Source: https://cbaclelegalconnection.com/tag/corporate-law/
Timestamp: 2019-04-20 23:04:12+00:00

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The Colorado Court of Appeals issued its opinion in Agilent Technologies, Inc. v. Colorado Department of Revenue on Thursday, November 2, 2017.
Holding Company—Property—Corporate Income Tax Returns—Combined Returns.
Agilent Technologies, Inc. (Agilent) is incorporated in Delaware, but during the years at issue (tax years 2000 to 2007), it maintained research and development and manufacturing sites in Colorado. Agilent timely filed corporate income tax returns for these years. Agilent Technologies World Trade, Inc. (WT) is a subsidiary of Agilent and is incorporated in Delaware. It was formed as a holding company to own foreign entities operating solely outside the United States. As a holding company, WT does not own or rent property, has no payroll, and does not advertise or sell products or services of its own.
For federal tax purposes, WT and the foreign entities elected to be taxed as a single corporation. Agilent did not include WT in its corporate tax returns for the years at issue. The Department of Revenue (Department) issued notices of corporate income tax deficiency requiring that Agilent include WT in its Colorado combined returns for the years at issue and assessed tax, interest, and penalties. Agilent contested the Department’s adjustments, and the director upheld the notices. Agilent sought review in the district court. The district court concluded that the Department was prohibited from requiring Agilent to include WT in its Colorado combined corporate income tax returns and entered summary judgment for Agilent.
On appeal, the Department contended that the district court erred when it held that WT was not an includible C corporation under C.R.S. § 39-22- 303(12)(c). Conversely, Agilent argued that C.R.S. § 39-22-303(8) required exclusion of WT from its combined return. C.R.S. § 39-22-303(12)(c) requires inclusion of a corporation in a combined report if “more than twenty percent of the C corporation’s property and payroll” is assigned to locations inside the United States. Because WT had no property factors, although it wasn’t prohibited from including WT, Agilent was not required to include WT in its Colorado combined tax return.
The Department also contended that the district court erred when it ruled that, as a matter of law, C.R.S. § 39-22-303(6) could not be applied as an alternative basis for including WT in Agilent’s tax return. It also contended that the economic substance doctrine should be applied to permit taxation of WT even in the absence of specific statutory authorization. C.R.S. § 39-22-303(6) authorizes the Department to allocate income and deductions among corporations that are owned or controlled by the same interests on a fair and impartial basis to clearly reflect income and avoid abuse. However, C.R.S. § 39-22-303(6) cannot be applied to allocate income among affiliated corporations that were not otherwise includible under C.R.S. § 39-22-303(8) to (12). Accordingly, the district court did not err in concluding that C.R.S. § 39-22-303(6) did not provide a basis for including WT in Agilent’s tax return. Further, it was not alleged that WT lacks a business purpose apart from reducing tax liability. Therefore, the economic substance doctrine does not provide an independent basis in this case for including WT in Agilent’s combined return.
The Colorado Supreme Court issued its opinion in Clean Energy Collective, LLC v. Borrego Solar Systems, Inc. on Monday, April 17, 2017.
Constitutional Law—Personal Jurisdiction—General Jurisdiction—Corporations and Business Organizations.
The Colorado Supreme Court issued a rule to show cause to review the trial court’s conclusion that defendant Borrego Solar Systems, Inc. is subject to general personal jurisdiction in Colorado. Because the trial court did not assess whether Borrego was essentially at home in Colorado, the court concluded it did not fully apply the test announced in Magill v. Ford Motor Co., 2016 CO 57, 379 P.3d 1033, and therefore erred in exercising general personal jurisdiction over Borrego. Applying the complete test, the court further concluded that Borrego is not subject to general jurisdiction in this state. The rule to show cause was made absolute and the case was remanded for further proceedings.
By Sharon A. McLaughlin, Esq.
The majority of attorneys begin their legal careers in law firms (versus in-house corporate legal departments – i.e., “in-house”) for a variety of reasons–- e.g., there are fewer in-house opportunities for new attorneys, law school graduates often want to get “big firm” experience and training before going in-house, and the compensation can often be higher in big firms. Nonetheless, in my experience as an attorney recruiter, many attorneys in law firms either know starting out or within their first 5 years of practice that they want to eventually transition in-house, and they usually cite one of the following 10 reasons.
With in-house legal departments, companies pay their attorneys’ annual salaries/bonuses/benefits and do not have billable hour requirements or quotas that their attorneys must meet to justify their cost. Conversely, law firms generally have a minimum billable hour requirement and quota that their attorneys must meet to justify their high salaries and to qualify for bonuses and salary increases. The billable-hour system is the way most lawyers in law firms charge their clients, and it’s a key measure of associate and partner productivity. This system can create a culture in which everyone is pushed hard and works long hours, eventually resulting in frustration, fatigue and exhaustion. Many attorneys despise this system, and it’s one of the most common complaints that recruiters hear from law firm attorneys. Consequently, it’s one of the top reasons attorneys in law firms want to go in-house.
Many law firm attorneys have the belief that they will have greater work-life balance going in-house, and this is often true. However, that’s not always the case. In their goal to become a profit center, some in-house legal departments have long, exhausting hours with a lower level of compensation. However, this is generally not the norm. It is incumbent on attorneys to vet this issue when interviewing with any prospective company to ensure that work-life balance exists (with appropriate questioning at the appropriate time, of course). Many in-house interviewers will volunteer information about their organization’s work-life balance since they know this is generally something incoming attorneys want to know and a big selling point when it exists. In addition, attorneys are often, by nature, intuitive and can sense when the in-house attorneys with whom they’re interviewing are happy and content in their roles versus overworked, exhausted and miserable. The latter is generally a tell-tale sign that work-life balance does not exist.
Another common complaint among law firm attorneys is the fact that they are essentially on call at all times. They must be available to deal with client emergencies or deadlines that arise at unpredictable and inopportune times – e.g., 4:00 p.m. on a Friday afternoon or over the weekend. As a legal recruiter, I have worked with and placed many in-house attorneys who report that they keep regular hours (e.g., 8:00 am – 5:00 p.m.), do not work weekends, spend quality time with their families, plan vacations in advance and, most importantly, do not fear being penalized for taking vacation with mountains of work upon their return.
4. Working closely with the business team and interfacing with upper level management and executives.
Another appealing quality that attorneys have identified about going in-house is the opportunity to work closely with an organization’s business team and regularly interface with upper level management and executives. An in-house attorney’s clients are the internal business units and the managers and executives who lead those units at the organization at which they work. As a result, these are often the people with whom the attorneys are regularly working, communicating and assisting on a day to day basis. For law firm attorneys, this level of interaction and exposure can be limited if not non-existent.
In a law firm, an attorney’s career track is generally one dimensional – you begin your career as an associate and then you may or may not make partner. If you do not make partner, you either remain an associate for many years until it becomes too embarrassing to stay; or, if it exists at your firm, you may move into a non-partner role with a special title – e.g., Counsel, Special Counsel, Of Counsel, etc.
At a company, attorneys often have various long term career opportunities available to them. Depending on the organization and its size, you may have the opportunity to move between practice disciplines in the legal group (e.g., litigation to commercial, commercial to regulatory, etc.), be promoted to managerial positions within the legal group, move to the business side in non-legal management or executive positions, etc. The in-house long term career opportunities are broader and may be more easily achieved than law firm partnership.
Because law firms value attorneys that can develop and bring in new business to the firm with some level of regularity, this is generally a prerequisite to becoming a partner and remaining a partner. However, this can be a daunting task for many attorneys because business development is generally sales-oriented, and it is not a skill that law schools or law firms teach. And, not everyone is a natural at business development, particularly those attorneys who are more “cerebral” in the way that they approach things.
Attorneys at law firms often are called to assist their corporate clients part-way through a deal or transaction when, for example, an issue arises; or, they may only be asked to handle a specific portion of a deal. Conversely, in-house attorneys are generally not only part of deals from start to finish, but they frequently participate in the pre-planning and business strategy. They also have the opportunity to see how their work and legal counsel impacts the company long-term.
Attorneys in law firms generally have various individual and/or corporate clients with whom they work at any given time. For in-house attorneys, the company (or business unit(s) within the company) is the client. Only working with a single client allows you to get to know that client more intimately, better understand the client’s business strategies and perhaps assist the client in shaping future business strategies and goals. The in-house attorney works with internal legal and business teams, all having a common goal to assist their single client. This is contrasted with doing a little here and a little there for multiple clients and lacking the same level of cohesiveness.
While many attorneys are under the impression that they may get less sophisticated work by leaving a big law firm and going in-house, this is simply not the case with many companies. As a cost-cutting measure, more and more companies are keeping their legal work in-house versus outsourcing it to outside counsel. So, where you have a large, global company that keeps much of their legal work in-house and engages in complex and sophisticated transactions or litigation valued at billions of dollars, the end result is that their in-house attorneys have the opportunity to work on exciting, high-profile and sophisticated legal matters to which they may not otherwise have access. This is even more true at many big law firms where some associates get little hands-on experience or interaction with the clients.
Large companies with global operations require legal counsel in the countries in which they are conducting business. This is often accomplished with attorneys native to the country in which the company has operations, but many companies are also sending their U.S. attorneys on international expatriate assignments or temporary rotations to work in conjunction with their foreign counterparts. This is a very appealing opportunity for some attorneys and can be a primary motivation to work for global companies.
Sharon A. McLaughlin, Esq. is a Regional Search Director with Special Counsel in Houston, Texas. As a Regional Search Director for Special Counsel, she trains and advises internal Attorney Search Directors on the permanent placement of attorneys in in-house corporate legal departments. Her role focuses on training, strategizing, coaching, developing and implementing solutions for Special Counsel’s Attorney Search Directors nationally to provide the company’s clients the best attorney search power on the market. Ms. McLaughlin has more than nine years of legal recruiting experience placing associate and partner level attorneys with law firms and in-house corporate legal departments throughout the country. Prior to transitioning into legal recruiting, Ms. McLaughlin was an attorney in private practice and specialized in business and employment-based immigration law in Texas and California. Ms. McLaughlin is admitted to the State Bar of Texas as well as the State Bar of California. She received her B.A. from Stephen F. Austin State University in Nacogdoches, Texas in 1992, and her J.D. from Southwestern University School of Law in Los Angeles, California in 1996. Special Counsel operates in 42 markets across the United States. Through its affiliation with its parent company, Adecco Group North America, the company has access to a vast network of additional locations throughout the U.S. and in over 60 other countries, enabling the company to provide permanent placement and legal staffing services and solutions nationally or internationally. Special Counsel also has a blog, where this post originally appeared on February 23, 2014.

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