CCBJ April 2023 Edition

Corporate Counsel Business Journal

APRIL 2023

VOLUME 31, NUMBER 4

Living to Your Full Potential

SHAWN WHITE SHARES THE VIEW FROM HER SEAT SERVING AS GENERAL COUNSEL WITH THE SMITH FAMILY CIRCLE.

INSIDE

Living to Your Full Potential Compliance Takes Center Stage for GCs

Insurance Tools for the Corporate Executive Moving Toward a Renewable Energy Future

AND MORE!

NETWORK Strategic

The participants in the CCBJ Network demonstrate, through their many contributions, their unwavering commitment to the advancement and success of corporate law departments. The engagement and support of these “partners of corporate counsel” assure we continue to develop and distribute the news and information this unique and sophisticated audience relies on to meet the evolving legal and business needs of their organizations.

Please help us improve and expand our services to corporate counsel by sharing your ideas with our publisher, Kristin Calve, at 844-889-8822 or kcalve@ccbjournal.com

Living to Your Full Potential

 Shawn White unveils her secret recipe for serving as the general counsel of the Smith Family Circle as well as her dedication to marrying her financial acumen and dedication to her role as a servant leader.

CCBJ: What led you to join The Smith Family Circle?

Everyone who knows me, knows if I have a night off, I am at a museum, a concert, a play, a movie premiere or a film or music festival. I am a passionate fan of the arts plus it is my nature to want to help people. In this role, I support creatives, and use my skills and experience to tackle financial, business and legal risks allowing them to focus on their art and their philanthropy in ways that make the world better. I began my career on Wall Street and continued working in finance and investments as a global corporate transactional lawyer in New York after law school. But, along with that work, I have always supported the arts, nonprofits, philanthropists and donors. I’ve served as General Counsel to The Broad Contemporary Art Museum and the Broad Foundations. Prior to that, I worked as VP - Corporate Counsel at Prudential Financial, and concurrently supported the Prudential Foundation as Chief Legal Officer. As another example, while working as head of global contracting at ICANN – the public benefit corporation that maintains the global internet infrastructure – I worked on expanding the infrastructure in underserved regions including Africa, where we launched a Nairobi office. My career has been marked by a myriad of times when I have gravitated to opportunities to work with those families, corporations, organizations and people who are charitable and creative – especially those intent on building legacies of giving, service and artistic expression. All along, I have been afforded a balance between cutting-edge deals and service to others and this has laid the foundation for working with highnet-worth families, helping them grow and protect wealth while helping them support charitable causes. My work combines my passion and purpose with the skills I’ve acquired through experience and education.

Managing and advising investments, business and personal matters for the family, aligns perfectly with my expertise in family offices, investments, finance, the arts, nonprofits and philanthropy.

In many ways, you could say family is the reason that I joined and the reason I returned to LA, my hometown.

While I considered working as a General Counsel for the Smith’s, a close-knit, multi-generational family who embodied the word, I was considering my own family, as my father’s health was declining. Working with this family brought deep comfort to me during the period that turned out to be the last two years of my father’s life.

The opportunity to marry critical parts of myself with my business and financial acumen keeps me energized and

inspired every day. Supporting vastly different creative personalities and being encircled by this family at work is tons of fun. I mean, my work supports the Fresh Prince and Lena James from the show A Different World, two television characters that profoundly influenced on me as a young Black woman. Come on, how amazing is that in terms of a full-circle moment.

Please tell us about your leadership style and who or what has influenced it?

Early in my career, I worked as an entry-level financial analyst, on one of my companies’ investment teams in the oil and gas industry. There I observed a leader who empowered others and after whom I modeled my own leadership style.

This leader was the managing director to whom all the teams reported and a true diversity, equity and inclusion (DEI) champion. Upon reflection, I worked for the ultimate DEI champion before DEI even took on the preeminence that it has today. He was ahead of his time.

He was concerned that I was not being evaluated or treated fairly as the only junior woman and Black person. He thought I was not being treated in the same way as the rest of the all-white, all-male junior team. He took it upon himself to talk to his senior leaders about implicit bias and to mentor me.

He opened the doors which allowed me to bring my talents and gifts to the team. He showed me the importance of caring about people, being curious, observant, compassionate and equitable. He stood up against implicit bias and microaggressions on my behalf and the entire organization was better because of his leadership. Most importantly, he encouraged me to continue in finance despite negative experiences at a very formative time in

my career. It takes only one person to make a profound difference in the life of someone else. Encouragement goes a long way.

Every day, I pay it forward with a similar leadership style and a deep interest in getting to know everyone on my team, the teams I support, and their respective needs in the same way that he knew and advocated for me. Then, I work to shape a career and client experience that values who they are, what they contribute and how best to collaborate with them. I enjoy getting to know people and I want them to enjoy the work. When I served as a General Counsel to a community bank in New Jersey, our retail branch manager would play a boom box for 10 minutes before opening every day to get everyone up, moving and laughing. Typically, it would turn into a Soul Train line that would have made Don Cornelius proud. I tried to make it downstairs to the branch for the dance party with the tellers and security guards as many mornings as I could. She was a great leader who knew her team and figured out a creative way to boost morale. It is important to remember that all around you are people who love your organization and have great ideas and views on your company's success. Unfortunately, bias and microaggressions can sometimes work to silence them. The lesson that I take from my experience is that great leaders look for imbalances and use their power to correct them and empower others.

As leaders, we must be observant and tackle inequities head-on. This is what I strive to do every day.

What qualities do you look for when you're hiring new people for your team?

I strongly believe that happy people do their best work. As a result, I look for curiosity, collegiality, compassion, comprehension, intellect, patience, respect for others and an ability to handle conflict calmly, clearly, and with an open mind.

Also, I value life experiences and resilience. While higher education gives a solid foundation, the best employee may not have the fanciest degrees or prior titles, especially for people of color. I look for life skills learned outside of the

As leaders, we must be observant and tackle inequities head-on. This is what I strive to do every day.

classroom. Life experience, and having overcome adversity, often shapes a great employee. Someone who has figured out how to thrive in difficult environments and tackled adversity is equipped to tackle problems head on and innovate creative solutions.

I am a fan of case studies that allow me to see how people handle their work and life experiences. Along with resilience, I I look for themes that tell me what they value to ensure we have or can design a role they can tackle enthusiastically.

How would you describe the culture of your organization?

At SFC, as the name would suggest, we are a true family. Our culture strives to ensure everyone feels valued and respected for who they are, for their unique skills and talents, and for their contributions to the team and the world. Among the core values that we focus on are a pursuit of excellence, an unflinching commitment to personal growth and self-development and a guiding spirit that every action we take is grounded in respect, kindness, collaboration, generosity and curiosity.

Curiosity and collaboration are valued so much that this role allows me to build my capabilities in entertainment law while leveraging my prior corporate expertise. Also, it allows me to share my nonprofit, investment, corporate and finance knowledge to uplift others.

What is the greatest career advice you have ever received?

To be authentic. There is no one else like you. Your authentic self is invaluable and needed in the world. This advice came from my mother, who died from cancer in 2021. She was beloved lifelong educator in the Los Angeles Unified School District, a DEI champion, and a force for good in everything she touched. Her voice in my head is still pushing, encouraging and cheering for me. In her twenties, there were so many choices that women couldn't make without a man or without encountering substantial difficulty – from opening a bank account to buying a home. She wanted me to benefit from the freedom women had fought so hard to obtain and encouraged me to make bold choices.

My mother's love and strength gave me the power to seek adventures, to take risks and be comfortable being the only woman and often the only Black person in many spaces. I studied abroad in the Basque region of Northern Spain during my junior year of high school, moved to New York City for college, joined the global practice of an Am Law 100 firm and later the mergers and acquisitions group of a Fortune 100 company, where I negotiated transactions worldwide because of the love and strength that I received.

My mother also encouraged me to speak truth to power. Because of her, I stand up for myself and others, I am fearless in confronting adversity, and I never let anyone silence my voice, especially because I am afraid of losing a job.

To me, being authentic means that there is no title or money for which you should sacrifice your character or values. At times in my career, I have adopted existing norms to allow my substantive knowledge and abilities to be the focal point of my interactions and to grow my knowledge base. This allowed me to obtain skills and experiences that have afforded me more freedom as my career has advanced.

Now, I’m not saying I haven’t made tradeoffs around things like what I wear, and even though I would prefer to wear sweatpants to work as a lawyer in private practice, I wore a suit. Another example is that I wore pantyhose back in the day in finance as was the norm, despite how awful they were, especially in the summer. But I have never sacrificed my values or my beliefs including my pursuit of a more equitable, diverse, and inclusive world.

My mother and grandmother always said that all money isn't good money and that we should save early and often to create a path to personal freedom. She also said that “you do what you have to until you can eventually do what you want to do,” and she wanted me to reach that moment as early as possible.

With my mother’s advice, I've worked to afford myself a level of financial freedom.. This is one reason working in family investment offices and teaching financial literacy within my family and community is so important. Maya Angelou said, "Develop enough courage so that you can

stand up for yourself and then stand up for somebody else." Financial freedom helps us be bold changemakers in paving the way for others.

It's interesting that as I reflect on this advice and the evolution of my career, the reality is that when I took a risk and stood up for what I believed in, I’ve found that I was not alone. I have found likeminded individuals and cultivated a career that is authentic to who I am as a person - the direct benefit of never being afraid to speak my truth. Overall, I have had more champions than antagonist. It has been an amazing career thus far and I am excited to go to work each day.

What changes would you like to see within the legal profession?

Hmmm, how much time do we have?

Our country is in a crisis, and we are one of the professions tasked with helping to guide our democracy to a better place. How can we do that if our profession is in crisis – especially concerning diversity, equity, inclusivity, health and wellness - which I believe are interrelated. The institutionalized and systemic racism of our country's history burdens all of us. Almost no one goes to work as their whole selves. We must understand that DEI isn't just buzzwords or for the underrepresented; it is a plea for all of us to find space to be ourselves.

The legal profession must spearhead real change in our laws and policies. Still, we must also look within to ensure that diverse perspectives are represented as we push for changes, especially in the criminal justice system.

How do we move the needle on DEI in the profession while improving the health and well-being of lawyers in ways

that help our nation? There are six shorthand takeaways for law firms and law departments that, for me, are critical steps. In many instances, corporate law departments are advancing more rapidly than their law firm counterparts and there are lessons that can be learned from that success. The steps are:

1. Assess shortcomings and get help from external professionals since we all have blind spots.

2. Set metrics for progress because it is human nature that we only move what we measure.

3. You should begin at the beginning with critical attention to eliminating bias in hiring, creating internships and other pipeline programs.

4. Address employee retention and promotion without falling under the spell of the revolving door of your metrics – which can seem as if the needle is moving on DEI but instead reflect new diverse employees replacing others and overall dissatisfaction and departures.

5. Make money matter by creating incentives that reward leaders for success and hold them accountable. Use your resources to offer enrichment opportunities to bridge the gaps created by our nation’s past to achieve equity, and

6. Be bold and willing to overhaul processes and dismantle internal norms.

Let me conclude by saying, diversity adds to everything we do. Diverse perspectives matter. The world is becoming increasingly interconnected, and we must value diversity, equity and inclusivity if the U.S. is to remain a dominant player on the world stage.

If you are reading this and share my views, contact me and follow me at shawnrwhite on LinkedIn and Instagram for more ways that we can move the DEI needle together. 

All views expressed are my own and do not reflect the views of my employer.

To me, being authentic means that there is no title or money for which you should sacrifice your character or values.

Front

Compliance Takes Center Stage for GCs

By now, even the folks at Thomson Reuters Institute are sick of the more-with-less challenge. In the Executive Summary leading their 2023 report, State of the Corporate Law Department, they call it an “eye-rolling cliche among corporate law departments.” “As a result, TRI says, “even at a time when pressure to control outside counsel costs remains high, corporate law departments, by and large, anticipate increasing legal spend across practices, global regions, and industry sectors.” Much of that results from a shift in focus from 2019 to 2022. The key change worldwide is the increased importance of compliance/regulatory requirements, which, as the accompanying chart shows, shot from fifth place on the list to first place. “The top priorities for corporate law departments globally fall into familiar categories,” TRI says, “A shifting regulatory landscape has caused compliance to rise to the top of the priority list for many companies.” That said, compliance is #1 globally, including across Europe and Asia Pacific. Cut to the U.S., however, and compliance drops to #5 on the list and cost control leaps to the top.

GLOBAL

COMPLIANCE

RISK/LITIGATION MITIGATION

UNITED STATES

(including $50M+ cos.)

COST CONTROL

COMMERCIAL LEGAL ADVICE

COST CONTROL EFFICIENCY

COMMERCIAL LEGAL ADVICE

RISK/LITIGATION MITIGATION

EFFICIENCY COMPLIANCE

SHO R T TA K E S

Don’t Miss the VSD Train

In this piece from TheCorporateCounsel.net, Dave Lynn, a partner at MoFo, discusses the DOJ’s new voluntary self-disclosure (VSD) policy, designed to encourage companies to self-disclose misconduct to the feds, cooperate in investigations, and remediate misconduct. Lynn frets that VSDs stir up difficulties because the decision requires careful weighing of potential benefits and unpredictable outcomes when you hand an investigation to the DOJ. “At least this new VSD policy provides some clarity and uniformity as to how U.S. Attorney’s Offices will approach self-disclosure situations,” Lynn says.

Source: TheCorporateCounsel.net

Privacy Risk Primer

Jerry McIver, data privacy officer for Trustpoint.One, discusses managing data privacy risk. “Understanding the location of your information is critical,” says McIver, who advocates for data mapping, which can help a company understand the extent of its risks by identifying its use of information, whether it is duplicative, the required security, and the people who have access. What are common mistakes? McIver names three: overcollection of data; storing duplicative data, which is increasingly common with collaboration apps; and not understanding why a team is processing certain records.

Source: ABA Journal

The Win-Win of Secondments

Michelle M. Graham, senior legal editor for Thomson Reuters Practical Law, discusses two intertwined problems, more work/less staff and lack of a clear career path for many associates, and sees a common solution: secondments. “Particularly within law firms with adequate leverage, secondments can prove to be an effective way to utilize associates,” writes Graham, adding that secondments, often discounted as costly and cumbersome, may be approaching their moment. “[T]he time may be right for secondments to see a surge in popularity, and those law firms that take the best advantage of this strategy may be best positioned to reap the long-term rewards,” she writes.

Source: Thomson Reuters Practical Law

In-house Career Killers

The 10 Things mastermind takes a different approach with his 10 not-to-dos because “being an in-house lawyer is much harder today than it was 10 years ago, and the wrong move can be your first-class ticket to Unemploymentville.” For example, dress the part. “It is highly unlikely that the board of directors or the C-suite want to see their lawyers dressed like they are getting ready to install a new fence . . .” Don’t be a jerk. “Sometimes this strategy works if you are bringing in millions of dollars in billings. But, it rarely works in the in-house legal world.” And take admin chores seriously. “If you’re asked for your input on evaluating staff or paralegals or other attorneys, don’t half-ass it.”

Source: 10 Things You Need to Know as In-house Counsel

Merger Shakes Up Duopoly

It’s a deal that “will reshape the legal research and legal technology landscape on a global basis and threaten the longstanding “Wexis” legal research duopoly,” according to legal tech guru Bob Ambrogi. vLex and Fastcase have joined to form a mammoth entity with the world’s largest lawyer subscriber base and a legal research library of more than 1 billion documents. Oakley Capital, a European private equity investor, and Bain Capital Credit, a global credit specialist with $42 billion in assets under management, have big plans for the combined business, including hastening development and deployment of AI tools for the legal market. The combined entity, vLex Group, and will be led by Lluís Faus.

Source:

Source: LawSites

Chatting Up E-Discovery

In this piece on e-discoveryteam.com, discovery guru Ralph Losey the very chatty bot from Open AI, ChatGPT, to rewrite the 14 Sedona Principles at an 11th Grade and a 2nd Grade level. The results are fun and enlightening. Indeed, Losey says thee 2nd grade rewrites knocked his socks off. He’s also dazzled by the 11th Grade version. “[T] he first thing you may notice is the 11th grade rewrite is a lot shorter,” Losey writes. “ChatGPT is noted for being wordy, verbose even, yet it is still far more concise then the Sedona original. Hmm. Perhaps the shortened, easier to read version changes the meaning somehow, but I don’t think so. Seems to me like the AI did a pretty good job.”

Source: eDiscovery Team

Briefly

AAA Mediation.org® & MC3 Collaborate on Broad ADR Initiative to Strengthen Mediator Certification & Education

Weil Advises A&M Capital Europe on the Acquisition of a Majority Stake in World of Sweets and Bobby’s OpenText unveils the newest Cloud Editions Innovations and reimagining the Future of Information Management

DISCO Expands Global Footprint with Entry into India

ESG lawyer Mauricio Llamas to join Hogan Lovells in Mexico City

Joe Ostoyich and Will Lavery Bolster US Antitrust Practice at Clifford Chance

Exterro Granted Patent for Innovative Data Source Discovery Software

Akin Advises Vista Credit Partners in $125 Million Financing for Arcadia

Energy Partner Omar Samji Joins Weil in Houston

Steve Flores Expands Compensation & Benefits Capabilities for Cooley in Chicago

Akin Advises Nordic Trustee AS on Restructuring of DOF ASA and Subsidiaries

iManage Announces Strategic Growth Investment by Bain Capital Tech Opportunities

Mitratech Acquires Circa and Trakstar, Unifying Top Technology Platforms Through Continued Investment in HR Compliance & Talent Strategy

Required Reading

Too busy to read it all? Try these books, blogs, webcasts, websites and other info resources curated by CCBJ especially for corporate counsel and legal ops professionals.

BLOG: Above and Beyond KM

Mary Abraham believes working in law firms can be hazardous to your health. “Specifically, working with constant interruption and too little sleep has an impact on the body similar to alcohol and substance addiction,” she writes. “The impact on work product also is bad unless the lawyer involved expends more of their depleted resources to catch and fix errors that result from exhaustion or distraction.” Clearly, she says, a change is needed. But the usual drivers of change, client demands and market pressure, are not going to get it done. What might work, however, is partner activism. “This doesn’t mean revolution, but it does mean that partners step up and exercise their influence to create healthier working conditions within their firm,” she writes. “Specifically, this means exercising restraint in assigning work and setting standards. To be crystal clear: this absolutely is NOT about lowering standards. But it is about setting and maintaining standards that are healthy rather than excessive.”

MAGAZINE: Inc.

Everyone runs up against a project they are dreading. You know the one. It’s that item on your to-do list that keep getting bumped down, and down, and down. It’s been on the back burner so long that it’s a fire risk. Check out this piece from the ever-practical Inc. for 6 steps to help you unstick yourself and move the project from hell forward: 1. Give yourself a pep talk. “Beyond working yourself up to actually grab the reins and get started, this is also a good opportunity to determine what exactly is holding you back from beginning that project.” 2. Force yourself to commit. “Shut yourself in a quiet room with only the things you need for that project. Do your best to stay away from the lure of your phone notifications or your inbox, and at least do something related to that big task -- even if it's just getting all of your thoughts scribbled on paper.” 3. Break it down. “When you do finally sit down to make some progress on that project, the best place to start is by breaking it down into smaller milestones. What bite-sized chunks can you separate it into?” 4. Find the right timing. “You'll read a lot of advice that recommends you tackle those cringe-worthy tasks or projects first thing in the morning. And, I can understand the benefit in getting those things out of your way. But, everybody's different in this regard. If you're not at your most focused or energized in the morning hours, it'll be that much more challenging to talk yourself into actually getting started.” 5. Don’t be afraid to ask for help. “Whether you just want to bounce some ideas around with someone or get some early feedback on a piece of your project, involving other people motivates you, provides a sense of accountability, and ultimately improves the quality of your end product.” 6. Stay focused on the finish line. “You know how rewarding it is to finally cross that monster off your to-do list. So, always keep that in your mind. Your hard work will be more than worth it when you finally get to bid this groan-worthy project adieu.”

Contributors

Thanks to the law firms, technology companies, alternative legal service providers, management consultants and other supporters of corporate law departments who share their insights and expertise through the CCBJ network. Your participation is appreciated.

Lilit Asadourian is a partner at Barnes & Thornburg. Lilit handles high-stakes financial services and insurance recovery litigation in courts across the country for some of the largest financial institutions and Fortune 500 companies. With more than 20 years of experience in private practice leading complex insurance coverage and commercial disputes, combined with in-house experience at Bank of America and Fifth Third Bank, Lilit brings a unique skill set. Lilit’s practice focuses on representing corporate policyholders in breach of contract and bad faith disputes involving first- and third-party coverage claims arising under errors and omissions (E&O), directors and officers (D&O), employer liability (EPLI), fiduciary, cyber, general liability, crime, and property policies.

Mark Chavez serves as Ocean Point Terminals’ General Counsel and Secretary, and brings more than 19 years’ of legal expertise to the Company, with almost 18 years’ of experience focused almost exclusively in the energy industry. Before joining Ocean Point Terminals, Mark served as the Assistant General Counsel, Commercial & Refining for PBF Energy, and provided support in all legal areas to PBF’s east coast refineries, while also supporting PBF’s commercial, credit and rail groups.

Miles Indest is an Associate with McGuireWoods in Houston. Miles enjoys helping companies protect their intellectual property and resolve high-stakes litigation. Miles has significant experience representing energy and technology companies in complex disputes involving contracts, environmental issues, government investigations, and trade secret theft.

Meghaan Madriz is a Partner with McGuireWoods in Houston and Austin. Meghaan Madriz advises employers of all sizes on their employment-related matters and zealously defends them against employee claims in court, arbitration, and administrative proceedings.

Yasser Madriz is the managing partner of McGuireWoods' Houston office. A trial lawyer with extensive experience handling complex, high-stakes litigation in federal and state court, he plays key roles in various multi-billion dollar cases filed throughout the United States. He represents both plaintiffs and defendants from a wide array of industries in a broad range of business, commercial, and energy litigation matters.

Alice O'Donovan is an Associate with McGuireWoods in London. Alice is an associate in the firm's Business and Securities Litigation department. She represents a diverse range of clients in complex multijurisdictional cases in the High Court, the Court of Appeal, and in international arbitrations in forums such as the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC).

Thomas E. Spahn practices as a commercial litigator. He regularly advises Fortune 500 companies on such high-stakes issues as properly creating and preserving the attorney-client privilege and work product protections when conducting corporate investigations, when hiring outside consultants, when dealing with the government, and during other daily and extraordinary situations. He also advises in-house counsel on ethics issues, including conflict of interest, confidentiality, and dealing with corporate wrongdoing.

Shawn White is an experienced corporate executive and a dedicated public servant with a strong background and proven record of success in both corporate and nonprofit settings. In 2021, she joined as General Counsel, Smith Family Circle, the family office that manages the assets and business enterprises of the Smith family (Will Smith, Jada, Willow, Jaden, Trey, and their family circle), based on the principle of improving lives. Previously, she served as a member of the executive team of The Barack Obama Foundation as General Counsel, and its seniormost attorney, responsible for leading the legal team and the provision of all legal services.

Former DOJ Criminal Division Prosecutor Justin Givens Joins McGuireWoods in Los Angeles

Dan Haley Named New General Counsel and Corporate Secretary at Guild

Frank Monaco Expands US Insurance Practice at Clifford Chance

Akin Advises Princeton Equity Group in Strategic Investment in Stretch Zone

Barnes & Thornburg Welcomes Attorneys and Legal Professionals to Nine Offices

Akin Gump Launches OverRuled, an Innovative Legaltech Solution

Consilio Releases 2022 Diversity & Inclusion Report, Showcasing Significant Traction on Key Initiatives

Weil Guides WellSpring Consumer Healthcare in Acquisition of Bayer AG Skin Care Brands

Epiq Expands Consulting Capabilities to Launch Epiq Flex IG Talent

McGuireWoods Partner Summer Speight Appointed to U.S. Magistrate Judge

Wali W. Rushdan II Joins Barnes & Thornburg as Real Estate Partner in Delaware

Clifford Chance advises iStar Inc. on merger with Safehold Inc.

Muckle LLP chooses BigHand Business Intelligence for improved financial transparency

Pulse

Insurance Tools for the Corporate Executive

LILIT ASADOURIAN BARNES & THORNBURG

 Lilit Asadourian sits down with CCBJ to discuss the basics of insurance coverage that in-house counsel should understand and shares some best practices for maximizing and protecting your company’s insurance assets.

CCBJ: Please tell us about yourself and how you came to this role?

I’ve been practicing law in California for over 20 years, in Los Angeles and in San Francisco for a period of time. I attended UCLA both for undergrad and law school. However, I was born in the former Soviet Union and am Armenian by background.

I’ve been a partner with Barnes & Thornburg for a year and now serve as co-chair of the Insurance Recovery and Counseling Practice Group. We only represent policyholders in our practice. Prior to that, I was a partner with another Am Law 100 firm for many years. I have been practicing insurance recovery for the better part of my career, along with high-stakes financial services and commercial litigation. I also served on secondment as in-house counsel at two national banks after the financial crisis. I currently reside and work out of Los Angeles, but my practice tends to be national because of the clients that we service and the jurisdictions in which these cases tend to be litigated.

What are some of the basics of insurance coverage that in-house counsel should understand and direct their attention toward?

I advise my clients to make sure senior management within the legal department has at least a yearly health check with the department in the organization that owns the insurance program. Insurance policies are typically not procured by the corporate legal department; they’re probably being procured by either somebody in the CFO’s office or, for larger organizations, in the risk management department. But there needs to be communication between the corporate counsel and the risk management department to make sure that the policies being purchased are consistent with the company’s risk profile and the company’s needs.

Sometimes we see gaps where the risk management department or the CFO is so focused on premiums that they’re not really paying much attention to the policy language itself. That’s where companies run into trouble—when they think they have coverage but discover

an unexpected exclusion or gap because there was not investment of time on the front end, during the policy purchase, to really evaluate whether they’re getting everything they think they need. There also needs to be a balance on cost to be sure, but beyond the premiums, it’s important to make sure there is analysis and negotiation of the policy terms.

Clients should ask for a summary of the key policy coverage grants and the exclusions, particularly for the financial lines or the critical corporate policies that protect the directors and officers. That would be the directors and officers (D&O) policy, the cyber policy and often the errors and omissions (E&O) policies, which would protect the company for any risks of malperformance or negligence in the business functions as it relates to their customers. These policies tend to be more bespoke, so there’s more variation from one

company to another. These policies also lend themselves to more influence and revisions—if time is put in during the purchase process to evaluate the language.

A company’s insurance program should include three or four very basic policies. There should be a commercial general liability policy and a commercial property policy, particularly if you have brick-and-mortar locations or you have inventory, etc. And then a D&O policy. In many instances, companies are also buying E&O policies and, in some instances, employment liability policies too, particularly if there is a big workforce and a supervisory structure.

Many companies now are also buying cyber policies separate and apart from D&O and E&O policies. Those are the layers of coverage that are available to companies and the ones corporate counsel should have a basic understanding of; these are the wide-ranging types of policies that will respond to different claims.

Please tell us some best practices for maximizing and protecting your company’s insurance assets.

Where companies tend to run into trouble is where they’ve purchased a really good policy, but don’t have a good plan for when they’re going to notify the insurers of potential issues that might give rise to a claim. Or they get a demand letter from a counterparty or shareholders and don’t think it is necessary to give notice to the insurer. It is best to create a consistent plan for when and how new claims get tendered to the insurers. Most policies require reporting a

claim as soon as practicable after certain people within the organization have knowledge of it.

Many of these policies are what are called “claims made and reported” policies that only work on a 12-month cycle. So if you receive a claim and you wait to notify the insurer after the policy is expired, the insurer is likely going to take the position that you didn’t give notice in time. It won’t matter whether or not the insurer was prejudiced by the late notice when dealing with these “claims made and reported” policies. So it’s very important for the corporate legal department to have a plan for every time a new claim comes in the door, or there’s a new incident that could give rise to a claim; a well-rehearsed and well-documented procedure that people can execute on. Because not every corporate counsel sees every issue, so those who are receiving the demands should be trained to at least escalate to somebody within the legal department or the risk management department so it can be determined how and whether to provide notice to the insurance company.

Secondarily, I really encourage there to be a feedback loop between the legal and risk management departments to make sure that some best practices are being followed. Such as, after the insurer has been notified of a claim that there’s a process for responding to the insurer’s request for information; that you’re cooperating with the insurer, providing status updates on the claim; that you’re not taking any settlement offers or entering into any settlement discussions without informing the insurer of the prospect of settlement; and, where appropriate and necessary, that you’re getting the insurer’s consent to settle. Not doing those things is an easy way to jeopardize the policy coverage.

So the key takeaways are: Have a process for noticing, make sure you’re providing information that is being requested, have a feedback loop with your risk management department, and make sure you’re not settling claims without insurer notice.

Corporate counsel and risk management executives need to communicate to ensure the policies being purchased are consistent with the company’s needs and risk profile.

Are there any particular industry sectors that have had growing insurance claims recovery matters, such as energy and renewable energy, crypto, cybersecurity or others?

Cyberattacks have been a concern for at least the last decade and are a growing concern as bad actors proliferate and evolve their techniques, whether that’s phishing, hacking or data breaches. All of our clients are very focused on cyber risk and really want to make sure they have the best possible cyber policies in the market so they have the least disruption to their business in the event of a cyberattack that either stalls their systems or exposes them to potential third-party liability because of a breach of private information.

What I’m seeing evolving now is a significant amount of litigation around the unlawful collection and distribution of biometric information, such as a fingerprint, voice print, and facial recognition software. So the next phase of privacy breach litigation likely will involve biometric information.

Also, many hospital systems are now being subjected to litigation for allegedly collecting and distributing private medical information through various internet sites. Data privacy generally is a growing concern for all companies that collect any sort of customer personal information.

As to the companies or private equity firms that invested in, for example, crypto, we anticipate that, in the next year or two, they’re going to see shareholder and investor claims alleging that, by investing in cryptocurrencies, they mishandled shareholder and investor funds and breached fiduciary duties, particularly triggering coverage under D&O policies. Also SPAC-related claims are likely to increase and trigger coverage under D&O Policies.

What insurance policies are typically triggered when a company is sued?

There’s no single policy that responds to all claims. The way a well-designed insurance program works is that the company buys four or five different lines of coverage— sometimes six or seven depending on the company—and they’re all meant to cover different risks. So which policy responds will depend on who is making the claim and what the allegations are.

If you are a private or public company facing a shareholder claim and your investors are claiming there was a breach of fiduciary duty by the directors and officers, typically your D&O policy is going to respond to that. If you have a government investigation, whether it’s a Securities and Exchange Commission subpoena or a civil investigative demand, or some other agency is investigating the company, that could trigger either a D&O policy or E&O policy.

If you have a claim by a customer or a class action by a group of customers taking the position that you wrongfully handled their accounts or you violated certain laws in the process of providing certain services to them, such as lending,

repossession, foreclosure, credit issues, etc., those are all typically going to trigger an E&O policy. Those are designed to protect the company against claims by customers for the professional services the company provides.

If you’re being sued because there’s an alleged data breach of private information, you typically would start with your cyber policy, and then your commercial general liability policy may also respond to that because CGL policies also have a personal injury component that sometimes responds to privacy or advertising-injury claims. If you have a claim by an employee for wrongful termination or harassment, etc., that would trigger your employment practices liability insurance.

So there’s generally a suite of policies that are all meant to work together, each of them covering a different risk. What coverage issues typically arise for insureds during litigation or class action lawsuits?

The coverage issues that typically arise are, broadly speaking, that there would’ve been coverage under the policy, but the insurer was not timely notified. That’s why notice is an important component for protecting your investment in insurance. Insurance should be viewed as an asset of the company. We frequently see companies that have purchased insurance, but because notice was not provided timely, the insurer will raise the defense that there’s no coverage because of lack of timely notice. This is a gift to the insurer.

We also frequently debate with insurers about whether a written notice from a government agency asking for information rises to the level of a claim under the policy, such that the insurer needs to pay for defense costs in responding to that subpoena.

Other issues that arise involve specific exclusions that come as a surprise to the company. I’ve had clients who are in

a particular line of business and, unbeknownst to them, there’s a broad exclusion in the policy that basically says anything that arises out of this particular line of business is excluded. Well, what was the point of that policy? Somebody wasn’t paying attention when the policy was placed. These types of surprise exclusions often catch companies off guard because they didn’t realize a certain risk was either completely excluded or limited.

Other broad issues that we commonly see are insurers taking the position that the company had prior knowledge of particular issues that later gave rise to a claim but didn’t properly complete the application process or inform the insurer that a particular event had happened or there were claims brewing behind the scenes. At times, the insurance company will allege the insured basically misrepresented its status and the carrier insured the risk without fully understanding the company’s risk profile and seek rescission of the policy.

We also see insurers trying to take the position that, because there are fraud allegations or intentional conduct allegations, they are not responsible to provide any coverage, including defense costs, for those types of claims. 

Lilit Asadourian is a partner at Barnes & Thornburg. Lilit handles high-stakes financial services and insurance recovery litigation in courts across the country for some of the largest financial institutions and Fortune 500 companies. With more than 20 years of experience in private practice leading complex insurance coverage and commercial disputes, combined with in-house experience at Bank of America and Fifth Third Bank, Lilit brings a unique skill set. Lilit’s practice focuses on representing corporate policyholders in breach of contract and bad faith disputes involving first- and third-party coverage claims arising under errors and omissions (E&O), directors and officers (D&O), employer liability (EPLI), fiduciary, cyber, general liability, crime, and property policies. Reach her at lilit.asadourian@btlaw.com

Supreme Court Fumbles Attempt to Define Privilege Standard

THOMAS SPAHN M C GUIREWOODS LLP

Part I

On January 23, 2023, the U.S. Supreme Court took the unusual step of dropping a case after oral argument. In re Grand Jury, 23 F.4th 1088 (9th Cir.), cert. granted, 143 S. Ct. 80 (2022), cert. dismissed as improvidently granted, 143 S. Ct. 543 (2023) (per curiam). Many commentators have noted the bizarre oral argument, in which both the plaintiff and the government seemed to shift their positions on the proper privilege standard. But what was the basic issue, why did the Supreme Court back away, and where does the Supreme Court's move leave the law?

The story starts in 2014. In United States ex rel. Barko v. Halliburton Co., the court adopted a narrow version of the widely articulated "primary purpose" test for privilege protection — holding that "[t]he party invoking the privilege must show the 'communication would not have been made "but for" the fact that legal advice was sought.'" 37 F. Supp. 3d 1, 5 (D.D.C. 2014) (citation omitted). The court held that the privilege did not protect communications during Kellogg Brown & Root (KBR)'s investigation into possible overseas fraud, because the investigation "resulted from the Defendants['] need to comply with government regulations." Id. The D.C. Circuit Court vacated, with Judge Kavanaugh noting that the privilege could apply to KBR's investigation and other similar investigations "even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion." In re Kellogg Brown & Root, Inc., 756 F.3d 754, 758-59 (D.C. Cir. 2014).

Only a few district courts have adopted what became known as Judge Kavanaugh's "one significant purpose" standard, and only one circuit court (In re Grand Jury, supra) had anything nice to say about it. The next two weeks' Privilege Points will surmise why the Supreme Court backed away, and what might happen next.

Part II

Last week's Privilege Point described the Supreme Court's failure to decide between a "primary purpose" and a "one significant purpose" privilege standard. Everyone wonders why the Supreme Court dropped the case. The best explanation may be that the court realized that it should have waited for an internal corporate investigation case like KBR. In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014).

In re Grand Jury, 23 F.4th 1088 (9th Cir.), cert. granted, 143 S. Ct. 80 (2022), cert. dismissed as improvidently granted, 143 S. Ct. 543 (2023) (per curiam), involved a governmentinitiated criminal tax investigation. Since the District Court's file was under seal, we don't know much about the context or the substance of the withheld documents — unlike many civil investigation cases. And of course our common law advances most efficiently and fairly when based on incremental rulings in specific situations (even

about specific withheld documents) — rather than in some one-size-fits-all legal doctrine pronouncement. So the Supreme Court might have done better by waiting for a civil investigation case with a lengthy document-specific district court opinion to sink its teeth into. It is unfortunate that the Supreme Court did not at least reject the extreme "but for" standard, under which the privilege presumably would not protect most if any documents created during an investigation mandated by government regulations or even some internal corporate policy.

The good news is that the government did not argue for a draconian "but for" standard during the Grand Jury oral argument. In fact, the government lawyer said "we completely agree with the result" in KBR (Transcript of Jan. 9, 2023, Oral Argument at 76, In re Grand Jury, 143 S. Ct. 543 (2023)). Next week's Privilege Point describes the opportunity for the Supreme Court to address a similar dichotomy of approaches in the work product arena.

Part III

The last two Privilege Points (Part I and Part II) addressed the Supreme Court's abandoned attempt to address the abstract "primary purpose" versus "one significant purpose" privilege standard in the absence of specific facts about particular documents. Interestingly, the Ninth Circuit's In Grand Jury decision mentioned what it called the "because of" test in the work product arena — before noting the inherent differences between the attorney-client privilege and work product protection. 23 F.4th 1088 (9th Cir.), cert. granted, 143 S. Ct. 80 (2022), cert. dismissed as improvidently granted, 143 S. Ct. 543 (2023) (per curiam). We will see if the Supreme Court takes the hint.

For decades, some circuits (most notably, the Fifth Circuit) have limited work product protection to documents that will be used to "aid or assist" in litigation. Other circuits have endorsed a much broader "because of" standard, which extends work product protection beyond that narrow range — as long as the documents were created

"because of" litigation or anticipated litigation, and would not exist in the same form but for that litigation. In some situations, courts from different parts of the country have simultaneously disagreed. For instance, the court in Hempel v. Cydan Development, Inc., Case No. PX-18-3040, 2020 U.S. Dist. LEXIS 153208, at *15 (D. Md. Aug. 24, 2020), rejected work product protection because a document was "not written with any purpose of actually assisting Plaintiffs or their counsel." Just three days later, the court in Profit Point Tax Technologies, Inc. v. DPAD Group, LLP, No. 20-mc-0009, 2020 U.S. Dist. LEXIS 156639, at *182-83 (W.D. Wis. Aug. 27, 2020), protected as work product documents "prepared because of disputes that would otherwise have been litigated." It is easy to envision documents that fail the "aid or assist" standard but satisfy the "because of" standard. For example, a company worried about having to raise money to pay for a possible loss in pending litigation might create documents focusing on where it will find the money — which presumably would satisfy the "because of" standard, but not the "aid or assist" standard.

This dichotomy differs from — but parallels — the privilege standard debate that will continue after Grand Jury. With any luck, the Supreme Court will address this inherently federal issue while on the lookout for an extensively litigated documentintensive case to use in rejecting the frighteningly narrow "but for" privilege standard. 

Thomas E. Spahn practices as a commercial litigator. He regularly advises Fortune 500 companies on such high-stakes issues as properly creating and preserving the attorney-client privilege and work product protections when conducting corporate investigations, when hiring outside consultants, when dealing with the government, and during other daily and extraordinary situations. He also advises in-house counsel on ethics issues, including conflict of interest, confidentiality, and dealing with corporate wrongdoing. Reach him at tspahn@mcguirewoods.com

Moving Toward a Renewable Energy Future

MARK CHAVEZ OCEAN POINT TERMINALS

CCBJ: What should our audience know about the energy sector and what to expect coming down the pipe in 2023?

The current economic environment in general, as well as some recent banking failures, could potentially have an impact in the energy sector in a couple of different areas during the remainder of 2023. In the emerging energy technology area, the loss of access to capital by virtue of certain bank collapses, as well as rising interest rates, may negatively impact companies attempting to get financing. In the oil and gas sector, if you have a recession this year, as some expect will occur, that may push crude prices down and negatively impact the earnings of energy companies operating in the upstream. Conversely, for companies that store petroleum products, a recession would likely cause an increase in storage rates and drive earnings up for companies operating storage terminals We saw this during the pandemic and could see something like that on a smaller scale in the latter part of 2023 if interest rates continue to rise and the economy slips into recession.

Long term, I believe we will continue seeing the energy industry move towards decarbonization, even within the oil and gas sector itself. For example, my company, Ocean Point Terminals, stores hydrocarbons, including crude oil, jet fuel, gasoline, and other similar products, but we are currently working on projects to utilize solar power and other clean fuels to generate the energy that powers our operations. We are adopting these alternative fuel sources to reduce costs and improve our emissions profile. No matter your industry, everyone is looking to create the ideal energy portfolio.

How important is it for companies to have a strong ESG score?

It’s very important for a couple of reasons. At its most basic level, a high ESG score indicates that you’re doing the right

thing in terms of addressing your company’s environmental, social and governance responsibilities in an effective and responsible way, and that you’re conducting your business with consideration given to the effects your company has on the communities in which it operates. A strong ESG score is also critical in terms of ensuring a company’s access to capital. You are starting to see financial institutions focusing on ESG scores because they want to invest in a way that makes sense for them, not only financially, but socially as well. So, if you, as a company, are not doing everything you can to ensure you are operating in an environmentally responsible way, contributing to the communities in which it operates, and appropriately governing your business, you’re doing a disservice to, not only those around you, but to yourself by potentially shutting off access to certain capital markets.

All the companies I’ve worked with spend a significant amount of time and effort evaluating their ESG performance and exploring ways to continuously improve. Given the state of the world, I only foresee ESG scores becoming more and more important over time.

Why do you believe the average consumer is still hesitant when it comes to renewable energy?

People gravitate to the familiar and are creatures of habit. So, as the world changes, many people tend to go with what they know rather than consider alternative sources of energy, whether renewables, biofuels, liquified natural gas, wind, solar or others. Secondarily, I believe there is also some level of hesitation with respect to cost and investment. For example, if you want solar panels in your home, you may be looking at a cost of between $30,000 and $70,000 for panels and installation, depending on your home’s square footage, the amount of shade you get, the roof’s age, and other factors. Whether you’re a company or a consumer, you have to make the choice to accept that initial cost before you can realize the benefits.

Having a balanced portfolio of energy sources at your disposal, however, makes sense from an environmental and cost perspective. As a result, as time goes on you will see more and more fuel sources in the market. And, as they become more present in the market, people will more readily adopt these solutions and move us towards a more balanced energy portfolio. It’s just going to take a little bit of time.

What verticals (e.g., retail, banking, marketing, etc.) do you see being targeted in the energy sector right now?

Whether to be vertically integrated or specialized in one sector is always going to be a company-by-company answer that is driven by each entity’s own unique strategic vision. I’ve worked with several energy companies, and each has approached integration differently. Some, are very integrated, having assets in all sectors of the energy industry, as well as supporting marketing groups

and perhaps even captive insurance companies within its organizational structure. This level of integration provides a natural hedge because when one sector is under performing, some of those losses may be offset by other units within the organization. Other companies, however, prefer to maximize profits in one area and may spin off their midstream or downstream assets, as an example, depending on how they want to unlock the value of their enterprise. So, in short, I don’t think there’s any one answer to your question. It just ends up being a strategic call based on how each company evaluates market conditions in its sector and thinks it can best take advantage of them.

You served with the US Army. How do you believe your military experience better prepared you for your current role?

Serving in the United States Army was an invaluable

experience, and I really can’t thank the Army enough for the training they provided—the technical skills training, the organizational training, and the social training. The U.S. military offers the entire package, and it has had a significant impact on the way my career has gone.

When I entered the military, it was primarily to help pay for school. It was not something that I had previously given much thought to. But once I began serving, I began to appreciate the experience and understand that the skills I was gaining would benefit me for the entirety of my life. I was surrounded by an extraordinarily diverse set of soldiers representing all nationalities, all parts of the United States, all ages, different backgrounds and a multitude of life experiences. The Army taught us that, regardless of our differences, we could become an effective and cohesive team. Through that experience, I have gained invaluable communication skills. I have worked all over the world and the skills I gained in the military are a key reason why I have been successful in those endeavors.

Then there are my organizational skills. I always have a plan and do my best to get things done as quickly and efficiently as possible for my clients. As a soldier, you are taught how to approach your mission and how to adjust your plan to continually changing circumstances. Those skills apply equally to my work as an attorney and I approach the practice of law in the exact same way. In sum, the Army gifted me with a variety of positive character traits that I still carry with me and, knowing what I know now, I would have enlisted even if I had enough money to complete my education—that’s how valuable it was in molding me as a person.

What is your advice to others looking to advance within profession?

You need to have a plan for where you want to go and have a roadmap laid out in your mind. Sometimes life will introduce detours, but to be successful, you need to have a clear picture of where you want to end up. Without that focus, it becomes very difficult to maneuver through your career. And maneuver you must because, even with the best laid plan, life will inevitably throw a variety of obstacles at you, and you will have to recalibrate and adjust your plan to reach your goal. So, whether it’s something as simple as deciding whether you’re going to take this opportunity or that one, move to this geography or that one, you always need to analyze each decision and ask yourself, “How is this going to get me closer to my goal?”

At least that’s how I’ve approached my career. If we went through my resume, I could tell you exactly why I chose each position at that point in my life and tell you how that decision moved me closer to my end goal. And at the end of the day, all those decisions have led me to where I am now—general counsel of a world-class organization—which is where I’ve always wanted to be. 

Mark Chavez serves as Ocean Point Terminals’ General Counsel and Secretary, and brings more than 19 years’ of legal expertise to the Company, with almost 18 years’ of experience focused almost exclusively in the energy industry. Before joining Ocean Point Terminals, Mark served as the Assistant General Counsel, Commercial & Refining for PBF Energy, and provided support in all legal areas to PBF’s east coast refineries, while also supporting PBF’s commercial, credit and rail groups. Reach him at mchavez@opterminals.com

Even if you store hydrocarbons, solar and other forms of clean energy should be part of your energy portfolio.

We’ve Come to the End of the COVID-19 Outbreak Period Road

MILES INDEST, MEGHAAN MADRIZ, YASSER MADRIZ & ALICE O'DONOVAN M C GUIREWOODS LLP

On March 29, 2023, the U.S. Departments of Labor, Health and Human Services, and the Treasury (collectively, the departments) issued new guidance in the form of frequently asked questions (FAQs), Part 58, regarding the upcoming end of the COVID-19 Public Health Emergency (PHE) and National Emergency (NE) and the implementation of requirements under the Families First Coronavirus Response Act (FFCRA), the Health Insurance Portability and Accountability Act (HIPAA), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This guidance addresses various benefit plan-related issues that will arise in connection with the end of the NE as of April 10, 2023 (sooner than initially provided in the guidance), and the expiration of the PHE on May 11, 2023. Because President Biden signed a bipartisan Congressional resolution to end the NE as of April 10, 2023 (ending the NE more than four weeks earlier than anticipated by the guidance), some of the guidance, particularly timeframes triggered by the end of the NE discussed below, may be further updated or addressed by the departments.

While the departments previously issued multiple series of FAQs related to the implementation of the FFCRA and CARES Act, the March 29 guidance aims to clarify how the end of the PHE/NE will impact the coverage and payment requirements and provides plans and issuers with examples to aid in post-PHE/NE plan administration. A more detailed summary of the guidance is included below.

COVID-19 Diagnostic Testing

At the beginning of the COVID-19 pandemic, on March 18, 2020, Congress enacted FFCRA requiring group health plans and health insurance issuers to provide certain items related to diagnostic testing, detection and prevention of COVID-19 without imposing on those benefits any cost-sharing requirements, prior authorization or other medical management requirements. Subsequently, the CARES Act broadened

the range of diagnostic and prevention items that are required to be covered without such restrictions. The FAQs confirmed that the requirements under section 6001 of the FFCRA to provide COVID-19 diagnostic testing and related items do not apply to those items and services when furnished after the end of the PHE. Further, any plan or issuer that decides to continue to provide coverage for items related to diagnostic testing and treatment of COVID-19 after the PHE ends may impose restrictions (i.e., cost-sharing requirements, prior authorization or other medical management requirements). For example, a plan or issuer may decide to no longer cover without cost-sharing any over-thecounter COVID-19 tests purchased by a participant after the PHE ends; however, over-the-counter COVID-19 tests are medical expenses generally reimbursable by health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) to the extent a cost is not covered by a plan or issuer.

The departments did, however, encourage plans and issuers to continue to provide coverage without any such restrictions, including coverage of telehealth and remote care services, and to notify participants, beneficiaries and enrollees of the key information regarding changes to COVID-19 coverage (i.e., the date the plan or issuers may implement any costs or restrictions). In providing this encouragement, the departments reiterated that the prior notice rules regarding any material modification to terms noted in the summary of benefits and coverage (SBC) provided to participants are still applicable.

Specifically, notice of any material modification to benefits not reflected in the most recently issued SBC must be provided to participants and enrollees within 60 days prior to the date on which the modification will become effective. However, if a plan or issuer previously made a material modification to increase benefits or reduce or eliminate cost sharing for COVID-19 testing or treatment or for telehealth (or other remote care services), and revokes these changes because of the end the PHE, the departments will consider the plan to have satisfied its 60-day advance notice obligation if it:

• previously notified the participant, beneficiary or enrollee of the general duration of the additional benefits coverage or reduced cost sharing (such as, that the increased coverage applies only during the PHE); or

• notifies the participant, beneficiary or enrollee of the general duration of the additional benefits coverage or reduced cost sharing within a reasonable time frame in advance of the reversal of the changes.

Finally, the departments clarified that the reimbursements and cash-price posting requirements under the CARES Act do not apply to COVID-19 diagnostic tests furnished at the end of the PHE. However, the departments once again encourage providers to continue making the cash price of COVID-19 diagnostic tests publicly available for a sufficient time (e.g., at least 90 days) after the end of the PHE.

Rapid Coverage of Preventive Service and Vaccines for Coronavirus

The CARES Act and implementing regulations required non-grandfathered plans and issuers to cover, without cost-sharing requirements, any “qualifying coronavirus preventive service” (consistent with recommendations of the U.S. Preventive Services Task Force, Advisory Committee on Immunization Practices of the CDC) within 15 days following the applicable recommendation. A “qualifying coronavirus preventive service” includes certain items, services or immunizations (emphasis added) intended to prevent or mitigate COVID-19 that meets certain federal standards. The departments confirmed that these statutory requirements related to rapid coverage of preventive services for COVID-19 continue to apply to qualifying preventive services furnished by nongrandfathered plans after the end of the PHE. For plans

and issuers with a network of providers, the requirement to cover qualifying coronavirus preventive services outof-network, or to provide such services out-of-network without cost sharing, no longer applies after the PHE ends.

Extension of Certain Time Frames for Employee Benefit Plans Subject to ERISA and the Code

In 2020, in an effort to assist plans and participants with issues in meeting certain pre-established time frames during the NE, the departments issued a joint notice (see May 4, 2020, Federal Register notice and Employee Benefits Security Administration Disaster Relief Notice 2020-01). This notice provided that, effective March 1, 2020, certain HIPAA special enrollment, COBRA continuation coverage, and internal claims and appeals and external review periods must be disregarded (i.e., tolled) when determining the due dates for certain elections and other actions by plans and/or participants in such plans, and that such relief would continue during the NE and 60 days thereafter (referred to as the “Outbreak Period”). From a plan participant’s perspective, these elections/actions included, but were not limited to, the 30-day period (or 60-day period, as applicable) for requesting HIPAA special enrollment, the 60-day election period for electing COBRA continuation coverage, the due date for making COBRA premium payments, and the time period within which individuals may file a benefit claim or appeal under a plan’s claims procedures.

Subsequently, in 2021, the departments issued a clarifying joint notice (see April 12, 2021, Federal Register Notice and Employee Benefits Security Administration Disaster Relief Notice 2020-01 ) that limited the relief provided in the initial 2020 joint notice to the earlier of (i) one year from the date the plan/participant was first eligible for the relief provided under the 2020 joint notice (i.e., the extended action period), or (ii) 60 days after the announced end of the NE (i.e. the end of the Outbreak Period).

In the guidance, the departments reaffirmed the duration of the Outbreak Period and anticipate that the Outbreak Period will end July 10, 2023 (60 days after the end of

the NE). The departments emphasized that group health plans are not prevented from allowing longer time frames for participants to complete relevant actions, and the departments encouraged group health plans to continue to allow for longer time frames.

The departments also provided examples of how the rules operate after the end of the Outbreak Period.

Electing COBRA

Assume Participant A works for Employer X and participates in its group health plan. Participant A experiences a COBRA qualifying event, loses coverage on July 12, 2023, and is provided a COBRA election notice on July 15, 2023. Because the qualifying event occurred on July 12, 2023, after the end of the Outbreak Period, the extensions do not apply. The last day of Participant A’s COBRA election period is 60 days after July 15, 2023, which is Sept. 13, 2023.

Paying COBRA Premiums

Participant B participates in Employer Y’s group health plan. Participant B has a qualifying event and receives a COBRA election notice on Oct. 1, 2022. Participant B elects COBRA continuation coverage on Oct. 15, 2022, retroactive to Oct. 1, 2022. Participant B has 45 days after July 10, 2023 (end of the Outbreak Period), which is Aug. 24, 2023, to make the initial COBRA premium payment. The initial COBRA premium payment would include the monthly premium payments for October 2022 through July 2023 (the participant must “catch up” for coverage to be effective). Subsequent monthly COBRA premium payments would be due in normal course (first of each month, with 30-day grace period).

Importantly the tolling relief/extensions still apply during the 60-day period between the end of the NE and the end of the Outbreak Period.

Special Enrollment Periods After Loss of Eligibility for Medicaid or Children’s Health Insurance Program (CHIP)

Group health plans are required to provide special enrollment opportunities (generally 60-day election periods) to certain individuals who were eligible for but declined coverage, due to enrollment in other coverage, and subsequently lose eligibility for that other coverage. Since the beginning of the PHE, state Medicaid and CHIP agencies generally have not terminated coverage for anyone receiving those benefits (referred to as the continuous enrollment condition). Accordingly, as those Medicaid and CHIP agencies begin to reprocess eligibility for those coverage options, employer group health plans may encounter individuals who lose Medicaid and CHIP coverage from March 31, 2023 (the end of the continuous enrollment condition) until July 10, 2023 (the anticipated end of the Outbreak Period), and who are eligible for special enrollment in a group health plan governed by ERISA and the Internal Revenue Code until the date that is 60 days after the end of the Outbreak Period.

Similar to other sections of the FAQs, the departments note that group health plans are not prevented from permitting a longer special enrollment period for these individuals and are encouraged to do so. As an example of a longer special enrollment period, the guidance describes the process that the Centers for Medicare & Medicaid Services put in place for those individuals affected by a Medicaid/CHIP loss of coverage that choose Health Insurance Marketplace coverage (or unwinding SEP). Individuals eligible for unwinding SEP can submit applications for Marketplace coverage between March 21, 2023, and July 31, 2024, and

Miles Indest is an Associate with McGuireWoods in Houston. Miles enjoys helping companies protect their intellectual property and resolve high-stakes litigation. Miles has significant experience representing energy and technology companies in complex disputes involving contracts, environmental issues, government investigations, and trade secret theft.

Meghaan Madriz is a Partner with McGuireWoods in Houston and Austin. Meghaan Madriz advises employers of all sizes on their employment-related matters and zealously defends them against employee claims in court, arbitration, and administrative proceedings.

will have 60 days to select coverage once an application has been submitted.

High-Deductible Health Plans, Health Savings Accounts and Benefits for COVID-19 Testing and Treatment

In general, and in order for an individual to remain eligible to contribute to a health savings account (HSA), a highdeductible health plan (HDHP) cannot provide medical care services without cost-sharing prior to an individual’s satisfaction of the applicable minimum deductible. The departments relaxed this requirement during the PHE and NE with respect to certain COVID-19-related medical care.

The departments indicated that until further guidance is issued, an individual covered by an HDHP that provides medical care services and items for the purpose of diagnostic testing and treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible may continue to contribute to an HSA. In light of the anticipated end of the PHE and NE, the departments are assessing the appropriateness of continuing this relief. However, the departments indicated that any future modifications generally will not require HDHPs to make changes in the middle of a plan year, which will avoid the need for any midyear changes in order for an individual to remain eligible to contribute to an HSA. 

For further information, please contact one of the authors or any other member of McGuireWoods’ employee benefits team.

Yasser Madriz is the managing partner of McGuireWoods' Houston office. A trial lawyer with extensive experience handling complex, high-stakes litigation in federal and state court, he plays key roles in various multi-billion dollar cases filed throughout the United States. He represents both plaintiffs and defendants from a wide array of industries in a broad range of business, commercial, and energy litigation matters.

Alice O'Donovan is an Associate with McGuireWoods in London. Alice is an associate in the firm's Business and Securities Litigation department. She represents a diverse range of clients in complex multijurisdictional cases in the High Court, the Court of Appeal, and in international arbitrations in forums such as the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC).

LEGAL TECH STARTUP SPOTLIGHT

CEO: Kjerstin "KJ" Erickson

HQ: Las Vegas, NV

# of Employees: 38

Total Raised: $25.45M

Post Valuation: $46.73M

Growth Rate: 0.15% (91st %ile) @UpCounsel

www.upcounsel.com/

Description:

Operator of a legal platform intended for businesses to find and hire legal help solely based on their preferences. The company's platform provides free access to document collaboration software, a full-service billing platform to track income and quickly send invoices and receive payment, and free marketing opportunities for lawyers, enabling lawyers and clients to quickly connect, and seamlessly collaborate on documents and securely transact business.

Most Recent Financing Status

The company raised $3.9 million of equity crowdfunding in the form of SAFE Notes via Wefunder on December 10, 2021. Arora Project also participated in the round. Previously, the company raised an undisclosed amount of venture funding in the form of SAFE Notes from Arising Ventures on July 7, 2021. Prior to that, the company raised an undisclosed amount of Series 1 seed funding from PSR Law Firm (India) and PRMM USA on June 1, 2021.