United States: Life At Winston: Charlotte Edition Q3 2021

Hello and welcome to the first issue of Life at Winston:
Charlotte Edition.

It's official, Labor Day is behind us and Summer has officially handed the baton to Fall. Usually this time of year I watch as friends and colleagues divide into two distinct groups—the "back to school blues" folks who still associate Fall with the abrupt end of three months of pure, golden freedom, and those who view Fall as an exciting new beginning (or, "the ones who loved school," as the first group would say).

Danielle Williams

Office Managing Partner

Of course this year defies that traditional transition and neat division of emotions. The serious challenges we're still facing from the pandemic, and the extreme volatility and violence across the globe stands in contrast to the development of exciting, life-bettering technological advancements, new business opportunities, and an increasingly visible and tangible effort by businesses, governments, and individuals to address discrimination and inequality.

Our first issue optimistically focuses on those latter themes, providing perspectives on immediate issues and opportunities impacting our businesses and communities in Charlotte, the U.S., and around the world.

On the business front, we held our fourth annual  Disruptive Technologies Legal Summit, presented with our partner, the Berkeley Center for Law & Technology. I joined several of my Winston partners and a host of highly regarded experts to discuss opportunities and legal considerations for our clients in areas of ongoing innovation and disruption including FinTech, AI, Block Chain, and Universal Computing. Details appear below.

You'll also find our perspectives from the  2021 UNC Banking Institute that brings together bankers, lawyers, regulators, policy experts, and industry leaders, and important takeaways from the ABA's 2021 Virtual Litigation Section Annual Conference where Charlotte Partner Kobi Brinson outlined how the  Biden administration's enforcement priorities might affect different legal sectors. Be sure to save the date for the  2022 UNC Banking Institute and the  Prelude sessions.

Additionally, we examine the impact of the DOJ's initiative to relax the Yates Memo's restrictive approach to corporate cooperation. Charlotte partner, Jack Knight, analyzes the DOJ's revised policy and its effect, or lack thereof, on the number of individual employees prosecuted by the DOJ for related corporate crimes.

At the intersection of big business and higher education, we are thrilled to see the ongoing impact of the June ruling from the Supreme Court in the student athlete compensation case  NCAA vs. Alston. This landmark decision has the potential to positively impact student athletes and more specifically, collegiate athletics, across the United States.

Here at home, Winston's  Charlotte-based pro bono team continues to do important work on a wide range of initiatives impacting human rights and access to justice for our fellow citizens, working with Bank of America to take on the North Carolina DMV, and co-leading the effort to secure incarcerated individuals' Eighth Amendment rights in the wake of pandemic-related confinement violations.

We hope you enjoy Life at Winston: Charlotte Edition, and invite you to share with a friend or colleague who might find it interesting. Let us know if you have any topics you'd like us to discuss or any burning questions we can answer in our next issue. We'd love to hear from you.

Disruptive Technologies Legal Summit 2021

Winston & Strawn and the Berkeley Center for Law & Technology held the fourth annual Disruptive Technologies Legal Summit, a legal and regulatory look at what's driving disruption in our world on September 14, 2021. Programs examined emerging technologies in four key areas—FinTech, Blockchain, AI, and Universal Computing. If you missed the live program, you can still get CLE credit by viewing the recordings online. Access the  Disruptive Technologies Legal Summit 2021 site for additional information on how to obtain a username and password for Winston's CLE portal.

Of note, Charlotte Managing Partner Danielle Williams moderated a fascinating session on how disruptive technological change is impacting the way we relate to one another as individuals, companies, governments, and governing organizations, both domestically and internationally. Titled Defining Geopolitics in the Fourth Industrial Revolution, the session included business leaders from INX Limited, VMware, Centre, and UC Berkeley Law Professor Chris Hoofnagle.

Other recorded sessions available for viewing include:

• The Evolution of the "Crypto Revolution": Digital Assets Beyond Bitcoin, National Crypto Banks, and Central Bank Digital Currencies
• Blockchain, Smart Contracts, and Financial Instruments: Edging Toward a New Trading Paradigm?
• The AI Bias Paradox: Underdelivering to the Underserved
• Pushing Into Post-Pandemic Technology Frontiers in Health Care and Life Sciences
• The Dream of Universal Computing

Perspectives From The 2021 UNC Banking Institute Program

Winston & Strawn is proud to sponsor the Banking Institute, a two-day continuing legal education program presented by the Center for Banking and Finance at the University of North Carolina School of Law. The Institute brings together bankers, banking lawyers, regulators, policy experts and other leaders to discuss important issues facing the industry. We invite you to read our analysis of the following 2021 panels:

Jack Cobb

Partner

• Long-Term Effects of COVID-19 on Bank Health
• The Current State of the LIBOR Transition
• Bank Partnerships with FinTech Firms

Follow the links for info on the  2022 UNC Banking Institute and the  Prelude sessions.

Jason Bennett

Partner

College Athletes: 9 / NCAA: 0

The 9-0 Supreme Court Decision that Justice Neil Gorsuch wrote in
NCAA vs. Alston capped a remarkable string of wins for Winston Co-Chair Jeffrey Kessler, the firm's litigation team, and our college athlete clients. In it, the Supreme Court unanimously held that the National Collegiate Athletic Association can no longer set limits on education-related compensation (like scholarships or school supplies) because it violates antitrust laws. While Jeffrey handled oral arguments at the High Court, he has represented college football players and men's and women's basketball players as co-lead counsel in this case for years. This year's landmark decision was the culmination of an ongoing fight that will finally allow college athletes to get a share of the billions of dollars in profits they help generate for their schools.

The Rebound: COVID-19's Impact on Real Estate Finance and Litigation

Few industries have been more affected by the pandemic than real estate. As the economy shifts to a post-pandemic environment, two Charlotte partners on the front lines of real estate financing talk about deal flow and risk mitigation for lenders, and mortgage-related litigation issues impacting our area's large financial institutions.

Brian Bailey is a partner in the Real Estate Finance Group who represents lenders in commercial real estate loans.

Commercial real estate loans are an important indicator of broader economic activity. What sort of deal flow are you seeing?

Brian J. Bailey

Of Counsel

Deal flow has picked back up considerably and is now close to pre-pandemic levels, but there are important changes in what is being financed. Through late last year, most of the loans we did were secured by multifamily, industrial and office properties. Today, more loans are being secured by retail properties, often anchored by a grocery store. What we haven't seen yet is the return of hotel loans. But we expect those as travel continues its rebound.

The pandemic has caused lenders to really ramp up their risk mitigation efforts. How is that being reflected in loan documents?

We're witnessing three notable trends: Quarterly reporting requirements are going much deeper—lenders don't just want to know if tenants are receiving forbearance—they want to know if tenants have even asked for a deferral. It's about giving the lenders a visceral sense of the property that goes beyond the numbers.

There's also an increase in the use of reserves or escrows to be used for debt service if tenants are receiving rent abatements, and clauses that include stimulus payments as "rent" in which the lender has a security interest.

And lenders are looking ahead to the next crisis by putting in clauses requiring the sponsor or guarantor to make the lender whole if the borrower takes advantage of emergency economic recovery legislation that negatively impacts the borrower. Of course, there is pushback from borrowers, but lenders are now asking for these clauses.

Stacie Knight is Of Counsel in the Litigation Group whose work includes representing large financial institutions in single-plaintiff mortgage litigation.

One of the economic issues of greatest concern during the pandemic was that widespread job loss would lead to significant foreclosures. How has the situation unfolded on your side of the table, representing lenders?

Stacie Knight

Of Counsel

Mortgage-related litigation is still nowhere near pre-pandemic volumes. Foreclosure and eviction moratoriums remain in place, courts are still backlogged, and banks want to avoid foreclosing on borrowers who have suffered financial hardship due to the pandemic. Our clients are undertaking much more voluntary loss mitigation, such as forbearance or loan modifications, than they did after the 2008 financial crisis, when loss-mitigation initiatives like the Home Affordable Modification Program were primarily driven by the federal government. That being said, we do anticipate that litigation will pick up significantly in the fourth quarter.

What do you see as the biggest priority for your clients in the current environment?

Staffing is a huge issue. Many financial services firms reduced headcount during the pandemic, and now need to quickly staff up to handle the influx of underwriting loan modifications and the expected uptick in litigation. Given that the typical mortgage case can last anywhere from six to 18 months, we expect the increase in our client's litigation workload needs to continue into 2023.

I'll Take "President Biden's Enforcement Agenda" for $1,000, Please

With every new administration comes a new set of priorities and approaches to the enforcement of law. During the ABA Virtual Litigation Conference, a virtual Jeopardy game, hosted by attorney Nash Long, challenged a panel of industry experts to serve as contestants and predict how the Biden administration's enforcement priorities may affect the experts' respective sectors. Winston & Strawn Partner Kobi Brinson tackled the Jeopardy categories of "People Are Policy" and "Taking It to the Bank."

Kobi Brinson

Partner

In "People Are Policy," Kobi focused on the presumptive leaders likely to be confirmed to head the CFPB and OCC, as well as the direction of their respective anticipated policy agendas. Kobi turned to industry expectations for regulators who supervise financial institutions and enforce applicable laws and regulations in "Taking It to the Bank." She noted that increased regulation of traditional financial institutions and FinTech market participants was universally anticipated. She explained further that the CFPB and OCC have already indicated an enhanced focus on racial equity issues under President Biden, as well as increased agency collaboration to address student loan servicing and other consumer protection priorities. During Final Jeopardy, Kobi provided a glimpse into an administration-wide emphasis on structural change that will be intended to provide a lasting impact on racial economic equity.  Read more here.

Have the DOJ's Revisions to the Yates Memo's "All-or-Nothing" Approach to Corporate Cooperation Really Changed Anything?

The short answer is not in any significant way. But first a little background ...

A little over three years after the 2015 Yates Memo was released, in a November 2018 policy address, then-Deputy Attorney General Rod Rosenstein announced that the DOJ would be relaxing the Yates Memo's restrictive approach by permitting corporations to receive credit for identifying individuals "substantially involved in or responsible for the misconduct at issue." Although Rosenstein emphasized in  his remarks that "fighting white collar crime" and pursuing individual wrongdoers remained "a top priority" for the DOJ, he also noted the importance of rewarding companies for quickly and efficiently identifying the most culpable individuals by offering cooperation credit.

Jack Knight

Partner

But did the DOJ's revised policy really change anything? That is, has the fact that the revised policy only requires corporations to identify employees who were substantially involved in or responsible for the misconduct at issue to receive cooperation credit resulted in a decrease in the number of individuals prosecuted? An analysis of the deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) announced by the DOJ's Fraud Section finds that the number of prosecutions of individual employees based on the same or similar corporate misconduct at issue has largely remained the same. Rosenstein's seemingly significant changes to the Yates Memo's policy on individual accountability of corporate employees thus appears to have had little to no impact on the number of individual employees prosecuted by the DOJ for related corporate crimes.  Read more here.

Winston & Strawn and Bank of America Support Driver's License Restoration Project in North Carolina

Attorneys from Winston & Strawn and Bank of America came together for the second year to support the North Carolina Pro Bono Resource Center's Driver's License Restoration Project, helping economically disadvantaged residents of North Carolina restore their suspended driver's licenses, and provide them with a desperately needed socioeconomic lifeline.

In North Carolina, if a person fails to appear in court to resolve a traffic ticket or fails to pay traffic or criminal court debt, the State suspends their driver's license indefinitely, whether or not it is the person's first ticket or first time failing to resolve a ticket. The loss of a driver's license can have dire consequences for the economically vulnerable, by cutting off access to food, healthcare and employment. This is particularly true for North Carolinians living in rural areas without access to public transportation.

Jason Bennett

Partner

Alan Stevens

Partner

During the virtual clinic held in May, Winston & Strawn and Bank of America attorneys examined the driving records of 52 clients and prepared advice letters on how to restore suspended licenses.

"Bank of America welcomes the opportunity to participate in the Driver's License Restoration Project, and to partner with the team from Winston & Strawn in this important effort to provide legal services to those who are unable to pay for them," said Todd Stillerman, Associate General Counsel, Bank of America.

The Winston & Strawn team includes Charlotte Partners Jason Bennett and Alan Stevens; Charlotte Associates Tanielle Henrique, Lindsay Kell, James Lucarello and Alyson Traw; New York Partners Christine Spletzer and Corey Tessler; and Dallas Associate Michelle Boudreau.

Winston & Strawn's collaboration with the Driver's License Restoration Project is part of the firm's Racial Justice & Equity CEASE Pro Bono initiative created in 2020 as part of the firm's committed actions to address issues of racial justice and equity in our communities.

For more details about Winston's Pro Bono practice,  click here.

Winston Seeks COVID-19 Protection for Vulnerable Incarcerated Individuals

Attorneys in Winston & Strawn's Charlotte office worked with the ACLU National Prison Project, ACLU North Carolina and the Washington Lawyers Committee for Civil Rights and Urban Affairs to bring a class action suit against the Butner Federal Correctional Complex in North Carolina, alleging discrimination on the basis of disability and unconstitutional conditions of confinement in violation of the Eighth Amendment.

Jeff Wilkerson

Partner

"The class action suit seeks to hold the Butner Complex and its leadership responsible for the prison's grossly insufficient response to COVID-19 and to dramatically improve the conditions for the prisoners inside," said Charlotte Of Counsel Gretchen Scavo.

Gretchen Scavo

Of Counsel

The federal prison houses 4,000 individuals, including elderly and medically vulnerable people, and its response to the COVID-19 pandemic has been slow, inconsistent, and ineffective at curbing deadly outbreaks. To date, 30 incarcerated people have died of COVID and almost 1,300—nearly 25% of the prison's population—have been infected with the virus.

"Winston and co-counsel will continue to fight against the dangerous and discriminatory conditions caused by the Federal Bureau of Prison's indifference to the dangers of the COVID-19 pandemic to vulnerable imprisoned populations and the surrounding communities," said Charlotte Partner Jeff Wilkerson.

The Charlotte-based pro bono team includes Partner Jeff Wilkerson, Of Counsel Gretchen Scavo and Associates Patrick Doerr, Elizabeth Ireland, Peyton Poston, Ashley Romero, and Stephanie Turner.