Seton Hall hosted a Continuing Legal Education (CLE) seminar focused on cyber security and real estate development opportunities in New Jersey. The event was co-sponsored by CB Title Group and Lakeland Bank. Presented by Dean Karen Passaro of the Division of Continuing Education and Professional Studies, the program detailed best practice protocol for attorney cyber security and served as a comprehensive guide to Opportunity Zones, the tax advantaged investment legislation designed to drive long-term capital investments into low-income rural and urban communities.
In late 2018, the Pennsylvania Supreme Court ruled that attorneys have an ethical obligation to keep their client's information protected. Several other states are following Pennsylvania's lead, including New Jersey, which is introducing new legislation that requires lawyers to take proactive steps to protect their client's data and information.
Michelle A. Schaap, Esq., of Chiesa Shahanian & Giantomasi PC (CSG), presented "Cyber Security & Intangible Property Perils That May Impact Your Real Property." Throughout her presentation, Schaap spoke on the best practices for lawyers to protect their clients from the "bad guys." She noted that cyber insurance, email encryption, password protocols and two factor authentication are all methods law firms can employ to protect their clients' information. Schaap also shared resources that can help keep firms aware of the most recent and common cyber security breaches, including the New Jersey Cybersecurity and Communications Integration Cell website.
In the case of a breach, Schaap made a number of recommendations, including that attorneys immediately give notice to their clients and have a response plan prepared ahead of time. She also suggested that firm employees should be trained to identify hacking attempts and perform due diligence on contracts and policies to understand their legal obligations.
Schaap also shared several stories of hackers targeting smaller law firms through email phishing scams throughout the presentation, underscoring the importance of firms implementing procedures to mitigate the potential disaster of "inevitable" data breaches. In one of her stories she recounted a scam regarding the purposeful misdirection of funds and noted that something as simple as phoning a client before a wire transfer can save millions of dollars.
"We have become accustomed to moving the quickest way and using the fastest technology to avoid human contact because we believe that it can slow our work down. But we are reminded by Michelle that the old-fashioned conversation can be the best protector against many cases of fraud. Her presentation pointed out a number of these obvious but often overlooked strategies that are low or no cost for any organization," Passaro noted.
Real Estate Development
The second half of the seminar featured Jennifer M. Porter, Esq. and Bozena M. Diaz, Esq., both attorneys from CSG, and their presentation "Opportunity Zone Investing & Real Estate Development: Land Use, Zoning & Tax Considerations."
A federal initiative, the Opportunity Zones program was enacted as part of the 2017 federal Tax Cuts and Jobs Act and was designed to drive long-term capital investments into low-income rural and urban communities. In early 2018, Governor Phil Murphy nominated 169 low-income census land tracts as Opportunity Zones. An Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. The idea was designed to promote development, job creation and investment in low-income communities by allowing taxpayers to defer the recognition of capital gain if the proceeds are reinvested in a qualified opportunity fund (QOF). Importantly, additional capital gains derived from these investments in Opportunity Zones may be subject to decreased tax after five and seven years, and permanently excluded from capital gains tax after 10 years.
These census tract Zones were chosen by assessing economic indicators: income, unemployment rates, property values etc.
As one might imagine, with the prospect of long-term profit without tax beckons, one of the difficulties for investors becomes choosing which opportunity zones are the best investments. Porter and Diaz recommend considering the surrounding geographic area, underwriting, developer track records and the tract's access to transit and other infrastructure.
Although the lure of tax free investment has brought great interest to the Opportunity Zones, the attorneys from CSG also noted that there are regulatory pitfalls to these investments in Opportunity Zones that must be properly navigated.
Dean Passaro noted, "There is a tremendous opportunity now to become part of the success of communities that need outside investment and attention. But like anything else, the details are crucial to success in this cutting-edge new program. This seminar was perfect for Seton Hall's Continuing Education and Professional Studies program: We're about opportunity – and the details. So, we'll definitely revisit these and similar topics this year."