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April 1983 Vol. 7, NO.2

THE OFFICIAL PUBLICATION OF THE ARKANSAS BAR ASSOCIATION

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Arkansas Lawyer SPECIAL FEATURES Cover Story: Law Day USA-May 1, 1983 Growing Public Discontent with the Civil and Criminal Justice System

OFFICERS

J. L. (Jim) Shaver, Jr., President Dennis Shackleford, President-Elect Annabelle Clinton, Secretary-Treasurer Richard F. Hatfield, Council Chairman

The Tax Equity and Fiscal Responsibility Act of 1982

Second Injury Law II Effective Assistance of Counsel

EXECUTIVE COUNCIL

Floyd Thomas, Jr. Norwood Phillips W. Kelvin Wyrick Charles Carpenter Robert M. Cearley Kaye S. Oberlag D. Mac Glover Marcia Mcivor

Robert Hornberger Tommy Womack Juiian Fogleman James A. McLarty

EX-OFFICIO

J. L. (Jim) Shaver, Jr. Dennis Shackleford James D. Cypert Annabelle Clinton Frank C. Elcan, II Richard F. Hatfield

58 William French Smith 59

Joseph M. Ervin 68 Paul J. Nicholson

W. W. Bassett, Jr. 78 David E. Howe 90

Annual Meeting

56

REGULAR FEATURES President's Report J. L. (Jim) Shaver, Jr. 54 Juris Dictum ..........•.... . . . . . . . .. Robert L. Lowery 55 Law School News 86 In Memoriam 94 Executive Council Notes ...•..•.•.... Annabelle Clinton 85 Service Directory IBC C. E. Ransick 95 Addenda AICLE News Claibourne W. Patty, Jr. 74 The Arkansas Bar Foundation Randall W. Ishmael 82 Lawyers' Mart 76 Young Lawyers' Update ........•.•... Frank C. Elcan, II To Wit .

66 Legal Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Methods and Means Bernard Stern in 64 The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar

EDITOR

C. E. Ransick

ASSOCIATE EDITOR Carol Utley

Association, 400 West Markham, Little Rock, Arkansas 72201. Second class postage paid at Little Rock, Arkansas. Subscription price to non-members of the Arkansas Bar Association $6.00 per year and to members $3.00 per year included in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association, The Arkansas Lawyer, or the Editorial Committee. Contributions to The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Markham, Little Rock, Arkansas 72201.

All inquiries regarding advertising should be sent to The Arkansas Lawyer above address.

July 1983/Arkansas Lawyer/53

PRESIDENT'S REPORT

by J. L. (JIM) SHAVER, JR.

tion and a dedicated Chairman of our Federal Legislation and Regulations Committee-E. Charles Eichenbaum.

The attempts at court-stripping of the U.S. Supreme Court's jurisdiction were defeated in the last session.

Daniel Webster 'There are many goals of great value to man which cannot be attained by unconnected individuals, but must be attained, if at all, by association. "

I want to talk about some of the goals attained by our Association for the membership.

Legislative Package Although I have served in the Arkansas Legislature for so many years, I am still impressed with the total effort that has gone into the Association's current legislative package for Arkansas. Each member has received the Association's Legislative Digest, Vol. 2, No.1, 8-1-82. covering 27 proposed bills, with a "Do Pass" from the House of Delegates on 18 bills, now in Legislative Package. Subsequent Legislative Digests will carry not only the action on these bills, but will also itemize all other bills during the Legislative Session that we consider of interest to Arkansas lawyers.

Federal Legislation We are most fortunate in having an understanding Congressional delega54/Arkansas LawyerlJuly 1983

However, the Congress defeated the attempt to place restrictions on the Federal Trade Commission's assumed jurisdiction over the professions, in approving the FTC's emergency funding measure on December 20, 1982. The Arkansas Bar Association has been a leader in the effort to remove FTC jurisdiction over the legal profession.

It would appear that the legal profession was "tarred" by the AMA. In her article under FORUM (The Arkansas Gazette, January 2, 1983), national columnist Mary McGrory indicates that the AMA's PAC was the main reason for the Congressional action. A case can be made in Arkansas since the Arkansas Supreme Court has a clear Constitutional mandate to regulate the legal profession and does not need any federal assistance. We will continue to oppose FTC intervention in the regulation of our legal profession.

Specialization The Arkansas Plan for Specialization has been approved by the Arkansas Supreme Court, and is printed in the News BUlletin, September 1982.

The Court has not as yet appointed its Commissions to regulate this program.

However, at least two of our Association's sections (Probate law; Taxation, Trust & Estate Planning) are already working on their applications. It is expected that the Family law Section and Workers Compensation Section will also file.

IOlTA (Interest on lawyers' Trust Accounts) The Association's petition for establishing the IOlTA program in Arkansas

has been filed with the Arkansas Supreme Court.

Since it is impracticable and uneconomical to set up interest bearing accounts with interest accruing to individual clients in most instances; and because lawyers are prohibited from personally benefiting from any interest, they have placed nominal and short-term trust funds in aggregated, non-interest bearing, commercial bank checking accounts.

Under IOlTA, these idle funds are placed in an aggregated (NOW) checking account, with the interest earned paid to a foundation to provide moneys for pUblic interest law projects.

"The obvious appeal of a program which can produce found money-new money-that doesn't appear to come out of anybody's pocket is simply overwhelming."-Charles C. Keller, President, Pennsylvania Bar Association.

During the first year of IOlTA in Florida, $290,000 for legal aid has been granted by the Florida Bar Foundation. 160 banks and savingsin-loan Associations are participating in the program.

With the cut back in legal Services Corporation funds, IOlTA appears to be the rational solution to the problem of furnishing legal services to the poor.

Public Relations The Public Information Committee with Chairman Sam Peronni continues to push video and radio "public service" spots with the TV and radio stations around Arkansas. The Committee is now making its own video spots-so we will be looking forward to messages of greater interest to Arkansans. law Day USA on May 1st will provide Continued on page 55

............

1111

JURIS DICTUM

by Robert L. Lowery Executive Secretary, Judicial Department

Judicial Reapportionment The Temporary Board of Judicial Reapportionment was created by Act 265 of 1981 and extended by Act 38 of the First Extraordinary Session of 1981. The nine-member Board consisted of the Governor, the Attorney General, the Secretary of State, the Chief Justice of the Arkansas Supreme Court, the Speaker of the House of Representatives, the President Pro Tem of the Senate, the Chairman of the Judiciary Committee of the House of Representatives, the Chairman of the Judiciary Committee of the Senate, and one additional member named by the Governor.

The Board completed its work in December, 1982. It considered statistical reports of the Arkansas Judicial Department for past years and for 1985 as projected. In addition to the filings in each of the Circuit, Chancery and Probate Courts in each county, the Board considered the number of courthouses in each circuit, the population per judge, the square miles in each district and the number of attorneys in each district, as well as other special matters pointed out by jUdges, prosecutors, legislators and others.

The 1980 combined filings per judge showed a wide variance between the districts, the high being 2,010 and the low being 880. The 1985 combined filings per judge were projected to range from a high of 2,884 to a low of 1,180.

The population per judge ranged from a high of 47,902 to a low of 24, 175. The square miles of land area per judge ranged from 1,956 to a low of 137. The number of attorneys per judge ranged from a high of 146 to a low of 20.

While the Board had the authority to recommend as many judges as it saw fit, this authority was effectively nullified by the economic realities of the times. It was decided that the fiscal condition of the state did not permit the addition of judgeships to the system at this time.

The Board then considered the option of redistributing the workload of the judges by transferring counties from one circuit into another. The Judicial Department was requested to provide information in this regard, and a number of options were prepared and presented to the Board for its consideration. After reviewing the options and hearing additional testimony from interested parties, the Board concluded that the apparent inequalities of judicial workload would not be best remedied by the method of altering existing judicial districts.

It was the recommendation of the Board that the judicial circuits remain as they are and that the 1985 General Assembly be urged to provide at least the following judgeships:

Continued from page 54 a wonderful opportunity for the Association and membership to observe the 1983 theme, "Sharing in Justice."

Robert L. Brown will again serve as our State Chairman.

were well received by the legislators.

During the Fall, legislative briefings on the Association's package were held around the State. Most of these were well attended. However, the briefing in North Central Arkansas at Batesville had to be cancelled because of the weather. Reports are that the sessions

1. A circuit judge in the Sixth Judicial

District (Perry and Pulaski Counties).

2. A circuit/chancery judge in the Seventh Judicial District (Grant, Hot Spring and Saline Counties).

3. A circuit/chancery judge in the Tenth Judicial District (Ashley, Bradley, Chicot, Desha and Drew Counties).

4. A circuit/chancery judge in the Seventeenth Judicial District (Lonoke, Prairie and White Counties).

It is hoped that by 1985 the economy will be in a condition whereby more judgeships can be created along with more support staff. While the filings will occasionally stabilize or even experience a small drop, the overall trend is for a steady and substantial increase.

From 1972 to 1981 the filings increased over 70 per cent while the number of judgeships increased less than 30 per cent.

It should aiso be noted that the Seventy-Third General Assembly assumed additional judicial expenses, the most significant recent addition being the bringing of the court reporters into the state system. With this recent change, the State of Arkansas has increased its judicial expenditures so that now approximately $0.25 of every $100.00 is spent on the judiciary.

f-...

The Young Lawyers Section is responsible for the Association's Relief Program. Since some 14 counties in Arkansas were declared disaster areas in December, 1982, the YLS has gone fully operational in this important public service.

Conclusion These are a few of the "goals" being "attained by association~ with the Arkansas Bar Association.

r ...

July 1983/Arkansas Lawyer/55

ARKANSAS BAR ASSOCIATION 85TH ANNUAL MEETING

"ANATOMY OF THE TORT TRIAL"

WITH SEVEN NATIONALLY RENOWN SPEAKERS

June 8-11, 1983 Arlington Hotel Hot Springs, Arkansas S6/Arkansas Lawyer/July 1983

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Law Day-U.S.A. May 1,1983 "Sharing in

Justice"

Cover Story ...

"Restrainer Container" "The drawing evolved around the idea that not only does the Constitution grant freedom, it also restrains these freedoms in order to assure us of an orderly society".

-Artist Calvin C. Carr

The art work is a colored pencil drawing from West '79/The Law-an exhibition of contemporary art reflecting aspects of the Law, sponsored by West Publishing Company in cooperation with the Minnesota Museum of Art. We are indebted to the author and West Publishing Company for permission to use "Restrainer Container" on the cover of the 1983 Law Day USA issue of The Arkansas Lawyer. Artist Carr received his B.S. Art from the University of North Dakota and his M.A. Art from the University of Minnesota. A participant in many competitive and invitational art exhibits, he is currently working in the Minneapolis Public Schools.

The theme for the 1983 Law Day USA is "Sharing in Justice".

S8/Arkansas Lawyer/July 1983

"Participation, the sharing in our country's system of justice, helped our concepts of justice to evolve in an orderly way as our society changed from a small, homogenous group of farmers and tradesmen to the highly industrialized, vastly diverse country we are today. Participation in the making of important decisions forced such changes as the social security system, environmental protection measures, and voting rights for women.

Citizens have the right to help determine the meaning of justice. Forging justice in the fires of social and economic change should not and must not be left to the few. It is the natural province of the many.

This theme will be followed in several of the educational and promotional materials produced by the ABA for Law Day, calling attention to the principles and practice of American law and justice, the role of law in society, and the rights and responsibilities of citizenship"-ABA 1983 Law Day Observance, Bulletin #1.

Artist Carr's "Restrainer Container" fits in particularly well with the "Sharing in Justice" theme.

It has also been our policy to publish a "Law Day" article in The Arkansas Lawyer. This year, we have selected the address of the Honorable William French Smith, Attorney General of the United States, before the ABA House of Delegates, on August 10, 1982. The Attorney General discusses public discontent with our legal system.

EUREKA! Chairman H. William Allen of the American Bar Association's Standing Committee on Ethics and Professional Responsibility advises that "one of the Committee's primary responsibilities is to issue opinions on proper professional and judicial conduct" to any member of the Bar and to any Bar Association upon request. NOTE: Mr. Allen is a member of the Arkansas Bar Association! He is a member of the AlIen, Cabe & Lester Law Firm, 1290 Worthen Bank Building, Little Rock, Arkansas 72201 (501/374-3333).

Requests for advisory ethics opinions should be addressed to the Committee, 33 W. Monroe, 7th Floor, Chicago, Illinois 60603 (312/6219200).

Growing Public Discontent With The Civil And Criminal Justice System By: William French Smith Attorney General Of The United States

There is an old story about an attempt by the great Chief Justice, John Marshall, to dislodge a particular law book from a high and tightly packed shelf. He succeeded instead in dislodging the entire row of books, which struck him on the head and knocked him to the floor. A librarian instantly rushed to his aid, but the venerable old Chief was unhurt and answered the offer of assistance by saying: "I am a little stunned for the moment.

I have laid down the law often, now this is the first time the law has laid me down."

Like that shelf of books long ago, our legal system is today in need of restructuring. Ineffectiveness and inefficiency threaten to lay low our legal system itself.

Nearly two decades ago, Dean Roscoe Pound observed: "Law is experience developed by reason and applied continually to further experience." During the past two decades, a growing public discontent has arisen over our civil and criminal justice system-in large part, because reason has not been applied sufficiently to improving the federal legal system.

What are the sources of public discontent? First and foremost, a belief

that our criminal justice system is more than fair to the accused but less than successful in protecting society. In addition to questioning the effectiveness of criminal justice, the public has become increasingly concerned about the efficiency of both the civil and criminal systems. Simply put, the burgeoning case/oad in our courts has slowed and clogged the wheels of justice.

In asking Edmund Randolph to become this Nation's first Attorney General in 1789, George Washington observed "that the due administration of justice is the firmest pillar of good government." Since its beginnings, the Department of Justice has had a special responsibility for seeking improvements in the administration of justice. During the last eighteen months, the Department of Justice has implemented or proposed a great number of improvements to do justthat. Today, I want to review those efforts.

In no area is the need for change clearer than in our criminal laws. In recent years, through actions by the courts and inaction by Congress, an imbalance has arisen in the scales of justice. The criminal justice system has tilted too decidedly in favor of the rights of criminals and against the rights of society.

By 1981 nearly nine of ten Americans believed that the courts in their own areas failed to deal harshly enough with criminals-an increase of almost one-third since 1972. Also by 1981 , nearly eight of ten Americans did not believe that our system of law enforcement worked to discourage people from committing crimes-al-

most a fifty percent increase since 1967. In the Nation's capital, one public interest legal foundation has set up a Court Watch Project to involve its 80,000 members nationwide in the monitoring and reporting of judges who give sentences that appear far too lenient in specific cases.

We have focused so much on protecting the accused that we have lost sight of the purpose for which government itself was established-to protect citizens from those who would prey upon them. Let us be ever mindful of the need to safeguard individual liberty, but let us also recognize that the most basic individual liberty is freedom from violence. That basic liberty can be secured only by the effective and vigorous enforcement of our criminal laws.

As Judge Learned Hand recognized fifty years ago: "Our dangers do not lie in too little tenderness to the accused ... What we need to fear is the archaic formalism and the watery sentiment that obstructs, delays, and defeats the prosecution of crime."

Too frequently today, our criminal justice system allows the crimina/to be set free and imprisons the law-abiding citizens with the fear-and reality-of crime. We have been working for some time to secure passage of legislative reforms that would restore the balance between the forces of law and the forces of law/essness by making our criminal laws more effective. The United States Senate now has before it a package of reforms which would, among other things: -Reform our bail system to prevent the most dangerous offenders July 1983/Arkansas Lawyer/59

from returning to the streets once they've been caught; -Make jail sentences more certain and abolish the frequently abused process of parole; -Provide stronger criminal forfeiture laws that will take the profit out of crime, especially organized crime and drug-trafficking; -Increase the other federal penalties for drug-trafficking; -Recognize the rights of the victim more fully and require judges to weigh the criminal's impact upon the innocent when sentencing; -Make it a federal crime to kill, kidnap, or assault senior federal officials, including Justices of the Supreme Court; and -Permit the federal government to transfer surplus property to the states, free of charge, when the property is needed by the states for prisons.

The importance of these reforms to our system of justice and to the safety of the public cannot be overstated.

In the last decade violent crime jumped eighty-five percent. In the time it takes to deliver my remarks today, an average of fifty violent crimes will be committed across the country. During that same period, over 400 property Crimes Will be committed. Last year alone, one out of every three households in our Nation was victimized by some form of serious crime. At a time when the incidence of crime has reached crisis levels, it would be irresponsible for Congress not to act on these badly needed reforms.

To meet the continuing and grave threat of crime, we are also pressing other reforms. We have proposed modification of the exclusionary rule so that the criminal would not go free when the officer seizing evidence acted in the reasonable, good faith belief that his actions were lawful. And we favor limiting the insanity defense so that only those who did not have the mental state which is an element of their crime would escape responsibility for their acts. Abuses of the exclusionary rule and insanity defense have helped turn the criminal justice system into a cynical game. Our reforms would make it once again a quest for Justice-not only for the accused, but for society as well.

BO/Arkansas Lawyer/July 1983

Recognizing that law enforcement is largely a state and local function, we have institutionalized a new cooperation and coordination between federal, state, and local officials. Through law enforcement coordinating committees in each federal district across the country, federal resources will be directed against the particular problems in each community on which they can have the greatest impact.

Since much of the epidemic of crime arises from narcotics trafficking, we have brought the resources and expertise of the FBI to bear on the drug problem for the first time. Since last summer, the FBI has initiated over 800 investigations nationwide involving narcotics trafficking, including 200 joint Investigations with the Drug Enforcement Administration. Drug trafficking not oniy causes so much violent crime, but is also rapidly becoming a leading occupation of organized crime. BringIng the sophisticated resources of the FBI into the effort, in conjunction with DEA, will make a vital difference in the battle against drugs.

The security of the American people-and their respect for our legal system-require these kinds of new initiatives to improve the effectiveness of our criminal justice system. We need not-and must not-eompromise our respect for individual rights, but we must secure the safety of our people against crime.

In a similar fashion, the security of American economic well-being and our people's respect for law require new initiatives to meet the problem of illegal immigration to the United States. We need not-and must not-forsake our heritage as a nation of immigrants yearning to be free, but we must rationalize and enforce the laws governing Immlgrahon. . The staggering dimensions of illegal ImmIgration to this country have dramatically undermined public confidence in our legal system. Although the problem is not susceptible to simple solution, the public rightly expects major improvement. As one national opinion survey found in June 1980 over ninety percent of the public favo; an "all out effort to stop illegal" immigration. As is the case with criminal law, the public wants fair and reasonable immigration laws that will be effective and efficiently enforced.

In recent years, this Nation truly has

lost control of its own borders. There are some three to six million illegal aliens in this country-and the number grows by from one-quarter to one-half million each year. Added to that, the United States in 1980 admitted over 800,000 legal entrants-the largest number since 1914. Taken together, legal and illegal immigration to this country in 1980 reached an all-time high for any year-including the great unrestricted migrations between 1880 and 1921. The Mariel Boat Lift from Cuba in 198Q--and the arrival of Haitians that year at the rate of about 1,000 a month-have themselves become a symbol of the failure of American immigration and refugee policy.

The largest single weakness of prior policy has been its lack of realism.

Rather than confronting reality, it chose to look the other way and to adopt makeshift approaches to only the pressing problem of the moment.

On July 30 of last year the President proposed a new and comprehensive immigration and refugee policy that recognizes things as they are and logically proceeds from there on all the issues now pending-illegal immigration, legal immigration, mass arrivals of undocumented aliens, and refugee assistance. In a similar fashion, the bipartisan Simpson-Mazzoli bill now pending before Congress would provide an excellent vehicle for achieving necessary reforms.

Although all of the interrelated proposals that go together to make a new policy workable are beyond the scope of these remarks, the central theme can be simply stated. It is to deter illegal immigration by modestly expanding the opportunities for legal employment and then concentrating more enforcement resources upon thwarting future illegal immigration. To do so, we must-for the first time-ban employers from hiring iliegal aliens.

Just as the problems of crime and illegal immigration have revealed ineffectiveness in the federal justice system. dramatic increases in the burdens upon the courts have fostered its inefficiency. Since 1960 annual civil filings in the district courts have more than tripled. In the same period appeals increased seven-foid. And the trend is continuing. For the twelve-month period ending this March 31 st, civil filings were up twelve percent and appeals were up eleven percent over the previous twelve-month period. During

its last term, the United States Supreme Court itself accepted fifteen percent more cases for argument than during the preceding term-and thirty-six percent more cases than just the term before that.

Most significantly, the number of cases per judge has increased dramatically. Despite the Omnibus Judges Bill of 1978, which added 152 judges to the federal bench, the growth of the federal judiciary has not kept pace with the litigation boom. At the district court level, judges today must process fifty percent more new filings each year than in 1960. Judges at the appeals level must hear almost four times as many cases today as in 1960.

In addition, litigation is more complex and time-consuming than ever before.

For example, compared to 1960, five times as many federal trials took more than one month in 1981. It is unsur路 prising that expeditious resolutions of civil suits seldom occur. A recent study found over 15,000 cases in our federal district courts that had been pending for more than three years.

The first step in responding to these problems must be more judicial resources. The 1978 Omnibus Judges Bill represented the first increase in the size of the federal judiciary in the past two decades. Already there is an obvious immediate need for more federal judges to handle the burgeoning caseload. In addition, I believe it is time to recognize that the creation of judgeships should be regularized and based upon such an assessment of need, not politics.

The problem facing the federal courts, however, is not simply one of two few judges to handle the work. Too great an expansion of the federal judiciary would create its own set of problems. Constant, dramatic expansion tends over time to dilute the prestige and reduce the collegiality of the federal bench, making it harder to attract the best candidates. Increasing the number of decision-makers issuing opinions would threaten uniformity, evenhandedness, and stability in the application of the law. Doctrinal confusion even within a single jurisdiction has become increasingly difficult to avoid. As former Assistant Attorney General Daniel Meador has noted, we risk creation of a "judicial Tower of Babel."

We are therefore actively supporting a wide range of legislative initiatives

which will, if enacted, significantly lessen the burden on the federal courts.

We support the abolition of diversity jurisdiction, which accounts for a quarter of the civil filings in the district courts and about 14 percent of appeals in the circuit courts. There is no longer any persuasive rationale for diversity jurisdiction, and its abolition would free the federal courts for their primary task of interpreting and enforcing federal law.

We have also proposed a major revision of the federal habeas corpus laws, to impose a statute of limitations and provide that issues fully and fairly litigated in state court not be subject to relitigation in federal court. Our purpose is to restore finality in criminal law.

An incidental effect would, however, be the removing of an unnecessary burden on the federal courts, since state prisoners filed over 8,000 habeas cases in federai courts last year. The only thing to commend the vast majority of those cases, to paraphrase Judge Learned Hand, "is the hardihood in supposing they could possibly succeed."

We are also considering the proposal to create special tribunals to decide certain types of factual disputes arising in the administration of welfare and regulatory programs. The resolution of many such disputes does not require the resources or expertise of an Article III court. The creation of such tribunals was proposed over five years ago by a Justice Department Committee headed by Judge Bork.

To ease the burden on the Supreme Court itself-which has doubled since 1960-we are proposing legislation that would abolish the mandatory jurisdiction of the Supreme Court. The Supreme Court could better supervise the development of law in the federal circuits if it had complete discretion over its own docket. Every case which the Supreme Court must hear because of mandatory jurisdiction represents one less case the Court could have heard because of its importance. Chief Justice Burger has urged that "all mandatory jurisdiction of the Supreme Court that can be should be eliminated by statute," and the Department of Justice fUlly agrees.

The measures I have mentioned today would do much to improve the effectiveness and efficiency of our federal justice system. There is, however, one further problem that must be immediately addressed. We must amend

the Bankruptcy Act of 1978 to remedy the constitutional defects found by the Supreme Court in its recent decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co. The Bankruptcy Act of 1978 sought to improve the efficiency of the federal courts in dealing with bankruptcy matters. The dimensions of that undertaking are readily apparent-as of March 31 of this year nearly 700,000 estates were pending before the federal bankruptcy courts. As the result of the Supreme Court's decision, however, a new system must be in place by October 4 of this year when the Court's mandate will issue.

We are presently engaged in an expedited review of the options available under the Supreme Court's opinion. There are at least three-all of which present difficulties. First, we could return to the pre-1978 system, but it was that system which caused Congress to pass the 1978 Act. Second, we could grant Article III status to bankruptcy judges, but that would mean the appointment of some 200 federal judges with life tenure. Or third, we could continue the bankruptcy courts as Article I courts, but narrow their jurisdiction to exclude private civil cases such as Northern Pipeline. Unfortunately, this third option is perhaps the most complex analytically-particularly in light of the limited time available-and would reintroduce at least some of the inefficiencies the 1978 Act sought to eliminate.

Although the October 4 deadline makes changes in the bankruptcy system necessary immediately, the other changes I have outlined today are also imperative and require timely action.

Public discontent with the federal criminal and civil justice system increases daily as the perception spreads that it is neither effective nor efficient enough to meet the needs of modern society.

Discontent over the role of law may ineVitably lead to disrespect for the rule of law-unless we take well-reasoned action soon. Reform is therefore essential. As Winston Churchill once wrote: "Things do not get better by being left alone. Unless they are adjusted, they explode with a shattering detonation."

The fuse of public discontent is lit. It is up to all of us-especially the leaders of the organized bar and the officials of the Justice Department. to avert the threatened explosion.

t--

July 1983/Arkansas Lawyer/51

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DRAFTING WILLS & TRUSTS: A BASIC WORKSHOP FOR ATTORNEYS "A ONE-DAY IN-DEPTH PLANNING & DRAFTING WORKSHOP"

EDWARD C. HALBACH, JR. ProFessor Of Law, University of California. Berkeley

DATES AND LOCATIONS 9:00 A.M. - 5:00 P.M. Thursday, May 12, 1983 SALT LAKE, UTAH Marriott Hotel 75 South West Temple

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WORKSHOP OBJECTIVES: The fundamental concepts, basic principles and common problems of will and trust drafting are the focus of this one-day drafting workshop, with consideration of the smaillo medium estate situations. The Workshop material includes a text on law, pre· and post·mortem planning, and problems and techniques of drafting, plus sample clauses, complete will and trust forms and other practical information intended to provide practical guidance to the attorney in preparation of estate planning documents. The forms include. among others: marital deduction formulas; tax allocation and disclaimer clauses; an outright will for a surviving spouse with trust for minor children; a marital deduction trust; and a revocable living trust. Professor Halbach reviews and analyzes the forms pro· vision-by-provision. This "how-to·do·it" workshop stresses the drafting problems confronting the practitioner, including: A. Estate, gift and income tax law.

B. Dispositive provisions for spouses, children and others.

C. Powers of appointment, class gifts and other future interest provisions.

D. Trustee selection and the trustees' powers.

E. Administrative provisions and powers.

F. Lifetime planning to insure optimal results and postmortem flexible.

WORKSHOP SPEAKER: EDWARD C. HALBACH, JR.. an internationally recognized authority on estate planning and taxation, is a noted author and popular lecturer in the field of wills, trusts. futu!e interests, taxation and estate planning.

He is president-elect of the International Academy of Estate and Trust Law, has served as Chairman of the ABA's Real Property, Probate, and Trust Law Section, and received the 1981 Award for Excellence of The National College of Probate Judges.

ADVANCE QUESTIONS: Registrants are invited to submit questions in writing to the Forum in advance to the scheduled workshop. The Forum will answer as many as possible of the questions of general interest.

WORKSHOP MATERIAL: Each registrant will receive a wills and trusts drafting guidebook expressly revised and updated for this program. The guidebook provides a detailed outline of the topics to be covered by Professor Halbach as well as will and trust forms and special clauses.

CONTINUING LEGAL EDUCATION CREDIT: This program has been designed to qualify for continuing legal educa· tion credit from the States of Colorado, Utah and the other surrounding states.

FEE: THE REGISTRATION FEE IS S160.00. The fee includes tuition. workshop materials, and coffee breaks. Meals are not included. Early registration is encouraged to guarantee your reservation at this popularly acclaimed drafting workshop. On site registration will be accepted only if meeting room space is available.

REFUND: Full refunds less $15.00 will be made if requested 15 days before the date of the workshop in which you are registered. No refund can be made after that date.

TAX DEDUCTION: Education expenses, including travel costs and meals. are deductible for income tax purposes if they improve or maintain professional skills. Treas. Regs. § 1.162-5.

MAIL THIS FORM WITH YOUR CHECK TO: The Southern (aliforMI T4"

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July 1983/Arkansas Lawyer/63

office

Methods And Means By: Bernard Sternin

Getting Started With Methods A great deal is continually being written that relates to the substantive areas of practice. There doesn't seem to be a shortage of materials that discuss the what of what has to be done in the practice of law.

By comparison, relatively little seems to get written that deals with the how part of practice. We don't often see materials that describe methods we might use to get our work done.

That's what this column is about. Its purpose will be to set out ways and means, techniques you might want to adopt to help get work done. Someone next door or down the street or in another city may be doing much of what you are doing, but using methods that are more effective. The goal here will be to spell out what some of these methods are, so that you can decide whether some of them might be worthwhile for you to use.

(Editor's Note: Methods and Means is a new Regular Feature. Bernard Sternin is a graduate of Harvard Law School and a member of the New York State Bar. He has served in the American Bar Association as Chairman of the Committee on Word Processing and Automated Drafting in the Section on Economics of Law Practice; as Vice-Chairman of the Committee on the Use of Modern Technology in the Section of Insurance, Negligence and Compensation Law; and on the SubCommittee on Equipment and Technology of the Committee on Economics of Law Office Management in the Section of General Practice; and is on the Section on Economics of Law Practice.)

64/Arkansas LawyerlJuly 1983

Effective office methods are important. They can often save a significant amount of money. What's more, once you establish them as routines you regularly follow they can continue to save money in an ongoing way without any further attention.

Establishing methods is important for another reason, beyond saving money: By setting them up as routines that are regularly followed you take a major step forward in establishing controls over your office operations.

Methods are one of the most important means you can use to make sure that office experience remains available to you and your staff in the future.

Methods institutionalize learning. They perpetuate the know-how of each person in the office and make it available to others. Methods give you a more reliable tool than memory to be sure that the practices you have found to be best are established and continued.

Most of the materials that are written about law office methods are in books and periodicals that deal with "office management." The materials in these publications fall into two broadly different categories:

The first category deals with management of the office as a whole. This group contains materials that relate to areas such as organizational arrangements, personnel administration, layout of office space, and so forth. Let's call this area of concern "plant management."

management of specific pending office matters. This group contains materials that relate to areas such as indexing systems, ways to bring up files for attention, methods for doing the procedures and producing the documents that are needed, record keeping, diaries, ticklers, docket systems, and the like. Let's call this area of concern "file management."

The materials in the first category, plant management, are probably of more interest to the larger law firm. The materials in the second category, file management, are probably of more interest to the smaller law firm and to the solo practitioner. I suspect that attorneys in smaller firms and solos bill more of their work on a flat fee basis than do attorneys in the larger firms, and hence keeping costs down becomes relatively more important. Also, I suspect that in smaller firms attorneys carry a greater case load than in larger firms. Consequently, the amount of time lawyers in smaller firms can give to each file may be more limited, and therefore more effective processing techniques become relatively more important.

The "methods and means" I'll be dealing with in these columns will relate primarily to techniques we can use to get our work done in handling particular matters. Consequently, the materials I'll be discussing here will be more in the area of file management than plant management.

There is one important topic that re-

The second category deals with the

Continued on page 65

YOUNG LAWYERS'

UPDATE

By Frank C. Elcan, II YLS Chairman

YLS To Host Regional Affiliate Outreach Meeting On March 25 and 26, 1983, the Young Lawyers Section wili host lawyers from the states of Oklahoma, Missouri, Tennessee, Mississippi, Louisiana, Texas and Arkansas at a regional Affiliate Outreach meeting of the Young Lawyers Division of the American Bar Association. The program will be held in Hot Springs, Arkansas, (by pure coincidence) during the Oaklawn Park racing season. The program on Friday, March 25, wili feature a showcase of American Bar Association/Young Lawyers Division public service projects which are underway in various other sections throughout the nation. On Saturday, March 26, the Arkansas Institute for Continuing Legal Education will sponsor a triai tactics seminar. Both the Friday and Saturday sessions wili adjourn weli in advance of post time at Oaklawn Park. In addition, the Young Lawyers Section has reserved a block of reserved seats at Oaklawn Park and a block of rooms at a hotel in close proximity to the race track. I encourage young lawyers from all sections of the state to make plans

Methods And Means Continued from page 64 lates both to plant management and to file management. That's the question of the attorney-secretary arrangement you use. Is one-to-one always best? In some situations could two-to-one or one-to-two or two-to-two be better?

Several years ago I wrote about some new attorney-secretarial arrangements in an article called "An Easy and Effective Way to Reorganize your Law Office for Automation." The article was an attempt to deal with the question of which secretary should get the automatic typewriter in offices in which there were more secretaries than ma-

to attend this meeting. It is a rare opportunity to see American Bar Association projects demonstrated for possible implementation in our state. The trial tactics seminar is expected to be excellent as well. More information on the seminar wili be forthcoming through Bar mailings.

YLS Coordinates Disaster Relief The Young Lawyers Section Committee on Disaster Relief was calied into action after the disastrous weather that struck our state in December.

Chairmen Ed Tarvin of Little Rock and John Moore of Mountain Home coordinated activities in conjunction with the Federal Emergency Management Agency in rendering legal advice to those persons stricken by the flooding and tornadoes. The legal advice was given to those who were eligibie by federal guidelines for free legal services, and was limited to non-fee generating cases. Area coordinators in each of the judicial districts in the state where damage occurred were contacted to provide assistance to the Federal Emergency Management Agency staff working in their area. chines. However, even if you don't have any word processing equipment you may stili want to think about some possible new patterns of office organization and work flow for their own value, independent of machines. if so, write to me for a free copy of the article.

Those persons who worked with this project are to be thanked for their work in such a time of crisis.

Annual Meeting Scheduled in June The annual meeting of the Young Lawyers Section is scheduled for Thursday, June 9, 1983, at the Arlington Hotel in Hot Springs in conjunction with the annual meeting of the Arkansas Bar Association. Election of officers for the 1983-1984 bar year wili be conducted, as weli as reports of the various committees of the Section. We are also sponsoring the annual dance which wili be on Thursday night. A good time was had by ali who attended the dance last year, and plans are underway to make this year's dance a good one as well. I hope ali young lawyers wili attend the annuai meeting. It is an excelient means of meeting active section members from ali areas of the state, as weli as providing the opportunity to become involved in one or more of the various committees operating in our section.

,

~

arrangements in a series of gradual steps.

To obtain a copy send a self-addressed envelope stamped with postage for two ounces and marked with the title of the article, to Bernard Sternin, Desk 70A, 5 Hawke Lane, Rockvilie Centre, New York 11570.

Bern'd Offering: "An Easy and Effective Way to Reorganize your Law Office for Automation." An article that discusses patterns of secretarial support and office work flow other than the traditional one-to-one arrangement. The article also sets out a plan for evolving new

If you are now using automatic typing equipment and want to have further relevant material included, indicate what equipment you have.......

July 1983/Arkansas Lawyer/55

TO WIT

By S. Sponte, Esq. "S. Sponte is the nom de plume of a lawyer who practices and is generally bewildered in Westmoreland County, Pennsylvania."

Halfway Home I am above all else a person of passion, and to that professionally troublesome affliction I incessantly and deliriously yield. When matters touch upon that base and basic instinct, I do not plead for my clients, I bleed for them. I do not pray for their relief, I pray for their deliverance, and it should come as no surprise to my more stable colleagues that I accept defeat in such instances with all the philosophical good grace of a scorned liberal.

Such a crusade caused me recently to appear before a judge in another county who fUlly believed that he was THE LAW. He had made up his mind well in advance of trial as to the appropriate outcome and he was not about to be dissuaded of his perch by some foreign lawyer armed only with excessive zeal, a brash though fetching manner, and 150 years of supportive, uncontroverted precedent. When the defense rested, His Honor called us both to sidebar and handed out copies of his opinion, no doubt written at the speed of light, for in it the real matter had simply ceased to exist. That I was to taken aback was, to some degree, my own fault, for I had not preViously been aware of his famous opinion of some years earlier in which he had declared the doctrine of stare decisis to be unconstitutional infringement upon his right to freedom of expression.

The effect of this particular setback to my psyche was typically cataclysmic. Whereas before I was sailin', now I was frightfully becalmed. I stopped reading my mail, returning my phone calls, answering my correspondence.

In short, for a time, I took on all the appearances of a successful, busy lawyer.

I should know better than to be so prone to passion, for I first learned of its 66/Arkansas LawyerlJuly 1983

corrosive effect upon the legal mind in law school, at the hands, the mind and mouth of one Professor Alleshazy.

Next to the Dean, passion was his favorite anathema, and he would preach upon it endlessly. "It has no place in your thoughts", he would suggest, and we would listen. "It is of use only to concert musicians and hookers", he would argue, and we took note. "In this profession, you wilt never be the former, and only rarely the latter", he would roar with clenched fist swinging madly skyward, shaking Blackstone from repose. "Be dispassionate or be damned", he would bellow fervently, collapsing thereafter in a quivering, spasmodic heap at the base of the podium, while we broke into a frenzied fit of coldly analytical cheering.

As with most professors, I paid him no heed, and thus brought to my fledging practice the ardor of the uninitiated.

For a while, while the romantic weight of law school still sat squarely on my shoulders, the object of my passion was crystal clear. Like Justice Black, I carried a small copy of the Constitution in my pocket, always alert to a spontaneous outbreak of Constitutional debate. I was on the road of Brandeis and Cardozo then, and they were close to my heart. Somewhere along that road, though, I must have missed a sign, for I have long since settled into a small town general practice, and I haven't heard a word from Louis or Benjamin for years.

Amidst the title exams and falldown cases that otherwise occupy my time, I lapse into mental pause of late and wonder why I have spent so much passion on such a harmless career. I am not now a likely candidate to sway by force of passion the larger course of human events. No cadre of bated

breaths await my every word, and I expectl'lI pass along uncited and unseen.

The nature of my living permits me to leave in my wake only ordinary contributions to smaller worlds. Before too long though, some poor old downtrodden widow will wander totally bereft into my office with an eviction notice to cheer me up and spark anew the fire.

Until then, for passion's sake, I will take up the violin. It seems a reasonable choice, considering the alternative.

Copyright 1980-S. Sponte, Esq.

t(Editor's Note: Law generally is a rather somber profession. True, once in awhile,there is a pleading or decision couched in a humorous vein. However, we lawyers must admit that there are few wits in the legal profession. So, it is with the especial pleasure that we continue the Regular Feature in The Arkansas Lawyer, appropriately entitled "To Wit" and authored by S. Sponte, Esq. All lawyers should be able to identify with him.)

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The Tax Equity And Fiscal Responsibility Act Of 1982 Part 1

By Joseph M. Erwin and Paul J. Nicholson INTRODUCTION

This is the first in a series of three articles which is designed to explore the effects of the Tax Equity and Fiscal Responsibility Act of 1982 upon the provisions of the Internal Revenue Code. It is not designed to be a scholarly treatise but a practical working guide for the general practitioner.

This first installment will cover the individual and withholding provisions (including pension withholding provisions) of the Act. The second article will cover the business, pension and corporate provisions and the third article will cover the reporting, penalties and enforcement, and administrative provisions.

MEDICAL EXPENSES AND CASUALTV LOSS DEDUCTIONS

Topping the list changes made by the 1982 Act upon the provisions of the tax law is the change in the deduction for medical expenses. Under pre-82 Act law', sums paid for doctors and dentists services were deductible on Schedule A of Form 1040 to the extent that they exceeded 3% of the taxpayers adjusted gross income. The 1982 Act raises this percentage threshold to 5% of adjusted gross income. In addition, the Act repeals the deduction for amounts paid toward health insurance premiums beginning with tax years starting after 1982. The Act' repeals the 1% threshold in the deduction of prescription drugs and eliminates the deductibility of non-prescription drugs for tax years after 1983.

Casualty loss deductions and disas68/Arkansas Lawyer/July 1983

ter loss deductions are also modified.

Beginning in 1983, taxpayers wishing to take a casualty loss deduction will have to meet the present $100.00 per loss threshold plus an additionallimitation of 10% of adjusted gross income.

In other words, only that portion of a casualty loss that exceeds 10% of the taxpayers adjusted gross income and also exceeds $100.00 will be deductible.

The same rules apply for disaster losses which are deductible during the year of loss or in a preceding year. If a taxpayer elects to take a disaster loss for a preceding year then he must use the preceding years adjusted gross income in applying the $1 00.00 and 10% limits.

GROUP TERM LIFE INSURANCE

Employees are not taxed upon the premiums paid by their employer for providing them with up to $50,000.00 of group term life insurance coverage.

The Act provides that this rule will continue to obtain but that in taxable years beginning after 1983 a category of taxpayer called a "key employee" will be taxed 0" the premiums paid by the employer unless it can be shown that the plan providing the insurance does not discriminate in favor of "key employees" as to eligibility to participate and in the type and amount of benefits that are available under the plan'.

The Act defines "key employee" as anyone who during the plan year or the preceding four plan years was (1) an officer of the employer, (2) one of 10 employees owning the largest interest in the employer, (3) a person owning

more than 5% of the stock in a corporate employer or a more than 5% interest in the stock possessing more than 5% of the voting power of a corporate employer, or more than 5% of the capital or profit interest of a noncorporate employer, (4) a person owning more than a 1% interest in the stock or profits, or of the voting power of the corporate or non-corporate employer and having annual compensation from employer in excess of the $150,000.00.'

For the purposes of applying the test set out above, the constructive ownership rules under Section 318 will apply.

However, the aggregation rules under Section 414(b) will not apply in determining whether the individual is a 5% or a 1% owner'.

As for determining whether the plan discriminates in favor of key employees the plan will not be considered discriminatory if (a) it benefits 70% of all of the employees of the employer, (b) 85% of all participating employees are not "key employees", (c) it benefits employees who qualify under a classification set up by the employer and found by the treasury not to discriminate in favor of key employees.'

The employees of related employers will be treated as employees employed by a single employer for the purposes of these tests except (a) those employees with less than three years of service, (b) part-time and seasonal employees, (c) employees not covered by the group term insurance plan but covered by a collective bargaining agreement if the group term life insurance was the subject of good faith bargaining and (d) non-resident aliens who receive no U.S. source income.

,

The Act sets out that there will not be discrimination merely because the amount of life insurance provided to employees bears a uniform relationship to compensation. It is unclear yet as to whether the present regulations permitting bracket coverage where employees in certain salary ranges are provided certain coverages are valid under the Act. For example, under present regulations an employer may set up categories in which employees earning $10,000.00 to $20,000.00 per year obtain insurance in an amount equal to 200% of salary with employees earning $20,000.00 to $30,000.00 per year obtaining insurance coverage in the amount of 250% of their salary. It is possible that such categories will be considered discriminatory.

TAXING UNEMPLOYMENT COMPENSATION If the unemployment benefits received by a taxpayer added to disability payments, otherwise eligible for exclusion, added to the deduction for two earner married couples and other adjusted gross income exceeds the statutory base amount then the taxpayer must include in income the smaller of the amount of unemployment compens.ation or one-half the amount of the excess by which the above total exceeds the base amount.

Prior to the Act the base amount was $25,000.00 for a married individual filing a joint return, "0" for a married taxpayer filing separately and $20,000.00 for all others. The 1982 Act lowers the base amount for married taxpayers filing jointly to $18,000.00. It retains the "0" amount for married taxpayers filing separately and lowers the amount for all others to $12,000.00'. This change applies to unemployment compensation paid in tax years ending after 1981, thus this provision is retroactive to benefits paid in 1982. Individuals who end up underpaying their estimated tax because of the retroactive nature of this change will not be subject to penalty'.

ALTERNATIVE MINIMUM TAX The Act repeals the add on minimum tax and expands the alternative minimum tax for tax years beginning after 1982. The tax preferences under the new law include those under previous law plus some additional new ones.

The alternative minimum tax under

the Act is computed by first computing the taxpayer's "alternative minimum taxable income" (explained below).

This figure is then reduced by the appropriate exemption and multiplied by a 20% rate. If the resulting figure exceeds what the taxpayer would owe using the standard method of computation (that is his regular tax) then the amount by which the regular tax is exceeded is added to the regular tax'.

The taxpayers alternative minimum taxable income is computed by starting with the taxpayers adjusted gross income, computed without regard to regular net operating losses. Adjusted gross income is then added to the amount of the taxpayers tax preferences (defined below) for the year.

This figure is then reduced by special alternative minimum tax net operating losses (explained below) and further reduced by special itemized deductions and by any trust distributions included in income under the "throwback" rules". The result of this computation is the taxpayers "alternative minimum taxable income". As stated before, this figure is then reduced by the amount of the appropriate exemption which for a married taxpayer filing

jointly is $40,000.00, for married taxpayers filing separately, $20,000.00, and for all others, $30,000.00". The result is then multiplied by the 20% rate.

The taxpayer is permitted to take certain special itemized deductions to arrive at alternative minimum taxable income. These special itemized deductions are deductible only to the extent that they have not been utilized in determining adjusted gross income.

The special itemized deductions are: (1) casualty and gambling losses, (2) medical expenses (only to the extent they exceed 10% of adjusted gross income), (3) charitable contributions, (4) the estate tax attributable to income in respect of a decedent, and (5) qualified interest".

"Qualified interest" consists of qualified housing interest and qualified interest other than qualified housing interest. These items are deductible only to the extent of "qualified net investment income" for the year".

Qualified housing interest is defined as being equal to interest paid or accrued on indebtedness incurred to acquire, construct or substantially rehabilitate any property which is a

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July 1983/Arkansas Lawyer/69

principal residence of the taxpayer or a qualified dwelling used by the taxpayer or any member of his family during the year. A qualified dwelling is a house, apartment, condominium or mobile home not used by the taxpayer on a transient basis'". Qualified net investment income is equal to qualified investment income over qualified investment expenses, and qualified investment income is equal to the sum of gross interest, dividends, rents, royalties, items treated as ordinary income under the recapture rules, intangible drilling costs, any net capital gain on the sale of investment property, and items of tax preference for excluded interests and dividends". Qualified investment expenses are expenses directly connected with the production of investment income". However, any deductions which are tax preferences are excluded.

In computing the minimum tax base, the taxpayer is permitted to reduce adjusted gross income by a specially computed alternative tax net operating loss deduction. The alternative tax NOL deduction is essentially the regular net operating loss deduction for a year with these two exceptions: (1) In computing the alternative NOL which may be carried forward the loss is reduced by the alternative minimum taxable income of the preceding year to which it was carried.

(2) The alternative NOL is computed in the same manner as the regular NOL except that (a) it is reduced by the amount of the items of tax preference arising in that year which are taken into account in computing the NOL and (b) only those itemized deductions which qualify as alternative tax itemized deductions are taken into account.

The alternative NOL is used up in the carryover year by the amount of alternative minimum taxable income whether or not the taxpayer is subject to the alternative minimum tax. And, the NOL deduction for purposes of the regular tax isn't affected by the special minimum tax computation".

All of the pre-82 Act tax preferences whether for the add-on or alternative minimum tax will obtain as tax preferences under the new Act except those for the amortization of child care facilities and the preference for railroad rolling stock and qualified stock options". In addition, the Act adds the following as tax preferences; (1) interest excluded under all savers certifi70/Arkansas Lawyer/July 1983

cates and for post-4 net interest exclusions, (2) dividends excluded under the dividend exclusion, (3) the excess amounts which are expensed in regard to expenditures for mining exploration costs, development expenditures and circulation expenditures, research and experimental expenditures over the amount which would be deducted if these expenditures had been amortized and capitalized on a straight line basis over a ten year period, and (4) the bargain element in incentive stock options at the time the option is exercised.

(This is the amount by which the fair market value of the shares at the time of exercise exceeds the option price.)"

The alternative minimum tax may be reduced by the usual tax credits allowable except that the non-refundable credits are not allowable." The foreign tax credit is allowable to the extent of the foreign tax and the taxpayer's foreign source alternative minimum taxable income. Where the alternative minimum tax exceeds the regular tax amount and an allowable credit is wasted, there can be a carryforward or carryback of that credit under the usual rules and a use against the regular tax, and not the alternative tax, in the carryforward or carryback year. An example is as follows: "X" has a regular tax of $10,000 less $5,000 investment credit.

His alternative tax is equal to $8,000 so his tax is equal to the $5,000 regular tax plus $3,000 excess for alternative tax.

In effect, only $2,000 of the credit was used and $3,000 can then be carried forward or back."

PROLONGED WRITE OFF ELECTION

The Act permits a taxpayer to avoid the treatment of research and experimental expenditures, intangible drilling costs, mine development and exploration expenditures and circulation expenditures as tax preferences by electing to write off these expenditures over a ten year period". In the case of lOG's, the Act permits a special election in which the lOG can be written off over a five year period taking a certain percentage set out in the statute, of the lOG in each of the five years". Investment credit on the lOG is allowed in the year in which it is paid or incurred and in computing the applicable percentage, the lOG is reduced by the basis reduction under the new investment credit rules 2 " .

WITHHOLDING PROVISIONS

Section ยง301" of the new law requires the payor of interest, dividends or patronage dividends to withhold from payments a tax equalling 10% of the amount of the payment. The withholding is to be made at the time the payment is made or credited. The taxpayer receives a credit for the amount of withholding against his income tax in the year in which the Withholding was made. The Act establishes a category of exemptions from withholding, and it establishes a category of exempt recipients. It provides for the election out of withholding by the timely filing of an exemption certificate, and it defines in detail the term "payor" and the types of payments which are subject to withholding".

The terms exempt individual includes persons who have filed an exemption certificate and whose tax liability for the preceding taxable year is $600.00 or less ($1,000.00 on a joint return), individuals who are 65 or over with a tax liability for preceding years of $1,500.00 or less or $2,500.00 on a joint return", and simple trusts (being defined as trusts which distribute all of their income). Also payments to corporations, governmental bodies, securities dealers, money market funds, exempt organizations and nominees, are exempted from withholding". Minimal interest payments not in excess of $150.00 per annum are exempt where the payor has so elected. And, qualified consumer cooperative payments are exempt where the cooperative has applied for and received an exemption.

Financial institutions are permitted to elect annual withholdings as opposed to making with holdings every time an interest payment or dividend payment is made. This election is conditional on the balance of the account subject to the withholding not being permitted to fall below the amount of the tax that would otherwise be deducted and conditioned on the financial institution not permitting the account to be closed until the proper amount of tax has been withheld".

"Payor" is the person paying or crediting the interest, dividend or patronage dividend". Middlemen such as custodians, nominees and corporate trustees who receive payments to be passed on the payee are treated as payors and are required to withhold the tax if the original payor does not".

Payors are to make deposits of withheld tax under a system of withholding to be established by regulations. They are liable for the withheld tax to the United States and no one else. And, reasonable reliance on an exemption certificate in effect at the time the tax is to be withheld will relieve the payor of liability" .

Interest which is subject to withholding includes interest paid; on registered obligations, deposits in banks, amounts paid by mutual savings banks, savings and loan associations, bUilding and loan associations, cooperative banks, homestead associations, credit unions, industrial loan associations or similar organizations in respect to deposits, investment certificates or withdrawable or repurchaseable shares and amounts of interest paid by insurance companies under an agreement to pay interest, interest paid by brokers and interest paid on accounts held by investment companies". All dividends are subject to withholding, a dividend being defined as a distribution out of a corporation's earnings and profits. Distributions from a Subchapter S corporation in money made within two and one-half months after the close of the corporation's taxable year is defined as a dividend and subject to withholding".

Some interest and dividend payments are excluded from the definition of interest and dividends. Interest payments which are excluded include: (1) Interest paid on obligations held by natural persons, (2) interest on state and municipal obligations, (3) interest on all savers certificates, (4) amounts subject to withholding of tax on nonresident aliens and foreign corporations, (5) amounts exempt from tax relating to income derived from foreign governments, (6) amounts which are subject to withholding of tax, and (7) amounts paid outside the United States which is income from sources outside the United States".

Dividend payments which are excluded include; (1) amounts paid out as a distribution of stock relating to the reinvestment of dividends in stock of public utilities, (2) any amount which is treated as a taxable dividend by reason of redemption 01 stock or a preferred stock bail-out or in connection with certain reorganizations, (3) any amount of interest that is not subject to withholding, (4) to the extent provided by regulations any amount paid by a foreign corporation not engaged in a trade or business in the United States,

(5) the capital gain of a regulated investment company or real estate investment trust dividend, (6) any amount which is an exempt interest dividend of a regulated investment company, and (7) any amount paid or treated as paid by a regulated investment company during the year if it is anticipated that at least 95% of the dividends paid or treated as paid during the year will be exempt interest dividends."

PENSION WITHHOLDING

Payors of distributions from an employer deferred compensation plan, individual retirement account, annuity, bond purchase plan or commercial annuity are required to withhold tax from the distribution whether it is a "periodic" distribution or a "non-periodic" distribution, for tax years beginning after 1982. This is a reversal of past procedure in which withholding was not made unless specifically requested by the recipient."

The Act refers to the amount of a periodic or non-periodic distribution subject to withholding as a "designated distribution". This term is defined to be the portion of a distribution which is not an amount paid as wages or an amount that it is reasonable to believe is not includable in gross income." In other words, the withholding is to be made from the taxable portion of a distribution.

The payor of a "designated distribution" of any periodic payment must withhold from the payment as if it were wage payment for the appropriate payroll period. 3I The amount to be withheld is to be determined by reference to "a withholding certificate" which is to be filed by the recipient stating the number of exemptions and the recipient's marital status. If the recipient fails to file a withholding certificate then he is to be treated as a married individual claiming three exemptions. 39 As for withholding on "non-periodic" or on lump sum distributions the Act divides such distributions into two categories; qualified total distributions and non-qualified total distributions. A qualified total distribution is defined to be a designated distribution which it is reasonable to believe is made in one taxable year of the recipient and which is made under a qualified pension, profit sharing, stock bonus or annuity plan, and consists of a balance to the credit of the employee under the plan." Ac-

cumulated deductible employee contributions are treated separately in determining if there has been a qualified total distribution. Withholding on a qualified total distribution is determined under IRS provided tables and other computational procedures that reflect the 10 year forward income averaging treatment of the ordinary income portion of the distribution." If the distribution is made on account of a participant's death, the tables or other procedural computations will take into account the $5,000.00 death benefit exclusion whether or not allowable.

Withholding on a non-qualified total distribution is made at the rate of 10% of the amount of the distribution."

The recipient of a periodic or nonperiodic distribution has the right under the Act to elect exemption from the withholding provisions of the Act." Prior to making a distribution the payor is required to notify the payee of his right not to have the distribution subject to the withholding rules. As to periodic payments, the payor must notify the payee no earlier than six months before the time of the first payment and must thereafter annually notify the payee of his right to file, amend or revoke an exemption election." Any election made by the payee remains in effect for the calendar year uniess revoked earlier.

As for non-periodic distributions the notice must be given no later than the date of payment. The Internal Revenue Service has promulgated regulations which set out a suggested form for the notices and exemption statements."

These regulations provide that the payor may incorporate the election statement with a withholding certificate in the same form.

In addition to Withholding requirements, the new Act imposes upon employers, plan administrators, and issuers of insurance and annuity contracts the duty to report to the Internal Revenue Service, plan participants and the plan beneficiaries such information as will be prescribed by future regulations. It is expected that the required information will include information sufficient to identify the amount of the distribution, the amount of the accumulated deductible employee contributions, the amount of accumulated non-deductible employee contributions, the amount of capital gain, the amount of ordinary income, the cost basis of any employer securities included in the dist,ibution and in the case of qualified total distributions JUly 1983/Arkansas Lawyer/71

information regarding the five year rule.

These reporting and withholding rules for pension payments are effective for payments made after December 31, 1982. The Internal Revenue Service may delay compliance until June 30, 1983 where prior compliance would cause undue hardship."

In addition, the Internal Revenue Service is authorized to issue exemptions on a case by case basis on pre-July '83 payments where the payor has attempted to comply in good faith and has a plan to assure its ability to comply

by July 1,1983." Also, the Act provides that there will be no penalty levied for the failure to collect or account for payments made before July 1, 1983 where the payor has made a good faith effort to withhold and actually withholds from any subsequent 1983 payments sufficient amounts to satisfy the preJuly 1, 1983 requirements." However, there is no relief for any failure to timely pay over any amount actually withheld.

BACK UP WITHHOLDING RULES The act provides for withholding at the rate of 15%, starting in 1984, on certain payments to a taxpayer who has failed to furnish his taxpayer 1.0. number to the payor or with respect to whom IRS has notified the payor that the number furnished is incorrect. The new provision does not apply to payments for which withholding is otherwise required. 49 The category of payments to which this rule applies consists of the following; (1) payments made by a person in the course of a trade or business as rent, salaries, wages, premiums, annuities, compensations, remunerations or other fixed or determinable gain or upon the collection of certain foreign items, (2) payments relating to non-employees, (3) payments relating to dividends, (4) payments relating to

patronage dividends, (5) payments relating to the returns of brokers, (6) payments relating to interest payments, and (7) payments relating to certain fishing boat operators."

The withholding on a payment described above is required if the payee fails to furnish his taxpayer identification number to the payor or IRS notifies the payor that the number the payee furnished is incorrect. In the case a taxpayer who fails to furnish a number or who furnishes an obviously incorrect number, the withholding obligation applies immediately and continues until an apparently correct 1.0. number is furnished."

The Tax Equity and Fiscal Responsibility Act of 1982 is a vast and complex law which touches almost every facet of the Internal Revenue Code. It will take some time for scholars and practitioners to totally digest and become comfortable in applying its provisions. One can only hope that Congress will refrain from mammoth tax legislation over the next few years so as to permit the tax community to catch up in its understanding of the full ramifications of T.E.F.R.A. The next installment will cover the business, pension and corporate provisions of the act.

_

FOOTNOTES Unless otherwise noted all section references are to the Internal Revenue Code of 1954 as amended by T.E.F.RA 1982.

Medical & Casualty Loss

1. *213(a) 2. *213(b) and (b)(2), *202(b)(1).

Group Term Life Insurance

3.

4.

5.

6.

Alternative Minimum Tax

9. *55(b) and (d), S. Rept pp 109-111.

10. For good explanation of Throwback Rules see: McNulty, Federal Income Taxation of Individuals pp 320·323 (West Publishing Co. 1978).

11. *55(a) and (1)(1).

12. 155(e), S. Rept. p. 110.

13. 1155(e)(5)(A); 55(e)(5)(B); 55(c)(5)(c) and 55(e)(8).

14. *55(e)(4), S. Rept p. 110.

15. 155(e)(5)(A).

16. 155(e)(5)(c).

17. 155(d), S. Rept. p. 111.

18. *57(a), Conf. Rept. p. 475.

19. Id. 20. *55(c)(1).

21. S. Rept. p.l11.

Prolonged Write Off

CONCLUSION

1-_-

Unemployment Compensation

7. *85(b).

8. TEFRA *611(b)(2).

*79 as amended by *244 of T.E.F.R.A. *79(d)(6). *416(i)(I). * 79(d)(3)(A).

22. *58(c).

23. *58(i)(4).

24. ConI. Rept. p. 475.

Withholding Provisions 25. Codified as §3451 (a) for an explanation of the policy behind the withholding rules. See

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

Senate Report p. 288. *3452. *3452(b). *3456(b). *3453(a). §3453(b) and (e). *3451 (e) §3454(a) §3454(b). §3454(a). *3454(b).

Pension Withholding

36. §3405(a)(l) and (d)(2) Policy statement: Senate Report p. 288, Conference Report

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

48.

pp. 584, 586.

13405(d)(5). *3405(a)(1) and (d)(2). *3405(a)(4). *3405(d)(4).

13405(b)(2)(B) and (C). *3405(b)(2)(A). *3405(b)(3)(A) and (B); *3405(a)(2) and (3); *3405(d)(10)(A). *3405(d)(10)(B).

Reg. *35.3405-1. *334(e)(5).

Conf. Report p. 586. *334(e)(6).

Backup Withholding

49. *3402(S).

SO. *3402(S)(3)(A).

51. *3402(S)(I).

Joseph M. Erwin and Paul J. Nicholson are practicing attorneys in Little Rock, Ark. Erwin was graduated from Southern Methodist University Law School where he received his J.D. and L.L.M. Nicholson was graduated from the University of Arkansas Law School. This article is presented on behalf of the Taxation, Trust and Estate Planning Section of the Arkansas Bar Association.

Paul J. Nicholson 72/Arkansas Lawyer/July 1983

Joseph M. Erwin

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AICLE NEWS

by Claibourne W. Patty, Jr. Executive Director Arkansas Institute ot Continuing Legal Education

, It

Several Programs Of Interest Planned For Spring Banking Law in the 80's-A Semi路 nar for Lawyers and Bankers, cosponsored with the Banking Law Committee of the Arkansas Bar Association will be presented on February 18, 1983, at the Excelsior Hotel in Little Rock. The program, chaired by Chris Barrier of Little Rock, will have as speakers in small panels, lawyers, lawyer-bankers, and bankers on these topics: structure and transitionbranching, holding companies and acquisitions with John Selig, Esq. as panel leader with William H. Bowen, Esq. and James H. Penick, III, Esq. as panelists; product development ARMs investor accounts, and future prospects with H. Hall McAdams, III, Esq. as panel leader and Thomas A. Prince, Esq. and Bobby Shepherd, Esq. as panelists; learning to live with bankruptcy with Isaac A. Scott, Esq. as panel leader and Jim Guy Tucker, Esq. and James E. Smith, Jr., Esq. and panelists and interest rate regulation-Amendment 60 with James M. McHaney, Esq. as panel leader and Jim Guy Tucker, Esq. and Pat Koch as panelists. The luncheon speaker, Dr. Robert L. Qualls, Executive Vice-President of Worthen Bank and Trust Company and former Director of the Department of Finance and Administration under the first administration of Governor Bill Clinton, will speak on the topic "Peering into the Future". The Banking Law Committee was promoted to cosponsor this program since in recent years the banking industry has been experiencing substantial changes not only in the areas of the regulation of interest rates but by considerations of branching and holding company activities, new types of 74/Arkansas Lawyer/July 1983

accounts and the upsurge of individual and corporate bankruptcies. The theme of this program is "Lawyers!

Bring your Banker-Clients! Bankers: Bring your Lawyers-and Tell Them What You Need to Know!!"

The Second Federal Civil Practice Seminar, cosponsored with the Arkansas Federal Practice Committees of the Eastern and Western Districts of Arkansas will be presented on March 17, at the Excelsior Hotel, Littie Rock.

The program, cochaired by Bill Wilson, Esq. and LeRoy Autrey, Esq. will include the topics of pre-trial conferences, hearings on motions, attorneys fees, motion practice with a proposed update on bankruptcy law. Since the highlight of the previous Federal Civil Practice Seminar was the afternoon panel with all federal judges able to participate, there will again be such a panel which will allow each of the judges to give a four or five minute opening on their views of the practice in their courts after which the floor will be open for questions from the lawyer participants on all topics pertaining to federal civil court practice in Arkansas.

This program will be a second in a series of programs which have been encouraged by the Eighth Circuit Court of Appeals and it is expected that this will be as well received by the participants this year as the first annual program in 1982.

The Sixth Annual Labor Law Institute, jointly sponsored with the Labor Law Section of the Arkansas Bar Association, the National Labor Relations Board, and the Industrial Research and Extension Center of UALR will be pre-

sented at DeGray Lodge, Arkadelphia, on March 25-26, 1983. The topics presented will include: Eighth Circuit Title VII and labor law update; labor law implications of recession economics; privacy in the work place; wrongful discharge issues; affirmative action plans, their use, discovery and disclosure; LMSA and reporting requirements; NLRB issues and new developments; new developments in Title VII; arbitration issues; and comparable worth.

The participants in these programs are traditionally federal and state officials who are at the decision-making level, a U.S. Circuit or District Judge and seasoned lawyer-practitioners who act as moderators and workshop leaders.

On the same dates there will be a "race track special" program jointly sponsored with the Young Lawyers Section of the Arkansas Bar Association as a part regional meeting of young lawyers including states surrounding Arkansas at which the YLS of the Arkansas Bar Association will host for the discussion of public service programs and to conduct a seminar on Friday and Saturday mornings March 25-26, at the Ramada Inn in Hot Springs. The afternoons will be spent at the racetrack, which sport is not available in many surrounding states. More details on the subject matter of this course will be mailed out to YLS members within the next 30 days.

A new program jointly sponsored with the Economics of Law Practice Committee entitled Automating the Law Office-A Team Approach will

be presented on April 15, 1983, at the Riverfront Hilton in North Little Rock. It has been a concern of the Economics of Law Practice Committee that many lawyers and law firms are considering automation but are not familiar with what equipment is avaiiable, how to best utilize their staff and even understanding the "iingo" associated with this class of vendors. It is hoped that this program will answer many of the questions heretofore unanswered, and a mailing will be made within the next 60 days.

The annual Tax Awareness Institute jointly sponsored with the Taxation, Trust and Estate Planning Section of the Arkansas Bar Association will be presented at the Riverfront Hilton in North Little Rock, April 22-23, 1982.

The program will be devoted to a comprehensive update on tax planning of business organizations which will involve a comprehensive fact situation involving the formation, evolution and eventual dissolution of a typical small business organization with a discussion at each step including sole proprietorships, general partnerships, securities law, limited partnerships, corporate formation, C corporation vs.

S corporations; corporate operations and tax treatments of liquidations and sales. A brochure more fUlly outlining the details of this program will be mailed to the bar membership within 60 days.

Another first will be a program jointly sponsored with the Health Law Committee of the Arkansas Bar Association to be held at the Excelsior Hotel in Little Rock on May 13, 1983, which will be devoted to topics of particular interest to lawyers representing doctors, clinics, hospitals and other health care facilities due to its emphasis on the areas of medical malpractice, malpractice concerning hospital liability, antitrust problems in the health law field, hospital staff privileges and medical office management. This seminar will be more fully explained in a brochure to be mailed to the bar membership within 60 days.

Yet another first is another program to be sponsored with the Arkansas Women Lawyers Association to be concerned with an Orientation of New Federal Court Admitlees to be held in the middle or later part of May and will be a walk through and orientation in the literal sense of the word during the

morning with a session before a full panel of federal district judges in the afternoon culminated by a swearing in ceremony. Due to the nature of this program the mailing of brochures will be limited to those persons who have been admitted to U.S. Federal District Courts within the last five years. This program is patterned after a similar program conducted the Northern District of Michigan which was highly successful and will no doubt be well received in Arkansas.

Last but not least please mark your calendars for Video-Tape Replays of the Fall Legal Institute highlighting one day of real estate transactions and another day of domestic relations update which will be held at the following dates and locations: Thursday and Friday, January 27-28, at the Media Center of Southern Arkansas University, Magnolia, Arkansas; Thursday and Friday, February 10-11, Plaza East Room, Camelot Hotel, Little Rock; Thursday and Friday, February 24-25, Spencer Gallery-Fine Arts Center, UAM campus, Monticello; and Thursday and Friday, April 7-8, Audiovisual Center, Arkansas State University, Jonesboro. The topics to be presented will include all of the topics presented at the Fall Legal Institute as a video replay with the exception of crop and pasture leases on Thursday, which will be presented by Dean Jake Looney, live. The Magnolia workshop will be jointly sponsored by Southern Arkansas University. The Little Rock workshop will be jointly sponsored with UALR School of Law. The Monticello workshop will be jointly sponsored by the Office of Continuing Education, University of Arkansas at Monticello and the Southeast Arkansas Legal Institute. The workshop at Jonesboro will be jointly sponsored by Arkansas State University Continuing Education Division and the Northeast Arkansas Legal Institute.

These video replays allow attorneys to attend a major program such as the Fall Legal Institute which they were not able to see live either due to a conflict in schedule or the distance involved.

Estate Planning Theme Of 1983 Midyear Meeting By the time you receive this newsletter the Midyear Meeting of the Arkansas Bar Association, held at the Camelot Hotel, Little Rock, during

January 13-15,1983, will be history. As a response to the strong preference of Arkansas practitioners, the program cochairmen, Dean Lawrence H. Averill, Jr. and Richard A. Williams, Esq., had developed a day-and-a-half program around the general topic of estate planning divided into three specific sessions.

The first session on Thursday afternoon was lead by Dean Averill and Richard Williams and was devoted entirely to drafting techniques pertaining to non-trust wills; trust wills; marital deduction wills; revocable trusts; irrevocable trusts; and trusts for minors. The Friday morning session lead by Professor L. Scott Stafford with panelists Byron Eiseman, Esq.; Ted Drake, Esq.; F. H. Martin, Esq.; and Joseph Hickey, Esq. was devoted to problem solving techniques using specific problems included in the handout materials which were considered with emphasis on recent tax law changes. The Thursday afternoon session was devoted to estate planning for lawyers (and other professionals) and consisted of the following speakers and topics: Thomas L. Overbey, Esq. spoke on income and estate planning for lawyers with emphasis on tax savings techniques during active practice, for retirement and in contemplation of death; William S. Arnold, Esq. spoke on estate planning for professionals with particular emphasis on disposal of practice or partnership interests; and Gregory C. Lathrop, a chartered financial analyst and President of Lathrop Investment Management Corporation in Little Rock, spoke on the topic of investment opportunities for professionals. At the time of going to press we expected a total registration of 150-175 persons.

Also conducted on Thursday morning was the Second Annual Trial Advocacy Competition between the law schools of the University of Arkansas at Fayetteville and UALR. The trial competition was held in the restored south courtroom of the Old Federal Building, UALR School of Law, and was sponsored by the Arkansas Chapter of the American Board of Trial Advocates. The law school represented by the prevailing team is entitled to receive the "Henry Woods Annual Award for Trial Advocacy" inscribed with the name of the law school and the team members with the plaque to be retained by the prevailing law school until the next annual competition.

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An Important Announcement for Arkansas Bar Association Lawyers In 1977 Robert P. Wilkins and the Arkansas Bar Association produced the Wills and Trust System for Arkansas lawyers.

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I. Congress enacted the Economic Recovery Tax Act of 1981 (ERTA).

2. Congress enacted the Tax Equity and Fiscal Responsibility Act. 3. R.P. W. Publishing Corp. has published an expanded national version of Robert P. Wilkins' book: Drafting Wills and Trust Agreements: A Systems Approach. The ERTA supplement to this book contained over 600 pages.

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1983/Arkansas Lawyer/77

Second Injury Law,

OLD AND NEW Part II

SECOND INJURY LAW PRESENT

by W. W. Bassett, Jr.

(Editor's Note: This article is the second of a three-part series on Second Injury Law taken from the keynote speech given by W. W. Bassett, Jr. of Fayetteville, during the 1982 Workers' Compensation Institute.

Part /-Second Injury Law Past appeared in the January 1983 issue of The Arkansas Lawyer.)

Now we move on to the Second Injury Law Present. Again, the Second Injury Law Present is most probably a misnomer. As we saw in a review of the cases under 81-1313(f)(1) and 811313(f)(2)(i)(ii) & (iii), we very rarely saw application of the Second Injury Fund even raised by a party, never saw it actually defended before the Commission or in the courts as a separate entity and as early as 1950 saw its application severely limited. What then, has brought to life this sleeping giant known as the Second Injury Fund? It may have been the inequitable results of Sandy and the later Mullinax case or perhaps others at the level of the Full Commission which we don't know about, or it may have been compromise legislation between management and labor in an effort to enact a law that will "fit" in the eighties and the years to come. I personally don't know.

Whatever, 81-1313(f)(i) was passed by the Legislature on March 2, 1979, but was to "commence" January 1st, 1981. The immediate problem was: will the Act be given retroactive effect or will it apply only to those cases that arise after January 1st, 1981? We now have an answer to that questionalthough we didn't for sometime and it 78/Arkansas Lawyer/July 1983

proved to be a real problem for some.

The question of course was whether the new Act(s) were to be treated retroactively or whether they were to be prospective in nature. In Harrison Furniture v. Chrobak, Ark. App. _ : 602 SW.2d 955 (1981), the Court of Appeals held that the new Act applied only to cases that arose after January 1, 1981 (Note: The full Commission adopted the Court of Appeals ruling of Chrobak in Earl Beaird v. Reynolds and Williams and Home Insurance, Opinion dated January 7, 1982).

The period of Second Injury Law Present is best represented by a triumvirate of cases after January 1, 1981 , to the present time. I say present because even though the new amendments are in full force and effect (the 1979 Amendment became effective on January 1, 1981 and the 1981 Amendment became effective on March 3, 1981.), the bulk of these cases have hardly reached the Administrative Law Judge Level let alone the Full Commission or the Court of Appeals. This area of law is perhaps the most interesting even though this period is the shortest in length of time, and it is by far the most revolutionary in terms of "change".

During this period, our Court of Appeals broke with established cases and gave us some idea what we might expect in those cases to follow in the future.

At the time of his employment with Chicago Mill & Lumber Co., Sterling Greer had a left prosthesis as a result

of a non-related compensable accident many years prior to January 19, 1978. In January of 1978, the claimant suffered an additional injury which resulted in a 40% impairment to his right leg. Mr. Greer maintained that under 81-1313(f)(2)(iii) he was permanently and totally disabled. The Law Judge held that Mr. Greer was totally and permanently disabled as a result of the two injuries and on the basis of 811313(f)(2)(iii) concluded that the second injury fund would apply. However, the Full Commission following, although not mentioning, the case of Sandy, found that since the claimant had not sustained a total loss of the right leg (remember only 40%) as the result of the second injury that the Second Injury Fund would not apply.

In a novel approach, the Arkansas Supreme Court in the case of Chicago Mill and Lumber Co. v. Greer, 270 Ark. 627; 606 SW.2d 72 (1980) met the old law of Sandy head-on and while quoting from Act 253 of 1979, did not use that Act as the basis for its decision but instead utilized the rationale and reasoning contained in the new 1981 Act. The Court found that: "The respondent would be liable only for the degree of disability that the employee suffered during his employment with it and the Second Injury Fund should be responsible for the additional compensation". The Court remanded the case to the Full Commission with instructions to: "Determine the liability of Chicago Mill and to require the Second Injury Fund to pay the difference between this amount and permanent and

total disability."

This was a landmark case. For the 1sttime, it opened up Sec. (f)(2)(iii) and exposed the Second Injury Fund to huge awards of permanent and total disability whereas for 30 years awards had been unavailable because of Sandy and the prohibition against applying Sec. (f)(2)ÂŤ(iii) unless there was a total loss or use of the member of the body. The Court didn't overrule Sandy but so distinguished it that I respectfully submit that it no longer has weight. Not only did the Court in Greer brush aside Sandy's requirement of total loss or use of the member before Sec. (f)(2)(iii) applies, but the Court also held that the prior injury need not be an injury "in the compensation sense" before Sec. (f)(2)(iii) applied. This brings us to the second in our triumvirate of cases, namely Marshall v. Ouachita Hospital, 269 Ark. 958, 601 SW.2d 901 (1980) and affirmed on Second Appeal _ _ _ _ _ Ark. App. _ _; 621 SW.2d 7 (1981). The Court of Appeals was faced with a worker who was injured in 1978 and later underwent a laminectomy at L-5, S-1. There was no dispute that as a result of this injury and the claimant's prior condition that he was permanently and totally disabled.

But, had the claimant suffered a prior "injury"? Was this injury a prior "compensation injUry"? Hardly, the claimant's prior "injury" that he suffered was the result of being stricken with polio when he was 21 years old. The claimant began his career at the Ouachita Hospital wearing braces on both legs and a back brace which connected with the leg brace. He also was required to use two crutches in order to walk. He, however, had served as a salesman for an insurance company, a shoe company and for a rubber company and had received his GED as well as having graduated from an accounting course.

He had a long history of work with the Ouachita Hospital for over 22 years and in short was "a good employee".

Keep in mind this is not a Sec. (f)(2)(iii) case, but instead involves Sec. (f)(2)(ii) or an injury 'to the body as a whole'.

The Administrative Law Judge found the claimant to be permanently and totally disabled, but took a rather novel approach and apportioned 80% of the claimant's award, finding that this was the amount that represented prior disability and to which the respondents would be entitled to receive credit. The Court of Appeals reversed finding that the polio suffered by the claimant was

not the result of a work related injury, and then found for the first time that in order for Section (f)(2)(ii) to apply, the prior injury had to be a work related injury or an injury in the "compensation sense". This proved to be incorrect as later recognized by the Court of Appeals. The tragedy of Marshall is that the Court of Appeals reached the right result for the wrong reason. Marshall muddied already dirty water involving questions of apportionment and the Second Injury Fund. However, Marshall is mentioned herein only for its importance at the time it was decided for it is no longer the law and to show and prove a prior injury, that particular injury in question need not be work related or a disability in the compensation sense. After all, the entire reason for apportionment, and in turn the application of the Second Injury Fund, is based upon the fact that the worker should be fUlly compensated but at the same time should not receive a windfall. Secondly, and just as importantly, the employer and carrier should not have to pay for an injured worker's disability that occurred sometime prior to the accident in question.

We now have the Marshall case and the Greer case decided by two different courts and presumably reaching two different results. What effect then did the opposite results of the Marshall and Greer cases have upon Administrative Law Judges, the Full Commission and more importantly, the Work-

ers' Compensation Practitioners who had to sift through the effects of these two cases? The Full Commission grasped the difficulty and I think quite vividly and articulately set forth the problem all of us faced as a result of these two cases in the June 17, 1981 case of Honeycutt v. Craighead Memorial Hospital. This case involved a claimant who had a second grade education and whose experience had been primarily manual labor. The claimant incurred a compensable injury to her back on March 16, 1978 while employed by the hospital. She had surgery on two separate occasions and was released in 1979 with a 30% rating to the body as a whole. Prior to the claimant's compensable injury, she had incurred a noncompensable injury to her back for which surgery had been performed in 1974. There was no functional rating as a result of this 1974 surgery but the doctor who performed the surgery as a result of the 1978 injury estimated her disability would probably be between" 10% and 15% to the body as a whole as a result of this 1974 injury". The claimant had returned to work following the first noncompensable injury and the lay testimony reflected that her condition was in no way affected by her 1974 injury.

Meanwhile, the respondents contended that at least a portion of the claimant's disability at the present time was attributable to her February, 1974 injury and they therefore invoked the Second Injury Statute. continued on page 80

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Second Injury continued from page 79 What then was the Commission to do? In its conclusion, the Commission recognized that the Case of Marshall v. Ouachita Hospital which had been decided by the Court of appeals most probably was still the law. Remember, the Marshall case which was decided first by the Arkansas Court of Appeals held as follows: "A claimant had not suffered any job related injury as defined by the workers' compensation act nor any disability since he was disabled as a result of polio and hence the prior disability as a result of the polio was not subject to apportionment".

On the other hand, Chicago Mill v.

Greer decided after Marshall, and specifically on October 13,1980, held: "Neither can we agree with the respondent fund, that the first injury must be an injury that would have been compensable under the Act." How did the Full Commission handle this conflict between the courts? With a bit of artful legal draftsmanship, that's how. Talk about the "artful dodger" in Oliver Twist, well our Commission put him to shame in their legal dexterity and gymnastics in writing this opinion. I quote in part from it: "We assume that any inconsistency that may exist as a result of the above cited Marshall and Greer cases, if indeed any inconsistency exists, (note the diplomacy involved) will Ultimately be resolved between the respective courts."

The poor Commission! What was it to do to escape its no-win situation? It was damned if it followed Greer and damned if it followed Marshall. The Commission did the only thing it could do and that was to simply wait out the jurisdictional battle between the Court of Appeals and the Supreme Court, knowing well that a definitive statement from the courts as to whether Marshall or Greer represented "the law" was bound to happen. The only question was when. Well, Marshall didn't last long. lt did however pave the way for the third of the Second Injury Law Present cases, namely Harrison Furniture v. Renard Chrobak, _ _ Ark. App. _ _; 620 S.W.2d 965 (1981).

BO/Arkansas Lawyer/July 19B3

Mr. Chrobak had been afflicted since infancy with a spastic left hemiparesis.

The neuromuscular condition manifests itself in a withered left hand, arm and leg and resulted in both of his extremities on the left being smaller than the right. The claimant also walked with a limp and he had little or no use of his left hand and arm. On October 11, 1979, the claimant suffered an injury to his right hand which severed two fingers and severely damaged his entire right and in that it was essentially functionless.

The Administrative Law Judge found that under Davis v. Stearns-Rogers and Rooney v. Charles that the claimant's prior left hemiparesis was not a disability in the compensation sense.

The Law JUdge reasoned that since the claimant had worked every day of his adult life with hemiparesis and had never missed any work that the disability was in effect "latent" and did not represent an active disability. As such the respondents were not entitled to apportionment. The Law Judge found the claimant to be permanently and totally disabled and refused to apportion any disability whatsoever.

The Full Commission meanwhile affirmed the Administrative Law Judge as to permanent and total disability but for a different reason. The Full Commission did not mention the Davis case of Rooney v. Charles in their affirmance but mereiy held that the Law Judge's action and failure to apportion was proper because the claimant's disability was similar to that disability that Mr. Marshall suffered when he went to work for the Ouachita Hospital, i.e. polio, and therefore under the then law, not apportionable. Keep in mind that when Chrobak was heard by the Administrative Law Judge that Greer hadn't yet come down. In fact, when the case was heard by the Full Commission, Marshall was the law, bad law, but nevertheless, the law. The Full Commission affirmed the Law Judge on the basis that the record reflected not only that the claimant was permanent and totally disabled but that apportionment would not lie-but for a different reason-strictly under Marshall which was then the law, the prior disability was nonapportionable since it was not a disability that resulted from a compensable injury. They didn't want to, I think, but the Full Commission reluctantly followed Marshall. The Court of Appeals did likewise. That is, the Court criticized Marshall but ended up

following it anyway probably so the "right result" could be reached.

Let's now take a quick look at what happened to Greer and Chrobak on remand.

You recall that the final result in Greer was that the claimant was permanently and totally disabled as a result of the two injuries and that the matter was finally remanded to the Commission to decide two things: One, the degree of disability that the claimant suffered during his employment with the respondent and, Two, the ultimate liability of the Second Injury Fund. You recall that the Second Injury Fund was to be responsible for all disability in excess of what the respondent employer was to pay. The Full Commission on remand (Op. Del: 4-14-81) found that Chicago Mill and Lumber Company was to be responsible forthe Schedule and that the Second Injury Fund was responsible for all additional amounts but proceeded to hold that Greer's disability was one other than permanent and total and placed a "cap" on the claimant's total disability and awarded him $37,800.00, the maximum then payable under law.

The maximum that Greer could then recover would be 450 weeks of disability. Further, the Commission found that the disability as a result of the second injury was 40% to the right lower extremity (i.e. 40% of 175 weeks equals 70 weeks) and the employer paid 70 weeks. Thus, if we are going to follow strictly the letter of Greer, what we should do is find out the amount of disability that Mr. Chrobak suffered as a result of the injury with Harrison Furniture Company and then hold the Second Injury Fund liable for the difference. That is indeed simple enough.

Following Greer, Chrobak's injury would be treated as being "one other than permanent and tota'" and a "cap" placed on his award of 450 weeks but since he was injured one year later than Mr. Greer, award him benefits under Sec. 10(b) not to exceed $50,400.00. Remember, Mr. Greer received only $37,800.00 as a cap but this was because he was injured in January of 1978 and the maximum amount of compensation at that time was $37,800.00 as opposed to the maximum of $50,400.00 applicable on October 11, 1979 when Chrobak was injured for a disability other than permanent and total.

On remand by the Commission to the AU, the Judge simply had to figure up the disability that was allributable to the claimant's last employment. Since the claimant received an injury to his three fingers this requires nothing more than totalling up the anatomical loss of these three fingers, require the respondent to pay this amount and then order the Second Injury Fund to pay the difference. Or, following Greer strictly to the leller, the employer in Chrobak would pay the same 70 weeks as did the employer in Greer and the Second Injury Fund would be exposed to the same 380 weeks. Simple. As long as the Administrative Law Judge was of the same persuasion as the Commission was in Greer. He wasn't. Basically, the Law JUdge in Chrobak on remand found that Mr. Chrobak was permanently and totally disabled as he had found prior to the case going on appeal and as the Full Commission and the Court of Appeals so found. He however did not find that the disability should be one "OTHER than permanent and total" and thus have a cap placed on the award in the amount of $50,400.00 Anyway, correct or not, on remand, the Law Judge concluded that the effect of Greer was to follow the spirit, if not the leller, of the 1979 and 1981 Amendments. It should be kept in mind that the Court of Appeals in Chrobak did not indicate whether the maximum amount should be under Section 13 as a disability "other than permanent and total" or whether it should be under Section 10 of the Act. The Law Judge, right or wrong, pointed out in his opinion that nowhere in the Greer or Chrobak cases was there any intention whatsoever to treat the disability of the claimants as being other than permanent and total and stated that if the Court was following the new 1979 and 1981 Amendments that Chrobak and Greer would have both been entitled to receive permanent and total disability and not have their respective conditions treated as a disability "Other than permanent and total" and "capped" at the smaller figure.

It appears that the Court in both Greer and Chrobak attempted to "carve a nitch" for these two deserving claimants who would not receive benefit of the new law because the Legislature had elected to defer its effectiveness until January 1st, 1981. Why else and how could one explain the fact that

all of a sudden the Second Injury Fund was held responsible for tremendously huge awards there heretofore had been either the responsibility of the carrier either in whole or in part or had resulted in smaller awards to the claimant by virtue of the rule of apportionment? No maller, J am advised that Chrobak has been sellied so that case is over.

This perhaps is a good time to make a distinction between the Death and Permanent Total Disability Bank Fund and the Second Injury Fund.

They are two different funds with entirely different functions. As we mentioned at the beginning of the talk, there is a difference between the Second Injury Law and the Second Injury Fund.

Likewise, there is a difference between the Second InjUry Fund and the Death and Permanent Total Disability Bank Fund. The Death and Permanent Total Disability Bank Fund is found at 811310(c)(2). It is designed to compensate employees after the $50,000.00 cap is met and as of March 1, 1981, $75,000.00 is the maximum cap. Thus, a claimant who is permanently and totally disabled is able to receive the applicable compensation rate for an unknown number of weeks. Now it is a mathematical certainty simply by dividing the number of applicable weeks by the claimant's compensation rate as to how long that particular person will receive indemnity benefits from the insurance company. But what happens after the $50,000.00 (or $75,000.00) limit has run? Again, we are not talking about cases where there is application of the Second Injury Fund. What we are talking about is that once the $50,000.00 has run, who will make indemnity payments to this permanently and totally disabled worker? Let's see from an example as to how the Permanent and Total Disability Bank Fund is supposed to work.

If our friend again, Harry, is permanently and totally disabled and he has earned wages entitling him to a compensation rate of$100.00 per week, he may expect to draw compensation for 500 weeks. Very simply, he draws $100.00 a week for 500 weeks and the insurance company kisses him goodbye after paying the statutory maximum. But wait a minute, when Harry was injured, he was only 20 years old. If he receives compensation for 500 weeks, or approximately 9V2 years, is he going to be a ward of the

Government at only age 30? No, at this point, the Permanent and Total Disability Bank Fund kicks in and picks up the same $100.00 compensation rate for Harry for as long as he remains totally and permanently disabled, probably for life.

LEGAL RESEARCH & WRITING

By Licensed Attorney

Former Research Editor UALR Law Journal Former Assistant

Reference Librarian UALR Law Library References Furnished On Request Contact: N. MARIAN EPPERSON, Attorney at Law, 1700 First National Building, Litlle Rock, Arkansas 72201.

Phone: 378-0112 or 378-0106.

LABOR RELATIONS MANAGER Capable of negotiating and administering positive collective bargaining agreements.

Minimum two years experience in active labor relations environment. Send resume with salary history to Fleming Companies, Inc., Greg Belsheim, P.O. Box 26647, Oklahoma City, qK 73126

July 1983/Arkansas Lawyer/81

ARKANSAS BAR fOUNDATION by: Randall W. Ishmael

"The idea of a bar foundation could hardly be classified as revolutionary.

Indeed, bar foundations of various types have been in existence for many years, and have been employed for a number of differing purposes. With a few notable exceptions, however, bar foundations have tended to be passive organizations, often seeking nothing more than a single purpose related to the tax advantage it could provide. According to the 1978 survey taken by the National Conference of State Bar Foundations, it is evident that most bar foundations have amounted to little more than rather inactive committees of the state or local bar association. It frequently has no genuine autonomy from the bar, and its ambitions often stopped with its acting as a depository for a few memorial or other special purpose contributions. "-The Bar Foundation-Recognizing a Professional and Public Responsibility (1979)

The Arkansas Bar Foundation is one of the notable exceptions. It is an ongoing organization-ever growing, developing and producing. In fact, in The Bar Foundation, the Arkansas Bar Foundation is reported as one of, if not the, best among the state bar foundations--even its Constitution and By-Laws are published in the Appendices "as the way to go."

The Arkansas Bar Foundation's fine reputation around the Country is enigmatic to members of the Arkansas Bench and Bar, even to those lawyers who are familiar with it. However, most lawyers know little about "the" Foundation. We want all to know "all" about our organization.

Let's discuss some of its current projects, 82/Arkansas Lawyer/July 1983

(1) "You and the Law" is a T.V. series of 1D color 3D-minute film to be introduced late in February 1983 on Educational T.V. in Arkansas. The series has been prepared under the auspices of the School of Law, University of Arkansas, with funding by the Arkansas Bar Foundation. Associate Dean David Malone serves as producer and moderator. Each film is shot in different locales with lawyers from across the State. Each subject is treated for the lay person, and is independent of the others. Changes can be made in each film, as the related law changes. Three more subjects are proposed for future filming.

appointed to review the Constitution and By-Laws, with a view to updating some of the functions of the Foundation. A report on their findings and recommendations will be made in our next column.

(2) The Bar Disciplinary StUdy Committee (John P. Gill, Chairman; John F. Stroud, Jr.; and Ralph M. Cloar, Jr.) has completed its project on new Rules of the Supreme Court Regulating Professional Conduct of Attorneys-at-Law-a near 1Do-page effort with the research. Again, the Foundation was involved in underwriting the project financially.

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(3) The Special Committee to Review ABA Standards of Criminal Justice (Judge John Fogleman, Chairman) has about completed the comparative analyses with Arkansas law-with a Foundation grant.

Space does not permit the recounting of the many other projects of the Arkansas Bar Foundation. The three selected cover public legal education, Bar discipline and standards for criminal justice. What is more important is the par excellence of the treatment of these subjects and the permanent contribution to the Law. We are not content to "rest on our laurels." Two committees have been

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1983 WORKERS' COMPENSATION INSTITUTE

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LEGAL ECONOMICS By: Kline D. Strong

Time/Accounting/Billing Programs: A Tax Trap For starters, consider the difference between a 'time /accounting and billing' package and a fully-integrated office accounting program-<:alled the General Ledger or 'GL' for short. Although a good so-called 'billing' package is indispensable, it alone leaves much to be desired and-if not carefully monitored-<:an lead to calamitous consequences. The deficiencies of the typical 'billing' package will be illustrated before the hidden haymaker is discussed.

The Typical Billing Package For a GL program to function satisfactorily in any business, the 'billing' sub-system must be near foolproof and very efficient because so much 'lifesustaining' paperwork is involved. This is particularly true of lawyers where 'services' need to be so fully described as contrasted to merchandise sold by units bearing substantial markups which are paid for without explanations of any kind. So keeping track of time and of 'advances'-the so-called client costs advanced by lawyers-is both essential and tedious for without accurate records of these data, the preparation of client billings would be chaotic.

In fact, worse than chaotic, because empirical, irrefutable statistics show that timekeepers NET what nontimekeepers GROSS-about 40% morel So a good TAB system-Time /Accounting & Billing-must include such fundamentals as...

• proof by screen display that the timekeeper, the client, the maner and the legal-service time are all correct when data is entered, not weeks later when a bill is prepared; • standard 'rates' must be modifiable by timekeeper both when time is recorded and later when a draft bill is prepared for review 84/Arkansas Lawyer/July 1983

before being (1) changed or (2) mailed; • client 'matters' must be kept and billed separately so 'tax-deductible' payments will not be lost through commingling with personal expenses-and for a host of other good reasons; • non-check advances such as long distance telephone and photocopy expenses-where a separate check is not written for each client/matter being charged-must be easily and accurately chargeable when made but subject to be 'written off' during the billing process if their 'then totals' are out-of-Iine with the final fee; so-called retainers or other client prepayments-and any other credit balances-must be subject to allocation as between (1) client advances and service time and also (2) among the lawyers rendering services, so that productivity reports are accurate.

Deficiencies in the Typical TAB Package Even if the time /accounting /billing package performs all of these 'billing' procedures perfectly, it would be defineably deficient in that. ..

• a TAB subsystem has nothing at all to do with the assets, liabilities and equity accounts of the balance sheet or • the income and expense accounts of the profit and loss statement. .. hence, all ofthese vital records must be kept manually. As bad as this situation is, the mingling of computerprepared bills and manually-maintained books may produce an even more formidable problem-the tax trapl

The Tax Trap Everyone knows that 'advances' of client costs by lawyers are in reality 'loans' on open account. As such, they are not reportable as income when reimbursed by the client. Thus, when the 'billing' system itemizes such 'advances' on client bills separately from fee income-and they are repaidonly fee income is reported as taxable income.

Now, all of this is perfectly proper provided the GL accounts are also adjusted, but then that's the problem isn't it-the computer does not have anything to do with these GL accounts. So what happens?

1. The Symptoms. Advances made by check are no problem since they will be 'booked' as client advances and, therefore, will not be claimed as tax deductions-unless later 'written off' which is a totally separate procedure. By contract, 'noncheck' advances such as long distance calls and photocopy expenses are not 'booked' as client advances in any GL account because separate checks do not support these advances. That is, separate monthly checks pay the entire telephone bill and all photocopy expense inclUding both the portions thereof allocable to client advances and the regular office expense portions. And this presents the problem-unless the accounts are properly adjusted, they will be claimed in toto as tax deductions, including the portions allocable to but not allocated as client advances!

2. The Problem. When the computer 'bills' the client, its job is done. But the aura of computer 'perfection' lingers longer and the secretary /bookkeeper may well ignore the repayment of 'advances' since, as everyone knows, these are not "Continued on page 85

EXECUTIVE COUNCIL NOTES

By Annabelle Clinton

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Secretary-Treasurer

Minutes Of The Executive Council Meeting The Executive Council met on December 11, 1982, and addressed the following issues: YOUNG LAWYERS SECTION PROJECTS: The Executive Council will recommend to the House of Delegates a project sponsored by the Young Lawyers Section which will provide for the pro bono representation of the low-income elderly in Arkansas.

The Disaster Relief Committee has made the necessary arrangements for responding to requests for legal service teams in disaster areas so designated by the President as a result of the recent tornados and flooding. The Young Lawyers Division of the American Bar Association will have an affiliate outreach regional program at Hot Springs, Arkansas, in March, 1983.

The Council approved the allocation of $1,000.00 to the Young Lawyers Section for payment of expenses incurred by that Section's Executive Council in attending the ABA outreach program at Hot Springs.

FTC AND LSC: The Council adopted a memorial on lawyers and the Federal Trade Commission urging U.S. Senators Dale Bumpers and David Pryor to support and vote for HR 6995 or Senate 2499 with the McClure Amendment attached, which bills re-

strict the jurisdiction of the Federal Trade Commission with regard to lawyers and other professionals regulated by state regulatory authorities.

With regard to the national Legal Services Corporation, President Shaver reiterated that the Association supports LSC but would not become involved in the controversy over restricting its activities and funding.

BANKRUPTCY REFORM: The Council requested the Creditors' Rights Committee to submit a resolution, in alternative forms, for consideration by the House of Delegates at its mid-year meeting. Alternative A favors enactment of Federal legislation providing for the appointment of additional judges who are qualified to exercise the Federal judicial power under Article III of the Constitution of the United States. Alternative B favors deferral of enactment of permanent Federal legislation to correct constitutional infirmities of the Bankruptcy Reform Act of 1978 until the organized bar of Arkansas and the United States have had an opportunity to develop and adopt recommendations concerning such legislation.

LEGISLATION: The Association's legislative package has been prepared and will be filed at the proper time. Re-

gional briefings regarding the Association's legislative package have been completed. However, LAWPAC contributions for the support of lobbying efforts by the Association total only $2,600.00 as of December 1, 1982.

The Council requested the Jurisprudence and Law Reform Committee to refer to the House of Delegates at its mid-year meeting a proposed constitutional amendment to remove jurisdiction for juvenile matters from the county court. The Council voted to support the Arkansas Judicial Council's proposed amendments to the judicial retirement law.

OTHER MAnERS: The Association has submitted a list of lawyers to the Arkansas Supreme Court for nomination to the nine-member Board of Legal Specialization. A petition for interest on lawyers' trust accounts has been filed with the Arkansas Supreme Court. The Council approved a proposal by Mr. Robert P. Wilkins of South Carolina to offer his new book on wills and trusts with an Arkansas supplement and an annual service to Arkansas lawyers under the auspices of the Arkansas Bar Association at a cost of $50.00 for a period of 60-90 days.

A Tax Trap

If the clients had paid these expenses independently as they were incurred, no tax implications would have arisen whatsoever, but if Smith & Jones deduct the entire $4,800 annual amount as expenses but do not include this same amount as income when repaid, they have in reality claimed $4,800 in expenses to which they were not entitled.

4. The Answer. The answer is not to discontinue the use of a good TAB system, the answer is to acquire software which will perform all of the bookkeeping functions for the office,

including preparation of fully-aajusted GL accounts, as well as handling all TAB functions properly.

Thus, in a fully-integrated data processing system, when telephone, photocopy or other 'expenses' are charged to clients, they are automatically deducted from the appropriate expense accounts. Then, if these 'charges'now booked properly as client 'advances'-are later reduced during bill preparation or 'written off' as uncollectible, they are properly deducted at that time as bad debt or miscellaneous expense.

Continued from page 84 fee income for tax purposes. Then, when tax returns are prepared, oniy the accumulated 12-month totals of fee income are included but the entire totals of the telephone and photocopy expense accounts are deducted. In sum, advances repaid are not included for tax purposes but the same amounts are deducted as expenses.

3. Examples. Smith & Jones, a 4-man firm, advance $400 a month on the average for telephone and photocopy expenses allocable to clients.

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JUly 1983/Arkansas Lawyer/85

LAW SCHOOL NEWS Dean J. W. Looney Assistant Dean Ellen Brantley

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT UTILE ROCK FACULTV NEWS Dean Lawrence H. Averill, Jr. has recently published two articles. His article "Valuing Oil and Mineral Interests for Estate Planning Purposes," appeared in volume 17, issue 2 of the Land and Water Law Review.

Another article, "How to Value Traded Securities for Transfer Tax Purposes," has been published by Prentice-Hall, Inc. in Successful Estate Planning Ideas and Methods. Dean Averill served as cochairman of the Midyear Meeting of the Association and spoke on Estate Planning Drafting Techniques.

Professor Glenn Pasvogel's book, Construction Mechanics and Materialmens Liens: The Law in Arkansas, has been published by Harrison Publishing Company.

Professor Fred Peel continues his visiting professorship at the College of William and Mary during the spring semester, and Professor Susan Webber remains at Louisiana State University. Donaghey Distinguished Professor Robert R. Wright is serving as Distinguished Visiting Professor at the University of Cincinnati. All three of the visitors will be returning to UALR in the fall of 1983.

An article by Professor M. E. Mullins, "Creation Science and McLean v.

Arkansas Board of Education: The Hazards of Judicial Inquiry into Legislative Purpose and Motive," has been published in the most recent issue of the UALR Law Journal.

Several faculty members attended the Association of American Law Schools meeting in Cincinnati, Ohio, January 5-8. Among those attending were Professors Fenton Adams, Ruth Brunson, Ken Gould, James W. Spears, Norman Stein, and Robert Wright.

86/Arkansas Lawyer/July 1983

EIGHTH CIRCUIT TO SIT AT SCHOOL OF LAW A panel of judges of the Eighth Circuit Court of Appeals will sit in the South Courtroom of the Old Federal Building the afternoon of February 2.

The panel will be Chief Judge Donald Lay, Judge J. Smith Henley, and Judge Richard S. Arnold. The Court will hear three arguments and then conduct an informal session with students and faculty.

NEW SCHOLARSHIPS Two new scholarships have been donated to the School of Law. The Brian MacMillan Scholarship was created in memory of a 1979 law school graduate by his friends and family. It goes to a Trial Advocacy student.

The Pine Bluff firm of Coleman, Gantt, Ramsay and Cox has established an annual scholarship to a second or third year student. Additionally, an anonymous donor has made a generous gift for scholarships for needy students.

ALUMNI ENTERTAINED Dean Lawrence H. Averill and his wife, Suzanne, entertained law school alumni at a party at their home in October. Cohosts for the party were the President, President-Elect, and Past President of the UALR Law School Association, Mike Bearden, Diane Mackey, and Frank Whitbeck. Although UALR School of Law was created in 1975, the graduates of its predecessors, the Arkansas Law School and the Little Rock Division of the University of Arkansas School of Law, are considered alumni and are active in the organization. Dean Averill has already announced his plan to make this an annual event, and plans are currently being made for an alumni get together this spring.

TRELEASE TO GIVE ALTHEIMER LECTURE Professor Frank J. Trelease of McGeorge Law School, University of the Pacific, will deliver the Ben J. Altheimer Lecture on Friday, April 8, 1983. Professor Trelease is Dean Emeritus of the University of Wyoming College of Law and a widely known scholar in the field of water law. He received the BA and LL.B. degrees from the University of Colorado and the S.J.D. from the University of Wisconsin.

Dean Trelease will speak on "Arkansas Water Law: Needs and Choices."

The lecture will be held at 7:30 p.m. on April 8, in the South Courtroom of the Old Federal Building at the law school.

A reception honoring Dean Trelease will be held in the Law Center following the lecture. All members of the Association are invited to attend the lecture and the reception.

Dean Trelease is the author of numerous articles and casebooks on water law and natural resources law, including Water Law, (3rd Ed. 1979, West PUblishing Company). He has acted as a consultant to the States of Alaska, Nebraska, and Wyoming on reform and revision of water laws, and as general consultant to a number of cities, industries and companies on water law and litigation. He served the federal government as General Counsel for the Missouri Basin Survey Commission, and as consultant to the Public Land Law Review Commission, the National Water Commission and the National Commission on Water Quality. He was Associate Reporter to the American Law Institute's Restatement of Torts, 2d, for the modernization of the chapter on riparian rights. In the international field, he is Reporter for the Natural Resources Law Sections of the Encyclopedia of Comparative Law,

and he has been employed as an expert by the United Nations Food and Agriculture Organization and Office of Technical Cooperation to draft a water law for Jamaica, to recommend improvements of the water law of the Philippines, and to revise the water law

of Swaziland.

From 1942 to 1977, Dean Trelease was associated with the University of Wyoming. He served as Dean of the College of Law from 1960 to 1971. He has taught as a visiting professor at the Universities of Arizona, Colorado, New

Mexico, North Carolina, Washington, Texas, Louisiana State University, Lewis and Clark College, the University of Chicago, and Washington University.

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE HARTMAN HOTZ LECTURES IN LAW AND LIBERAL ARTS A major gift from Dr. and Mrs. H. Palmer Hotz has established a lecture series in the fields of law and liberal arts in honor of the late Hartman Hotz, a prominant Arkansas attorney. The income from the gift will be used annually to invite persons with distinguished professional reputations to campus for periods of from two days to one semester to present lectures, conduct classes or seminars and engage in discussions with students and faculty of the University. A committee, representing the School of Law and the J. William Fulbright College of Arts and Sciences, will be formed to plan the lectures and select the individuals who will participate in the series.

APPELLATE ADVOCACY FOCUS During the week of November 15-21 , the law school focused on appellate advocacy with two major events.

First, Senior Federal Judge J. Smith Henley and his law clerks, Beth Enos and Casey Kincaid, served as judges for the final rounds of arguments for those students in the fall semester appellate advocacy course. Two arguments were heard by the judges featuring the teams of Billy Parker and Mark Pennington; Tom Falivene and David Hardin, Teresa Adams and Diana Blackman; Sallie Laux and Andy Lydick.

Second, teams from 13 law schools in the Southwest visited the campus for the Region 10 Preliminary Roundofthe 33rd Annual National Moot Court Competition. Members of the University of Arkansas team competing in the tournament were Kitty Gay of Fayetteville, Carol Goforth of West Fork and Greg Stephens of Conway. Cindy Jones of Friendwood, Texas was the alternate. The tournament drew more participants than any in recent years according to Doug Carson, director of

the School of Law Appellate Advocacy and Legal Writing Program.

PRODUCT LIABILITY SYMPOSIUM The Arkansas Law Review and the School of Law sponsored a Products Liability Symposium in October which attracted a number of Arkansas practitioners as well as law students and faculty. Featured speakers included Professor Jerry J. Phillips of the University of Tennessee, a recognized authority in the products liability field. Also featured were Federal District Judge Henry Woods, Phil Carroll of the Rose firm and Win Drummond of the McMath, Leatherman Law firm, all who have had extensive experience in products liability litigation.

The symposium follows an earlier program at the law school organized by Bill Wilson of Little Rock as a part of the course he taught at the law school this fall dealing with products liability. That program featured a panel discussion,

by JUdge Henry Woods along with Otis Turner of Arkadelphia and Nick Patton of Texarkana.

and Drug Law this fall and in the spring will offer a new course dealing with the law and the public's health.

THREE JOIN FACULTV FOR SPRING Three new professors have joined the law school faculty to teach during the spring semester. Lonnie Beard, a graduate of the University of Arkansas School of Law and from NYU (LL.M. in Taxation) will teach Federal Taxation and Estate Planning. Allen Hoberg, a graduate of the North Dakota School of Law and a member of the first group of LL.M. graduates in agricultural law, at the University of Arkansas, will assist with a USDA funded research project, teach an undergraduate agricultural law course, and assist in teaching Agricultural Finance and Credit. James Maurer, who recently retired to Northwest Arkansas after 30 years in corporate law will teach the course in Corporations. He is a graduate of Stanford

Law School.

ker

.'Y=--=" OXFORD SCHOLARS NAMED Four outstanding third year students have been selected to participate in the C. W. Oxford Lecture Series named in honor of Dr. Charles W. Oxford, Vice President for Academic Affairs. The 1983 Oxford Scholars are Pall Hoffman, Bobby Pryor, Scott Ransick and Danny Richey.

ROB LEFLAR APPOINTED Professor Rob Leflar has been named as the consumer representative on the U.S. Food and Drug Administration's Immunological Devices Advisory Committee. Professor Leflar along with Professor Neil Hamilton introduced a new seminar in Food

'"

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Little Rock lawyer JOHN BARRON, JR. was elected to a two-year term on the State Delegates Board of the Arkansas Trial Lawyers Association.

OTIS D. STONE, retired after 38 years with the federal government, opened his office for the general practice of law in Hot Springs. Garland County Circuit Judge HENRY M. BRITT was elected to the Board of Trustees of The Coilege of the Ozarks recently. RAYMOND R. ROBERTS is the new trust officer for the First National Bank in Rogers. H. DAVID BLAIR of Batesviile, was recently inducted into the American College of Trial Lawyers. LINDA BOONE of Heber Springs spoke to the Heber Springs Business and Professional Womens Club on wiils and estate planning. Attorneys WESLEY J. KETZ, JR. and DAVID M. CLARK have moved to 345 Main Street, Batesviile, to newly remodeled offices. T. J. HIVELY, formerly with the two, became circuit judge on January 1st. STEVE DEMOTT is the new instructor of business law and director of the Smail Business Development Center at Henderson State University. He is a former deputy prosecuting attorney for the 9th Judicial District East. In honor of DAVID SOLOMON'S birthday, his family recently donated 20 volumes of the Harvard Law Review to the Phillips County Law Library. PEGGY BUNN has joined the law firm of Poilard and Cavaneau in Searcy. She is a 1982 graduate of the University of Arkansas at Little Rock School of Law. BLAIR ARNOLD has been appointed to the Independence County Election Commission. He replaces another Batesviile lawyer, John Purtle, who was unopposed as a Democratic nominee to the City Council. VELDA PATRICE PRICE and CURTIS L. NEBBEN have joined the staff of the Arkansas attorney general.

JEFF SLATON, former vice president and general counsel of the bank of Yeilviile, has opened a law office at 324 East Emma in Springdale. KAY WEST YOUNG of West Memphis, spoke to a 88/Arkansas Lawyer/July 1983

class at Forrest City Middle School about shoplifting and possession of alcohol and drugs as part of a program sponsored by the Junior Auxiliary's Youth Awareness Program in that city.

DENNIS C. SUTTERFIELD has opened a law office at 107 South Boulder in Russeilviile. He was graduated from the University of Arkansas School of Law. JAMES W. CULLUM has been selected as one of the Outstanding Young Men of America. He was nominated by a men's civic organization in Clinton. James E. Briil, Chairman of the American Bar Association's Economics of Law Practice Section, announced the appointment of THOMAS D. LEDBETTER as computer committee chairman. CLYDE DICKENS CALLIOTTE of Little Rock, received the Distinguished Alumni Award recently from Southern Arkansas University in ceremonies held at the SAU campus. Wright, Lindsey and Jennings announces that LAWRENCE B. BURROW formerly senior vice president and manager, trust division of Worthen Bank and Trust Company, has joined the firm as counsel. H. BRADLEY WALKER, R. STEVEN JONES, SAMUEL WOLFF and GENE A. LUDWIG have become associated with the firm located at 2200 Worthen Bank Bldg. in Little Rock. The law finm of (Steve) BELL and (Gary) VINSON in Batesviile has relocated to 154 South Third Street in Batesviile. Little Rock attorney S. GRAHAM CATLETT was guest speaker at the October meeting of the Little Rock Board of Realtors.

TONY YOCOM of Hope, a recent graduate of the University of Arkansas at Little Rock School of Law, has joined the firm of Pilkinton and Pilkinton in Hope. GARLAND HURST of Sheridan has opened his office for the general practice of law. He is a graduate of the law school in Fayetteviile. MAJOR DAVID F. BARTON, United States Air Force, recently addressed members of the Fort Walton Beach, Florida Optimist Club. GLOVER, SANDERS,

PARKERSON & HARGRAVES now have a law office in Hot Springs Viilage.

JUDY DESIMONE spoke to the Beta Chi Chapter of Epsilon Sigma Alpha International in Pine Bluff about law as a career. PHILIP E. KAPLAN of Little Rock, was elected chairman of the board of the National Conference of Christians and Jews. STEVE DAVIS has joined the law finm of Meadows and Elcan in Harrison. He was graduated from the University of Arkansas School of Law where he served as editor of the Arkansas Law Review. Assistant Attorney General MATTHEW W. FLEMING was sworn in as a special assistant United States attorney for the Eastern District of Arkansas in November. He has been with the attorney general's office since 1981. JIM BURNETT has moved his law practice to 117 Front Street in Lonoke. BOB GANNAWAY of Little Rock, addressed the 28th annual banquet of the Van Buren Chamber of Commerce in November.

State Insurance Commissioner W. H. L. WOODYARD III has resigned from the commission to enter the private practice of law. RICHARD A. GARRETT and WILLIAM C. HARBOUR have opened a new law office at 101 a NW Third Street in Bryant. BOB BRANCH of Paragould has been appointed to the Supreme Court Committee on Professional Conduct. NED METCALF of Batesviile has been promoted to assistant vice president of FirstSouth and will be director of the association's community marketing.

KIM SMITH of Fayetteviile, has been elected president of the Arkansas Prosecuting Attorneys Association.

DAVID RUSH and BILL WALTERS of Greenwood have formed a partnership for the practice of law. GILBERT L. GLOVER II of Little Rock is the new executive director for Legal Services of Arkansas. He previously served the organization as senior staff attorney for three years. JOE ROSS of Little Rock, spoke to the residents of Jessie Poweil Towers, a retirement home, on "A Citi-

zens Rights as a Voter." He also instructed students at Rose City Junior High School who were participating in a mock trial. Once a month, Ross and Col. Ransick address the patients in the drug program at Fort Roots Hospital through a legal orientation session.

This offers the patients a chance to ask questions and obtain free pamphlets published by the Arkansas Bar Association. The program was enacted over a year ago and has reached many of the hospital's patients in need of legal information and direction. ROBERT C. COMPTON, WILLIAM I. PREWETI, FLOYD M. THOMAS, JR. and JOSEPH HICKEY announce the formation of Compton, Prewett, Thomas and Hickey at 423 North Washington, EI Dorado. EUGENE D. BRAMBLETI and JAMES M. PRATI, JR. announce the formation of the law partnership of Bramblett and Pratt at 146 Washington Street, Camden. W. H. ARNOLD III announces the reorganization of the partnership of Arnold and Arnold in Texarkana at Suite 508 State Line Plaza, Texarkana, with THOMAS S. ARNOLD. RICHARD L. ARNOLD and MORRIS S. ARNOLD are of counsel with the firm. RICHARD F. HATFIELD of Searcy and RICHARD A. WILLIAMS of Little Rock were recently elected to the American College of Probate Counsel. Both are active in the Probate Law Section and have chaired the Taxation, Trust and Estate Planning Section of the Arkansas Bar Association. RICHARD L. MAYS of Little Rock, attended the American Bar Association's Second Annual Educa-

AR

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Natural Resources Law Institute Arlington Hotel Hot Springs, Arkansas February 24-26, 1983

tional Conference on Prepaid Legal Services held in Boston, November 4-6, 1982. TARV;N and BYRD in Hamburg held an open house in December celebrating the opening of new offices located at 204-A East Lincoln.

The new partners are TIMOTHY R. TARVIN and JOHN RICHARD BYRD. KELVIN WYRICK of Texarkana, was guest speaker at the December 14 meeting of the Hope Kiwanis Club. He spoke to the group about the role of the chancery. DAN E. BARTELL of North Little Rock has joined the firm of Thurman and Associates at 301 North Broadway in North Little Rock. JERRY JONES of the Rose Law Firm in Little Rock, spoke at the annual meeting of the Arkansas Highway Users Conference held at the Sheraton Hotel in December. JON SANFORD, prosecuting attorney-elect for the fifth judicial district, announces that JAMES R. MARSCHEWSKI and JAMES R. PATE both of Russellville, will be deputy prosecutors for Pope County.

CHARLES R. DOUGAN of Little Rock, recently purchased the Lonoke Real Estate and Abstract Company in Lonoke.

CLARK COUNTY BAR ASSOCIATION President-Don P. Chaney Secretary-Treasurer-Steve Beck ARKANSAS ASSOCIATION OF DEFENSE COUNSEL President-Ben Core President-Elect-John C. Deacon Treasurer-Steve Mathews Secretary-Robert L. Henry Jr.

Workers' Compensation Institute Camelot Hotel Little Rock, Arkansas March 4, 1983 Long Range Planning Conference Red Apple Inn Eden Isle May 5-7,1983

INDEPENDENCE COUNTY BAR ASSOCIATION President-Jerry Post Vice-President-John Purtle LAWRENCE/RANDOLPH COUNTY BAR ASSOCIATION President-Wm. David Mullen Vice-President-Dick Jarboe Secretary-Treasurer-David Throesch ST. FRANCIS COUNTY BAR ASSOCIATION President-Steve Routon Secretary-Treasurer-Brad J. Beavers TEXARKANA BAR ASSOCIATION President-John F. Stroud Vice-President-Judge Charles Bliel Treasurer-James Nutt Secretary-Robert E. Dodson WHITE COUNTY BAR ASSOCIATION President-Chris Raff Vice-President-Mike Millar Secretary-Treasurer-Watson Bell

COLUMBIA COUNTY BAR ASSOCIATION President-Bill Finnegan Vice-President-W. A. Eckert III Secretary-Elliott Clegg Law Day Chairman-Steve Crane

Annual Meeting Arlington Hotel Hot Springs, Arkansas June 8-11, 1983 Fall Legal Institute Fayetteville Hilton Fayetteville, Arkansas September 8-9, 1983 Practice Skills Seminar Camelot Hotel Little Rock, Arkansas October 13-14, 1983

July 1983/Arkansas Lawyer/89

'f

Effective Assistance Of Counsel And The Shotgun Approach To rJ

\

Framing Issues: More Is Not Always Better By: David E. Howe

The court appointed attorney representing a criminal defendant often may not find himself in a position which he considers enviable, for several reasons. In many cases, such an attorney will have had little or no prior experience in criminal trial work.

Thus, he will often be required to spend a greater than usual amount of time preparing his client's defense, simply by reason of his need to familiarize himself with the applicable law and procedure. Further, the court appointed attorney would probably prefer to devote that time to his established clients. There is, however, one other aspect of criminai defense work that is rapidiy becoming a primary factor contributing to the unattractiveness of that work, namely, the increasing number of allegations of ineffective assistance of counsel that are being made by convicted criminal defendants.'

It is not difficult to guess at the factors that might motivate a prisoner to allege ineffective assistance. One of the primary motivating factors would, of course, be the prisoner's honest belief that his counsel could have and should have done a better job at trial. This belief may often be erroneous, but this does not alter the fact that the prisoner in good faith believes he should not have been found guilty. However, even where the prisoner does not have a good faith belief that he was rendered ineffective assistance, he may never-

90/Arkansas Lawyer/July 1983

theless allege ineffective assistance simply because he has nothing to lose and everything (freedom or new trial) to gain if he succeeds.

However, while the availability of habeas relief may act as a boon to the convicted defendant, it can also impose several burdens on trial counsel. First, although a court's finding that an attorney has rendered ineffective assistance does not automatically impose any legal sanction on the attorney such as those which could result from a complaint to a Bar Association Ethics Committee, such a finding may nevertheless be damaging to the reputation of the attorney. Second, even if the court's find that no ineffective assistance has been rendered, the attorney may nevertheless have been required to give extensive testimony regarding his defense of the prisoner. This testimony may extend to the defense strategy used, the number of visits with the client, the length of time of each visit, and so on ad infinitum. Further, where (as is often the case) this testimony is adduced two, three, or even four or more years after the occurrence of the events in question, it is extremely doubtful that counsel will be able to adequately recall all relevant details of those events.'

Finally, such allegations can be vexing to counsel because of the sometimes tenuous nature of the allegations he is forced to answer. Some examples follow:

-In one recent federal court case, petitioner's habeas counsel alleged that trial counsel had rendered ineffective assistance by failing to raise a particular legal issue.

This argument was based on a recent Supreme Court decision. One judge observed that habeas counsel had also represented the petitioner in his request for state post-conviction relief, and that this particular legal issue had not been raised in that proceeding. When habeas counsel was questioned about this, he replied that he had not at that time known that the issue was available, because the Supreme Court decision being relied on had not, at that time, been rendered.' Yet he was asserting that trial counsel had rendered ineffective assistance by failing to raise the identical issue at trial!

-In another recent case, petitioner alleged that he had been rendered ineffective assistance by his counsel's failing to call three witnesses that would have testified in his defense at trial. The trial record, however, revealed that one of these witnesses had in fact appeared and testified extensively for the defendant, and both the prosecution's and defense counsel's notes revealed that the other two witnesses had left the scene of the crime ten minutes before the crime had occurred, and could not identify the defendant or

recall whether he had been present or absent at the time they were at the scene. An adverse finding on this issue was nevertheless appealed.

-In another recent case, petitioner had been represented by one counsel at trial, by a second counsel in the state post-conviction proceeding, and by yet a third counsel at the start of his petition for federal post-conviction relief. The third counsel withdrew after the magistrate's report was filed, and a fourth counsel was appointed. The fourth counsel immediately alleged that the petitioner had received ineffective assistance from all three previous attorneys.

The trial attorney is aided somewhat by the standards of persuasion imposed by the courts on ineffective assistance allegations. Briefly, the standard in the Eighth Circuit is that the petitioner must show that his attorney failed to exercise the customary skills and diligence that a reasonably competent attorney would exercise in the circumstances.' Thus, counsel is not forced to live up to the defendant's expectation that he have the skills of a Clarence Darrow.' In addition, even if counsel is found to have rendered ineffective assistance, the petitioner must also show that he was materially prejudiced thereby, for it is not every mistake that will alter a verdict.' A heavy burden is thus placed on the defendant to overcome the presumption that counsel was competent.'

The fact that such standards have been imposed does not, however, necessarily relieve the trial lawyer from all potentially burdensome effects of such allegations. He may, for example, still be required to testify as to the circumstances of his defense of the petitioner, and he may also be required to testify about events occurring several years prior to the time of testimony.

It would thus appear that a reduction in the number of frivolous or merilless ineffective assistance claims would be well received by many members of the bar. However, it is also clear that the availability of habeas corpus relief based on ineffective assistance of counsel should not be abolished. The right to a fair trial is fundamental to our jUdicial system, and adequate representation by counsel is a necessary part of that system.' Further, it can not be doubted that the rendition of competent legal assistance is the primary duty

of our profession, and that it is also our duty to police the profession.' And this duty rests on each practicing member of the legal profession, as well as on the profession as a whole. But one still wonders what a criminal defense lawyer can do to free himself from vexatious and frivolous allegations of ineffective assistance.

One method of coping is reflected in a trend found in habeas counsel themselves, and undoubtedly stems from their heightened awareness of the arsenal of ineffective assistance allegations that can be raised, ,. and also from their awareness that they too may later be alleged to have rendered ineffective assistance." This approach is commonly called the "shotgun" or "more is belter" approach, and it can be expressed as follows: If an issue, no malter how tenuous, has the barest possibility of succeeding, it should be raised and argued.

The appeal of this approach is obvious. First, if counsel has raised an issue, he can not later be alleged to have rendered ineffective assistance by not raising it. In addition, it may be thought that by raising several defenses, the attorney may decrease the likelihood that his client will later think he was ineffective. And finally, the ABA Code of Professional Responsibility makes it clear that an attorney will not be disciplined merely because he has raised an issue that is of questionable legal validity, so long as there is a good faith argument that can be made in support of the issue."

This approach, however, should generally be avoided, for several reasons. First, the burden on judicial administration would be manifeslly increased. This increase, moreover, is not likely to work to the defendant's advantage. For example, the raising of numerous merilless issues may arguably divert the reviewing judge's attention from those issues actually having merit, and it is also possible that the judge who is forced to sort through twenty frivolous issues in order to find the three or so issues that might have some merit is not going to be in a receptive frame of mind when he considers those three." Further, counsel's arguments with regard to the meritous issues are also likely to be diluted by his devotion of time and/or space in his brief to frivolous issues.

It is also apparent that the shotgun approach should not be adopted by the trial lawyer, because this approach is simply not advisa-

ble from a tactical viewpoint at tria!.

It takes no great feat of clairvoyance to predict that the trial lawyer raising several relatively merilless issues at trial may soon find himself confronting a jury that is either asleep or hostile. As a further example, it does trial counsel little good to place the character of the defendant at issue when he knows the prosecution has several "bad act" witnesses waiting in the wings. Finally, where an issue is patently frivolous, it is possible that the attorney raising that issue is ignoring the ethical ideals, if not the disciplinary standards, governing his profession."

Despite these considerations, it is apparent that habeas counsel, at least, are still tempted to employ the shotgun approach when framing issues, and it is also apparent that prisoners may still be tempted to allege ineffective assistance of counsel even where they have no good faith belief that they were, in fact, rendered inadequate assistance.

It is possible that the courts or the various bar associations may attempt to alleviate this problem by altering the burden of proof placed on the petitioner, by imposing time limits or other limits on the availability of habeas relief, or by imposing sanctions on attorneys raising meritless issues. Such actions, however, may be inadvisable, because they may unduly hinder the petitioner's ability to obtain relief, and they may also impermissibly hinder counsel's ability to adequately represent his client. Consequenlly, the probability that such actions will be taken is remote, and the criminal defense attorney's best defense will still be the defense of due diligence, supported by documentation.

In this regard, the attorney should always take his file with him when he visits the defendant, and he should be sure to write down the names of all potential witnesses and defenses discussed. He should also be sure at least to telephone all potential witnesses, and to write down the substance of their potential testimony. Finally, the attorney should be sure to discuss trial strategy with his client, and to write down the course of action agreed to, as well as the reasons for not further pursuing alternative courses of action.

Although this "documentation" solution may appear to be adequate or cumbersome, in reality, it may not be.

All it calls for is that the attorney exercise thoughtfulness and foresight in his trial preparation, so that he will, in fact, continued on page 92 July 1983/Arkansas Lawyer/91

Counsel continued from page 91 be able to adequately represent his client, and so that he may later be able to justify his actions. This is expected of an attorney anyway, and should not be too much to ask.

Finally, it is hoped that this article will remind the potential habeas attorney that, at least as applied to ineffective assistance considerations, more is not necessarily better. It is always the better approach to stress those issues having merit, rather than to dilute them by reference to the frivolous. 1S FOOTNOTES 1. Statistics from the Administrative Office of the United States Courts indicate that in 1980, 1,322 appeals involving state and federal habeas corpus petitions were docketed in the United States Courts of Appeals, with 70 of these appeals haVing been docketed in the Eighth Circuit. 11980] ANN. REP., DIRECTOR OF THE ADMIN OFFICE OF ,HE UNITED STATES at 366-67 Table B-7. In 1981, 1,602 such appeals were docketed in the Circuit Courts, with 101 of these having been docketed in the Eighth Circuit. 11981 ] ANN. REP., DIRECTOR OF THE ADMIN. OFFICE OF THE UNITED STATES at A-12 Table B-7. This reflects a oneyear increase of 21% overall, and 22% for the Eighth Circuit.

These figures also reflect only the tip of the iceberg, because they do not take into account those petitions in the United States District Courts that have not been appealed, nor do they take into account state court cases involving petitions for post-conviction relief.

Empirical research further reveals that in 1981, the Eighth Circuit published at least 21 options in cases wherein ineffective assistance of counsel had been placed in issue. This figure, moreover, does not take into account those docketed appeals that were later either dismissed or decided without published opinion. Thus, an estimate that at least 20% of all federal habeas petitions include ineffective

assistance of counsel issues may be taken as a conservative one.

2. Scott v. State, 592 S.w.2d 122 (Ark. 1980) is particularly illustrative of the evidentiary problems inherent in untimely ineffective assistance claims.

3. Engle v. Isaac, 102 S.Ct. 1558 (1982), casts serious doubt on the petitioner's ability to even raise such an issue in the federal courts. Engle makes it clear that where an issue has not been raised in the state courts, the petitioner may not later raise it in a federal habeas corpus petition absent a showing of both cause and actual prejudice, id. at 1572, and indicates that a mere lack of knowledge that the issue was available may not constitute "cause". Id. at 1573-74.

4. See Comer v. Parratt, No. 812108 (8th Cir. April 2, 1982) and the cases cited therein.

5. But note that trial tactics, even if unsuccessful, may provide an adequate justification for failure to raise a particular issue. See, e.g., Thompson v. Scurr, 668 F.2d 999, 1002-03 (8th Cir. 1982).

6. See Comer v. Parratt, supra.

7. See Eldridge v. Atkins, 665 F.2d 228,232 (8th Cir. 1981). The standards governing ineffective assistance claims in the Arkansas courts are, if anything, more exacting than those employed by the Eighth Circuit. In Arkansas, the petitioner must: prove by a preponderence of the evidence that his attorney has by his acts or omissions made the proceedings 'a farce and a mockery of justice,' or that [petitioner's] representation by counsel was 'so patently lacking in competence or adequacy' that it is the court's duty to correct it. Sheppard v. State, 255 Ark. 40, 498 S.w.2d 668 (1973).

The burden lis] on the [petitioner] to overcome the presumption that his attorney was competent. Clark v.

State, 255 Ark. 13,498 S.w.2d 657 (1973).

Davis v. State, 592 S.W.2d 118, 119 (Ark. 1980).

8. See, e.g., Anders v. California,

David E. Howe is a graduate of Dartmouth College and a cum laude graduate of the Creighton University School of Law, and has been admitted to the Arkansas, Nebraska and Minnesota Bars.

From 1981 to 1982, Mr. Howe served as law clerk to the Honorable J. Smith Henley, Senior Judge of the United States Court of Appeals for the Eighth Circuit. He is currently a member of the law firm of Baker, Miller, Mills and Murray in Dallas, Texas.

92/Arkansas Lawyer/July 1983

386 U.S. 738 (1967).

9. See generally, Wade, Public Responsibilities of the Learned Professions, 21 La. L. Rev. 130, 134 (1960).

10. Typical allegations of ineffective assistance can include allegations that counsel failed to adequately interview the defendant, failed to keep the defendant informed of the progress of the case, failed to interview witnesses, failed to subpoena witnesses, failed to challenge the jury selection process, failed to move for change of venue, failed to raise various defenses, failed to demand investigations into competency or sanity, or failed to object to the introduction of evidence or to the prosecutor's conduct during trial. This list is by no means all-inclusive.

11. In this respect, cases such as Engle v.lsaac, 102 S.Ct. 1558 (1982) and Scott v. State, 592 S.W.2d 122 (Ark. 1980) may have the unfortunate effect of providing additional incentive for the use of the shotgun approach in the initial state post-conviction petition.

Under Engle, for example, it is at least arguable that the petitioner could show "cause" for his failure to raise an issue in the state court by showing that his state habeas counsel rendered ineffective assistance. Thus, if the petitioner's state habeas counsel is aware of this possibility, he may be tempted to use the shotgun approach as a means of precluding such arguments at a later date.

12. See ABA CANONS OF PROFESSIONAL ETHICS NO.7; ABA DISCIPLINARY RULES NO. 7-101; ABA ETHICAL CONSIDERATIONS NO. 7-4.

13. The author has personal knowledge of at least one case wherein at

David E. Howe

least 25 ineffective assistance issues were raised.

14. The oath required of all candidates for admission to practice before the courts of Arkansas states, in part, "I DO SOLEMLY SWEAR:... I will not counselor maintain any suit or proceeding which shall appear to me to be unjust, nor any defense except such as I believe to be honestly debatable under the law of the land..." But see Anders v. California, 386 U.S. at 744-45.

15. See Wasby, The functions and importance of appellate oral argument: some views of lawyers and federal judges, 65 Judicature 341, 344,346,348 (Feb. 1982); Bright, The Ten Commandments of Oral Argument, 67 A.B.A.J. 1136, 1137-39 (Sept. 1981).

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Dr. Stevens and Richardson are associated with the Southwestern Human services Institute. They each have strong backgrounds in psychology including private practice. Soth have University faculty experience in addition to recent activity in Federal and State CoW'tS with involvement in criminal. personaJ iI\jW'y. worlanan's camp and other cases. Stevens' advanced degree is from Vanderbilt and Richardson's is from the University of Missouri.

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3Jn memoriam The recompense of unto him.

a man's hands shalf be rendered Proverbs 12:14

EDWARD J. CUNNINGHAM

THOMAS J. BONNER

Edward J. Cunningham, aged 39, of Mountain Home, died June 27, 1982.

He was a member of the Arkansas Trial Lawyers Association, the Baxter County, Arkansas and American Bar Associations. He was in private practice in Mountain Home.

He is survived by his wife, Phyllis Middlebusher Cunningham; a son, Mall Eddins of Mountain Home; a daughter, Keli Eddins of Mountain Home, and a sister, Ramona Cun路 ningham of Bismarck, N.D.

Thomas J. Bonner, aged 63, of Little Rock, president of Stebbins and Roberts, Inc., died Friday, August 20, 1982.

He was a former partner in the law firm of Spitzberg, Bonner, Mitchell and Hays. He had been the attorney for the Little Rock Water Works from 1949 to 1973 when he resigned to become president of Stebbins and Roberts.

Bonner was born in Newport and was graduated from the University of Arkansas at Fayetteville and the U of A Law School.

He was a member of SI. Mark's Episcopal Church and a former member of the vestry of SI. Mark's. He was a member of his county bar associalion, the Arkansas and American Bar Associations, the Country Club of Little Rock, Rotary Club and Kappa Sigma Fraternity. He was a Wond War II veteran.

Survivors are his wife, JoClaire Adamson Bonner; a daughter Anne Claire B. Martin of Little Rock; two brothers, Don Canos Bonner of Little Rock and Rev. Lyle Bonner of McKinnleyville, Cal.; two sisters, Elizabeth Green of Newark, Del., and Dora Neptune of Dallas, and a grandchild.

EDWARD F. McFADDIN Edward Fitzgerald McFaddin, aged 87, of Little Rock, a retired Arkansas Supreme Court Justice, died Sunday, July 18, 1982.

He was a graduate of Hardin-Simmons University and the University of Texas Law School. He had been a member of the Arkansas Bar Association and the American Bar Association for the past 63 years and served on the Arkansas Supreme Court for 24 years.

McFaddin was a veteran of World War I. He was a past director of Rotary International, a member of the XV Club, a member of the First United Methodist Church and a 32nd degree Mason.

Survivors are his wife, Mrs. Matilda McCammon McFaddin; three daughters, Mrs. L. Cotton Thomas of Little Rock, Mrs. G. F. Wynne of Warren and Dr. Marsue Johnson of Denton, Tex.; nine grandchildren and nine great-grandchildren.

DAVE E. WITT Dave E. Witt of Little Rock, died Sunday. July 18, 1982. He was a former Little Rock city attorney in the 1950s and a veteran of the Navy. He was a member of the Pulaski County and Arkansas Bar Associations and the Trinity United Methodist Church.

He is survived by his wife, Wilboum Burnel Witt, and a brother, Dale D. Witt of Little Rock.

94/Arkansas Lawyer/July 1983

was a past president of the state Prosecuting Attorneys Association.

In 1976, he received the Clarendon Chamber of Commerce Award for Man olthe Year. Lee was cited for his unselfish work in securing induslry for Clarendon.

Survivors are his wife, Mrs. Margaret Johnson Lee; three sons, Mayo Lee of Washington, D.C., David and Perry Lee of Clarendon; a daughter Mrs. Ann Lee Mills of Clinton, Mo.; a sister, Mrs. Boyce Lee Tolson of Fairfield Bay, Arkansas; and three grandchildren.

ARNOLD M. ADAMS Federal Bankruptcy JUdge Amold M. Adams, aged 69, of Lillie Rock, died Sunday, November 7, 1982.

He was a native of Batesville and was graduated from Arkansas College and the University of Arkansas Law School.

Judge Adams practiced law in Mountain Home until 1942 when he entered the Army to serve during Wand War II. After his discharge in 1946, he was appointed as assistant state attorney general for five years.

In 1962, Judge Adams left his law practice in Harrison to assume a sixyear term as federal bankruptcy referee.

Judge Adams served in the National Guard for 40 years and was a Mason.

He was a member of SI. Mark's Episcopal Church in Little Rock.

He is survived by his wife, Wrenetta Southard Adams; a son, Steve Adams of Fayetteville, and two grandchildren.

JAMES E. EVANS, SR. Springdale Municipal Judge James

E. Evans, Sr., aged 62, died December WILLIAM M. LEE William Mayo Lee, aged 69, died Friday, September 3, 1982, at his home in Clarendon following a long illness.

He was a graduate of Clarendon High School and the University of Arkansas. He served as a Lieutenant in the Coast Guard during Wond War II and was a member of the American Legion, the Veterans of Foreign Wars, and a Mason. He was a member olthe Clarendon First United Methodist Church where he served on the Board of Stewarts.

Lee served as Prosecuting Attorney for the 17th Judicial District for 15 years and as Circuit Judge for eighl years. He

10, 1982, in a local hospital.

He served on the bench for 25 years and was graduated from the University of Arkansas School of law in 1951.

Judge Evans served two terms as Springdale city attomey before becoming municipal judge.

He was born November 1, 1920, in Heber Springs. He was a member of the Robinson Avenue Church of Christ and a veteran of World War II. Survivors are his wife, Mrs. Edna Evans of the home; two sons, Jim Evans Jr. and Gary Evans, both of Springdale; three daughters, Mrs. Sandra Brown of Clarksville, Mrs. Deniese Evans of Tulsa, Okla., and Mrs. Beverly Cobb of Lubbock, Tex.; and seven grandchildren.

ADDENDA

by C. E. Ransick Editor

World Peace Through Law Center We were honored this year by an invitation from the Honorable Charles S. Rhyne, World President olthe World Peace Through Law Center, to appear on the program for the Conference on the Law of the World to be held in Cairo, Egypt, September 25-30, 1983-an invitation we declined for personal reasons. At Mr. Rhyne's request, we will furnish the Center future issues of The Arkansas Lawyer in return for a free subscription to the Center's The World Jurist. There follows, for the edification of recent admittees to the Bar, a review of the Center's history.

Organization The World Peace Through Law Center [Le Centre de la Paix Mondiale par Ie Droit-El Centro para la Paz Mundial Mediante el DerechoJ was founded in 1957, originally as a Special Committee of the American Bar Association. In that year, the Hon. Charles S. Rhyne had become the President of the ABA. In 1963, the Special Committee within the ABA was given a status independent of, but closely associated with the ABA, and it became a worldwide organization. At a meeting in Athens, Greece, sponsored by the ABA, the World Peace Through Law Center was established, with Mr. Rhyne as World President, an office he has continued to hold down to the present day. The Center is a non-political and non-profit institution and its participants speak as individuals rather than as representatives of a particular country or ideology.

Basic Viewpoints and Goals Considering the increasing threat of war between nations, with its calamitous consequences for all mankind, an overWhelming desire for peace has

grown among the people of the world.

This desire is probably stronger now than any such desire in all history.

Peace is the work of justice, but the vital need for an adequate international system of law remains the greatest gap in the legal structure of civilization.

Here a great opportunity will be won-or lost-to ensure peace under law. This is the ultimate goal of the WPTLC. The Center is the first world-wide venture to combine the efforts of judges, lawyers, law professors, and others throughout the world into an effective cooperative endeavor to mold a future legal order for humankind that will foster peace by helping to strengthen the world's legal system, both its law rules and its legal institutions (like the International Court of Justice) and by evaluating world law and developing a new international legal machinery to provide for the peaceful settlement of disputes between nations under the rule of law, yet to maintain national sovereignty. The Center's efforts of fostering world peace through law are expressed in all its activities, like its biennial Conferences and its publications.

Support The Center and its cause have been given cordial support by American Presidents of both political parties, beginning with President John F. Kennedy and continuing thereafter. Two Chief Justices of the U.S. Supreme Court have been associated with the Center. Support has come from chiefs of state of most of the countries of the world. The Vatican has sent a representative to each of the biennial Conferences that the Center has held in various countries over the years, and the relationship with the Vatican has been cordial and continuous.

Associated Organizations Several Associations have been created after the Center was founded.

Currently the most active ones are the World Association of Lawyers, the World Association of Judges, the World Association of Law Professors, and the World Association of Center Associates. Membership in these Associations includes membership in the Center. The Associations have established a number of Sections and Committees dealing with a great variety of issues of international legal concern such as the Section on Human Rights (WALl. the Committee on Criminal Law (WALl. the Committee on Criminal Justice Processes and Procedures (WAJ), and the Committee on Cooperation with Lawyers on Continuing Legal Education (WALP).

Membership Membership is comprised of jurists, Attorneys-General, Ministers of Justice, Supreme Court Justices, and justices of lower courts, professors of law, attorneys, law students, and a number of others from all over the world, who are interested in international legal issues. The Center and its national branches and its affiliated Associations are operating in more than 155 countries, with a total membership of about 100,000.

Meetings Every two years, the Center stages a Conference in one of the major cities in different areas of the world. The Conferences, which are conducted primarily in the English language, are attended by representatives from most or all of the countries concerned, including the Vatican. During these Conferences, which revolve around a certain preselected theme, ideas are exchanged-principally through panel July 1983/Arkansas Lawyer/95

discussions, demonstration trials, and speeches-on some of the critical problems of our time, and formal resolutions are compiled which may hasten the formation of international law.

The Conferences have been held in Athens (1963), Washington, D.C. (1965), Geneva (1967), Bangkok (1969), Belgrade (1971), Abidjan (1973). Washington, D.C. (1975), Manila (1977), Madrid (1979), and Sao Paulo, Brazil (1981).

Formal Relations with other International Bodies The Center has observer status with the United Nations.

Publications The Center puts out numerous pUblications, including two periodicals: a bimonthly newsletter, The World Jurist and a quarterly journal Law/Technology.

THE CAIRO CONFERENCE The World Peace Through Law Center and its affiliates, the World Association of Judges, the World Association of Lawyers, the World Association of Law Professors, the World Association of Law Students and the World Association of Center Associates, will hold its Eleventh Conference on the Law of the World in exciting Cairo, Egypt, September 25-30, 1983-eminent jurists from over 140 countries gathering in the heart of the thriving capital of Egypt-to join in the challenge of establishing peace in our world through the rule of law and its institutions.

The Eleventh Conference, which will have as its theme "The Universal Legal Principles as a Basis for World Peace", boasts a truly impressive program of panel discussions and seminars led by the outstanding jurists from the four corners of the globe. In addition to the traditional celebration of World Law Day, there will be special luncheons, a banquet and a compelling Demonstra-

tion Trial argued before some of the world's most distinguished Chief Justices by some of its ablest advocates upon issues which they will decide.

President Hosni Mubarak of Egypt is expected to preside over the Conference as Honorary President, and to deliver the Inaugural Address at the opening ceremony.

Registration for the Cairo Conference may be arranged through the headquarters of WPTLC, 1000 Connecticut Avenue, N.W., Suite 800, Washington, D.C. 20036. Early registration is encouraged. Registration fees will be about $300. Headquarters for the Conference will be in the new, five-star Marriott Hotel, located in the most exciusive section of Cairo.

Optional tours will also be available for trips around Egypt and to Israel, Italy, and Greece. For detailed information, contact: WPTLC Travel Coordination Center, 50 E. 42nd Street, Suite 2200, N.Y., N.Y. 10017 (212-5578472/73).

t--

Ethics Opinions Herewith is an interesting advisory ethics opinion of the Tennessee Supreme Court's Board of Professional Responsibility.

FORMAL ETHICS OPINION 82-F-28 Inquiry is made concerning the propriety of an attorney charging interest on accounts more than 30 days delinquent if notice of the intent to charge interest on such accounts is sent to all clients, and the charging of interest is limited to billings made af1er such notification.

Formal Ethics Opinion 338 of the Committee on Ethics of the American Bar Association states that there is no impropriety in the use of credit cards for payment of legal services and expenses provided certain conditions are fully and completely observed.

The opinion also states that a necessary corollary to the use of credit cards is the charging of interest on delinquent accounts.

It is the opinion of this Committee that there is no impropriety in the use of credit card plans for payment of legal services and expenses provided the following conditions are fully and completely observed: 1. All publicity and advertising relating to a credit card plan shall be 96/Arkansas Lawyer/july 1983

subject to the prior approval in writing of the Ethics Committee of the Board of Professional Responsibility.

2. No directory of any kind shall be printed or published of the names of individual attorney members who subscribe to the credit card plan.

3. No promotional materials of any kind will be supplied except possibly a small insignia to be tactfUlly displayed in the attorney's office indicating his participation in the use of the credit card plan.

4. A lawyer shall not encourage participation in the plan, but his position must be that he accepts the plan as a convenience for clients who desire it; and the lawyer may not because of his participation increase his fee for legal services rendered the client.

5. Charges made by lawyers to clients pursuant to a credit card plan shall be only for services actually rendered or cash actually paid on behalf of a client.

6. In participating in a credit card program the attorney shall scrupulously observe his obligation to preserve the confidences and secrets of his client.

7. The maximum effective rate of interest utilized in the plan shall not

exceed the applicable formula rate specified in TCA 47-14-103 for written contracts signed by the party to be charged.

It is opinion of this Committee that there is no impropriety in an attorney charging interest on accounts more than 30 days delinquent provided the following conditions are fully and completely observed: 1. Notice of the intent to charge interest on such accounts shall be sent to all clients.

2. The charging of interest is limited to statements made af1er such notification.

3. The maximum effective rate of interest utilized in computing such interest shall not exceed the rate specified in TCA 47-14-121 as the rate of post-judgment interest.

In any and all events an attorney shall not resort to overly zealous actions to obtain payment of fees. Where procedures for arbitration of fee disputes exist, attorneys are encouraged to utilize them rather than resorting to litigation or self-help measures which may have the appearance of taking undue advantage of the lawyer-client relationship.

June 18, 1982

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