Scherer Smith & Kenny LLP serves mid-sized and fast-growing entrepreneurial companies.  From complex litigation to business, real estate, intellectual property and employment law, our team brings strategic thinking, pragmatism and intense dedication to our clients’ success.

Partner Notes

By William M. Scherer

It’s my pleasure to write this Partner Notes.  With five partners in the firm now I don’t get to do so as often as I once did.  I’m pleased to say that things at the firm have been steady, and business has been good.  A big reason is the great clients we’ve been lucky enough to serve this year, and in years past. 

I sometimes think about long-term clients we’ve worked with since I opened the firm as a solo 32 years ago.  Many have become friends.  I’ve seen their kids grow up, go to college and start careers.  We have helped some through their entire business lifecycle, from opening their doors, expanding, adding partners or shareholders and additional employees, through sale.  And then in certain cases, becoming passionate with an entirely new idea that has led to starting a fresh new business all over again. 

I have represented others nearly from the time the doors of Scherer Smith & Kenny LLP opened, and I am now having conversations with them about retirement and the preparations that go along with that.  Most of the owners that I represent start their thoughts on retirement with the line, “I never thought I’d be saying this, but…” 

Watching our clients become successful and well-established is truly one of the best things about what I do.  Ask any lawyer, and if they are honest, they will admit that this practice poses many challenges.  The list is somewhat long, and those challenges can lead to battle scars.  And our clients go through these trials as well. 

However, from any challenge it’s critical to recognize the lessons learned from the effort.  This is true regardless whether the challenge led to success or failure.  Over years of these lessons, and by practicing resilience, I’ve seen some amazing businesspeople emerge.  Seeing their evolution and self-confidence has also rubbed off on me.

Ultimately, however, the practice holds many rewards as well.  These include the amazing colleagues I am lucky enough to work with who help our clients, each of whom is dedicated to their craft and doing their best to provide the best representation possible. 

My efforts this year have been no different.  Now Summer has nearly played out and Fall is just over the horizon.  This time of year always feels to me like the apex of our efforts.  Now we are just about over the hump and the time has come to enjoy the long slide into what is always a hectic Holiday season. 

Maybe that’s why the next few months before Thanksgiving are my favorite.  I generally know how the remainder of the year will look.  I’m familiar with the year’s rhythms and enough water’s flowed under the bridge to know what the remainder will hold.   It gives you a bit more freedom to just go with the flow, look around a bit, enjoy Cal football on Saturdays (well, that’s what I do!), and the gorgeous weather we get in Northern California until it turns colder in mid-November. 

This Fall will be special for several reasons, including my and my husband’s Fall vacation to Europe to see our friends who last Fall sold their home in Oakland, retired to Alicante, Spain, and are starting their new lives in a new culture.  We are looking forward to meeting their new friends and finding out how they are adapting to Spain, touring their new town and surrounding countryside and coast, and celebrating the leap of faith they took to realize their dream. 

I hope that every reader’s year has also held promise.  Promise is an elastic term, and promise may arise from opportunities, but also the challenges we work through.  I believe that struggles are an unfortunate but necessary element of progress in life.  Perhaps it is also a necessary element of an interesting life.  But whatever the year has been, and whatever the positive or difficult challenges you have had, I hope that their lessons provide you with positive influences for the year ahead.

FIRM ALERT:

We are proud to announce that Louis Sarmiento, Jr. has been promoted to the position of Senior Counsel at our firm, effective August 12, 2025.

Louis started with our firm in 2018.  Louis has been an integral part of our team, providing exceptional legal representation, developing strong client relationships, and contributing to the success of complex matters in our firm’s homeowners’ association and real estate practice areas. His commitment to excellence and collaborative approach make him a valued asset to our clients and our firm.

Please join us in congratulating Louis on this well‐earned achievement. We look forward to his continued contributions in his new role.

October 2025 California Anti-Discrimination Regulations Addressing the Impact of AI on Employment-Related Hiring and Management Decisions

Starting October 1, 2025, California will implement new regulations designed to prevent employment discrimination concerning the use of artificial intelligence (AI), algorithms, and other automated decision-making systems (the “AI Regulations”). The AI Regulations can be found within the California Code of Regulations, Title 2, Sections 11008 through 11079.  The AI Regulations were approved on June 27, 2025, by the California Civil Rights Council, an internal branch of the Civil Rights Division (CRD). The AI Regulations clarify how the Fair Employment and Housing Act’s (FEHA) long-standing antidiscrimination laws apply to modern hiring and employment practices, especially as AI-driven tools become more common for screening, evaluating, and making personnel decisions.

ALERT: Major Changes in Common Interest Development Governing Document Enforcement Procedure

I write to inform you of a recent change to the Davis-Stirling Act that affects the manner in which common interest developments (planned unit developments, condominium complexes, stock cooperatives, and community apartment projects; collectively, “CIDs”) impose monetary penalties on any association member for violations of the governing documents.

Assembly Bill 130 took immediate effect on July 1, 2025, impacting several housing-related issues, including governing document violations in CIDs. Under the law as it existed before AB 130, CIDs were authorized to adopt a policy imposing monetary penalties on a CID member for a violation of the governing documents, and CID boards were required to adopt and distribute to each member a schedule of the monetary penalties that may be assessed for violations. Under the pre-AB 130 law, boards were able to impose a monetary penalty on a member for a violation of the governing documents up to the amounts set forth in the CID’s adopted monetary penalty schedule after a duly noticed hearing.

Recent Act Expands Favorable Tax Treatment for Future Qualified Small Business Stock (“QSBS”)

The recent One Big Beautiful Bill Act signed into law on July 4, 2025 (the “Act”) expands the favorable tax treatment for QSBS acquired after July 4, 2025, under Internal Revenue Code Section 1202.

Specifically, the Act amends the holding period for QSBS acquired after July 4, 2025, so that it is no longer an “all or nothing” 5-year holding period.  Previously to obtain the capital gain exclusion under Section 1202 a shareholder must have held QSBS for at least 5 years.  Under the amendments, the holding period for QSBS is shifted to a tiered holding period structure along with increases to the eligible gain limit and amount of gross assets of a “qualified small business” as follows:

• The taxpayer receives a 50% exclusion for QSBS held for 3 years;
• The taxpayer receives a 75% exclusion for QSBS held for 4 years; and
• The taxpayer receives a 100% exclusion for QSBS held for 5 years or more.