Fortis Law Partners provides guidance on how to stay ahead of the curve in M&A, family leave, litigation, trademarks and the emerging psychedelics market
DENVER, Colo. (Dec. 5, 2023) — As 2023 comes to a close, attorneys at Denver-based Fortis Law Partners identify the top five trends and issues likely to impact employers and businesses in 2024.
Colorado employers must prepare for new paid family leave in 2024
Next year, Liz Hartsel, a partner in Fortis’ employment law practice, notes that Colorado employers might face a surprise related to Colorado’s FAMLI law. “Employers are already aware that beginning on Jan. 1, 2024, nearly every Colorado worker will be eligible to take 12 weeks of paid leave anytime within the first 12 months after a birth, adoption or foster care placement,” Hartsel says. “But they may not realize that because employers began collecting contributions in 2023, there is a unique twist specific to 2024.” Even if a parent welcomed a child in 2023 and took paid corporate or unpaid FMLA leave, they are also legally eligible to take another 12 weeks of paid FAMLI benefits in 2024, as long as they complete their leave within 12 months of the child’s birth or addition to their family. “The net-net is that parents cannot be penalized or lose out on FAMLI-funded leave in 2024 just because they’ve already taken leave in 2023.”
Litigation costs will continue to spiral
Fortis partners Henry Baskerville, Cara Thornton and David Olsky each litigate regularly for the firm’s clients and expect to see the ongoing struggle with rising litigation costs continue into 2024. “Pursuing litigation, along with much else these days, has become increasingly expensive, and we foresee no abatement in sight,” says Thornton. “One of the most significant factors leading to rising costs are the expenses associated with discovery in our digital age. The depth and breadth of metadata reviewed during the discovery phase of litigation, even in fairly routine cases, can run to hundreds of thousands of pages, making discovery extremely labor-intensive and, therefore, extremely costly.”
Some have argued that AI will help reduce the costly and time-intensive work of electronic discovery or legal research. Baskerville doesn’t think we’re there yet. “At Fortis, we have dabbled with AI to see whether it can help us be more efficient for our clients, but have found it is still a long way from being a useful tool in our business.” Recent debacles prove consistent with that opinion, as attorneys who have cited fake cases and purely fictitious judicial opinions and legal arguments pulled from ChatCGT during litigation are fined and sanctioned.
Olsky, who regularly successfully pursues high-stakes commercial litigation cases on contingency, notes that he expects contingency to continue to be one of the best options for individuals and businesses in 2024. “Entrepreneurs or business owners who find themselves in what seems like an untenable situation with no funds to seek legal recourse should not despair. Experienced litigation attorneys may be selective about the types of contingency cases they will take, but some are willing, and cases can be won if key criteria are met.”
Demand for trademarks expected to rise, and IP watchouts for artists creating in the metaverse
Andrew Comer, Head of Fortis’ Trademark and Intellectual Property practice group, notes that as more brand-conscious millennials become business owners, he predicts higher rates of trademark applications submitted. “However, we are also seeing a normalization of the trademark office’s processing timelines, which will hopefully result in a decrease in the amount of time it takes to obtain trademark review and approval in 2024,” he says.
Additionally, as the metaverse and NFT spaces continue to gain steam, Comer warns newcomers that recently decided case law indicates that previously established trademark, fair use and intellectual property rules will still apply in the metaverse the same way they do in the physical universe. “Artists and creators need to be aware that there is a significant legal risk in trading on the goodwill of well-established brands for commercial profit.”
M&A deals face market challenges and inflation risks
Looking ahead to the landscape of mergers and acquisitions in 2024, Julie Herzog, head of Fortis’ corporate practice, says the only thing she can predict is that ongoing wars and the pending U.S. Presidential election year will impact M&A markets in totally unpredictable ways. Still, despite concerns about volatility, she has identified two key trends that businesses should be aware of. First, Herzog expects historic interest rate increases and inflation to continue to have a significant impact on the M&A landscape.
“Opportunistic buyers seeking to conserve cash and avoid large loans with high interest rates will seek out lower-priced, distressed businesses,” Herzog says. “However, given that these types of businesses tend not to be in the best shape, buyers should also prepare to spend more time conducting due diligence and detailed legwork to uncover potential issues before closing.” Additionally, Herzog expects to see an increased prevalence of longer-term and more complicated earnouts next year as buyers use them as leverage to spur post-closing performance.
Notwithstanding the headwinds created by high interest rates and fears of a potential recession, partner Julian Izbiky says he expects to see substantial activity in the M&A space next year as baby boomer business owners sell their companies to retire and younger buyers snap them up.
Natural Medicine Health Act will begin to have an impact on Colorado markets
With the passage of Prop 122, also known as the Natural Medicine Health Act and the enactment of Colorado Senate Bill 23-290, known as the Natural Medicine Legalization and Regulation Act, a new age of legalized (non-synthetic) psychedelics in Colorado will begin to emerge in 2024, along with accompanying risks and challenges for businesses and employers.
Leni Plimpton, senior associate and member of Fortis’ employment law team, notes that employers, in particular, need to prepare for changes. “Currently, neither Prop 122 nor SB 23-290 require employers to provide healthcare coverage for natural medicine therapies, even if employees are now legally entitled to use them,” Plimpton says. “However, that may change over time. It’s also essential to note that although Prop 122 does give people over the age of 21 the right to use and cultivate natural medicines because psychedelic substances are still federally illegal, employers should not expect to see any impact on their existing drug-free workplace policies.”
Senior Counsel Tyler Rauert anticipates that the psychedelics business ecosystem will emerge in various overlapping areas – natural medicine, medicalization, and support services – along with adjacent applications and businesses. “Healing centers will need real estate. They will also need CPAs, business advisors, and lawyers who are well-versed in the rules and regulations. Thus, a psychedelic ecosystem and market will emerge, but one that is relatively limited due to the amount of regulation and restrictions,” he says.
Rauert also foresees plant-based psychedelic businesses facing tax, licensing, and ownership issues similar to those of the cannabis industry. However, Rauert ultimately expects this to be a very different market from cannabis, with the most crucial difference being that the Natural Medicine Health Act does not establish a retail psychedelic system. “As of now, the one thing we do know for certain is that in 2024, consumers will not be shopping different varieties of psychedelics at brick-and-mortar retail locations.”
For more detailed information on these trends or to schedule an interview, please contact Bree DeVita at firstname.lastname@example.org.
About Fortis Law Partners
Fortis Law Partners offers broad expertise to help clients achieve effective legal solutions, from the simplest matters to the most challenging business problems. Whether a successful outcome means winning at trial, dismissing a lawsuit, negotiating a settlement, closing a transaction, or just getting thoughtful legal advice, Fortis lawyers get results. Our business-minded problem-solving approach, coupled with a persistent dedication to client service, enables us to create unmatched value. Practices include Commercial Litigation, Corporate / Securities / M&A; Employment Law; Tax; Cannabis; Trademark; Construction; Trusts & Estates; Psychedelics; Compliance Programs and Internal Investigations; and Real Estate & Development. For more information, visit FortisLawPartners.com. Continue the conversation on LinkedIn and Facebook.