Should Law Firms be Owned by Non-Lawyers?

Fall 2012 Willamette Lawyer Cover

Mark C. Hoyt was interviewed for his thoughts by the Ethics Corner department in the latest edition of the Willamette University College of Law’s alumni magazine, Willamette Lawyer.


In light of the financial difficulties facing law firms, is it time to allow these firms to be owned by non-lawyers?

No, at least not because of financial pressures.  As lawyers, we have a unique place within society.  As Shakespeare noted, in many ways we are the gatekeepers of stability and access to justice.  As such, we answer to high ethical standards, which require us to place the interests of clients ahead of profit.  If, for the sake of relieving financial pressure, law firms are sold to outside investors, profit (which, let’s be real, is a motivator in every law firm any investor would be interested in owning) would be moved in front of our ethical obligations.  Thus, decisions related to protecting our client’s interests could fall prey to pure profit motives with decision makers who answer to no code of ethics.  Allowing investment to relieve financial pressures does not warrant such risks.  But should outside investors be able to buy and operate law firms like HMOs to make legal services more available to a broader spectrum of clients?  That would seem to pose another question!

– Mark C. Hoyt JD’92, managing partner at Sherman Sherman Johnnie & Hoyt, LLP

Willamette Lawyer strives to be a thought leader on legal issues that are primarily, but not exclusively, of significance to the Pacific Northwest. The magazine advances the mission of the law school by showing how members of the law school community are actively engaged in the dissemination of knowledge, the promotion of meaningful discourse and the consideration of new ideas. Willamette Lawyer earns the trust of its audience through respect for truth, fairness, free inquiry and the presentation of competing – and sometimes controversial — subjects.

You can find the latest issue and previous issues of the Willamette Lawyer here:

Habitat for Humanity Everest Build 2012

In October, Mindy Stubenrauch, Paralegal with the Banking and Lending Department of Sherman, Sherman, Johnnie and Hoyt, will be joining hundreds of volunteers from all over the world for Habitat for Humanity’s Everest Build in Nepal.

As part of its affiliation with Habitat for Humanity, North Willamette Valley Habitat for Humanity tithes each year to build homes overseas. This year Habitat International offered affiliates the option to designate their tithe to Nepal and in exchange, the affiliate can send a small number of volunteers to help build homes in that country.

In appreciation of the legal services provided by Gina Johnnie and Sherman Sherman Johnnie & Hoyt, the North Willamette Valley Habitat for Humanity affiliate chose to send a member of the firm on the build, along with a handful of other volunteers from the Willamette Valley area.

Bamboo house being built in Nepal (photo courtesy of Habitat for Humanity)

Volunteers at Everest Build 2012 will work alongside local families to build houses in Kavre, one hour east of Kathmandu, at the foot of the Himalyans.  The project involves building 40-45 houses in one week, using environmentally friendly, locally grown bamboo and sun-dried bricks.  In addition to providing sweat equity, each home partner family provides some of the raw materials such as timber, bamboo or mud from their own land.

Everest Build 2012 is a celebration of the 15,000 families in Nepal who have been helped by Habitat for Humanity in the past decade and a milestone on the path to providing safe, decent, affordable housing to 100,000 families in Nepal by 2016.

During this exciting week, Mindy will have the opportunity see what can be accomplished when families, organizations, communities and nations come together to build a future where everyone has a decent place to live.

To learn more about the Everest Build, Habitat for Humanity International or the North Willamette Habitat for Humanity, see the following links:

Habitat for Humanity – Mindy Stubenrauch’s Trip to Nepal

You can also follow Mindy’s posts during the build at our Facebook page.

For Better or Worse

Wedding venue booked?  Check.  Photographer selected?  Check.  Cake tasted?  Check.  Flower arrangements picked out?  Check.  Prenuptial agreement signed?  It should be.

It is no secret that negotiating a prenuptial agreement is unromantic and, at times, uncomfortable.  However, it is typically well worth it if the marriage fails.  As the rate of divorce rises, couples are becoming more interested in entering into prenuptial agreements before they marry.  Prenuptial agreements are not just for couples with a lot of wealth.  They are suited for couples that wish to put the financial cards on the table and agree on a method of division at the outset.

It is important to understand what the law is in Oregon without a prenuptial agreement.  Without an agreement otherwise, the court has the authority to divide all property owned by the parties, regardless of how held, including but not limited to jointly held marital property, separately acquired property, inherited property and property acquired prior to the marriage.  The court must make a division of property that is considered “just and proper”.  For couples who do not wish to leave this division in the hands of a judge, a prenuptial agreement is the way to go.

When it comes to drafting the agreement, there are many options.  Not all prenuptial agreements look alike.  The agreement should be tailored to the specific couple depending on the details unique to them, including but not limited to; their ages, current and future financial picture, health concerns, and family planning needs.  Some prenuptial agreements will be very lengthy while others may be very short.  A prenuptial agreement can be used to segregate assets that the parties already each have, and it can be used to segregate assets that one party may acquire in the future.  The agreement can specify how a couple agrees to divide assets in the case of a divorce.  The agreement can address spousal support.  The agreement can be used to protect one asset, or it can be drafted to protect all assets of the parties based on how the assets are held.

It is crucial that a prenuptial agreement is drafted correctly and executed carefully.  If not done correctly, the prenuptial agreement could be determined to be unenforceable.  The prenuptial agreement should be drafted, negotiated and signed as soon after an engagement as possible.  The closer the finalization of the agreement is to the wedding date, the less enforceable it is.  Once the wedding plans are made and the invitations have been sent, most people feel significantly more pressure to sign an agreement that they do not agree to.  It is also important for both parties to have independent legal advice prior to signing the prenuptial agreement.  Finally, the prenuptial agreement must be conscionable.  To this end, there must be a full disclosure of assets and debts.  Also, a waiver of spousal support by a party must not cause that party to qualify for public assistance.

While the prenuptial agreement process can be unromantic, divorces involving contested asset division issues are expensive.  If the marriage does not last forever, the unromantic process will be worth it.

Salem Police Foundation adds Attorney Michelle Morrow to Board

SSJH, LLP, Attorney Michelle M. Morrow has joined the board of the Salem Police Foundation.  The mission of the Salem Police Foundation is to promote community support for the Salem Police Department, and its vision is to enhance public safety by supporting the Salem Police Department, its members, and the community.

Michelle joins current board members Diane McLaran, David Withnell, Ruth Ann Stellmacher, John D. Hawkins, Gerry Blankenheim, John R. Hawkins, Nathan Knottingham, Dennis Miller, Dayra Quintero, Jerry Thompson, Clancy Tieszen, G. Wally Ybarra.

To learn more visit the Salem Police Foundation’s website or Facebook page.

What Title Insurance Doesn’t Cover

Too often parties to a real estate transaction assume because they have title insurance they are protected from any defects in the title and all claims from third parties. Unfortunately, this is far from the case.

Title insurance only addresses matters in the public record related to legal title of the property. Title insurance does not address claims which are not yet recorded, claims based on occupation of the property, or ensure parties they are buying a legally created parcel that they can develop or put to use. Each of these issues can cause significant problems for a purchaser, create significant liability for a seller, and are not addressed by title insurance.

Liens/Claims of contractors for work performed before the purchase, but not filed at time of closing can result in liens arising against the property after it is purchased. An unsuspecting buyer will not have title insurance to address these liens, unless the issue is specifically addressed in the title insurance policy. Similarly, if someone is occupying a portion of the property and claims ownership right or a right to continue occupancy not based on a recorded document, title insurance will provide no protection to the buyer who wants to make use of the property. Perhaps most significantly, a seller may have a deed to the parcel, and therefore legal title which the title company will insure, but the parcel was not legally created under land use laws and therefore cannot be developed by the buyer. Title insurance does not address this issue, and can leave a buyer or seller in a very difficult and costly position.

Taking the time to investigate the possibility of any unrecorded claims, claims based on occupancy, and checking with the appropriate government officials regarding the legality and usability of the parcel can avoid significant problems, which can be devastating to the ownership and development of property.

Mark Hoyt

Mark represents businesses and individuals in all aspects of complex civil litigation, land development, and construction. In his commercial litigation practice, he leverages his extensive experience in litigation, mediation, and arbitration to identify the vehicle which will most efficiently and effectively achieve his clients’ goals. He emphasizes construction defect, commercial and business dissolution litigation while maintaining a boutique practice recovering compensation for the victims of elder and sex abuse.