New Case Holding: Will Provisions Override Account Ownership Provisions

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

My law practice primarily involves the following areas and issues:

Probate Court Disputes and Litigation

  • Trust and estate disputes and litigation, and contentious administrations representing fiduciaries and beneficiaries; elder abuse; power of attorney disputes; elder care and nursing home abuse; conservatorships; claims to real and personal property; and other related disputes and litigation.

Business and Business-Related Disputes and Litigation: Private, Closely Held, and Family Businesses; Public Companies; and Nonprofit Entities

  • Business v. business disputes including breach of contract; unlawful, unfair and fraudulent business practices; fraud, deceit and misrepresentation; unfair competition; licensing agreements, breach of the covenant of good faith and fair dealing; etc.
  • Misappropriation of trade secrets
  • M&A disputes
  • Founder, officer, director and board, investor, shareholder, creditor, VC, control, governance, decision making, fiduciary duty, conflict of interest, independence, voting, etc., disputes
  • Buy-sell disputes
  • Funding and share dilution disputes
  • Accounting, lost profits, and royalty disputes and damages
  • Access to corporate and business records disputes
  • Employee, employer and workplace disputes and processes, discrimination, whistleblower and retaliation, harassment, defamation, etc.

Investigations and Governance

  • Corporate and business internal investigations
  • Board, audit committee and special committee governance and processes, disputes, conflicts of interest, independence, culture, ethics, etc.

The following are copies of the tables of contents of three of the more formal materials that I have written over the years about accounting/auditing, audit committees, and related legal topics – Accounting and Its Legal Implications was my first formal effort, which resulted in a published book that had more of an accounting and auditing focus; Chapter 5A, Audit Committee Functions and Responsibilities, for the California Continuing Education of the Bar has a more legal focus; and the most recent Tate’s Excellent Audit Committee Guide (February 2017) also has a more legal focus:

Accounting and Its Legal Implications

Chapter 5A, Audit Committee Functions and Responsibilities, CEB Advising and Defending Corporate Directors and Officers

Tate’s Excellent Audit Committee Guide

The following are other summary materials that you might find useful:

OVERVIEW OF A RISK MANAGEMENT PROCESS THAT YOU CAN USE 03162018

Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

From a prior blog post which you can find at https://wp.me/p75iWX-dk if the below scan is too difficult to read:

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Power of Attorney / Attorney in Fact Responsibilities and Rights – Slides 9, 10, 11 and 12

I seldom see discussions about power of attorney, principal, and attorney-in-fact responsibilities and rights. I am providing some of my power of attorney presentation slides. Click on the following links for my two prior posts containing my slide numbers 3, 4, and 5 https://wp.me/p1wbl8-tK and slide numbers 6, 7, and 8 https://wp.me/p1wbl8-u5. Below in this post I have provided slide numbers 9, 10, 11, and 12. Slide numbers 13, 14, 15, and 16 will be provided in a subsequent post.

You should note, obviously these slides are a summary of what can be a complicated area of law and specific facts, they are not a solicitation for services inside or outside of California, and they do not pertain to any particular situation or to you and your situation. You need to consult with an appropriate professional for your specific situation.

Best to you, Dave Tate, Esq. (California)

Blogs:

Power of Attorney / Attorney in Fact Responsibilities and Rights – Slides 3, 4 and 5

I seldom see discussions about power of attorney, principal, and attorney-in-fact responsibilities and rights. In this post and in subsequent posts I will be providing some of my power of attorney presentation slides. Below in this post I have provided screenshots of my slide numbers 3, 4 and 5.

You should note, obviously these slides are a summary of what can be a complicated area of law and specific facts, they are not a solicitation for services inside or outside of California, and they do not pertain to any particular situation or to you and your situation. You need to consult with an appropriate professional for your specific situation.

Best to you, Dave Tate, Esq. (California)

Blogs:

 

 

Who Can File A Petition Relating To A Power Of Attorney – Almost Anyone, Including Any Interested Person Or Friend

If you have a question or dispute about how a power of attorney operates, or how it should be or is being used, the California Probate Code allows almost anyone to file a petition with the Court for instructions or other remedies. See the provisions of Probate Code Sections 4540 and 4541 below.

Also note, there are powers of attorney for financial and asset management, and powers of attorney for health care and daily living – although some of the provisions are similar, there are important differences. And, perhaps outside of common knowledge, it is not always clear when, for how long, and for what decision making a person can become and becomes an attorney in fact, what decisions can be made, what decisions are legally prudent, and what people and resources, including the principal, might be or in circumstances should be or must be consulted about the matter at hand and possible options for decision making. 

California Probate Code Section 4540 provides as follows:

Subject to Section 4503, a petition may be filed under this part by any of the following persons:

(a) The attorney-in-fact.

(b) The principal.

(c) The spouse of the principal.

(d) A relative of the principal.

(e) The conservator of the person or estate of the principal.

(f) The court investigator, described in Section 1454, of the county where the power of attorney was executed or where the principal resides.

(g) The public guardian of the county where the power of attorney was executed or where the principal resides.

(h) The personal representative or trustee of the principal’s estate.

(i) The principal’s successor in interest.

(j) A person who is requested in writing by an attorney-in-fact to take action.

(k) Any other interested person or friend of the principal.

California Probate Code Section 4541 provides as follows:

A petition may be filed under this part for any one or more of the following purposes:

(a) Determining whether the power of attorney is in effect or has terminated.

(b) Passing on the acts or proposed acts of the attorney-in-fact, including approval of authority to disobey the principal’s instructions pursuant to subdivision (b) of Section 4234.

(c) Compelling the attorney-in-fact to submit the attorney-in-fact’s accounts or report the attorney-in-fact’s acts as attorney-in-fact to the principal, the spouse of the principal, the conservator of the person or the estate of the principal, or to any other person required by the court in its discretion, if the attorney-in-fact has failed to submit an accounting or report within 60 days after written request from the person filing the petition.

(d) Declaring that the authority of the attorney-in-fact is revoked on a determination by the court of all of the following:

(1) The attorney-in-fact has violated or is unfit to perform the fiduciary duties under the power of attorney.

(2) At the time of the determination by the court, the principal lacks the capacity to give or to revoke a power of attorney.

(3) The revocation of the attorney-in-fact’s authority is in the best interest of the principal or the principal’s estate.

(e) Approving the resignation of the attorney-in-fact:

(1) If the attorney-in-fact is subject to a duty to act under Section 4230, the court may approve the resignation, subject to any orders the court determines are necessary to protect the principal’s interests.

(2) If the attorney-in-fact is not subject to a duty to act under Section 4230, the court shall approve the resignation, subject to the court’s discretion to require the attorney-in-fact to give notice to other interested persons.

(f) Compelling a third person to honor the authority of an attorney-in-fact.

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

My law practice primarily involves the following areas and issues:

Probate Court Disputes and Litigation

  • Trust and estate disputes and litigation, and contentious administrations representing fiduciaries and beneficiaries; elder abuse; power of attorney disputes; elder care and nursing home abuse; conservatorships; claims to real and personal property; and other related disputes and litigation.

Business and Business-Related Disputes and Litigation: Private, Closely Held, and Family Businesses; Public Companies; and Nonprofit Entities

  • Business v. business disputes including breach of contract; unlawful, unfair and fraudulent business practices; fraud, deceit and misrepresentation; unfair competition; breach of the covenant of good faith and fair dealing; etc.
  • Misappropriation of trade secrets
  • M&A disputes
  • Founder, officer, director and board, investor, shareholder, creditor, VC, control, governance, decision making, fiduciary duty, conflict of interest, voting, etc., disputes
  • Buy-sell disputes
  • Funding and share dilution disputes
  • Accounting, lost profits, and royalty disputes
  • Access to corporate and business records disputes
  • Employee, employer and workplace disputes, discrimination, whistleblower and retaliation, harassment, defamation, etc.

Investigations and Governance

  • Corporate and business internal investigations
  • Board, audit committee and special committee governance and processes, disputes, conflicts of interest, independence, etc.

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Discussions About Powers of Attorney – Responsibilities and Rights (Part 1)

I am writing a couple of posts discussing powers of attorney under the California Probate Code. One of my current cases involves responsibilities and rights under financial and healthcare powers of attorney. A prior case in litigation involved whether or not to disconnect mom from medical equipment that was believed to be keeping her alive. Some of the discussion in these posts will be from a talk that I presented for the Professional Fiduciary Association of California.

Responsibilities and rights under a power of attorney are determined by the wording of the power of attorney itself, statutes, case law, and the facts and circumstances of the situation. These can be complicated issues. Although the wording of the power of attorney is extremely important, and that wording should be where the determination of responsibilities and rights starts, as you will see in these posts, the wording of the power of attorney does not give the complete answer. There are lengthy chapters and books written on these topics – in this and a couple of following posts I will be discussing some of the statutory provisions that govern responsibilities and rights under powers of attorneys under the California Probate Code.

Under the California Probate Code powers of attorney are discussed at Probate Code §§4000-4545.

Thus, for example, California Probate Code §§4050 and 4051 provide as follows:

Probate Section 4050:

(a) This division applies to the following:

(1) Durable powers of attorney, other than powers of attorney for health care governed by Division 4.7 (commencing with Section 4600).

(2) Statutory form powers of attorney under Part 3 (commencing with Section 4400).

(3) Any other power of attorney that incorporates or refers to this division or the provisions of this division.

(b) This division does not apply to the following:

(1) A power of attorney to the extent that the authority of the attorney-in-fact is coupled with an interest in the subject of the power of attorney.

(2) Reciprocal or interinsurance exchanges and their contracts, subscribers, attorneys-in-fact, agents, and representatives.

(3) A proxy given by an attorney-in-fact to another person to exercise voting rights.

(c) This division is not intended to affect the validity of any instrument or arrangement that is not described in subdivision (a).

Probate Section 4051:

Except where this division provides a specific rule, the general law of agency, including Article 2 (commencing with Section 2019) of Chapter 2 of Title 6 of, and Title 9 (commencing with Section 2295) of, Part 4 of Division 3 of the Civil Code, applies to powers of attorney.

In relevant part, California Civil Code Sections 2019, 2020 and 2022 provide:

Civil Code Section 2019 – an agent must not exceed the limits of his actual authority.

Civil Code Section 2020 – an agent must use ordinary diligence and keep his or her principal informed of his or her acts.

Civil Code Section 2022 – a mere agent of an agent is not responsible as such to the principal of the latter.

Thus, whereas the power of attorney might appear to say or suggest that the attorney-in-fact has absolute authority at least in the circumstances that are listed, you can see that, nevertheless, the attorney-in-fact cannot exceed his or her actual authority, he or she has to use at least ordinary diligence unless the power of attorney states otherwise, and the attorney-in-fact must keep his or her principal informed of his or her acts. And these are themes and requirements that run throughout the statutes that more specifically discuss responsibilities and rights, and that will be discussed in future posts.

Every case and situation is different. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this website. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only. I am also the new Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

 

OVERVIEW OF A RISK MANAGEMENT PROCESS THAT YOU CAN USE 03162018

Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

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New California case – California lacks personal jurisdiction over a Utah resident on a cross-complaint against her individually as a third party for intentional interference with prospective economic advantage, although the real property was located in California, and the Utah resident was appointed guardian ad litem for her mother in California

Keri Jensen v. Trine Jensen (Court of Appeal, Second Appellate District, B2896111, January 24, 2019), is very fact specific, so its value is mostly in the court’s legal evaluation as applied to this specific case. Frankly, I am a bit surprised by the court’s holding. Daughter Trine came to California and moved her mother back to Utah to stay with Trine. Trine was also appointed as guardian ad litem for her mother in California. Mother sued other daughter Keri in California relating to a parcel of real property that had been co-owned by mother and daughter Keri. In that lawsuit Keri then cross-complained against Trine personally and individually, not as guardian ad litem, for intentional interference with prospective economic advantage claiming that Trine took advantage of mom’s advancing dementia and coerced mom to sever the joint tenancy in the California real property.

Trine filed a motion to quash for lack of personal jurisdiction which the trial court granted and the court of appeal upheld. Since the parties apparently agreed that Trine was not subject to general jurisdiction in California, the court evaluated whether Trine purposefully availed herself of the California forum benefits, whether the controversy is related to or arises out of the Trine’s contacts in California, and whether California’s assertion of personal jurisdiction over Trine would comport with fair play and substantial justice.

It seems to me that this case is a close call as the real property is located in California. The court in dicta also made the point that Trine was not sued in California as guardian ad litem. I also note that there would be jurisdiction over Trine in Utah. The case also has other less relevant facts and is interesting reading relating to possible undue influence.

Thanks for reading this post. If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Every case situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

New California Rule of Professional Conduct 3.7 – Lawyer as Witness – As Applied to Estate Planning and Trust and Estate Administration Lawyers

On November 1, 2018, California enacted new rules of professional conduct for lawyers. The new rules make many changes, one of which is Rule 3.7 (lawyer as witness). The prior rule (Rule 5-210) applied only to a lawyer as a witness at trial in jury trial proceedings. New Rule 3.7 does not make that distinction – new Rule 3.7 applies to both jury trial and bench or judge trial proceedings. The following is an essentially verbatim summary of new Rule 3.7:

Rule 3.7(a)(lawyer as witness):

  1. Is the lawyer acting as an advocate (i.e., in my view, is the lawyer representing a client) in a trial or an evidentiary hearing?
  2. If the answer is yes to number 1, is the lawyer likely to be a witness?
  3. If the answers are yes to numbers 1 and 2, does the lawyer’s testimony relate to a contested issue or matter?
  4. If the answers are yes to numbers 1, 2, and 3, does the lawyer’s testimony relate to other than the nature and value of legal services rendered in the case?
  5. If the answers are yes to numbers 1, 2, 3, and 4, has the lawyer obtained informed written consent from the client?

Rule 3.7(b): A lawyer may act as advocate in a trial in which another lawyer in the lawyer’s firm is likely to be called as a witness unless precluded from doing so by rule 1.7 or rule 1.9.

The following is a more detailed discussion that reflects more of the practicalities of the lawyer being involved in or possibly becoming involved in a probate court proceeding in which the lawyer is a witness or might become a witness who will provide testimony or might provide testimony relating to a contested issue or matter or relating to an issue or matter that might become contested? I have stated the Rule in this manner because (1) there are situations in which the Rule is not triggered, and (2) there are situations in which the Rule is triggered, and (3) there are situations in which the Rule might be triggered or might become triggered. In situations (2) and (3) consideration should be given to obtaining informed written consent and the wording and timing of such, whether informed written consent is even an option under the Rule, and whether informed written consent or some other action such as disengagement is best under the situation, and the timing of such.

As probate court proceedings are bench or judge proceedings, for which, with limited exceptions, jury trials usually are not available, it is now important to consider the possible applicability of new Rule 3.7 in all probate court proceedings including those proceedings which have not yet reached the trial stage. New Rule 3.7 already has been a potential issue in some of my cases – Rule 3.7 will or may apply in some probate court proceedings, whereas in others it will not.

Every probate court proceeding and case is different – whether or not Rule 3.7 applies will need to be evaluated on a proceeding by proceeding and case by case basis and might need to be considered at various different times in the course of a proceeding or case as the situation could be fluid and changing.

Note that I am differentiating between a probate court proceeding and a probate court case although the two might be considered the same – many probate court proceedings are never formally scheduled for trial or evidentiary hearing – nevertheless, even when a trial or evidentiary hearing has not been formally scheduled, a reading of Rule 3.7 suggests that the possible applicability of the Rule should still be considered and an evaluation made whether the lawyer is or might be or become an advocate at a trial or evidentiary hearing or proceeding, and whether the lawyer is or might likely be a witness.

Repeating myself somewhat, because this is a situation or question that could arise more often, you will also note that Rule 3.7 can bring into consideration the possibility of conflict waiver, which raises a host of other issues to consider including, for example, the possible timing of a discussion about that possibility (such as possible discussion in an engagement letter), whether an actual conflict waiver should be considered and the timing of such, and, if a conflict waiver is required or desired, whether such a waiver is actually allowable under the circumstances of the proceeding or case, and whether such a waiver is the best or most prudent course of action compared to other possible options including possible disengagement.

New Rule of Professional Conduct 3.7 states as follows:

Rule 3.7 Lawyer as Witness

(a) A lawyer shall not act as an advocate in a trial in which the lawyer is likely to be a witness unless:

(1) the lawyer’s testimony relates to an uncontested issue or matter;

(2) the lawyer’s testimony relates to the nature and value of legal services rendered in the case; or

(3) the lawyer has obtained informed written consent from the client. If the lawyer represents the People or a governmental entity, the consent shall be obtained from the head of the office or a designee of the head of the office by which the lawyer is employed.

(b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer’s firm is likely to be called as a witness unless precluded from doing so by rule 1.7 or rule 1.9.

You should also read the discussions and comments, and the cited case, provided under Rule 3.7 to understand and to get a feel for whether the Rule 3.7 applies in your proceeding or case, and, if so, how to approach the possible client written consent option under the facts of your proceeding or case, and possible other options and situations, including disengagement and court discretionary authority to disqualify an attorney even if written consent is obtained (see, e.g., Lyle v. Superior Court).

It is not uncommon for the estate planning attorney or firm to also be involved in subsequent post-death administration which also can be or can become a probate court proceeding. Thus, if the proceeding is a probate court proceeding, pursuant to new Rule 3.7, you must first evaluate whether the lawyer is or might be or become acting as “an advocate” representative, and whether the lawyer is or might likely become a witness providing testimony (declaration?) relating to a contested issue or matter at trial or at an evidentiary hearing or proceeding?

These questions should be carefully evaluated on a proceeding by proceeding or case by case basis. Depending on your evaluation of these issues, next evaluate on a proceeding by proceeding or case by case basis: (1) does the lawyer’s testimony relate to a contested or possibly contested matter or to an uncontested matter; (2) does the lawyer’s testimony relate (solely relate?) to the nature and value of legal services rendered in the case; and (3) has or will or should the client provide written consent (see also the discussion above)? And, if client written consent is an option, you will also need to consider the wording of the (informed) written consent.

Will the impact of new Rule 3.7 be earthshaking? Rule 3.7 needs to be considered on a proceeding by proceeding and case by case basis. New Rule 3.7 already is or could be applicable in many probate court proceedings and cases. The overall impact will need to be determined over time, and on a county by county and probate judge by probate judge basis. However, in probate court proceedings or cases in which the lawyer is likely or could become likely to be a witness (for example, such as in will and trust contests or possible contests, and possibly in other proceedings or cases in which there is an objection or opposition, or possibly a likely objection or opposition) Rule 3.7 might apply or at least should be considered as possibly applying including the options available.

In appropriate cases you should also consider Rule 3.7(b) which states “A lawyer may act as advocate in a trial in which another lawyer in the lawyer’s firm is likely to be called as a witness unless precluded from doing so by rule 1.7 or rule 1.9.”

I will be writing subsequent posts on these issues as they can be important to estate planning and administration attorneys, and in proceedings and cases, and these are and will continue to be developing areas. Please also note that I will also be discussing other rules, cases, decisions, and issues, including possible client duties, that can or might apply in a particular situation, including, for example, Rules 1.6, 1.7, 1.9, and 1.10, which pertain to client confidential information, possible conflicts between current clients, possible conflicts between a former client and a current client, and new Rule 1.10 pursuant to which conflicts can be imputed between different attorneys in the same law firm.

Thanks for reading this post. Every trust situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see above), and connect with me on LinkedIn or Twitter.