.  You have two children from a former relationship.  You intend to treat the four children equally.  Your spouse “confides” in me that she thinks your former spouse has made your life with the other children unnecessarily difficult and, consequently,  does not think your two “other” children should be treated the same as the two children you have together.  Those feelings cannot be told to me confidentially because the two of you will have waived confidentiality.

In the business setting, assume I represent the business and I have been asked to do wills for you and your spouse as well as your business partner and spouse.  In my meeting with your partner and his spouse, they “confide” in me that they do not want you to be able to bring any of your children into the business because they do not trust them.  Given the maze of professional relationships, your partner cannot assume confidentiality.

The lesson is—don’t be surprised or offended if we talk to you about these confidentiality issues.

Digital Estate Planning – Who’s Got the Password?

By Joseph L. Goldman, Esq.

As on-line activity continues to grow, so does the importance of digital estate planning.

Digital assets are on-line accounts and information stored electronically.  These include social networking sites, on-line banking or brokerage accounts, on-line consumer transaction sites, video sites, photo storage sites, blogs and more.  Although most people realize how important it is to protect user names and passwords to avoid identity theft during their lifetime, they may not realize that the same protections could result in heirs and fiduciaries being denied access in the event of the death or incapacity of the account holder.

Some on-line sites have started addressing these issues but their policies vary considerably.  Only a few states have enacted legislation covering digital estate planning.  Neither New Jersey nor New York is one of them.

In planning your estate, you should consider the following:

  • Take inventory of your digital assets;
  • Make a list of all your devices and accounts and their user names, passwords, PINs, etc.;
  • Consider giving authority to your agent named in your Power of Attorney to access this information;
  • Give authority to the Executor of your Will or the successor Trustee of your Revocable Trust who will act as Trustee after your death to access this information;
  • Do not put user names and passwords in your Will or Revocable Trust.

Don’t leave digital estate planning to chance.  Instead, make it a part of your regular estate plan.

Are We Ready for Virtual Malls?

By Scott Lippert, Esq.

I recently read an article suggesting that new retail brands will be launched on-line, rather than in new stores.  This may well be the case, given the cost savings in creating a virtual store, rather than investing in multiple bricks and mortar locations.  The author predicted dire consequences for shopping malls.  I’m not ready to write them off just yet.  I am reminded of the prognostications of doom and gloom for the office sector that we heard some twenty years ago:  there would be no need to rent costly office space;  people would work from home and meet only when necessary via video-conferencing.  While some of that has occurred, it certainly hasn’t had a significant effect on the office market.

My own unscientific, purely anecdotal experience is that people like shopping malls too much to abandon them.  I may have a skewed view of this, having grown up in Paramus, the Mecca of shopping malls.  Paramus has no downtown.  If you want to go out and see your neighbors (in a climate controlled environment, no less), you go to the mall.  You may have no intention at all of buying anything.  On the other hand, once you’re there, you just might pick up a few things.

I see no impact of this purported trend at all on food and entertainment uses.  Clothing and gadgets might be another story, especially if your are able to try on or try out merchandise at a small sample store and then order the goods from a remote warehouse, which apparently is a very important feature of this new model.   But, I think people will still go to the mall just to go, and while there, may still want to purchase goods after going to a restaurant or seeing a movie.  It’s way too soon to anticipate the collapse of the retail real estate sector.  Or is it? After all, I read the article that I’m referring to on line and Newsweek just stopped publishing a print edition.