Knowing what the future holds for your business depends on recognizing trends as they unfold. Trends begin by a confluence of events that can be identified by experienced practitioners who can connect the dots.
Changes in laws, regulations and technology have come at a rapid pace over the past year. These developments signal what lies ahead from a legal perspective in immigration, patents, compensation & pensions, employment, and data privacy & cybersecurity.
We asked lawyers who are part of the Select Counsel network, which features prominent boutique firm attorneys across the nation who formerly practiced at premier Big Law firms, to discuss the trends that will be shaping key practice areas in 2018 and beyond.
More scrutiny means potential for delays
While foreign travel bans made headlines in 2017, the practical implications of the “Buy American and Hire American” Executive Order are affecting businesses the most, says Cindy Ansbach, who co-manages the boutique immigration practice Ansbach + Ghouse, PLLC. Ansbach, formerly a partner at Norton Rose Fulbright, says changing adjudicating standards by U.S. Citizenship and Immigration Services could present challenges for businesses in the coming year.
What developments will have the biggest impact on corporate-based immigration matters in 2018?
In October, USCIS updated its internal policy guidance to reflect its heightened standard of review for nonimmigrant extension petitions. It rescinded a longstanding policy that related to the standard of review requiring officers to give deference to prior determinations of eligibility when reviewing extension petitions for most nonimmigrant categories. As a result, employers have experienced an increased likelihood of delays and requests for additional evidence from USCIS.
Other changes mean additional steps for immigration matters. An Office of Inspector General audit of the USCIS H-1B on-site visit program found that it failed to provide “minimal assurance that H-1B visa participants are compliant … with applicable immigration laws and regulations.” In response, USCIS indicated that it would make numerous changes including plans to increase visits to companies and work locations. Also, individuals pursuing a green card through employment-based categories now are required to attend an interview.
How are companies responding to these developments?
The cumulative effect of these changes likely will result in USCIS issuing more requests for evidence, denying more applications and creating longer delays for processing. These changes will affect companies immediately and determine how they should plan for future needs.
Companies should also be aware of reports that USCIS may limit extensions for certain work-authorized visa categories, including H-1B petitions, which account for most professional positions held by foreign nationals.
New technologies facing easier path to patents, and courts favoring patent defense
The patentability of emerging technologies such as cryptocurrencies, deep learning, computer security and internetworking is being hotly debated. Boston-based IP attorney Robert Blasi, patent practice chair at Danielson Legal LLC and former partner at Goodwin Procter, advises technology clients on patent prosecution and strategy, which often puts practitioners on one side of the debate and the Patent Office and the judiciary on the opposite side. Blasi says there’s a recurring conflict between what the Patent Office considers patentable (statutory subject matter) and where industry devotes its research dollars and efforts.
What changes do you see ahead for patent law?
I think the Patent Office is getting incrementally more comfortable with patenting new technologies. As a result, some of the categorical rejections that we’re seeing from them now will continue to soften. I am concerned, though, that this merely kicks the problem down the road a few years to a lay judge who will use the same bright line tests that we’re seeing now to reject cutting-edge technological innovations.
In an ideal world, Congress would step in and provide clarity, but our current political environment suggests that we shouldn’t hold our breath waiting for them to act. Until then, good counsel in navigating these issues is worth its weight in gold when trying to patent new technologies.
What developments will have the biggest impact on patent matters in 2018?
The Supreme Court recently heard arguments in Oil States Energy Services v. Greene’s Energy Group on the constitutionality of the current inter partes review (IPR) process for U.S. patents. IPR has had a significant effect on patent litigation economics and practices over the past five years, and a holding in 2018 that IPR is unconstitutional would radically change the current state of patent enforcement. That said, I think the consensus among practitioners at this time is that the Supreme Court will declare IPR to be constitutional.
How will recent federal court decisions affect patent litigation?
In May, the Supreme Court addressed the issue of venue for patent infringement litigation in TC Heartland v. Kraft Food Group Brands LLC, and I’m pleased to see the way that decision is playing out. Clients are always concerned about having to defend themselves in a forum that is at best inconvenient. Many patent cases post-T.C. Heartland are being filed in districts where the defendant is incorporated or has a significant business presence, which certainly makes things more convenient for the defender and arguably puts them in a better position to defend themselves.
Watch for growth in pay equity and race, gender and age discrimination class action lawsuits
Led by California and New York, many states and cities have introduced or enacted new and rigorous pay equity legislation in recent years. Grube Brown & Geidt partner Heather Morgan, former partner and global chair of the Workforce Data and Technology practice at Paul Hastings LLP, says pay discrimination lawsuits and race, gender and age discrimination class action lawsuits likely will have the biggest impact on her employment law practice in 2018.
How are companies responding to the impact of discrimination lawsuits?
Systemic discrimination lawsuits can take years to litigate. During that time, they become a mighty resource drain on employees’ time and employers’ wallets. Defense attorneys’ fees add up quickly in these types of lawsuits, and it’s not uncommon for settlements to run in the millions of dollars.
My legal practice is not just about defending these lawsuits but also advising employers who are interested in taking steps to avoid being hit with a lawsuit in the first place – or, if they are sued, to know they have undertaken reasonable efforts to proactively mitigate the exposure. With the attention on pay equity and discrimination in hiring and promotion, I also expect to stay busy helping employers audit and improve their personnel processes.
What industries will see the biggest impact from developments in employment law?
The focus on pay equity in the tech sector continues to be a hotbed of discussion and litigation. The millennial generation – which comprises most of the U.S. workforce and an even greater majority at many technology companies – expects transparency. Millennials are asking how their salary was determined, and employers need to be prepared to answer that question.
A development affecting the hospitality and healthcare sectors as well as employers across the U.S. in general is the recent decision by the National Labor Relations Board that overturned the standard set in the 2015 Browning-Ferris Industries case. Under the BFI standard, a company and its contractors or franchisees can be deemed a single joint employer even if the company has not exerted overt control over workers’ terms and conditions. The Republican majority board voted to revert to the Board’s previous standard, which is a welcome relief to and win for employers who no longer need to structure their businesses with the overreaching and ill-advised BFI standard in mind.
COMPENSATION AND PENSIONS
“Pay for performance” and fiduciary responsibility are areas to watch
The big topic for 2018 in compensation is the continued emphasis on variable pay and “pay for performance.” Companies that reward employees with equity grants will add performance components to the vesting schedules, so that the stock award will be vested not only due to continued employment service but also based on achievement of performance targets.
Sandra Cohen, of Cohen & Buckmann P.C., adds, “Institutional investors and shareholders are still holding employers’ feet to the fire to create incentives that reward good company performance when compared to peers.” This is true, even though there was a change in law through the new Tax Cuts and Jobs Act of 2017, which eliminated the tax incentives for public companies to establish performance-based incentive conditions, by expanding Section 162(m) of the tax code.
What changes are ahead?
Carol Buckmann, ERISA attorney, predicts continued litigation against fiduciaries of 401(k) and 403(b) plans, challenging their decisions on investments and fees. She adds, “A pension fiduciary’s best defense will continue to be a written record of good fiduciary practices. Plan fiduciaries who take their responsibilities seriously will continue to try to improve their plans, develop better investment policies and written fees and controls policies, and better educate their participants.”
Pension fiduciaries should not wait to see what happens to the new Fiduciary Rule under review by the Trump administration’s Labor Department. Studies unfortunately highlight a class of company fiduciaries – Carol described them on the Cohen & Buckmann benefits blog as “ostrich fiduciaries” – who don’t understand or acknowledge their responsibilities to their plan participants. She expects more of these ostrich fiduciary-types to learn the hard way in 2018 through lawsuits or audits that they don’t have to acknowledge that they are a fiduciary in order to have fiduciary liability.
DATA PRIVACY / CYBERSECURITY
Responses to increase in cyberattacks have own risks
The sizable increase of successful cyberattacks – those in the headlines as well as those that may be swept under the rug – will continue to make waves in the year ahead, says Dallas-based IP attorney Mike Regitz. Previously an attorney with Norton Rose Fulbright, Regitz focuses his boutique practice at RegitzMauck PLLC on intellectual property, cybersecurity and data privacy matters and disputes. He says that after the Equifax breach, the federal government may be reassessing its role in protecting the public from the unauthorized access of information.
What changes do you see ahead for data privacy?
The current patchwork of data privacy and cybersecurity regulations in the U.S. appears to be insufficient to protect the personal information of consumers, and most of the governmental entities responsible for policing cybersecurity issues can act only after a breach has occurred. The federal government’s response could lead to a new regulatory structure much like Europe’s General Data Protection Regulation, which is generally a one-size-fits-all approach to data privacy. This could have an outsized impact on small businesses, many of which are not taking reasonable steps to combat the sophisticated techniques of cyber criminals due to real or perceived costs.
How are companies responding to the increase in cyberattacks?
Companies of all sizes are seeking to insure themselves against losses from cyberattacks. However, there are tremendous disparities in the cost and coverage offered by individual insurers. Some of these cybersecurity policies are so complex with so many exclusions that we have serious doubts that either the broker or the insured understand the nature of the coverage.
We anticipate that companies not only will purchase cybersecurity insurance of suspect value but also will start requiring cyber insurance from their partners and vendors. Unfortunately, due to the complexity of the policies and their many exclusions, such coverage may end up being largely illusory, resulting in increased transaction costs and greater profits for insurance companies.