The Kelley Drye Brief - Fall 2021

​Message From Kelley Drye’s Chair “,” A Look Ahead “,” New Additions to Kelley Drye “,” Celebrating Pro Bono Week “,” Upcoming Events “,” Can’t Miss Content “,” Stay Connected

Message from Kelley Drye’s Chair

Dear Clients and Friends,

November marks the beginning of a season of reflection and gratitude.

At Kelley Drye we are thankful for the depth and longevity of our client relationships and for the privilege to serve as trusted partners and advisors. Working alongside you to tackle business challenges and seeing your organization thrive is incredibly rewarding and motivating.

We are thankful for the Kelley Drye attorneys and staff who consistently demonstrate their commitment to providing exceptional service and delivering outstanding results for our clients. Our dedicated professionals are our greatest asset and have been the catalyst for the Firm’s success over the last 185 years.

In this issue of The Kelley Drye Brief, you’ll get to know the talented lawyers who have recently joined the firm – former senior FTC official Laura VanDruff, and Paul Singer of the Office of the Texas Attorney General. Their additions bolster our Advertising Law, Privacy, and State AG practices and their unique and unmatched expertise benefit clients preparing for the future of consumer protection law, and those facing State Attorneys General investigations, as well as investigations brought by the FTC, Consumer Financial Protection Bureau, and local and county District Attorneys’ offices.

During this season we also look ahead to the coming year. We asked our practice group leaders what legal issues and industry trends they predict for the next few months. Their predictions follow, along with upcoming Kelley Drye events including a timely webinar on the recently passed $1.2 Trillion Infrastructure and Jobs Act, and more.

Thank you again for your confidence in us. We are honored to work with you and are grateful for the relationships we’ve built through our collaboration. On behalf of my partners and the entire Kelley Drye community, I hope you and your families have a wonderful Thanksgiving and holiday season.

Best,
Jim Carr, Chair of Kelley Drye

A Look Ahead

Kelley Drye lawyers and industry experts stay on top of the issues impacting your business. From continued impacts of COVID-19, to the increase of privacy laws, see what legal issues and industry trends some of our practice group leaders and partners predict for the next few months.

Advertising Law

“The Federal Trade Commission will continue efforts to expand its footprint, while shaking up longstanding practices within the agency and pushing new strategies for monetary relief in light of the recent Supreme Court ruling that the FTC cannot obtain monetary relief under Section 13(b) of the FTC Act, a provision they had relied upon heavily in recent years. This will also likely result in increased collaboration with the Consumer Financial Protection Bureau and state attorneys general. Expected targets include ​‘gatekeepers’ that use their critical market position to ​‘hike fees, dictate terms, and protect and extend their market power.’ Topics will likely include financial practices, use of influencers, earnings claims, subscription services, warranty and ​‘right to repair,’ and green marketing.” – Christie Grymes Thompson, Chair, Advertising Law Practice Group

Communications

“With the permanent Federal Communications Commission leadership finally coming into focus, we can expect renewed vigor to addressing the Digital Divide, particularly measures to expand low-cost broadband services for students in order to address the so-called ​‘Homework Gap,’ an important issue to Chairwoman Rosenworcel. Meanwhile, bipartisan issues will dominate in the short term, such as protecting the communications supply chain from foreign security threats, finding mid-band spectrum for 5G, including enterprise 5G deployments, and reducing illegal robocalls by implementing ​“know your customer” requirements for service providers. All of these issues will present opportunities for enterprise customers and vendors not traditionally subject to telecommunications carrier obligations.” - Communications Practice Group

Corporate

“2021 M&A activity, aided by low interest rates and soaring stock prices, hit a new record, overtaking 2020’s already high numbers. We expect robust M&A and capital markets activity in 2022 and are focused on helping our clients create long-term value. We believe that companies that performed well during the COVID pandemic are trading at attractive valuation levels and are in demand by buyers. We continue to focus our corporate practice on advising clients on the strategic alternatives available to them.” - Tim Lavender, Chair, Corporate Practice Group

Environmental Law

“Over the last few weeks, there have been two important developments that will influence key issues moving forward. First, the EPA recently issued its long awaited ​‘PFAS Roadmap,’ which seeks to curb PFAS contamination through numerous regulatory actions, including reporting requirements, drinking water standards, restricting discharges into waterways, and listings as hazardous substances and hazardous waste. Second, the Supreme Court recently decided to hear four cases consolidated under West Virginia v. EPA, where the court will examine the extent of EPA’s authority to regulate carbon emissions under the Clean Air Act. The Supreme Court’s ruling in that case could have significant impacts on EPA efforts to regulate carbon, the Biden Administration’s broader efforts to address climate change, and a large number of pending climate change litigations.” - Bill Jackson, Co-Chair, Environmental Practice Group

Government Contracts

“All companies, including Federal contractors, subcontractors and suppliers will continue to confront the legal, business, and human resource complexities of vaccine mandates. Litigation, regulations, contracting actions, and personnel issues will have to be monitored and addressed. Biden Administration priorities and policies affecting federal contracting beyond COVID-19—such as infrastructure, supply chain management, domestic preferences and climate change—will impact contractors and subcontractors directly in the second year of the Administration.” – David Hickey, Chair, Government Contracts Practice Group

International Trade

“We expect global trade to continue to rebound in 2022, and anticipate that the partial easing of Trump-era tariffs on steel and aluminum from the European Union will be expanded to other countries as the Administration attempts to build its coalition to focus efforts on trade issues with China. We expect trade negotiations with China to continue with the U.S. seeking greater adherence to the Phase 1 deal between the U.S. and China, particularly concerning China’s continued subsidization of key industries and exports, theft of trade secrets and the shortfall of promised purchases of U.S. goods. On the customs front, we expect CBP will detain between $600 million and $1 billion of imported shipments over the coming year pursuant to forced labor enforcement. New forced labor enforcement actions are likely to target goods originating not just in Asia, but also Latin America, the Middle East and Africa. On the export and sanctions front, we expect to see a continuation of targeted sanctions and export control restrictions, with a focus on China, human rights abuses, and the technology industry. We’re also closely following OFAC’s increased scrutiny of the digital assets (cryptocurrency and digital payments) industry.” – Alan Luberda, Chair, International Trade Practice Group

Labor and Employment

“As the pandemic drags on into 2022, employers will continue to grapple with pandemic-driven issues, including the decision on whether to require some or all remote workers to return to the workplace and what the future workplace will look like beyond COVID. While federal and statewide vaccine mandates are combating the spread of COVID, such mandates lead to other workplace issues, including making determinations on religious accommodation requests. Mandates for, and availability of, the COVID vaccine also do not completely solve the challenges of the virus spreading. As such, creating safe working conditions through other workplace protocols is another challenge faced by employers. Additionally, with a strong industry focus on ESG, businesses will be expected to place stronger efforts in closing gender pay gaps, voluntarily increasing minimum wages, offering equal opportunities for training and career advancement, and responsibly handling claims of discrimination and harassment. Given the Biden administration’s pro-employee platform, the DOL, EEOC, and other government agencies will likely continue to make substantive pro-employee policy changes, and ramp up efforts to enforce protections for employees, including greater protections for unionized workers. And finally, 2022 is another election year, and as the fight for House and Senate control continues, businesses can expect more local and state employment law changes.” – Mark Konkel, Chair, Labor and Employment Practice Group

Litigation

“We expect litigation to continue to become more active, as we continue to shake off the various pandemic-related delays. We are interacting with courts via video far more regularly than ever before and remote depositions have become the norm, trends we expect will continue. We are also seeing an increase in new cases filed, including IP and class actions, likely reflecting a more confident view of the economy.” – Mike Lynch, Chair, Litigation Practice Group

PIPES and Alternative Investments

“2021 has been a roller coaster year for the special purpose acquisition company (SPAC) market. The concept of a SPAC is rather simple – a management team raises money from investors that is then placed into an escrow. The management team then seeks out an acquisition and, after reaching an agreement with one, requests that its investors approve it. If sufficient investors approve, the acquisition occurs (Investors that decide not to approve a transaction receive the return of their investment from the escrow). The expectation of many SPACs in the market was that 2021 would be the year of ​‘de-SPAC’ing acquisitions.’

The year started with extreme optimism as SPAC IPO activity reached dizzying heights. Unfortunately, nearly as quickly as it started, it fell precipitously at the beginning of the second quarter and has continued at this slower pace through September. There were 317 SPAC IPOs completed in the first quarter of 2021, followed by a steep decline in the second quarter with only 106 SPAC IPOs that raised $20.9 billion, representing a 66.5% decline on count and 81.3% decline in capital raised relative to the record-shattering first quarter. A recent PitchBook report notes that, ​‘even with 766 SPAC IPOs since the third quarter of 2020, only 210 de-SPAC events have closed,’ and, ‘[we’ve] still not seen a single quarter with more than 100 closed business combinations.’ Meanwhile, many SPACs face a crisis of financing as upwards of 90% of their investors often decline to approve an acquisition and elect to take a return of cash. The recent lackluster aftermarket performance for SPACs, both pre- and post-acquisition, may further intensify the downward pressure on new SPAC IPO issuance and general enthusiasm for the product.

While the ​‘SPAC bubble’ may have finally burst, or at the very least, significantly reduced in size, we have noticed that investors have not been keeping cash sidelined (as some did in the early days of COVID). In the third quarter of 2021 and continuing through the fourth quarter of 2021, we have seen a new resurgence in more traditional ​‘alternative investment structures,’ which include convertible notes (both secured and unsecured), convertible preferred stock, common stock and warrant offerings. These transactions have occurred in both private placements and traditional public offerings. In fact, as of mid-year 2021, 97 U.S.-listed companies had issued $54.3 billion worth of convertible bonds, according to Dealogic, a data provider. That is the highest year-to-date volume ever—and 11% more than the amount raised at this point in 2020, which was a record-setting year for convertible-debt issuance. Furthermore, we have also seen an increasing appetite from SPACs to incorporate alternate investment structures in conjunction with their de-SPAC events to provide critical financing to solve the aforementioned de-SPACing financing failure crisis. In short, we expect the trend toward alternative investment structures to continue in 2022.” - Michael Adelstein, Chair, PIPES and Alternative Investments Practice Group

Privacy and Information Security

\“With new privacy laws on the books in California, Colorado, and Virginia (and additional legislation possible in other states), all areas of privacy and data security will continue to be highly active. This area of demand crossed nearly all industry sectors, and applies both to B2C and B2B firm clients. Some of the demand will focus on compliance related matters, or in response to regulatory scrutiny from the FTC, State AGs, other agencies, or from the plaintiffs’ bar (or all of the above).” – Alysa Hutnik, Chair, Privacy and Information Security Practice Group

Real Estate

“The COVID-19 pandemic caused major shifts in real estate markets, which will be felt for years to come. The pandemic, coupled with enormous amounts of institutional capital and low interest rates, have propelled the industrial, warehouse and multi-family markets. The mainstream retail market will continue to struggle with competition from on-line sellers as well as increased consumer demand for high-end product. Similarly, the middle office market will struggle with the long-term implications of a remote workforce, but the demand for top office space with amenities will grow as companies try to lure employees back to the office. Barring any resurgence of COVID, the hospitality market will continue to improve. One wildcard for 2022 will be the transition away from LIBOR, which is being largely ignored by many in the real estate industry. Additionally, we anticipate that the 1031 exchange market will remain strong and, should the recently proposed tax reforms pass (namely those related to a new tax surcharge on ordinary income and long-term capital gains), see a significant increase in 1031 deal activity. The industry will be keeping an eye on this.” – Paul Keenan and Dean Loventhal, Co-Chairs, Real Estate Practice Group

White Collar Investigations and Compliance

“With the recent creation of a DOJ cryptocurrency task force and the SEC’s repeated comments on the need for greater regulation around cryptocurrency, we can expect heightened scrutiny on all who transact in this space. A closer look at fraud detection systems, AML programs, and sanctions screening is already underway.” - White Collar Investigations and Compliance Practice Group

Former Senior FTC Official Laura VanDruff and Paul Singer of the Office of the Texas Attorney General Join Kelley Drye, Bolstering Advertising Law and State AG Practices

This month we announced that Texas Associate Deputy Attorney General Paul Singer joined Kelley Drye & Warren LLP as a partner in the firm’s growing State Attorneys General practice group. Paul’s addition further strengthens Kelley Drye’s ability to help clients prepare for the future of consumer protection law, and to advise clients facing State Attorneys General investigations, as well as investigations brought by the FTC, Consumer Financial Protection Bureau, and local and county District Attorneys’ offices

Paul’s addition comes on the heels of Laura Riposo VanDruff joining the firm’s Privacy and Advertising practice groups. Both attorneys are former top officials at the Federal Trade Commission (FTC), with Laura as an Assistant Director in BCP’s Division of Privacy and Identity Protection (DPIP). Laura is a revered privacy law and policy trailblazers, and their addition further bolsters the firm’s capabilities, especially with respect to their specialized expertise in digital advertising and data analytics, information security, consumer financial services, data governance and data breach preparedness. Their experience and insight is extremely valuable in helping our clients prepare for the future of privacy and evolving consumer protection law.

Read more about these new additions to the firm here and here.

Celebrating Pro Bono Week

Pro Bono Week, a national celebration of pro bono was held the last week of October. The initiative was launched by The American Bar Association (ABA) to increase awareness of the growing need for pro bono services, and to highlight the positive impact that lawyers make in their communities across the United States and in the lives of the clients they serve.

Kelley Drye joined in the ABA’s efforts to draw attention to the need for pro bono participation, and to thank those who give their time year round. We are proud to report that 30 Kelley Drye attorneys were honored this year for committing more than 50 hours of their professional time to pro bono work.

In addition, Kelley Drye’s D.C. office and 64 other law firms in the Washington, D.C. area stepped up to help neighbors in need of legal assistance by providing a record 1,049,139 hours of pro bono work in 2020. Of those hours, 52 percent were devoted to assisting D.C. residents of limited means or the organizations that serve them, according to the D.C. Bar Pro Bono Center’s latest Pro Bono Initiative Report.

Each year the Pro Bono Center surveys participants of the Pro Bono Initiative, where signatory firms pledge to meet minimum benchmarks for pro bono legal services. In 2020, 9,328 attorneys engaged in pro bono work, with each attorney contributing an average of 91 pro bono hours.

To learn more about the types of pro bono matters Kelley Drye supports, read or listen to the Impact Initiatives on the firm’s pro bono webpage

Upcoming Events

Highways, Bridges and Broadband: Breaking Down the $1.2 Trillion Infrastructure Bill
November 19, 2021, 1:30 - 2:30 pm
After months of deliberation, on November 5th the U.S. Congress passed the $1.2T Infrastructure Investment and Jobs Act, which will deliver $550 billion of new federal investments in America’s infrastructure over five years. The bipartisan bill contains $260 billion for transportation and transit investment; $90 billion for investment in clean technologies; $84 billion for water infrastructure and $100 billion for digital infrastructure.

We hope you can join us as we explore the details of this historic spending bill, including:

  • Overview of the Infrastructure Investment and Jobs Act
  • Transportation Provisions
  • Energy Provisions
  • Water Infrastructure
  • Broadband
  • Cybersecurity
  • Buy America and Buy American Domestic Content Requirements


Register here.

Check our website for upcoming programs in 2022.

Kelley Drye lawyers are speaking at a number of events in the coming months, including the following:

Basics of Advertising: A New Take on Substantiation, Disclosures & Social Media
November 15, 2021, 9:15 - 10:00 am
Partner Gonzalo Mon will speak at the upcoming BAA Marketing Law Conference. This session will cover important principles of advertising law, including prerequisites to prove your claims, the type of proof required, how to make disclosures, and application of these principles to social media. In addition, it will cover options for challenging competitors. Whether new or experienced to advertising, this session will give you down-to-earth information you need to put later sessions into context. This presentation will put a great new spin on important topics. Register here.

Technology Roundtable: Private 5G Networks
November 16, 2021, 11:50 am – 12:20 pm
Private 5G Networks roundtable at Telecom Council’s virtual TC3 Conference. Private 5G networks are laboratories for 5G innovation with as many opportunities as unanswered questions. This discussion will delve into the choices of unlicensed or licensed spectrum, MVNOs, privacy, control, and federal concerns about security in this new category of local cellular networks. Register here.

Banking Acts & Responding to Government Inquiries
November 18, 2021, 12:00 – 1:00 pm
Partner Matt Luzadder will present ​“Banking Acts & Responding to Government Inquiries” at NACHA’s ACH Legal & Compliance Summit. The alphabet soup of compliance regulations and laws – BSA, AML, OFAC, USPATRIOT ACT, CARES, CARDS, etc. ranges from A-Z, but having a clear understanding of what the regulation and laws protect, and how to implement processes for ensuring compliance, can often be overwhelming. This session will provide a look at how the laws, rules and regulations harmonize to make internal processes work. Register here.

Updates in Litigation Risks: Product Liability, Private Litigation, and Consumer Class Actions
December 10, 2021
Join partner Donnelly McDowell as he provides an update on current food related litigation risks during FDLI’s Enforcement, Litigation, and Compliance Conference. Register here.

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