Mette, Evans & Woodside Hosts Breakfast Brief on Cybersecurity

Melanie L. Vanderau, AttorneyThe law firm of Mette, Evans & Woodside is hosting a Breakfast Brief presentation titled, “Incident Response: Managing and Mitigating Risk,” on September 17th at 7:30 am. The presentation, by Attorney Melanie L. Vanderau, will make business owners aware of procedures they ought to have in place to successfully manage their cybersecurity risks.

Successfully managing the aftermath of a security breach, cyberattack, hacking, or other security incident is critical to any business organization. Having an appropriate plan in place is essential to the process of incident response. In today’s technology environment, businesses must know how to manage their systemic and operational risk prior to any incidents and mitigate both financial and reputational damage after an incident occurs.

“My goal is to make businesses aware of the many threats to their vital digital information and the various ways they can protect themselves,” said Ms. Vanderau. “People from all types of organizations can benefit from this presentation, from financial institutions managing confidential financial information, to small businesses storing employee payroll records.”

Registration is free, but space is limited. A continental breakfast will be served. Attendees can register online here.

Mette, Evans & Woodside has a long-standing tradition of providing comprehensive legal representation in Litigation, Estates and Trusts, Business and Real Estate. Founded in 1969, the firm provides sound legal counsel to clients throughout Pennsylvania for all facets of their professional and personal life.

Cyber Security

How Can an Organization Manage the Risk of a Cyberattack?

Cyber Security

The threat of a cyberattack is the sort of thing that keeps business owners up at night. Having an appropriate plan in place is critical to managing an organization’s response to a cyberattack. An organization will want to both manage risk before a security incident occurs, and mitigate risk afterward.

After a cyberattack, an organization aims to limit financial and reputational damage. But also, an organization should manage operational risk by having clear procedures for risk mitigation in place, before a cyberattack occurs. Organizations should be confident that their response plan will be useful and effective as a risk mitigation tool, and that their agreements with vendors provide helpful provisions to shift this risk when the vendor controls the outcome.

The experienced professionals at Mette, Evans & Woodside can assist your organization with this critical process.

Agricultural Production Contracts

By: Melanie L. Vanderau, Esquire

Agricultural Production Contracts

The use of formal contracts in agricultural production, including crop growing and livestock production arrangements, has been on the rise in recent years. If you find yourself wondering whether it’s worth it to have a formal agreement in place in a production relationship, remember that the purpose of a formal contract is to minimize risk. The more certainty you have in place by clearly agreeing to terms in writing, the easier it becomes for you to manage and plan for risks to your business when entering into the production arrangement.

The best way to minimize risk is considering what you’re expecting out of the production arrangement and evaluating the proposed contract terms accordingly. Ask yourself some questions about how you want the relationship to play out and then consider how, if at all, those terms are treated in a written agreement. For example:

Pricing: How is the price of the product determined? Is the price based on a market price? If so, what market is used? When does the determination of market price occur? Who bears the risk of a fluctuation in market price? Do you want to have a minimum price built into the agreement to limit your risk of market fluctuation?

Payment: How are you expecting to get paid? Upon delivery? Will that be invoiced? How soon to you expect to receive payment after delivery? What happens if the payment is late? If they stop paying you, how do you get out of the agreement?

Quality: What quality standards are in place for the product? Are these standards objective third-party standards, like the USDA or the FDA? What happens if the product delivered does not meet the quality standard?

Delivery: Who is responsible for delivery? Who bears the risk of loss if the property is damaged in transit? If you bear this risk, is this loss covered by an insurance policy?

Cancelation/Termination: Is the term of the Agreement clearly stated? What procedures are in place to terminate the agreement early for each party? What is the impact of such termination? What happens if there is a default by either party?

Catastrophic Events: What party bears the risk for a catastrophic event outside of either party’s control? Avian flu, insect outbreaks, and catastrophic weather are all events that can drastically impact your ability to produce, depending upon the nature of your agreement. Does the agreement contain provisions that relieve you of your obligation to produce upon the occurrence of a catastrophic event?

Agreeing to clear terms like these allow you to manage your risks in connection with the production arrangement. While a written agreement may seem unnecessary at the outset, remember that it’s only when something goes wrong that the existence and terms of a contract become critical. That’s why it’s best to think about and plan for these issues at the beginning, when you can still take the time to manage and minimize your risks.

Revised Rules Regarding Garnishment of Federal Benefits

by Tim Hoy and Melanie Vanderau

Garnishment of Federal Benefits

The final interim rule governing garnishments of accounts containing certain federal benefits (31 CFR § 212.1 et. seq.) has been amended. The final interim rule, effective May 1, 2011, was established by the Department of the Treasury, the Social Security Administration, the Department of Veterans Affairs, the Railroad Retirement Board, and the Office of Personnel Management (“Agencies”) and created a procedure financial institutions were required to follow when receiving a garnishment order for accounts containing direct deposits of federal benefit payments. This procedure established a “protected amount” in connection with federal benefit payments that could not be held, frozen or otherwise garnished.

The amendments primarily serve to explain and clarify vague or otherwise unclear provisions of the interim final rule. They were effective June 28, 2013 and were in response to public comments solicited and received by the Agencies. An overview of the amendments follows:

The definition of “benefit payment” now states that such payment will be made by direct deposit and will have the character “XX” encoded in positions 54 and 55 or the Company Entry Description field and the number “2” encoded in the Originator Status Code field of the Batch Header Record of the direct deposit entry. The amendments add the requirement of the number “2” in the Originator Status Code, which serves to verify that the payment is in fact a federal benefit.

The definition of “garnishment order” now states that garnishment orders specifically include (1) levies; (2) orders issued by states, state agencies, municipalities or municipal corporations; and (3) orders to freeze assets in an account. These types of actions were all omitted from the definition in the interim final rule, which led to a need to clarify the definition to provide broader protections to federal benefits and guidance to financial institutions.

The definition of “protected amount” has been clarified to provide that the “protected amount” is the lesser of either (a) the amount of federal benefit payments deposited during the lookback period, or the balance in the account when the account review is performed. This was amended from “the balance in the account at the open of business on the date of the account review”, clarifying that the account balance will include intraday items such as ATM or cash withdrawals.

The rules regarding a financial institution assessing a garnishment fee have been amended. The prior rule provided that a financial institution may not assess a garnishment fee against a protected amount, and may not charge or collect a garnishment fee after the date of the account review. The amendments now provide that while the financial institution may not assess a garnishment fee against a protected amount, it may charge or collect a garnishment fee up to five business days after the account review if funds other than a benefit payment are deposited to the account within this period, provided that the fee may not exceed the amount of the non-benefit deposited funds. This permits financial institutions, if they choose, to monitor accounts for up to 5 days after the account review for a deposit of funds that is not a benefit payment in order to assess a garnishment fee. The Agencies also reaffirmed that the rules provide no restriction with respect to charging a garnishment fee against an account that does not contain any protected amount whatsoever.

With respect to the notice requirement, pursuant to the amendments, a financial institution is only required to send the statutory notice to account holders in cases where there are funds in excess of the protected amount. The prior rule provides the notice in even cases in which there are not funds in excess of the protected amount and thus no funds are held. In light of concerns about this leading to confusion for the account holder, this notice requirement was eliminated.

The Agencies’ comments to the final rule also clarify that the account review is only necessary if the financial institution will give effect to the garnishment order. If the financial institution has made the determination to give no effect to the garnishment order, there is no need to perform the account review under the federal rules. This would occur, for example, in the event that the account was exempt from attachment under state law, e.g. an account titled in the name of husband and wife in Pennsylvania.

As a general matter, applicable state law may provide greater protections than the federal law, and, to the extent not inconsistent with the federal procedures, should be followed. For example, Pennsylvania law requires that in the absence of a court order, a financial institution shall not attach the first $10,000.00 of each account containing any funds which are deposited electronically on a recurring basis and are identified as exempt. In most cases, this will offer greater protection to the account holder that is not inconsistent with the federal rule, and so the Pennsylvania rules will govern.

If you have any questions related to the amendments, or to the interpretation of the federal rules generally, please contact Mette, Evans & Woodside. Additionally, if you would like analysis or interpretation on the interplay between the federal rules and any applicable state garnishment rules, we can assist you.

Timothy a. Hoy, Esquire
Melanie L. Vanderau, Esquire
(717) 232-5000