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Navigating the Medical Malpractice Minefield – Strategies for Success

Introduction

For this featured interview, based on his experience of more than 3000 cases of medical malpractice, we asked Rodney “What have been the most common difficulties experienced by the legal profession when it comes to running cases of medical negligence/malpractice and how can these be overcome?”

Rodney identified ten themes he has noted over the years, which can catch out even the most experienced lawyers and he went on to discuss each in turn.

Screening

As defence organisations point out, only one in five complaints about possible medical negligence have a likelihood of success and this has been borne out in his own practical experience. It is, therefore, necessary to triage or screen cases at the outset, to make sure that they at least have the potential for being able to display the essential triad of duty of care, breach of that duty, and consequential, or but for, damage. Some cases may appear obvious on face value but as most lawyers have limited medical knowledge, it is important to obtain a preliminary screening report by a medical expert to identify exactly who had the duty of care, what standard should be applied, and whether or not any damage is likely to have occurred specifically because of any suggested breach. This initial opinion can usually be based on a detailed statement from the client but may require the perusal of specific notes and records.

In many cases, the client’s concerns are in fact more in the nature of a complaint about behavioural issues, including the attitude of staff, poor communication skills, or delays in managing their case. These are not within the legal definition of medical negligence or malpractice and are more appropriately handled through the normal complaints procedure for the practice or institution involved, rarely proceeding to litigation. Such complaints usually produce a written response within a matter of months.

 On occasions, a hospital or other source may have instigated Serious Incident Review which may identify areas where medical care has been deemed sub-standard and could be subject to a legal challenge. However, if lawyers become involved before such reviews are carried out, it is likely the report would not be released to the client as the matter would be deemed sub-judice.

A secondary review may also be appropriate once the medical evidence is complete. This considers all available evidence and allows the medical expert to work with counsel/ trial lawyers to consider the implications of potential strengths and weaknesses in the case before court proceedings.

Screening helps to contain costs by providing an early general overview of a case, for a fraction of the fees which would be required for a full liability and causation report plus a condition and prognosis report. Too often, Rodney says, he has noted lawyers skipping this vital preliminary phase and proceeding to obtain full reports which require considerable time, effort and for which costs which may not be recoverable.

Finally, he points out that the word ‘SCREENING’ is an excellent acronym for the other nine areas where difficulties can and do arise.

Statute

Almost all jurisdictions have a statute that limits the time allowed for the initiation of a case, usually to between one and five years. This is based on the date the cause of action accrued, modified by circumstances such as the time when the client is judged to have had reasonable knowledge of what has happened, related to age, for instance allowing young persons to bring cases from childhood after their age of emancipation and sometimes for those with mental health issues. Allowing the use of such a statute in defence of a claim is normally within the discretionary power of the court. Therefore, it is important to make sure there is no time bar or, in the alternative, there is a reasonable chance a court will allow proceedings to continue.

The presence of such a statute also serves as a warning to lawyers they should avoid any unnecessary delay in moving forward with their investigations or they may unintentionally run out of time and find themselves on the receiving end of a claim in professional negligence. This is another benefit from swift, initial screening which allows a determination to be made whether or not matters are likely to progress, issuing a holding writ if necessary. If not, the client can be informed, allowing them the latitude to seek other medical or legal advice should they wish before they run out of time.

Counsel

Counsel/Trial Lawyers should be consulted early after the initial screening. As well as giving legal direction for the proceedings, receipt of the screening report allows a more informed discussion of the case, particularly in the raising of particular questions they wish to be included in the briefing of experts. Counsel should maintain an ongoing overview as the various reports are received, to ensure the case stays on track and giving advice on handling any new issues as they arise.

Reports

The initial screening report should give advice on which specialties should be involved and in what order reports should be obtained. Under normal circumstances, the initial report is likely to deal with liability and causation. However, occasionally it is more appropriate to have a report detailing the likely consequential damages which may have arisen as, if these cannot be determined, a report on liability and causation is likely to be superfluous. A subsequence is not the same as consequence and just because a client has a particular complaint does not mean that it is in any way related to a breach of the duty of care. As an example, some weakness in a wrist following a well-healed fracture of the scaphoid bone is more a consequence of the injury even if it could be established the fracture was not fully stabilised for a week after the incident. Many cases fail on causation and, unless this is clear, there is no point in obtaining expert reports to deal with the nature of the injury, the present condition, or likely prognosis.

A duty of care is usually easy to determine. However, sometimes it is not so obvious and a case in medical negligence may be considered against a particular Consultant or Attending when a closer examination would reveal it is actually in the remit of other professionals from different medical specialities or, indeed, para-medical specialities such as nursing or physiotherapy. It is important therefore reports identify and focus on the key issues in the case and clearly elucidates if more than one speciality group has potentially breached their duty of care, such as a General Practitioner, Accident, and Emergency doctor, or other staff, all of whom may need to be co-joined.

Expert

Eminence is not the same as expertise and just because someone is well-known in their profession or has appeared in other cases,  does not mean they are appropriate for the subject under discussion. Further, they may not have expertise in writing medical-legal reports, having meetings to negotiate with other experts, or giving evidence in court.

 Experts must be chosen wisely, clearly understand their primary duty is to the court no matter who instructs them, and be a recognised expert in the subject matter of the case. They must be able to reason logically, both orally and on paper without using hyperbole, in a way which laypersons in general, and the court in particular, can understand and interpret. They need to be coldly objective and demonstrate no conflict of interest or bias on behalf of the plaintiff, the defence, or a specific line of medical therapy. It is quite reasonable for an expert to advocate a particular view as to how they feel a  case should be managed, however, they must also be prepared to accept the fact that there is liable to be a reasonably held range of opinion which they should also state and, if necessary, indicate by logical argument why their opinion should be given preference.

 Finally, experts have to accept that the standard is reasonableness, not perfection, and be prepared to alter their stated opinion if new evidence, which they have not previously considered, is presented during proceedings.

Expectations of the client

In some case, especially when the consequences have been devastating for the plaintiff, even the most experienced lawyers may become emotionally involved. The rule is empathy, not sympathy and to remain objective throughout so clear, unencumbered, professional advice may be given to the client. At an early stage, it is necessary to have an in-depth conversation with the client in order to ascertain exactly what outcome they expect from the case. Some want to punish, others wish for monetary compensation but on many occasions the client is primarily looking for a detailed, understandable explanation as to what happened. Anger is a common emotion that is best handled through empathy, understanding, and certainty they are being listened to, rather than any logical argument. Managing a client’s expectations is therefore one of the most important functions of a lawyer and vital if the client is to feel content with the outcome, however long the process takes.

Notes and records

Guided by the initial screening and comments of Counsel, all appropriate notes and records need to be expeditiously sourced, ordered, and paginated for ease of reference especially as, in some cases, many thousands of pages may be involved.  As well as contemporaneous medical notes, other records may be valuable, for instance, letters to the client from an institution following a complaint or other internal documents such as a report resulting from a serious incident review. External documents may be available following a post-mortem or inquest and the client themselves may have notes in a diary or even photographs on their phone.

Medical experts should be suspicious if they find notes have been redacted, especially if this has been carried out by the legal team either for the defence or the plaintiff. Unless the redaction relates to the names of third parties, it is not best practice to edit the notes in any way before forwarding them to an expert.

Insurance

Medical-legal cases can be very expensive and costs need to be controlled. There is no such this as a water-tight case and loss can result in a heavy financial burden. Any law firm should be clear about how they are going to be compensated in the event a case does not proceed. Unfortunately, not doing so has led to a number of cases being pursued long after they should have been discontinued, taking proceedings up to the door of the court in order to try and get a settlement of some sort to at least cover expenses. This sort of behaviour is frowned upon by the court system and is bordering on unethical.

Some form of insurance is therefore valuable and in some cases, the client can self-insure or have a legal policy in place to at least cover initial advices. It may also be possible to obtain After the Event Insurance if it is clear from the initial reports and the opinion of Counsel the case has a high likelihood of success. Using a blunderbuss approach, ordering multiple expert reports at an early stage, and even obtaining second reports when one expert report does not appear to back the client’s case is a recipe for financial disaster. Once again, a process or system for conducting medico-legal cases is vital to success, remembering that a  “system” is there to Save, Yourself, Stress, Time, Energy, and Money.

No medical knowledge/experience

Rodney points out his credo is “to help clients, their legal advisors and the courts to understand more clearly the nature of medical evidence in individual cases so they can make better decisions.” This should be a fundamental belief for all of those preparing expert reports. Courts make determinations, experts assist by rendering the medical evidence understandable for a lay audience and by giving advice as to acceptable standards of care.

The lawyers most likely to get into trouble with the process are those who do not undertake these proceedings on a regular basis. There are many nuances from both a medical and legal point of view that can make cases that look similar produce markedly different outcomes. One of those is an understanding that perfection is not a reasonable standard and secondly that no medical treatment can be guaranteed success. Known complications arise which is the purpose of the doctrine of informed consent. However, it is also true, that just because a patient has been told about the potential risks associated with a particular therapy or procedure, does not mean that when such difficulties arise it could not be considered due to a negligent act. It very much depends on context and circumstances in the individual case and again the expert should be in the best position to determine whether a poor outcome would reasonably be regarded as due to a known complication in all the circumstances or represent a negligent breach of the duty of care.

 In circumstances where experts differ in the interpretation of an objective finding, it is for the courts to assess all the evidence before them and make a determination. Sometimes this is difficult for lawyers to understand and particularly if they lack medical knowledge and experience of such cases. Especially at an early stage in their career, it is good practice to have coaches and mentors both within and outside their firm or even the profession. By reflecting on more challenging cases, they can continue to get the learning from them which in turn grows their expertise in what is a niche area and helps to professionalise their practice.

Guiding/directing an expert

It is an expert’s duty to remain independent and objective, no matter who engages them. It is certainly reasonable to ask questions as to why they have come to a particular conclusion or to ask for an evaluation of new evidence, but it is not acceptable to ask an expert to ‘tweak’ a report in order to place a client in a better light.  While some lawyers attempt to justify this by stating they are only trying to do their best for the client, they do not serve either the justice system or their profession well.  An expert who agrees to change any element of a report under such circumstances is compromised, not just for that case but for any other, and is open to being severely criticised in court. It is not unknown for experts found to have breached this code of conduct to have their professional registration to practice removed by their governing body. Such censure can have considerable implications for their personal, professional, and financial well-being.

Conclusion

In reflecting on the most frequent challenges he has come across in his three decades of dealing with personal injury and medical malpractice cases, Rodney concludes that representing clients in cases of potential medical negligence requires legal representatives to have an understanding of the many complexities involved and to be aware of the pitfalls. Securing early and proficient advice from an appropriate medical expert can mitigate the financial and reputational risks.

It is clear why Rodney is regarded as one of the foremost authorities on the medical aspects of medico-legal practice, and why his keynote speaking, coaching, and tutoring is so highly regarded by lawyers and doctors involved in such cases.

COURT DECISIONS PERTINENT TO SUICIDE RISK MANAGEMENT IN JAILS AND PRISONS

I am a forensic psychiatrist with experience and expertise in correctional health care administration and clinical practice. My area of expertise is suicide and wrongful death in jails and prisons. By researching and analyzing risk factors of suicide and developing prevention strategies, I have established considerable expertise in the field. As a consultant, I provide expert opinions and, if reasonable medical opinion, testimony on disputes such as standard of care, deliberate indifference, and civil rights violations. I have consulted on at least 70 cases under litigation in the United States and testified in at least 20 cases.

Introduction

During the last forty years, courts have attempted to address issues about legal liability related to suicide. The decisions cover various practices in jails and prisons, including diagnosis, monitoring, treatment, communication, policies, staffing, and training.

1          Inadequacy of mental health evaluation

In Comstock v. Mc Crary (1), psychologist Mc Crary did not perform an adequate psychological evaluation and risk assessment of an inmate who committed suicide. Had he done a detailed psychological evaluation, he would have known that several enemies who called him a snitch bothered the decedent.

2          Failure to identify obvious and substantial risk factors

In Williams v. Mehra (2), the significant issue involved a failure to identify an inmate’s substantial risk factors, including depression, psychiatric hospitalization, suicide ideation, and a previous suicide attempt with antidepressant tablets. The psychiatrists neglected to review the record that contained his diagnosis, suicidality, and specific treatment measure to address his suicidality, i.e., prescribing liquid medication.  Also, procedurally, the nurse failed to manage his medication on a watch take basis.

3                Psychotropic medication practice 

In Greason V. Kemp, (3), the Court held abrupt discontinuation of psychotropic medications of an inmate with a recent history of suicide attempts constituted deliberate indifference.  Greason killed himself in a Georgia prison. A doctor abruptly discontinued his antidepressant medication without reviewing his clinical file, conducting a mental status examination, or ordering close monitoring. The Court identified the department’s failure to train the staff, inadequate mental health care delivery, and delayed or denied treatment.

In Steele v. Shah, (4), a psychiatrist discontinued Steele’s psychiatric medications. Steele had a long history of depression, drug addiction, and attempted suicide twice before starting his long sentence.  The district court granted the psychiatrist’s motion for a summary judgment, indicating that his decision was nothing more than a disputed medical opinion. On appeal, the 11th  Circuit held that “psychiatric needs can constitute serious medical needs and that the quality of psychiatric care one receives can be so substantial a deviation from the accepted standards as to evidence deliberate indifference to serious psychiatric needs.”

4          Officers’ failure to communicate an arrestee’s suicide statements

In Gordon V. Kidd (5), the Court established that failure by an arresting officer to communicate to booking officers constitutes deliberate indifference.

In Conn v. City of Reno, (6) the Court of appeals reversed a district court’s grant of summary judgment in favor of two officers because there was “sufficient evidence to create a genuine fact regarding defendants’ “subjective awareness” of a serious medical need. 

In Freedman v. City of Allentown, (7), in contrast to Gordon v. Kidd and Conn v. City of Reno, the Court decided that a probation officer’s knowledge of an arrestee’s previous suicide attempt did not reach the threshold of deliberate indifference when he did not inform the arresting officer. Therefore, his actions were not intentional, malicious, or reckless, and “at most the averments against the officer amount to a lack of due care and are not actionable as a 1983 claim.” 

5          Suicidal ideation, suicide watch, and logging 

Mental health professionals often release inmates who deny suicidal ideation from suicide watch.  Some inmates intentionally conceal their true intentions after they make their decision to exit the world. 

In Woodard v. Myres, (8), the claims centered on the failure to institute standard suicide watch, lack of suicide watch monitoring and logging, premature discontinuation of suicide watch, and noncompliance with the facility’s policies and practice.

In Simmons v. Navajo County, (9) the Court opined that placing a pretrial detainee on suicide watch, even the highest level, standing alone “does not demonstrate that an official was subjectively aware of a substantial risk of imminent suicide.”  As per Simmons ‘ Court, determinants of imminent suicide risk include “observed suicidal actions, heard statements of suicidal, or witnessed evidence of suicidal intent,” indicating a strong likelihood of suicide.

In Hott v. Minnesota (10), falsification of suicide watch by an officer resulted in an unfavorable court decision for the officer.  

In Minix v. Canarecci (11), the district court opined that there was enough evidence to allow a jury to find a direct causal link between the Jail’s practice of classifying and releasing detainees from suicide watch and suicide.

In Broughton v. Premier Health Care Servs., (12), the issue was intentional concealment of suicidal ideation, making it difficult to stake a successful claim against correctional officials. The Court opined, “While Broughton’s disclaimer of suicidal ideation does not automatically insulate the defendants from liability, it does undermine the claim that they willfully ignored his past medical history and current symptomology.”

Strickler V. Mc Cord (13) illustrates the difficulty for jail officials charged with the care of inmates who are determined to commit suicide.  The Court found, “He lied on the intake form; he lied when questioned about suicidal thoughts at the Bowen Center, and he deceived the guards about his medication and the razor blades.” 

6          Recent Suicide attempt and failure to get prior medical records.

A recent suicide attempt is the most significant predictor of suicide. The courts have not opined on the recency of suicide attempt relevant to a liability claim. Clinically, a near-lethal suicide attempt within six months to a year has the most predictive value.  Failure to question an inmate about history of past suicide attempts can lead to potential liability. While some inmates intentionally withhold the information, the prior records serve as the most reliable vehicle to get such information. To prevail in a lawsuit, a plaintiff must establish the decedent previously made near-lethal suicide attempt/s/ 

In Terry v. Rice (14), County officials went out of their way not to collect information from the prison where the decedent was transferred, presumably for “safekeeping.”  In denying the summary judgment, the Court opined, “Going out of your way to avoid acquiring unwelcome knowledge is a species of intent. Being an ostrich involves a level of knowledge sufficient for a conviction of crimes requiring specific intent.”

In Mc Kee v. Turner, (!5) the treating psychiatrist was sued for failing to get prior jail records that indicated that the decedent had attempted suicide by hanging six weeks before he arrived at the prison. The dissenting judge opined, “McKee is distinguishable in one specific aspect, i.e., failure to obtain medical records.”  

7          Diagnosis and Treatment Issues 

Prisoners have claimed several diagnostic and treatment issues to support § 1983 claims. 

a)        Diagnosis of Mental illness

The diagnosis of a mental disorder or failure to diagnose per se does not support a claim of liability. While inmates diagnosed with depression, anxiety, and bipolar disorder have a high degree of suicidal propensity, unless indicators of suicide vulnerability accompany the diagnosis, the claim is not sustainable.   

 The Courts have held that displays of erratic behavior or signs of mental illness, without specific indicia of suicidal tendency, “do not rise to the level of a serious risk of suicide” and do not provide “the level of notice” required to trigger the deliberate indifference standard (16, 17)   

b)        Incorrect diagnosis

In Steele v. Choi (18), the Court concluded incorrect diagnosis or improper treatment does not support an Eighth Amendment claim. In affirming a summary judgment in favor of Dr. Choi, the 7th Circuit opined, “Estelle requires us to distinguish between `deliberate indifference to serious medical needs on the one hand, and `negligence’ in diagnosing or treating a medical condition.”

c)         Intentional refusal to provide medical care.

Courts have acknowledged that intentionally refusing to respond to an inmate’s complaints, including repeated requests to see a mental health professional constituting deliberate indifference. Thus, to prevail, the plaintiff must establish the providers intentionally refused to provide medical care or denied access to a physician. Further, such refusal must cause the inmate undue suffering or threat of injury.

d)        Delay in treatment

Courts have established that repeated delays in treatment of medical or dental conditions support a claim of deliberate medical indifference (19, 20). However, isolated delays or delays due to the natural course of events in a facility and administrative procedures, not an uncommon occurrence in a correctional setting, may not be actionable.  

Delay of treatment claim depends on the length of delay, the nature of the medical need, and the reason for the delay (16)   In Harris v Coweta County, (21), the Court held that such “a delay created a genuine issue of material fact about deliberate indifference.”

Delay in responding to repeated requests to see a mental health professional by a potentially suicidal inmate may result in a liability claim.   In O’Quinn v. Lashbrook (22), the Court decided a claim of delayed treatment was meritorious.

e)        Improper medication or modality of treatment

Improper medication treatment and medical supervision by the psychiatrist can support a claim of deliberate indifference if it can be proved such improper medication treatment cause suicidal ideation and serious injury resulting in death. Prisoners are not entitled to a specific prescription or modality of treatment if the choice of medication prescribed by the physician or the modality of treatment addresses his medical need.

f)         Inadequate treatment

In Durmer V. O’Carroll, (23), the Court opined that all inadequate treatment provided to a prisoner could not be construed as deliberately indifferent. Instead, it can simply be “no more than mere negligence.” The Court further opined a failure or delay in providing prescribed treatment if deliberate and motivated by non-medical factors, a constitutional claim may be presented.

In Arenas v. GA Department Corrections, (24), the Court found that a failure to provide adequate treatment to a young inmate with a longstanding history of depression and bipolar disorder constituted deliberate indifference.

       g)  Inadequate monitoring of inmates in administrative segregation

Periodic reviews of inmate’s suitability to continued stay in administrative segregation is a standard procedure.  Courts have recognized “substantial risk of psychological harm and decompensation posed by extended placement in segregation” including anxiety, panic, paranoia, depression, PTSD, psychosis, and disintegration of a basic sense of self-identity (25, 26)

8)         Policy, staffing, and training 

In many deliberate indifference lawsuits, counties face Monell claims related to suicide prevention policy, mental health and correctional staffing, and training.

  1.    Absence of suicide prevention policy   

In White v. Watson (27), the Court opined that the absence of suicide prevention policy and lack of training and supervision were “the moving force behind the failure to protect the inmate from the known risk of suicide in the Jail.  

Other Court decisions show that for a successful claim based on the absence of suicide prevention policy, evidence must be presented to show a pattern of suicide or suicide attempts.

         2)        Policy or custom causing or contributing risk of harm.

In Gibson v. County of Washoe, (28) the Ninth Circuit opined that County’s failure to respond to the decedent’s urgent need for medical attention was a direct result of “an affirmative County policy that was deliberately indifferent, under the Farmer standard, to this need.”

In Gates v. Cook (29), the Court noted multiple policies or practices that combine to deprive a prisoner of a “single, identifiable human need,” such as mental health care, can support a finding of Eighth Amendment liability.

          3)        Shortage of staff

In Bragg v. Dunn (30), the Court found persistent and severe mental-health and correctional staff shortages, combined with chronic and significant overcrowding, as the “overarching issues that permeate” the contributing factors of inadequate mental health care and suicide.

            4)        Failure to Train

Failure to train the staff focuses on the U.S. Supreme Court’s decision in City of Canton v. Harris  (31). A County can be found deliberately indifferent if it fails to train officers to recognize suicide indicators, policy issues, monitoring procedures.   Officers cannot be held liable for deliberate indifference “unless an inmate was so obviously mentally ill that the deputies, who had received no training regarding the diagnosis and treatment of mental illness, must have known that [he] was exhibiting symptoms of mental illness” (28)

Conclusion

The court decisions noted above provide valuable insights and directions to develop appropriate risk management strategies in jails and prisons.

***

Note: This article is abstracted from my book in preparation, titled, “Suicide in Jails and prisons: preventive and legal perspectives.

References

  • Comstock v. Mc Crary, [2001], 273 F.3d 693, 6th Cir
  • Williams v. Mehra [1999], 186F, 3d 686,690,6th Cir
  • Greason v. Kemp, (1990) 891 F.2d 829 (11t h Cir
  • Steele v. Shah, [1996], 87 F 3rd 1166, 11th Cir
  • Gordon v. Kidd, (1992) 971 F.2d 1087, 1095, 4th Cir
  • Conn v. City of Reno, 591 F.3d at 1105, 9th Cir
  • Freedman v. City of Allentown (1988) 853 F.2d 1111, 1117, 3d Cir
  • Woodward v. Myres, (2002) No. 00 C 6010, 99 C 0290, at *1, N.D. Ill.
  • Simmons v. Navajo County, (2010) 609 F.3d 1011, 1018, 9th Ci
  • Hott ex rel. Estate of Hott v. Hennepin County, (2001) 260 F3d 901, 8th Cir   
  • Minix v. Canarecci, (2010) 597 F.3d 824, 833, 7th Cir
  • Broughton v. Premier Health Care Servs Inc, (2016), No. 15-4150, 6th          Cir
  • Strickler v. McCord, (2004) 306 F. Supp. 2d 818, N.D. Ind
  • Terry v. Rice, (2003) CAUSE No. IP00-0600-C K/H, at *1, S.D. Ind
  • McKee v. Turner, (1997) No. 96-3446, 1997 WL 525680, *3, 6th Cir
  • Jackson, 787 F.3d at 1354-56.
  • Cavalieri, 321 F.3d at 621
  • Steele v. Choi, (1996) 82 F.3d 175, 178, 7th Cir
  • Gutierrez v. Peters, (1997) 111 F.3d 1364, 1371, 7th Cir
  • Hunt v. Dental Dept. (1989) ,865 F.2d 198, 200, 9th Cir 
  • Harris v. Coweta County, (1994) 21 F.3d 388, 393-94, 11th
  •  O’Quinn v. Lashbrook,(2019) No. 18-cv-2013-SMY, S.D. Ill
  • Durmer v. O’Carroll, (1993) 991 F.2d 64, 69, 3d Cir
  • Arenas v. Ga. Dep’t of Corr, (2020) No. CV416-320, at *2, S.D. Ga.
  • Palakovic v. Wetzel,(2017) 854 F.3d 209, 225-26, 3d. Cir.
  • Braggs v. Dunn, (2019) 367 F. Supp. 3d 1340, 1344, M.D. Ala
  • White v. Watson, (2016) No. 16-cv-560-JPG-DGW, S.D. Ill.
  • Gibson v. County of Washoe, (2002) 290 F.3d 1175, 1189, 9th Cir
  • Gates v. Cook,(2004) 376 F.3d 323, 333, 5th Cir
  • Braggs v. Dunn, (2017) 257 F. Supp. 3d 1171, M.D. Ala
  • City of Canton v. Harris, (1989) 489 U.S. 378
Tax cut banner

A Review of The Tax Cuts and Jobs Acts of 2017 in the Lull Before the Biden Administration’s Promised Redux

A. Introduction – An Overview of the TCJA of 2017

On December 20, 2017, the U.S House of Representatives and. Senate passed H.R. 1, “[a]n Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (referred to hereinafter as the “Tax Cuts and Jobs Act of 2017” or (“the TCJA”)), enacting the most sweeping tax reform bill in 30 years. Then-President Trump signed the TCJA into law on December 22, 2017.  And as a result, most of the provisions of the TCJA became effective for tax years beginning after December 31, 2017 (January 1, 2018), and ending on December 31, 2025.

However, America now has a new president, Joe Biden, who during his campaign and subsequently after taking office has promised to bring an end to what he characterizes as the sweeping tax cuts in favor of corporations and high net worth individuals at the expense of the working-class Americans that the TCJA has wrought.  And while world events have overtaken Biden’s young administration’s focus on bringing its version of tax reform to the forefront, I believe it might be prudent to use this lull in Congressional and Presidential focus on the Tax Code to reacquaint ourselves with the key provision of the TCJA and how they impact individual and business taxpayers.

B. Changed Tax Rates and Brackets due to the TCJA of 2017

What follows is a chart comparing the tax rates and brackets for pre-TCJA-2018 and post-TCJA-2019 tax years.

Chart of taxation

Under the TCJA, the top tax rate drops from 39.6% to 37%, and it takes effect at $600,000 of taxable income for married couples rather than about $480,000 under the pre-TCJA regime. For single filers, the top rate takes effect at $500,000 rather than $426,700. The lowest rate remains 10%, which takes effect at the first dollar of taxable income. However, taxpayers may have more or less income before the 10% rate applies than they did in the past, due to changes to deductions, exemptions, and other provisions.

Let’s quantify the changes for a “typical” hypothetical taxpayer, Mary Jane:

In 2018 when filing her taxes for 2017, Mary Jane, a single lawyer-taxpayer with a taxable income of $100,000 paid $20,842.75 in taxes:  ($9,525 x 0.10 = $952.50) + ($29,175 x 0.15 = $4,376.25) + ($55,000 x 0.25 = $13,750.00) + ($6,300 x 0.28 = $1,764.00).

However, in 2019 when filing her taxes for 2018, as a result of the reduction of the tax rates and the expansion of the tax brackets, when filing for the 2018 tax year, Mary Jane, still single with a taxable income of $100,000 paid only $18,289.50 in taxes: ($9,525 x 0.10 = $952.50) + ($29,175 x 0.12 = $3,501.00) + ($43,800 x 0.22 = $9,636.00) + ($17,500 x 0.24 = $4,200.00).

C. Key Deduction/Exemption Changes Bought on by the TCJA

This section highlights the key changes the TCJA of made applicable to individuals. Changes affecting businesses, including provisions affecting corporations versus pass-through entities, such as proprietorships, partnerships, S corporations, and their owners, are addressed in Part E., below.

While the TCJA made a number of important changes to the taxation of individuals, many of these provisions, unless extended by Congress, will sunset in tax years beginning after December 31, 2025 (January 1, 2026), at which time the rules under pre-TCJA law will spring back into effect.

1. Elimination of Taxpayer Personal Exemptions/ Increase in the Standard Deductions

For many taxpayers, especially those with several dependent children, the TCJA’s most sweeping change was the increase in the standard deductions and the repeal of all personal exemptions.  The TCJA raised the 2018 standard deduction to $24,000 per married couple and $12,000 for singles, compared with $13,000 and $6,500, respectively, under prior law.

As a result, the number of filers who itemized for 2018 was expected to, and did, drop by more than half—from nearly 47 million to about 19 million out of about 150 million expected tax returns, according to the Tax Policy Center.

As a result of the change, taxpayers can no longer claim a personal exemption deduction for themselves, their spouse or any of their dependents. Each personal exemption in 2017 provided a $4,050 tax deduction. This allowed a family of four to deduct a total of $16,200 in addition to a standard deduction of $13,000, itemized deductions and any adjustments to income. The loss of this personal exemption deduction greatly reduced the tax benefit of the increased standard deduction for taxpayers with large families.

To make up for the loss of this deduction, the child tax credit for qualifying children under the age of 17 was increased by $1,000 and made available to more taxpayers. Additionally, the TCJA created a new $500 credit for all other dependents, though there is no credit for the taxpayer and her spouse.

2. Elimination of Alimony (Paid) Deduction and Alimony Received (Inclusion)

For divorce decrees or separation agreement executed after December 31, 2018, any alimony paid was no longer a deductible expense for the payer. And any alimony received no longer needed to be included in the taxable income of the recipient. It is important to note that this new rule did not affect tax year 2018 returns or anyone who at the time of enactment was then paying or receiving alimony. Taxpayers who divorced before December 31, 2018 continued to be able to deduct and/or are required to report alimony payments as income.

3. Elimination of the Nonmilitary Job-related Moving Expenses Deduction

Under the TCJA, job-related moving expenses paid by an employee lost their deductibility. Only active-duty members of the armed forces who move due to a military order can claim that activity as an adjustment to income. As of the new law, employer-to-employee payments of non-military moving expenses became income that must be included in the employee’s taxable wages, tips, and other compensation reported on a W-2.

4. Limits on Mortgage Interest Deductions for Acquisition Debt and Elimination of the Home Equity Loan Interest Deduction

Under the TCJA taxpayers could continue to claim an itemized deduction for their home mortgage interest on acquisition debt — that is, debt secured by the home and used to buy, build or substantially improve it — up to $750,000 in principal ($375,000 if married and filing separately) on home purchases made after December 15, 2017.

Interest on then-existing acquisition debt of up to $1 million in principal for home purchases made prior to December 16, 2017 was “grandfathered” and remains deductible. The higher $1 million principal limit also applies to acquisition debt incurred before December 16, 2017 that is subsequently refinanced.

Home equity interest – interest on mortgage debt to pay for anything other than to buy, build or substantially improve a residence – became no longer deductible under the TCJA. Additionally, existing home equity debt was not grandfathered.

As a result of the TCJA it has become more important than ever for homeowners who can itemize to keep separate track of acquisition debt and home equity debt going back to the original purchase of their residences.

5. Elimination of the Casualty Loss Deduction

Only a taxpayer who suffers a personal casualty loss from a disaster declared by the president will be able to claim a personal casualty loss as an itemized deduction. Casualty losses are losses sustained by a taxpayer that are not connected with a trade or business or otherwise entered into for profit.  They include property losses arising from fire, storm, shipwreck, or other casualty, or from theft.

6. Elimination of the Employee Business Expenses Deduction

Pursuant to the TCJA, none of the previously allowed miscellaneous expenses that were subject to the 2%-of-AGI exclusion remain deductible on Schedule A. Employee business expenses that had not been reimbursed by the taxpayer’s employer were the most prominent deductible items in this category.

Additionally, the TCJA eliminated employee-taxpayers’ ability to deduct business meals, travel and entertainment from their taxes. The eliminated deductions included using a car for business as well as job-related education, job-seeking costs, a qualified home office, union and professional dues and assessments, work clothes and work supplies.

7. Elimination of Investment Expenses Deductions

Investment expense recapture was also eliminated under the TCJA, making it no longer deductible as a miscellaneous expense on Schedule A. The eliminated expenses include custodial and maintenance fees for investment and retirement accounts, fees for collecting dividends and interest, fees paid to investment advisers, the cost of investment media and services, and safe deposit box rental fees. Investment interest remains deductible as interest on Schedule A, subject to the limitations of IRS form 4952.

8. Tax Preparation Fees Deduction

Expenses paid or incurred by an individual in connection with the determination, collection, or refund of any tax are no longer deductible on Schedule A pursuant to the TCJA, no matter which level of government is presiding over the taxation or even what the tax is levied upon.

9. Elimination of Certain Legal Fees Paid on an Award, Judgment or Settlement Deduction

The TCJA also changed the nature and structure of financial agreements between counsel and our clients.  For example a legal award, judgment or settlement for personal physical injuries or physical sickness is tax exempt. So, the related legal fees are not deductible since that income is not taxable. Also, in the wake of the “#metoo” and “Time’sUp” movements, there is no deduction for sexual harassment or abuse settlements if the settlement includes a non-disclosure agreement.

Legal fees related to an award, judgment or settlement of claims of unlawful discrimination are deducted as an adjustment to income on the 1040 form, reducing adjusted gross income.

However, all other Legal fees related to all other taxable awards, judgments or settlements, which were previously allowable as miscellaneous expenses on Schedule A, are no longer deductible on the 1040. For example, if a taxpayer is awarded a settlement of $100,000 and her attorney receives $30,000 of it, the taxpayer must pay federal income tax on the entire $100,000 even though she only received $70,000.

10. Doubling of the Estate and Generation Skipping Tax Exemption to $11,400,000 ($22,800,000 for married couples)

The TCJA doubled the estate and generation-skipping tax exemption to $11,400,000 ($22,800,000 for married couples).  Additionally, the step-up in basis is retained at death.  As can be seen from the following graph, the enhancement sunsets at December 31, 2025.

Chart of estate tax exemption

Illustration by: Keebler Tax & Wealth Education, Inc.

11. New Flexibility in Education Provisions

Post TCJA, Section 529 Plans allow the distributions of up to $10,000 for “qualified expenses” for elementary school and high school, and starting in 2018, the forgiveness of student loan debt will not be taxable income to the student on account of the student’s death or total disability.

12. New Flexibility for ABLE Accounts

The TCJA also allows for increases in contribution limits in certain circumstances and allows for rollovers from 529 accounts to ABLE accounts.

D. State and Local Tax (“SALT”) Issues

“The U.S. Supreme Court’s ruling in South Dakota v. Wayfair Inc., No. 17-494 (U.S. 6/21/18), coupled with the passage of the TCJA, has had the greatest impact on SALT practice in decades, positioning SALT issues to be a one of the leading consideration in the overall tax landscape in the 2019 tax return preparation season and beyond While the reverberation of tax legislation can sometimes take months or longer to take hold, Wayfair and the TCJA began to make waves across the country in just a matter of weeks. For taxpayers and tax professionals this consequence continues to mean that SALT’s influence is now greater than ever, drawing more attention to the key role indirect taxes play in a taxpayer’s comprehensive tax strategy.” [1]

1. The TCJA’s SALT Deduction Limitations

Under TCJA, the SALT deduction was limited to only $10,000.00 per household as to an individual or married filing jointly taxpayer.  This limitation has proven to be a handicap for many taxpayers, especially those who are homeowners in high home value states such as California and New York; taxpayers who have traditionally been able to take substantial itemized deductions for both the interest paid on their mortgages and the property taxes paid to their county tax collectors.

However, state, local, and foreign property taxes and state and local sales taxes continued to be allowed as a deduction when paid or accrued in carrying on a trade or business, or an activity described in section 212 (relating to expenses for the production of income).

2. The Impact of Wayfair on the taxation of e-commerce taxpayers. 

Wayfair, which held that states can mandate that out-of-state retailers collect sales taxes from in-state customers, even if the retailers have no physical presence in the state.  As such, “Wayfair overturned 26 years of precedent (see Quill Corp. v. North Dakota, 504 U.S. 298 (1992)) by changing the nexus landscape from a physical presence to more of an economic influence considering how companies do business in today’s digital climate. Over the past two decades it had been challenging for states to meet budget requirements, and some would assert that this problem was attributed to out-of-state retailers being able to skirt their sales tax responsibilities thanks to the precedent from Quill, which was decided in a less digital world.

“Once the opinion was handed down in Wayfair, it did not take long for states to act and enforce sales tax requirements on out-of-state sellers selling goods and services into their jurisdictions. Before this landmark decision, just 20 states had some sort of economic nexus standard on the books or in the works. Within eight weeks after it, that number was up to 30 plus. The case has also opened the door for states without a sales tax to reconsider implementing one, as e-commerce becomes the norm.

“On the taxpayer side, misconceptions exist that because remote sellers were not charging sales tax on their goods, those transactions were tax-exempt. In reality, those transactions were supposed to be reported on use tax returns, but very few consumers complied with these obligations. Going forward, individuals will likely have to start paying sales tax on more of their out-of-state purchases, which can be seen as leveling the playing field between e-commerce and brick-and-mortar retailers.”[2]


[1] Brawdy, Why SALT will take center stage next to tax reform in 2019, The Tax Adviser (Dec 1, 2018)

[2] Id.

E. Overview of the TCJA’s Reduction of the Top Corporate Tax Rate from 35% to a Flat 21% Rate and Section 199A, the New 20-percent Deduction for Pass-through Businesses Pursuant to Section 199A of the Internal Revenue Code

1. Corporate and Small Business Tax Rates Reduction

Under the pre-TCJA law, “the highest corporate income tax rate was 35% and the highest rate of tax on qualified dividends received by an individual was 23.8 percent (20% plus the 3.8% tax on net investment income). As a result, under pre-TCJA law, the overall effective rate on corporate income distributed to individual shareholders was 50.47 (35% taxable income plus 15.47% (65% of taxable income times 23.8%)).” [1]

The TCJA eliminated the graduated income tax with a top rate of 35% and replace it with a flat 21% corporate income tax rate beginning in the 2018 tax year.  

Corporate Tax Rate

2017

Tax slabs

2018

21% Flat rate

According to a joint analysis from the Congressional Budget Office (“CBO”) and the Joint Committee on Taxation (“JCT”), the reduction will reduce revenue by $1.65 trillion over a decade. These corporate tax changes are permanent, while many of the major individual provisions, including changes for pass-through businesses, discussed below, will sunset for tax years beginning after December 31, 2025.

“Also, prior to the TCJA, sole proprietorships and owners of pass-through entities were subject to a maximum marginal rate of 43.4%, (39.6% plus 3.8% if the income was not subject to self-employment (“SE”) tax). Beginning on January 1, 2018, and ending on December 31, 2015, the highest individual rate is now 37% resulting in an effective rate of 40.8% when the net investment income tax applies.

“With the corporate income tax rate now a flat 21% and the corporate alternate minimum tax (“AMT”) repealed, a C corporation distributing all of its after tax profits as dividends to individual shareholders in the highest tax bracket results in a maximum effective rate of 39.8%, (21% of taxable income, plus 79% of taxable income times 23.8%). Thus, the reduction in corporate and individual tax rates after December 31, 2017 reduces the highest marginal effective rate on business income from 50.47% to 39.8% for a C corporation distributing its after-tax profit and from 43.4% to 40.8% for pass-through entities.”[2]

2. An Overview of the TCJA’s Section 199A’s Qualified Business Income Deduction

After all the math is done, Section 199A of the TCJA .grants an eligible business-owner-taxpayer other than a corporation a deduction equal to 20% of the taxpayer’s qualified business income, subject to deduction phase-outs and limitations phase-ins that are dependent upon the type of business the taxpayer is engaged in.

For example, for business owners with taxable incomes in excess of $207,000 ($415,000 in the case of taxpayers married filing jointly), the 20% deduction is phased-out, such that no deduction is allowed against income earned in a “specified service trade or business,” (“SSTB”).

Specified Service Trade or Business

  • Health
  • Law
  • Accounting
  • Actuarial science
  • Performing arts
  • Consulting
  • Athletics
  • Financial services
  • Brokerage services
  • Investing and investment management
  • Services in trading
  • Services in dealing securities, commodities, and partnership interests
  • Any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees or owners

On the other hand, at these same income levels, the deduction against income earned in an eligible business, a non-SSTB, is limited to the greater of:

50% of the taxpayer’s share of the W-2 wages with respect to the qualified trade or business, or

  • The sum of 25% of the taxpayer’s share of the W-2 wages with respect to the qualified trade or business, plus 2.5% of the taxpayer’s share of the unadjusted basis immediately after acquisition of all qualified property.
  • 199A’s Business Classifications, Deductions and Limitations
Non-Service or Non SSTB Service BusinessSSTB Service Business
Taxable income less than $315,000 (MFJ 2018)20% deduction20% deduction
Taxable income greater than $315,000 but less than $415,000Limitation phased-inDeduction phased-out
Taxable income greater than $415,000 (MFJ 2018)Wage/Capital TestingNo deduction

Illustration by: Keebler Tax & Wealth Education, Inc.

  •  Once the taxpayer’s 20% deduction is computed and limited, as appropriate, it is added to the second deduction offered under Section 199A; a deduction for 20% of the taxpayer’s qualified REIT dividends and publicly traded partnership (PTP) income for the year. These two deductions are truly separate and distinct. For example, if a taxpayer has a net loss from her pass-through businesses, it does not preclude the taxpayer’s ability to claim a deduction of 20% of REIT dividends and PTP income. Likewise, if a taxpayer’s sum of REIT dividends and PTP income is a loss, it does not reduce the taxpayer’s pass-through deduction.
  • After each separate deduction is computed, they are added together and then subjected to an OVERALL limitation, equal to 20% of the excess of:
  • The taxpayer’s taxable income for the year (before considering the Section 199A deduction), over
  • The sum of net capital gain (as defined in Section 1(h)). This includes qualified dividend income taxed at capital gains rates, as well as any unrecaptured Section 1250 gain taxed at 25% and any collectibles gain taxed at 28%.

The purpose of this overall limitation is to ensure that the 20% deduction is not taken against income that is taxed at preferential rates.

3. Advantages and Disadvantages of Business Entity Selection Before and After the TCJA

In the wake of the TCJA taxpayers and their advisors will need to analyze whether a small closely-held business should operate as a C corporation rather than, as most practitioners advised before the TCJA, a partnership or S corporation or other pass-through entity.

Aside from the change in corporate and individual effective tax rates after the TCJA, there remain the same array of tax factors and other considerations that must be taken into account to determine the optimal tax-efficient choice of entity for a small business.

“Because being a C corporation subjects the taxable income of a business to double taxation, most closely held small businesses have historically chosen to be taxed as either an S corporation or as an LLC. An added advantage of an S corporation is that its shareholders avoid self-employment tax on their distributive share of profits. While LLC members often attempt to avoid SE tax by analogy to being limited partners, courts have universally rejected this position, especially where the owners perform services. [See, e.g., Joseph Radtke, S.C. v. United States, 712 F. Supp. 143 (E.D. Wis.1989) aff’d, 895 F.2d 1196 (7th Cir.1990).]

“With the 21% flat corporate rate is now lower than most individual marginal rates and the QBI deduction reducing the effective tax rate on pass-through entity income, the general conclusion that a pass-through entity is necessarily the most tax-efficient choice of entity needs re-examination. In short, the disparity in tax rates between individuals and corporations must be compared with the impact of the QBI deduction for individuals to re-determine the best after-tax return for small businesspersons.

“If an entity, after taking into account the lower corporate tax rate and the QBI deduction, decides to change its status from C to S corporation or vice versa, there are several additional technical consequences from the decision. First, in converting from a C corporation to an S corporation, any excess of the fair market value of the assets of the C corporation over their bases constitutes a net built-in gain which is subject to corporate-level income tax if within 5 years after the S election the assets are sold or the S corporation is liquidated. §1374.

“Therefore, a fast growing business with a need to reinvest its earnings may choose to operate as a C corporation, converting to an S corporation to distribute current earnings when the need to retain capital declines. However, the S corporation will need to wait 5 years from the effective date of the S election before selling any property whose appreciation is attributable to the period it was a C corporation. Conversely, for any corporation revoking its S election to take advantage of the 21% tax rate, the 2017 tax act has a special provision that allows for a six-year recognition period for any §481 adjustment arising from the revocation. §481(d)(1).

“Specifically, the six-year period applies only to an “eligible terminated S corporation,” defined as any C corporation that was an S corporation immediately before enactment of the 2017 tax act (December 22, 2017) and revokes its S election within two years after that date. In addition, the owners of the corporation at the time of revocation must be the same persons who owned the corporation in the same proportions as on the date of enactment of the 2017 tax act. §481(d)(2).  In addition, a corporation revoking its S election may extend its post-termination transition period so that distributions by the C corporation are treated as nontaxable amounts from the S corporation’s accumulated adjustment account (AAA) rather than taxable dividends from earning and profits (E&P). §1371(f).”[3]


[1] Williamson and Harr, Being an S or C Corporation for Small Businesses After the 2017 Tax Act and the QBI Deduction, Tax Management Memorandum (BNA) (Feb. 4, 2019)

[2] Id.

[3] Williamson and Harr, Being an S or C Corporation for Small Businesses After the 2017 Tax Act and the QBI Deduction, Tax Management Memorandum (BNA) (Feb. 4, 2019)

Banner Carbon Capture

An Insight Into Carbon Capture Investment in the UK

In connection with its ambition to capture and store up to 10Mt of CO2 per year by 2030, the UK government is looking to identify at least two carbon capture, usage, and storage (CCUS) clusters suited to deployment in the mid-2020s as part of its Cluster Sequencing Process.

The intention is to support the deployment of CCUS projects at a number of industrial clusters, with the potential for these clusters to be expanded into a UK carbon network as users connect to the shared transport and storage (T&S) infrastructure.

The six largest industrial clusters by the level of CO2 emissions are at Humberside, South Wales, Merseyside, Grangemouth, Southampton, and Teeside.

These account for a significant proportion of the UK’s industrial CO2 emissions and are considered to offer the most potential in terms of shared CCUS infrastructure.

UK Industrial Clusters Map
Source: Industrial Decarbonisation Strategy March 2021 and NAEI 2018 data. It does not capture non-ETS emissions in a cluster.

CCUS Business Models

The UK government published an update to its CCUS business models in May 2021. It is through these business models that the UK government seeks to support the deployment of CCUS projects.

The cost of the shared T&S infrastructure is passed through to connecting carbon capture projects by way of a regulated T&S fee. These projects in turn benefit from support under Dispatchable Power Agreements and Industrial Carbon Capture Contracts.

The UK government is also looking at a business model to support “blue” hydrogen production at CCUS clusters. The intention is for shared T&S infrastructure to have sufficient capacity to enable the expansion of the CCUS cluster. 

CCUS Business Model

T&S Regulatory Investment Business Model (TRI Model)

The T&S company is responsible for the development, construction, financing, operation, maintenance, expansion, and decommissioning of the T&S infrastructure.

The UK government’s proposed TRI Model involves a licence being granted to the T&S company pursuant to which it receives an “allowed revenue” by charging users a regulated T&S fee to have their captured CO2 transported and stored.

The UK government is also considering incentives linked to availability, leakage rates, and connection of additional users, as well as reopeners for one-off material changes in expenditure outside the control of the T&S company. A regulator will be responsible for administering the licence and monitoring the performance of the T&S company.

It is recognised that the T&S infrastructure may be underutilised until more carbon capture projects are completed and connected to the shared T&S infrastructure, resulting in the T&S company collecting less than its allowed revenue in T&S fees.

The UK government is proposing to include mitigating measures in the TRI Model such as shaping the allowed revenue profile to align with expected utilisation build-up and providing for allowed revenue to be deferred and “rolled up” if connecting carbon capture projects are delayed.

The UK government also intends to make a contingent mechanism available to protect the T&S company’s revenues and a Government Support Package (GSP) to protect against specific high impact low probability risks.

Industrial Carbon Capture Contracts (ICC Contracts)

It is intended that CO2 emitters in sectors such as chemicals, refining, steel, and cement will invest in industrial carbon capture and connect to the shared T&S infrastructure.

In order to incentivise investment in industrial carbon capture, the UK government proposes to grant contracts that provide the CO2 emitter with a payment per tonne of captured CO2 to cover operational costs, T&S fees, and repayment of capital with a rate of return. The UK government is also looking at providing other support such as capital grants.

Dispatchable Power Agreements (DPAs)

The UK government intends to support the deployment of dispatchable power stations with carbon capture through contracts based on the contracts for difference (CfDs) used for renewables.

The proposed DPA provides availability payments for revenue certainty and variable payments to ensure that power stations with carbon capture dispatch ahead of unabated power stations by accounting for the additional costs associated with carbon capture.

It is through the DPA that the investor recovers the cost of T&S fees and capital invested in carbon capture, together with a rate of return.

Interdependency

T&S infrastructure investment is dependent on carbon capture projects being completed and connected. In turn, carbon capture projects are dependent on the T&S infrastructure being available.

It is through the expansion of the CCUS cluster that the T&S infrastructure can be used efficiently and costs per tonne of CO2 reduced.

Pipeline capacity and connection arrangements will be important when it comes to expanding the CCUS cluster and making full use of the shared T&S infrastructure.

The UK government is looking to mitigate risks associated with interdependency through mitigating measures and a contingent mechanism (see above), but investment in T&S infrastructure and carbon capture projects will necessarily take into account the other projects making up the CCUS cluster and potential expansion of the CCUS cluster. Individual projects are not able to stand on their own, notwithstanding that mitigating measures and a contingent mechanism may be used to plug gaps.

It is through the Cluster Sequencing Process that the UK government aims to support the efficient deployment of CCUS. Those projects which form part of a “Track 1” cluster will have the first opportunity to be considered for support.

The UK government announced on 30 July 2021 that five clusters met the eligibility criteria set out in its Cluster Sequencing Process.

These clusters are referred to as DelpHYnus, HyNet, the East Coast Cluster (ECC), the V Net Zero (VNZ) Cluster, and the Scottish Cluster. The UK government expects to announce “Track 1” clusters from 25 October 2021.

Carbon Pricing and Carbon Border Adjustment

In practice, policies to reduce CO2 emissions and incentivise CCUS will not work if carbon-intensive industry relocates to countries with less stringent climate regulations (or where there are stringent climate regulations but these are not enforced effectively).

There is no point in reducing CO2 emissions in the UK by shifting emissions to other countries. There needs to be a reduction in global CO2 emissions.

The proposed business models effectively pass the cost associated with CCUS through to UK taxpayers and consumers, but what happens after this support falls away?

If operational costs and T&S fees are no longer supported by UK taxpayers and consumers, continuing to capture carbon and connect to the T&S infrastructure will represent an additional cost for CO2 emitters.

This in turn has consequences for the shared T&S infrastructure.

UK carbon pricing and activism on the part of shareholders and consumers provides an incentive for CO2 emitters to continue to capture carbon and connect to the T&S infrastructure, but there is a question as to whether this will be sufficient if countries with less stringent climate regulations offer a cheaper alternative.

This is not just an issue for the UK and there has been a push for coordinated action across countries to reduce global CO2 emissions.

It is important to look at the global supply chain and ensure that CO2 emissions are not just shifted to countries where there are less stringent climate regulations.

If global supply chains are used to import materials or components from such countries at a lower cost we will just be shifting CO2 emissions, so measures such as ESG reporting will be needed to improve standards across the global supply chain.

ESG reporting offers to provide transparency with respect to the carbon footprint of a company’s global supply chain, enabling consumers and investors to distinguish between businesses that shift CO2 emissions to other countries and those that do not.

The FCA is currently consulting on extending climate-related disclosure requirements to more listed companies and institutional investors are voting against management at companies failing to address environmental issues.

However, so long as businesses can reduce costs by importing materials or components from countries with less stringent climate regulations there will be an issue with CO2 emissions being shifted to such countries.

In order to address this, countries have been looking at carbon border adjustments whereby imports from countries with less stringent climate regulations will face an additional charge to level the playing field.

If the UK government were to introduce a carbon border adjustment, it would be able to impose a higher cost on CO2 emitters without shifting CO2 emissions to other countries.

This would incentivise the expansion of the CCUS clusters without direct support from UK taxpayers and consumers. UK exporters will still be at a disadvantage in international markets when competing against companies that do not have to reduce their CO2 emissions, but coordination across countries in terms of carbon border adjustments will mitigate this.

The cost associated with reducing CO2 emissions still lands with the consumer in the form of higher prices, but CO2 emitters and global supply chains would be incentivised through the competitive market to minimise the cost of reducing their CO2 emissions.

This could, in turn, result in opportunities for CCUS clusters that are able to capture, transport, and store CO2 at a relatively low cost (i.e. companies may invest in, or source materials or components from, plants or production facilities at a CCUS cluster in the UK rather than those in countries with less stringent climate regulations if the carbon border adjustment outweighs the cost of carbon capture, transport, and storage at the CCUS cluster). This would have a real impact on global CO2 emissions.

Investment in Carbon Capture

There is a move away from carbon-intensive industries to renewables and CCUS as banks, private equity firms and other financial investors look at aligning their lending and investment portfolios with net-zero emissions.

In particular, some 53 banks from 27 countries representing almost a quarter of global banking assets have committed to aligning their lending and investment portfolios with net-zero emissions by 2050 as part of the Net-Zero Banking Alliance and there is an initiative to develop a standard for banks to measure and report on their social and environmental impact.

There has been a lot of interest in CCUS and the expectation is that significant financing will be available to support projects which are aligned with reducing CO2 emissions. Industrial companies and oil majors are also looking at investment in CCUS. 

Conclusion

The fact that the UK government’s proposed business models are based on existing regulated asset base models and contracts for difference is positive for investors.

The decision to invest in T&S infrastructure or to provide financing will rest on confidence in the revenue that will be allowed under the TRI Model, the status of the different projects making up the CCUS cluster, and the extent to which mitigating measures and contingent mechanisms will plug any gaps that may arise.

CO2 emitters and other investors in carbon capture will look at that the ICC Contract and whether it covers operational costs, T&S fees, and repayment of capital together with a rate of return.

The term of the ICC Contract will be important and, to the extent that the carbon capture equipment is still operational after the ICC Contract falls away, CO2 emitters and investors will be looking at carbon pricing and potential measures such as carbon border adjustments to ensure that there is long term demand for CCUS without relying on direct support from the UK government and consumers.

In the long term, these measures could lead to opportunities for CCUS clusters that are able to capture, transport, and store CO2 at a relatively low cost.

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How to Proceed When Dealing with Criminal Drug Charges

Criminal drug charges can threaten your future. If you don’t spend time in prison, you’ll still spend time on probation or parole. You could be forced to pay hefty fines, too. That’s why you need to take care and respond appropriately when accused. Here’s how to proceed when dealing with criminal drug charges.

Don’t Give Them Anything That Can Be Used Against You

Have you been pulled over for a traffic violation? Don’t do anything suspicious like throwing things in the back seat or rushing to hide things in the passenger compartment. Don’t get into a confrontation with officers asking to see ID. Acting like you don’t want to be searched can lead to them searching your car or your person. You might be stopped for legitimate reasons, too, such as matching the suspect in a crime. Be calm, present ID, and don’t answer any more questions than you’re legally obligated to answer. For example, you need to give them your name. You don’t need to give them an explanation for what you’re doing or why you’re in the area. Have the police shown up to your address in response to a wild party? Turn down the music, ask people to calm down, and don’t give them a reason to enter the premises. Clean up things as the party progresses so that there aren’t open beer bottles or bongs sitting in the middle of the room.

Hire a Good Attorney Immediately

Don’t try to defend yourself against drug charges. And don’t try to explain what happened. Police will use everything you say against you, and nothing you say will make them dismiss the charges. Hire a good Ottawa drug lawyer. Furthermore, you should seek their advice before you answer any questions from the police. Always have legal counsel present, whether it is a court hearing or an interview with the cops. Contact your attorney when you have questions so that you don’t make a mistake.

Follow Your Attorney’s Advice

This shouldn’t need to be said, but unfortunately, too many people negate the value of having good legal counsel by not following their advice. If your attorney says not to talk to the cops, don’t meet with them to “give your side of the story”. If you’re advised to stay silent about the case, don’t complain about the arrest and try to explain it all away on social media. The police can use what you say on social media against you. If you’re advised to stay clean, don’t push it by getting drunk or smoking cannabis to relax.

Stay Out of Trouble

An unfortunately reality of life is that you are more likely to be found guilty is you demonstrate a habit of “troublemaking”. If you’re facing drug charges, a DUI arrest can be used against you. Why? Because it shows you choose to abuse other recreational substances. That’s aside from the fact the tests may show illegal drugs in your system. Subsequent arrests for drug crimes can prevent your attorney from negotiating down the charges in a plea deal.

If you’re given parole, probation or a stint in rehab, obey the rules so that you don’t get hit with more severe consequences.

5 Steps to Finding the Right Engineering Expert Witness

It’s not always easy to find someone who can help you determine who is at fault for a failure, a safety issue, or a contractual breach. Ultimately, you want someone who understands the law and has a firm grasp of the concept of engineering and everything pertaining to it. If you need an engineering expert witness or licensed engineers who aid in risk assessments, consider taking these five steps below.  

1. Discover the Case’s Issues

Before reaching out to a litigation economics consulting firm like the Knowles Group for help, it can be worth working through the issues of the case to determine what it is you really need. Find out what the client’s story is and outline the technical facts for each claimed matter. It may surprise you to learn how many unique elements there are in a case and how each of them can determine the type of expert you use. It can also often help to determine the type of structures involved, the failures or issues, and any unique components that stand out.

2. Determine the Expertise Required

Upon establishing the facts of the case, you may then be able to narrow down the specialty fields you might require. For example, you may need an engineering expert witness who can work closely with a commercial building expert witness. They might also need to have a firm understanding of a specific type of framework or roofing material that sits at the center of the claim. The more precise you can be, the easier it might be to find the expert you are looking for.

3. Consider the Timeframe

Not every expert witness you call upon will have the capacity to be tied up in a case that takes years to resolve. During the early days of exploring a claim, identify the possible timeframe. For example, the average crown court case can take 525 days from the offense to the case’s conclusion. However, an engineer’s role in that case can be as simple as a brief analysis. Being able to pass this information on to expert witnesses can be helpful in selecting the right ones for your needs.

4. View Their Qualifications and Experience

For judges to approve of an engineering expert witness, they often require that they have a professional engineering license. This license is indicative of years of experience, a high level of education, and adherence to business and ethics codes. This is why experience matters in expert witness testimony. Without this qualification and resulting experience, you may not be able to put together a strong case with as much expert evidence as you may have hoped.

5. Learn About Their Court Experience

A qualified engineer may be highly skilled in what they do, but it certainly helps if they also have experience giving depositions, putting together technical reports, and providing testimony in a courtroom. It’s at this point you can also learn about their testimony style. The expert may break down the facts into layman terms for a jury or simply discuss what they know from their perspective.

Even if it’s not always that straightforward to find the right engineering expert witness for your case, this information above may help. The more experienced they are with their line of work and court cases, the sounder your case might be.

What are Non-Fungible Tokens and are There Ways to Legally Protect Them?

Also known as NTFs or NFTies, non-fungible tokens represent a type of digital asset and its ownership is recorded on a blockchain, which is a digital ledger that was made popular by digital currencies like Bitcoin. 

However, if in the case of digital currencies, tokens had a similar value and could easily be swapped for any other (they are fungible products), NFTs are unique and not interchangeable (or “non-fungible”). In fact, the best comparison with the real, tangible world is an art gallery, where each piece is unique in both aspect and value. And, just like with art pieces, NFTs are sold in an auction. 

The main purpose of non-fungible tokens is to broaden the options of artists and online creators when it comes to receiving proper recognition and payment for their work. Right now, if there’s a suspicion of IP theft, you’d need the help and advice of specialists like Heer Law, who can properly represent your interests. However, in the near future, NFTs may provide a faster way to discover the creator or owner of an online creation without a shade of doubt. In short, NFTs are a way to stop the piracy of songs, texts, movies, and other similar digital creations that can easily be replicated indefinitely due to the immense popularity of the internet. 

The NFT acts as a digital certificate of authenticity and allows both the rightful owner and the creator of digital art to reap the benefits of their work. For instance, the original Nyan Cat gif (considered a piece of crypto art) was sold by its creator in an online auction for 300 ETH (nearly $600,000)! 

But this is not the only example of an NFT that comes to mind. For instance, the digital artist Beeple sold an NFT art collection for over $3.5 million (also in cryptocurrencies). And people are not just buying digital art and memes – they are also buying tweets (yes, posts made by someone with a Twitter account), and other forms of digital originality. Due to NFTs, collectors now have a whole new market to spend their money on! 

Still, since NFTs are rather new on the market, many fear this is only a digital bubble in the making. And, while the same worries existed with Bitcoin and other cryptocurrencies, it’s also true that this is a very volatile market that can go away overnight. So, are there any ways to protect NFTs?

Is There Legal Protection for Creators & Owners?

Most specialists are a bit skeptical when it comes to NFTs. First of all, even if the technology uses blockchain to record the seller and buyer (plus other rules) it does not mean the buyer has complete ownership of the original. Therefore, in the case of the Nyan Cat, owning the original gif doesn’t mean you can prevent anyone else from using it in their online posts or even altering its original design. In addition, a transaction does not guarantee you are buying the art piece from its creator since it is difficult to establish such a thing. 

Therefore, from an intellectual property perspective, an NFT is more like a receipt that proves you bought a version of something. Nothing less, nothing more. As a result, it is difficult to enforce in the real world, using the current laws. Still, this hasn’t stopped people from spending their money on NFTs. Some even seem to believe the practice will seep into the real world and that we will be able to turn real estate properties into such assets. 

Wrap Up

The only conclusion that can be drawn right now is that NFTs are quite popular at the moment. Therefore, international patent protection laws and regulations may have to change in order to accommodate a new type of authenticity certificate. But until this happens, the world of digital creations is in a bubble of its own. Only time will tell if buyers were right to spend their cryptocurrencies on gifs and tweets.

Safety and Legal Protection: How Dash Cams Help

A Dash Cam provides irrefutable video evidence to protect you against false accusations after an incident, road rage, drunk drivers, and insurance fraud. This video footage can also be used as evidence to help remove sly drivers off the roads and protecting everyone on the other hand.

The new advancements like dash cams, body cam glasses, and other recording tools have provided next-level security to law enforcement.

The demand for dashcam footage is increasing daily by police investigators as a shred of vital evidence for a severe car accident. These videos provide the essential evidence of any mishap and a great help in the investigation process. This shows how beneficial and important Dash Cam footage can be.

How to use a dashcam?

Dashcams or dashboard cameras are located on the windshield, without blocking your vision, and records everything happing is in front of your car. There’s no doubt that the demand will continue to rise, with many dash cams costing under $100 and the footage being captured becoming more relevant in court dealings.

How can we use dashcams in case of accidents?

Camera footage from dashcams is admissible as evidence in court, so long as the dashcam is not used to record a private activity. The clear advantage of dash cams is that they can easily provide irrefutable evidence of who was at fault during an accident without relying on independent eyewitnesses. This can cut out the ‘he-said-she-said’ scenario, which may burden your claim.

Dashcams could be used in the following ways :

Evidence In Case Of An Accident

This is the most common reason people use dash cams on their cars. In case of an accident, you have a recording of the whole incident, and you have the advantage to show the authorities what really happened and what should be done. 

A Slew Of Sophisticated Features

Today, dash cams have many useful features that make them extra essential for drivers and business owners. These state of the art dash cams have GPS integrated with them so you can accurately track where an incident occurred. Some have voice reminders and accelerometers that alert the driver that the vehicle is being driven unsafely. Other models may include live view facilities that allow fleet managers to watch the vehicle in real-time while driving down the road! These dash cams can use the internal SD card/hard drive removed and analyzed on other devices. 

Some of the more advanced units even have their own proprietary software to aid in the viewing and reporting the journey.

Business Managers and owners Can Track Their Vehicles Efficiently;

Businesses can considerably benefit from executing a dashcam system on their fleet vehicles. Several insurance companies give discounts, and some outright requiring the installations of dash cams to get an insurance policy. For instance, You have a car fleet and have a strict “no use of cell phones while driving a car” law.

 How do you actually enforce this law without personally being in every vehicle, with your drivers every day? It is impossible Without a dashcam. Well, if you plan on applying a profit that day, it is. If you employ technology, you will easily see who is and who isn’t following the company’s policy.

Help Stop Fraud

There are lots of shady drivers on the road nowadays that prey on the unprepared. These drivers intentionally cause accidents and say that the other person caused the crash to claim insurance money.

 By placing a dash cam on your cars or other automobiles, drivers can record their journey. If they encounter such drivers, you can easily prove that he intentionally did the accident for insurance claims. Driver and the owner will be safe from these insurance frauds.

Dash Cam Can Protect You From any Insurance Lawsuit.

Dashcams and other security equipment could help protect you in various ways if you are sued. If an incident occurs, having a Dash Cams installed in your car can ensure that every detail, like your vehicle’s speed, the crash’s angle, and surrounding driving conditions, will be available. With this information, insurance companies can investigate the incident’s cause and fault more efficiently and timely. 

Can you use your dashcam when you drive abroad?  

There are restrictions on dashcams or the video footage you record using one in many countries. This is usually due to privacy rules that restrict video or image capture of public members without their approval. So it would be best if you verified the laws of the respected country or countries you’ll be driving in.

Legal Aspects To Consider While Building A Commercial Property

Commercial property, or commercial land, refers to land possessed or utilized by a business element. Commercial property is regularly not the same as private property in its plan, capacity, design, and feel. Most state laws have specific laws that manage commercial property. These are independent and unmistakable from private property laws. For example, commercial property regularly has specific protection rules than private property. Additionally, the commercial property might be related to unexpected reasonable direct in comparison to private property. Some lead might be permitted distinctly in local locations, while some direct is just permitted in industrially drafted territories (for example, business exercises).

One must have complete knowledge of legal aspects before building a commercial property. This awareness could be obtained via the internet through different websites or by the C-10 License study guide, which gives you a unique study mode. The C-10 License Study Guide is an intuitive, PC based program comprising various decision questions introduced in various investigation modes. C-10 License study guide is made explicitly for passing an exam, so it could help gain knowledge about legal aspects.

What are Some Commercial Property Legal Issues?

Because of the distinctions in commercial property laws, commercial property is regularly connected with particular legitimate issues. These can include:

  • Drafting and Land use–As referenced, commercial exercises can regularly just happen in commercial zones on commercial property.
  • In some cases, property burdens can be higher than private property burdens and might be diverse as per the sort of business set up on the property.
  • Protection Commercial property protection debates are a typical wellspring of lawful issues for some organizations.
  • Proprietorship debates Many organizations manage title, possession, and renting disagreements regarding commercial property.
  • Limit debates. Some commercial property may cause questions because of the property’s actual limits or if the property is jutting onto another neighboring zone.

Likewise, commercial property can include lawful issues with regards to the deal and acquisition of commercial structures. Such questions can include authoritative breaks, business-related debates, and issues with the use of the property.

If purchasing commercial property is essential for your business’s subsequent stages – either for exchanging use and speculation, here are five critical lawful contemplations when purchasing a commercial property:

  1. Discovering Opportunities

In contrast to the private area, you won’t discover an overabundance of commercial operators on your high road. Numerous commercial speculations are sold through private settlement in any case; barters are a helpful wellspring of good worth, especially if you are merely beginning.

Abandons saying that care is needed at any bartering – we’re not talking deal chase here – since, supposing that useful, you should hand over 10% on the day and complete inside a month.

2. Freehold Or Leasehold?

Freehold proprietors by and extensive control and own the entirety of the property: the land itself, any structures on it, the dirt beneath, and so on. If unpracticed in this world, know that a proprietorship might be limited by an outsider; for example, there might be a privilege of access over the property.

With leaseholds, the proprietor authoritatively holds the interest for a set period restricted to the rent’s length. The rent substance will rely upon the property and the connection between the landowner and the occupant.

3. Money Buyer Or Loan?

Money is regularly ruler, and business property is the same. Incredible arrangements are accessible on the off chance that you can move very fast.

On the off chance that you are utilizing an advance supplier, at that point, keep them refreshed at all times abandon saying that business property moneylenders are keener on loaning against the pay produced by very much let properties instead of void ones.

4. Expenses

Expenses for Buying business property include:

  • The underlying price tag or rent premium
  • Stamp obligation and land library charges
  • Assessor, bequest specialist, and specialist charges
  • Introductory changes or potentially embellishment
  • Prepayment of the introductory lease (for leaseholds) and protection
  • Perhaps VAT

Extra expenses for drafting the rent can be costly as there is no formal organization for purchasing a commercial property. Get due perseverance guidance (counting the standard property look yet additionally natural pursuits and enrolled charges).  

5. Occupants

As above, banks are a lot more joyful loaning against very much let properties, so except if you need to utilize the property for your motivations promptly, it’s valuable to purchase a property that has an occupant in situ.

Great inhabitants are precious, so it’s a uniquely favorable position to acquire a quick lease move which permits you to precisely spending plan your costs going ahead: the lease is fixed, you are paid ahead of time, and lease audits, for the most part, increment – however, ensure you get pre-culmination exhortation on the footing and rights you’re acquiring.

Guide to International Patent Protection

International patent protection has been gaining popularity over the years. Now more than ever, intangible assets such as patents have never been more important. As businesses continue to expand their market reach, patent protection has been one of the most important assets that jump-start their success abroad.

It is worth noting, however, that the journey of obtaining patents abroad can be costly. There is also no such thing as an international patent that you can use or enforce in other countries. But, there are several ways to obtain international patent protection.

Direct Filing

The direct route of obtaining an international patent is recommended for applicants with a tight budget. It is best for those who are interested in obtaining patents for only a limited number of countries.

The direct or Paris route allows applicants to file their initial application in their home country. Afterward, they have a 12-month period wherein they can file a patent application abroad. The countries where they filed the application would be the one to determine whether they are eligible for patent protection.

For instance, a US applicant wants to obtain a patent in his only two niche countries. Using the direct route, he would have to file a patent application to the United States Patent and Trademark Office (USPTO) first. Upon application, he then only has a 12-month period to file the application for the two countries where he wants to market his invention.

Patent Cooperation Treaty

The Patent Cooperation Treaty (PCT) facilitates the applicant’s international patent application. It streamlines the initial filing process by buying the applicants enough time (up to 30 months) to file for a national phase entry. National phase entry is when an applicant files an application to the country where they want to obtain the patent.

Note that the PCT does not examine an application fully and it does not necessarily grant patents to applicants. Rather, it is one of the routes to take when obtaining patents abroad. In essence, PCT grants an applicant enough time to further develop the patent and examine countries where it would be most suitable to obtain patent protection.

Since there is no such thing as an international patent, the PCT made it possible for an applicant to file one international application in one language and one location. This route is best suited for applicants who are interested in obtaining patents for numerous countries.

To further illustrate, let us take a US pharmaceutical company as an example. The company wants to obtain a patent in 12 countries. They already filed a patent application with the USPTO, but they are still not certain whether obtaining a patent for these 12 countries would be enough or, even, worth the cost. With the PCT route, they have enough time (30 months) to further observe the market behavior of a country, as well as further, develop the invention they want to patent. When they finally decide that they want to obtain protection in these countries, they can  then easily proceed with the national phase entry and file applications for each country. 

The World Intellectual Property Organization summed up the process of obtaining patent protection abroad in the illustration below.

Cost and benefits of obtaining a patent abroad

Having discussed the two different routes, applicants still need to take several factors into consideration before starting their international patent application journey.

1.    Cost

As mentioned above, obtaining a patent abroad can be costly. Since the patent process is associated with several fees (e.g filing fees, translation costs, attorneys fee, maintenance fees, and so on), applicants need to carefully assess their budget and resources.

2.    Enforceability

When obtaining protection abroad, applicants must evaluate whether the country’s patent system is reliable.

3.    Eligibility

Different countries have different patent laws. For instance, software or living organisms are not patentable in other countries as compared to the United States. It is important to have a basic understanding of the patent laws of different countries before filing an international patent protection.

4.    Longevity

Is the invention worth the patent protection? Or will it just be overshadowed by another product in the next 3-4 years? It is crucial to also conduct a market study and weigh its benefits before proceeding to file an application.

5.    Competition

If an invention is most likely the target of infringers, then it might be a good indicator to obtain protection for that specific country.

Overall, it is worth noting that the information set above is merely an overview of the international patent application process. It is still highly advisable to consult and ask for assistance from a qualified patent attorney. They would be able to provide a more strategic approach as well as give more details about the patent application process. With the help of a patent attorney, it would be much easier to navigate through the market of different countries.