The accounting and legal professions might never be the same and beyond handling deals for their New York offices and arranging memorials for colleagues who lost their lives on Sept. 11, any numbers of L.A. lawyers and accountants are starting to consider the fallout.
“Some folks are focusing only on those that were actually at Ground Zero, the people who were there and the companies that were there,” said David Steuber, co-chairman of the insurance recovery group at Howrey Simon Arnold & White LLP in Los Angeles. “This is in my mind too narrow of a view to take.”
For one thing, attorneys said they are re-evaluating how they store their documents.
Already, many firms keep originals at off-site storage facilities or on Zip files or storage devices that are updated sometimes twice a day. Law firms have even begun to e-mail their documents with new technology that allows for digital signatures.
Until now, the main reason for off-site storage has been to lower overall firm costs, as high-rise offices get more expensive. Now, those firms that don’t already store off-site have more reason to do so. Firms also are second-guessing storing at off-site facilities that are not fireproof.
Another issue is whether certain documents are legal using only copies, in the event the originals are destroyed. In most cases, they are, but there can be certain exceptions.
“There’s going to have to be a real effort to decide where to put things, such as actual negotiable documents, such as promissory notes,” said Marty Zohn, managing partner of Proskauer Rose LLP.
In addition, accountants said they are concerned about the immediate restraints on travel. In an industry where visiting clients is a daily event, accounting firms in Los Angeles have seen a noticeable drop-off in airline travel.
Greg Garrison, managing partner of the L.A. office of PricewaterhouseCoopers LLP, said the number of PWC executives in the air at any given time dropped to half its usual number the past few weeks.
And the use of videoconferencing and teleconferencing equipment has increased dramatically, he said.
“I think that is going to continue in terms of its usage for teleconferencing and videoconferencing,” he said. “But I would expect over the next couple of weeks, as things settle down in airports, we’ll be traveling anywhere and everywhere.”
New regulations
Accountants and lawyers have been swamped in the past few weeks with news about new regulations in their industry.
Most recently, the U.S. Securities and Exchange Commission said that it would relax timing and volume restrictions on companies seeking to buy back shares, said Philip Schimmel, partner in charge of the L.A. office of KPMG.
Other changes could be underway.
A federal bankruptcy bill struggling to make it into law could be revived since it includes information on Chapter 15 bankruptcies, which deal with international companies, many of which could be financially impaired by the U.S. economy and world events, Zohn said.
In addition, many tax attorneys are working with clients that received an extension on tax returns due Sept. 17.
The largest group of trial lawyers in the world, the Association of Trial Lawyers of America, announced on Sept. 14 that litigation attorneys should hold off on lawsuits regarding the tragedy. Although that’s not a regulatory move, many litigation attorneys see it as preceding government intervention that could quash many lawsuits.
“This is not an instruction or order. It’s a matter of common sense,” said Charles Finkel, a 22-year lawyer for Magana Cathcart & McCarthy in Century City, which specializes in aviation law. “I don’t think I’ve ever seen such a message before.”
Waiting for Congress
Upcoming congressional hearings could determine who is at fault for the Sept. 11 tragedy, after which many litigators believe the government will step in to aid victim’s families or limit the number of lawsuits. From the government’s perspective, Finkel said, forcing insurance companies to pay a large number of lawsuits will cause all insurance policy-holders to suffer.
But that doesn’t mean there won’t be lawsuits.
Chief among them in Los Angeles will be suits against the airlines and the airports for security issues, since many of the passengers who died were from Los Angeles and three of the four hijacked planes were headed toward the city. Many airline claims are handled by smaller firms in Los Angeles.
Defense attorneys could be thrown in the mix, as well, if their L.A. clients make a product that could have aided in the destruction of the World Trade Center or the Pentagon, said Julia Rider, a partner in the litigation department of Jeffer Mangels Butler & Marmaro LLP.
“Once you start picking apart everything, you look at the design of the buildings,” she said. “Was there sufficient fire exits? Were the stairwells designed properly? Were the sprinklers operating property? Then you can start working on the structure. There’s a theory that the contents of the building increased the flammability.”
Lawyers in business interruption insurance law also have been busy in Los Angeles because many local companies lost business during the tragedy. Others are simply concerned about whether they have the right protection in case of a similar disaster here.
Claims could continue for several years and many of them may become lawsuits if the insurance companies cannot pay, Steuber said. He said he expects most of that insurance work to fall to smaller firms since many of L.A.’s larger firms represent insurance companies.
